What's Wrong in Private Equity (w/ Lee McCabe)

0:00Well, the great ones will say, look, I want a lead generation business. I just happen to sell windows. But because I've built this machine and now I've got a company built on data and there's one source of truth, not five different sources of truth and different definitions of the word conversion. Because I've built this, well, guess what? I'm going to buy a roofing firm in three months and then I might buy a HVAC firm because I understand really well how to get business and how to drive leads. but to do that you have to be all over the data and all over the metrics. It's not venture capital, it's private equity.

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1:11And anytime you have a question about anything, ask, just like you're having a conversation with a colleague. NetSuite is customized for a wide range of industries, so it supports the way your business truly works. Whether your company earns millions or even hundreds of millions, it's time for NetSuite Next, where your business meets AI. For the first time ever, you can try NetSuite Next for free. Go to netsuite.ai slash funcast. Built for every industry, ready for every boardroom. netsuite.ai slash funcast. There's something going on in private equity right now, and it looks a lot like the past.

1:45Apollo Global has been writing a bunch of research this year on what the new version of private equity looks like. And it looks a lot like the 1990s. They're calling it back to basics. It's all about differentiating yourself on the buy, the build, and the exit. Simple things and simple ways to think about it, but hard to do. Paul and I have a great guest today. We're going to dive deep on what the new private equity looks like. We're going to talk tactically about what you can do to do those things and probably talk trash about kind of how it's been done before and how it can be improved. So, Paul, welcome back to the pod.

2:26And who do we have with us today? Thanks, Devin. Lee McCabe is here. Lee, thanks for joining us. I'm guessing based on your LinkedIn audience and prolific content creation habit that a lot of people know exactly who you are as I introduce you. But if you don't, you're going to know in about a couple minutes why we invited Lee on the podcast. I had a couple options for how to introduce you. I actually want to ask for your help in that. You're a recovering operating partner. You're a digital value creation guy. You're an entrepreneur. You're a Facebook and Alibaba alum. You're our favorite private equity provocateur.

3:03That's very kind of you. How do you introduce yourself? What do you do and what are you all about? I'm usually very quick. Lee McCabe, partner at Claremore Partners. I thought you were about to say recovering alcoholic, but recovering operating partner, I like a lot more. Yeah. There are 12-step programs for both of those. So we can invite people into how do you recover as a ex-operating partner in private equity? I'm still in step one. Yeah. So what you've done is you've seen it, you were inside companies. You saw what good looked like. You joined a private equity firm as an operating person.

3:34Yeah. You've left that firm and now are working with private equity-owned companies and other companies about how to drive value creation and other things. You've also figured out how to brand yourself and brand your business and what you do by being really good at social media, particularly LinkedIn. So we're going to talk a little bit about that today. But we think about private equity in the new, new way, a few ways. So Apollo would say, you have to have alpha on the buy, alpha on the build, alpha on the exit. Well, what does that mean? Well, there's$1.5 trillion just stuck in private equity right now.

4:08So distributions have dried up. Cambridge would call it the distribution drought. I'm going to talk about that a little bit, why that is. There was a lot more luck than skill. From 2010 to 2021, Apollo would say two-thirds of the value creation, the returns were driven by leverage and multiple expansion. No longer available. So you have to know on the build how to actually improve a business and run a business better because valuations are still elevated despite market dynamics. We're still paying historically high valuations for things. And then the problem with the exits. There's been one path to exit, which is take it public or sell it to another private equity firm.

4:47Those have largely dried up. Or sell to a strategic, and strategics have gotten much more picky about what they're willing to buy. And oftentimes don't want to buy a business from private equity where all the value has been extracted and there's no more natural resources to mine. So we do things like NAV loans and CVs and things like that. The way we look at it at Parker Gale, we have three mantras, unique access, unique insight, and unique skills. You need to have all three to do private equity well. But if you could have two of those three, maybe you could differentiate yourself. So let's start with what's broken in private equity.

5:23You've got 50 ,000 people on LinkedIn follow you and like the stuff you talk about. Like, what is, what's hit? What are they saying? What am I saying? Well, yeah, what are you saying? And what's the vein you're mining and why have people reacted to it so quickly? I think private equity has had a very easy time. I think it's been like shooting fish in a barrel for 20 years because of a few things. One, if the market re-raided the assets automatically every four years, happy days. You could buy something, sit back, and your multiple would increase. Interest rates, historic lows, beautiful for PE.

5:57You know, so there's been a lot of tailwinds in private equity, and that means a PE firm has had to do one thing well, governance. That's it. You still have to buy one, but they've bought companies. You've had to have your monthly meeting, your quarterly board meeting. That was really it. You could sit in an asset for four to five years, sell it, and make a fortune. So, but unfortunately, those days are gone now. But the problem is PE is still sat in that world. Now, I always have to say present company accepted because I think you guys do things very differently, which is great. But I think largely PE sits in that world.

6:33And because all they've had to care about is governance, you look at the average PE firm, some of them are still running Outlook and Excel. And it turns out you could run a PE firm on Outlook and Excel for a long time and have a great business. You can't do that anymore. So I think the things that need to change, the Apollo report is right. It's really common sense. It's basically saying, look, we can't rely on financial engineering anymore. When we buy a company, we have to actually create alpha. We have to figure out where value creation is going to come from. And we have to start from day one.

7:05You know, we can't cross our fingers and have a dance with the CEO and hope the CEO is going to get it in three years. There's 70 % of the time the CEOs don't make the exit during the whole period. So that obviously isn't working. So I think there has to be a more deliberate strategy about really starting day one, having a 100-day plan and actually using that 100-day plan and doing something with it, but continuing right through, finding the levers, build companies built on data, give operating partners power to actually do something in these businesses and build a great business. Yeah, I think when I eavesdrop on you and Paul talking and you kind of get down to the things that work, a lot of things we talk about on the pod, you're like, yeah, that's just kind of basic business execution.

7:49Foundational. Why is it so hard for private equity to kind of stick to the script and just execute a business better rather than trying to glaze it with so many acronyms and new strategies every day and other things? Paul, what do you and Lee nod your head about all the time? Well, we were talking about this last night at dinner. I think I asked you two flavors of the same question, which is what is the thing in your consulting advisory business that you insist on staying very close to and even doing yourself in a lot of cases? And then what do you think is the most important thing that people are missing?

8:22And I think your answer to both of those questions was the same. It's the data, right? So talk about your view on that and talk about how people are getting that wrong. Because to me, it's really easy to do 60 % or 70 % of the work on what I would call the data foundations for value creation. That last 20 % and 30 % is hard, and not a lot of people finish it. It's always the data. That's the main objective. You need a business run on data. And in this day and age, there's no reason you can't build a business built on data. What's hard for management to get that done? and why do private equity firms and the operating partners or deal people inside those firms kind of never finish the job before getting distracted?

9:03Because I think the majority of firms have come from founder-led, founder-owned businesses, and they haven't been data guys. They haven't been digital guys. And they've built great businesses for themselves. And they've got to a point where they've been very successful. And PE has come in and bought them. But I think that's where the problem is because then PE thinks, well, they'll continue growing. And again, we'll cross our fingers and we'll hope this guy takes us there. and they completely missed the foundation of it. Like if you can't answer simple questions like, what did you spend on marketing last month?

9:32Half a million dollars. Right, tell me exactly what did you get for that? What did that half a million dollars generate in revenue? If they can't answer a simple question like that, the machine's broken and it doesn't have to be because you build a good tech stack. Most companies don't have that and it's crazy now. You know, 10 years, it was probably harder. You might need an engineer. You probably couldn't buy it all off the shelf. No, you can buy it off the shelf. You can buy it all off the shelf. You can stitch it together. You can build a business built on data pretty easily. It should do two things.

10:03You know, the tech stack is the biggest foundational lift. And the most important, you do that, and it should enable two things. It should enable the customer journey. Most companies don't take the time to map that out, which is crazy. I always ask that question. Help me understand how you go from a cold point of contact with a customer or a business, to actually realizing revenue from them. Help me understand the friction you put them through. How many people do you pass them through? How many systems do you pass them through? How long does that take and to actually realize revenue from them?

10:34And they haven't mapped that out. But a good tech stack should give you all that data. So you understand what drops out at every stage. You go, shit, 50 % of my customers dropped out at that stage. Well, clearly if I fix that by only a few percentage points, that could be millions in revenue for me. Right, I'm going to get on that. But now I have the data. So it should enable the customer journey and give you the data to run a business built on metrics. So there should be no more gut feel anymore. You should have everything tagged and tracked. You know where every phone call is coming from, every web form is coming from.

11:08You should be able to measure the attribution right down to revenue. Most companies are not there, but that's the goal. If you create any of your business, your business becomes a lot easier and growth becomes a lot more. So whether people know you or not before this conversation, people are listening to what you're saying. And my guess is they're feeling some tension, which is they're nodding their head saying, yes, I know data is important personally. Yes, my investors are annoying me about having more data. but also yes I've worked through a couple CMOs or marketing teams that haven't been successful and have frustrated me because they're using words like customer journey and funnel but I never get to see the actual data and I never really get the insight of where the bottleneck is in the business so this this is what I noticed especially in smaller businesses like everybody understands the terms everybody understands the importance of the terms but there's there's this last mile of work that actually makes it meaningful and enables you to have a conversation about the data.

12:08Like that's what we say is data is only as good as the conversation it creates. So talk about like, what is your checklist of the things that if you're not doing these or finishing them or defining these for your business, you're never going to get there. And it's always going to feel a little bit too squishy. Because when I think about your background and when I think about the value that you provide for the companies that you work with, that's it. It's like wrangling the data, pinning it down for the very first time and making it mean something. How do you do that in the context of the customer journey?

12:43Well, first of all, you map out the business metrics. And again, I never feel to be surprised. We start by saying, just help me understand how you make money. Let me understand how you've got a business right now. And I'm still surprised at how many people in leadership teams can't do that on one page. It should be as simple as, what do you pay for a prospect? Okay, what's the conversion rate between a prospect and a lead? So what do you pay for a lead? Got it. Okay, what's the conversion rate between a lead and a customer? And you've already gone off the rails inside of a lot of companies by this point.

13:15Okay, so this is what you pay for a customer. Got it. Okay, so this means your cost of sale is X. What's the lifetime value? What's the average order value of that customer? What's the margin on this product? You should be able to map that on one page that anyone can look at and say, I get it. I get it why you are a business. This is how you make money on one page. I would say a lot of companies can do that, but the data underlying that is wrong. So the calculation, they're confidently wrong with bad data. So from the deal side, as the deal guy outnumbered here with two operating guys. They're ganging up on you.

13:53I would say, here's the problem. Everybody's nodding their head. Yes, this is what we need. Oh, my companies are good at this. Oh, or whatever. You buy a company for 12 times EBITDA. You put five or six turns of leverage on it. You've got covenants that are really tight. You've probably, most companies miss the first year revenue growth plan because everybody's too optimistic that they can change a trajectory of the growth or a change in ownership isn't going to distract management where the business doesn't grow the way. So most people, most private equity firms or companies are missing their first year plan.

14:24All of a sudden you're under pressure and you're telling me as the operating guy or the CMO, hey, I want to spend a half a million dollars on some data infrastructure, software, a consultant, you know, some tooling, other things. And I'm like, I can't, I don't want to spend on that because I don't know what the ROI is. I think we're fine. We hired Bain and they did a really good commercial diligence report for us. This is what it says. So there's this tension between what you as operating partners are seeing inside the business. A lot of middle market CMOs, no offense, aren't public company CMO quality, like data, like complete data geeks.

15:01Yeah. A lot of them, the knock in private equity would be, hey, they want to change the website. They want to rebrand the logo. They want to, you know, do some kind of high level, you know, branding stuff. and they've been burned a bunch of times on marketing, getting too much budget because they're going to spend all of it. They never don't spend all of it. So that's the tension. And so how do you break through that given if you're an operating partner inside a firm or you're a management team member where you're like, hey, I need the budget to go do this, and this wasn't covered in the VCP because the deal guys led the VCP, not the management team.

15:35Sometimes you can't. Okay, yeah. Sometimes you can't. It all rests on the CEO. and there's a big difference in the quality of CEOs, right? But really, ideally, you want a CEO who is intellectually curious and is hungry for that data and really understands what business they're in. So what do I mean by that? Well, think about home services. If you ask an average CEO what business you're in, they'll probably say, I run a roofing business, or I run a flooring business, or I run a window business. If you ask the really good ones, they'll tell you, I run a lead generation business. I run a sales and marketing business.

16:15Because they know that if they build a lead generation machine built on data, and they know the economics of the model, and they know what they can afford to pay for a lead, they can build a machine to be always on and just get those leads at the economics that work. And if they do that, they'll have a great business and they'll have optionality. So the great ones will say, look, I want a lead generation business. I just happen to sell windows. But because I've built this machine, and now I've got a company built on data, and there's one source of truth, not five different sources of truth and different definitions of the word conversion, because I've built this, well, guess what?

16:53I'm going to buy a roofing firm in three months, and then I might buy a HVAC firm, because I understand really well how to get business and how to drive leads. But to do that, you have to be all over the data and all over the metrics. Yeah. Paul, what do you see when you get into these companies from the data side and the tension between the budget to spend it, the ROI that might be squishy, and kind of the financial goals of the business? I think the empathic view, and Lee, I love your opinion on this, is some of this is driven by a lack of intellectual curiosity from a CEO or the investors because they don't know what to ask for.

17:32So just aligning on the questions you want to answer can be tremendously helpful. But then, like inside of our businesses, we're talking about 20-ish million ARR software companies. you might be talking about a marketing team of three people, four people, five people, eight people. Maybe. And so tradeoffs are real, right? Like, well, if I'm the CMO and I'm having a bad day, I might be answering that ask for a 10-page reporting template and saying like, well, do you want me to get this webinar out, which is going to get us some leads? I can't tell you how many or what the historical trend line would be, or do you want me to get this reporting template together?

18:11And that, to me, tells me we might not have the right person in the right seat. but that's a real reality for people in these companies. Or, hey, we built the ICP report with help of IGS or, you know, commercial diligence provider. I know who our ICP is. We just need to get more of those rather than the foundational data that's built, that's underpinning. It's like, no, I just need more, you know, leads in this zip code because it's underserved and we can sell at a good margin. I would also say, like, the last mile of getting this right, and I think you guys do a lot of this work, So I'd be curious what this looks like beyond the world of software.

18:45The last mile of defining the metric, setting up your tech stack so the right things are firing and the right things are being measured, and then doing the small behind-the-scenes adjustments that improve the machine, all of that is really annoying, tedious work. Like I was on a call with one of our portfolio companies yesterday and we had a half hour debate on the form structure for three landing pages, what the CTA should be and how we track the conversion of those things vis-a-vis Google ads and all that stuff. That is a very, very small topic that can be a big needle mover. And a lot of companies are not willing to look at the details.

19:29They want to stay at the conceptual level and talk about the customer journey as a fun business framework, not as a operational reality of what's going on inside their company. And I will say, I think part of the challenge is when you're doing the right things and you're going to that level of detail and you're doing the last mile of the work, the work is actually less fun. Sure. But that's what moves the needle. Yeah, boring makes a lot of money. I agree. It's not fun at all. I agree. Getting Google Tag Manager correct and setting up all of this. But the good news is you shouldn't have do it a lot.

20:04You set it up once and get it going and you're away. And that will actually free a ton of time for the CMO. Because now if they get to a system where, look, I've got one source of truth of data, it's all in my data lake, the things you just mentioned, like, well, I've got a quarterly report, I've got the board report. Well, you want any more? Claude can do that for you. We've got it going in several companies. Once you've got all that data, you're going to have so much time back on your hands. Because now Claude has got the data, can create all these reports for you. There's no more sitting over PowerPoint for three days, pulling a board report together or pulling your weekly report together.

20:38You'll have the dashboards at your fingertips. This is one of the few areas where AI clearly works right now, but you need the data. And you need, I think the way the intellectual curiosity manifests itself that you're talking about is different now than it was a couple years ago. Because before it was the intellectual curiosity shows up as the willingness to look at the data, frame the data up, talk about it, have a point of view on it. Now that's gotten way more frictionless for people. I think the challenge now is in a world where the emotional and financial cost of producing these reports has essentially gone to zero or the cost of your$200 monthly Claude plan, like you have to be more choiceful in what you report on.

21:22Because a reporting pack of 40 things, we're going to cover everything, is actually not as useful as the seven or eight things that really matter with really tight definitions, alignment of the team on what matters, and then like a semi-vulnerable conversation, to your point, about where the bottleneck is. And a lot of people don't like to talk about the bottleneck because the bottleneck, one interpretation of that is like, this is where I'm screwing up or this is where I haven't figured it out yet. Yeah. But we like to say you can't fix a secret. I think the grid teams are okay unveiling those secrets to their investors, talking about what the options are, and then committing to what they're going to do about it.

21:59But before you do that, you have to get the data in place and you have to be willing to talk about it. And I think a lot of companies out there fail both of those tests. Here's what I see a lot, which is the person you need in the first year to set that data foundation and the tech stack and get it all right and do all that really boring, tedious stuff is the wrong person for the last few years of the investment. And oftentimes we say, if you're going to make a mistake one way, the strategic CMO who can really drive the vision and sell the vision at the exit versus the highly tactical VP of marketing or demand gen analyst.

22:40analyst uh if you got it wrong you probably want to get it wrong that you just hired the demand gen analyst because they that first year that strategic cmo doesn't want to do the donkey work yeah and as we all believe in the way we grew up and the way we operate is like salvation is in the donkey we have to put the work in yeah that's where the goodness is is in all that work so you You hire the great resume CMO right out of the gates into this founder-owned business, you're going to transform. And no offense to them, they didn't take the job to do the donkey work of tooling it. And they're probably thinking, oh, this is this great private equity firm with all these operating partners.

23:20They're going to help me or they're going to do that for me. Or it already exists because why wouldn't it? They wouldn't have bought it if it didn't exist. Then they show up. And then they're like, holy cow, there's no data here. There's nothing here. And then they're just in this churn and you go hire a consultant to come in and they do a bad job and you waste six months and$600 ,000 on it, you don't have really anything to show for it. So this is like where I sit as the investment person, chairman of the board. This is the tension. So yeah, like let's talk about more about like what actually works and what you've seen work in like that first year of the investment.

23:54It's what you said. It's foundational. Day one, you can't cross your fingers and wait around. This is a hygiene factor. You should have a business built on data. But actually, not everyone wants that. And you made a good point earlier. You keep saying, well, the good teams should want that. It's finding the good teams and the good CEOs. Because some CEOs might feel exposed by that. I really don't want a company around on data. Because I think they'll get more questions. And again, the CEOs who have built a great business for themselves, and they'll say things, well, we've always done it this way.

24:27This is how we've done for the past 10 years. Why would we change this? Well, especially if the management team stays pre-investment, post-investment, or one private equity firm to another private equity firm, and they've been sold as these great executives who built a great business. And all of a sudden, the new firm comes in and is like, whoa, whoa, wait a second. I can see them being defensive and not wanting the transparency. Because they don't want to be exposed. You're right. Yeah. And sometimes I'll talk about the operating partner job. Well, the way I frame it is the operating partner job is the weirdest job I've ever loved because it's four jobs in one.

24:58You're a consultant, therapist, teammate, and spy. And depending on the moment you're catching me and depending on the meeting that I'm in, I'm playing one or a couple of those roles. But I think you're hitting on something, which is if you're a good consultant, you can set up this basic data infrastructure that we're talking about. And you can get the team talking about, okay, guys, no, using the definitions that we now all agree on. What's our market? How many of those are turning into leads? How many of those are converting? What's that costing us? and so on, but it's getting them to come along into a more vulnerable place than they've been before.

25:35One, that's like a very necessary second ingredient. But two, that therapist job, getting them to come to that more vulnerable place, starting with the CEO, might be the harder part of the work, right? Yeah, by far. And that's, yeah, it's completely down to the CEO and the quality of the CEO, because you can only lead a horse to water. All right, let's talk about this. How was Act One? Okay. How do we move the needle? What works? And deepen the data side where you guys go. So act two, I want to talk about what's broken inside private equity firms where they can't move this needle. Yeah. Why, you know, they got drunk on value creation plans that actually were multiple expansion and leverage driving the returns and not these 100-day plans of things.

26:21So you were inside a private equity firm and had a good experience. Great experience. Great firm. Yeah. Paul's inside a private firm. I hope having a great experience. It's going great. I am being treated well. But a lot of people who listen to our podcast and a lot of people who follow you and us on LinkedIn actually enjoy the fact that we kind of call it the way it is. Yeah. Like there's structurally this operating stuff inside of private equity is broken. And we've gone from like 500 to 20 ,500, literally like 15 years ago, 500 operators inside private equity funds. Yeah. Now 20 ,000. It's the fastest growing piece of the hiring puzzle for private equity firms.

27:02And it mostly, in my opinion, doesn't work. I agree. It doesn't. So what's broken with it from your perspective? And where do you get big engagement from your audience? So there's a few things. I think there's very little operational control. And again, because PE firms have a need to do that. governance is all that they've had to be good at. So they haven't focused on the operations. And I think, well, I know that of course they've employed operating partners, but if you ask 20 firms, how you define an operating partner, you'll get 25 different answers. There's very different ways how they're deployed.

27:35Largely, they've got no teeth and largely they're consultants. We're trying to work with the portcores to get things done and improve. But at the end of the day, if the CEO of the portcores doesn't want it, there's an operational control to change anything. And I think it's largely been a kind of badge to placate LPs, if you look at operating partner hiring, because they want to say the LPs, look, we've got five guys. One was X, big firm. Look, we've got this roster of great operating partners, great resumes. You're in safe hands. We are good at operations. And post-GFC, the global financial crisis, LPs were like, whoa, whoa, wait a second.

28:13We got a bunch of deal guys buying companies, levering them up. And now they're in trouble. And I was like, no, no, no, wait a second. We got this guy from Danaher. We just hired this guy from, you know, Boston Scientific. We just hired this guy from FedEx. Don't worry. We've got all the big things covered. And that was placating. And then they got really comfortable with that, I think, because they're like, well, we can charge these out to the portfolio. It doesn't cost the GP anything. This is like free. We'll just put it on the portfolio and we'll put it under the EBITDA line because it's an ad back because when we sell the company, we won't be charging the fees from the funds.

28:47Um, so, and you, but I want to get to back to like, they have no teeth. Why you're, you're Alibaba, Facebook, you have a great resume. You've done lots of things. Uh, I'm sure there were times that you were like, Hey, I, I can see what's happening, but for whatever structural reason or emotional reason, I can't drive the results. Because I get it, right? There's no scale in operating partners. You have a portfolio of 100 companies, you might have six operating partners. There's no scale in that. So putting them on companies is tough. And ideally, as you guys well know, ideally you'd have a great CEO who you would just trust to get everything done.

29:26And you could meet every quarter and flip the business in four years and make a lot of money. So I think that's the friction, which is always the dance with the CEO. Ideally, of course, In the ideal world, you want the CEO to work and operate and be successful. So I think there's always been that friction. PE firms are afraid to kind of disrupt that culture and say, no, the operating partner comes in. We need to give him some power to change things. Because a lot of the time, the CEO is not going to like it. So I haven't got a great answer of how that friction goes away. But you guys know there's definitely a friction there.

30:03and sometimes you're lucky, you get great CEOs who you can stand by the side and just watch them create a great business and be successful. But I think, again, I keep coming back to that metric where 70 % of CEOs get fired before the exit. So something's not working. So I think at some point, something's got to give. Yeah. Paul, what do you see from your side? Where is the friction? I mean, I think we have a good model, but also I know there are days you come in and be like, I'm trying to get something done and I can't. And it's like, well, let's talk about the challenge to actually do the thing you want to do, given where we are with the banks, where we are in our timeframe on the investment, where we are on team dynamic and other moves we might need to make before that move.

30:45But like, yeah, talk through the frustration as an operating person to move the needle and feel like, wow, I'm just a glorified consultant with maybe a better equity package. Well, we had a CEO tell us one time who's done this a bunch of times. I think he'll know who he is when I give you this quote, but he liked to say companies basically have three problems. There's either no plan or too many plans or no communication. and when I think about you know the frustrating days on the job which I think I have fewer than the average operating partner because of what this place is like and how we run it's because of one of those three problems it's we we haven't taken all the stuff that we agree in multiple conversations is probably a good idea and branded it into a plan with a capital p or that's shifted a bunch of times in a bunch of people's different minds.

31:41And now there's three or four plans floating around and we're not exactly sure which one is what we're driving towards. Or again, these are small businesses. There's something to do every day. There's a crisis to respond to every day. There's a customer that needs help every day. It's very easy to get distracted and to go solve the problem and not talk to each other. If I was going to add a fourth thing to that list, it's we haven't built the trust yet with the executive. And that might be the hardest one and the most important one because when i do feel like i'm making a difference it's because one of our ceos is calling me out of the blue yep and saying three very important words you got a minute because that tells me they're yeah that that tells me they're they're thinking about something important and it's a signal to me that they have enough trust with me to bring out an idea or a problem or a mistake that's ill-formed and not perfectly framed and not on a powerpoint slide anywhere, but like, we're going to work on it together.

32:39So when those things are missing, it's like, you kind of feel like this guy hanging around the hoop of a business where there's a lot going on, but you don't have, you know, like an acupuncturist, you don't know exactly where to put the needle. How does that relationship get built with that CEO where you get the call at nine o 'clock on a Tuesday night, got a minute? I think like Paul said, it's trust, but I've also that some CEOs just don't want it. But how? When you get it, what does it look like? How have you been introduced into the organization? How have you been pitched to the company, to that executive?

33:15When did you start that whole process of the relationship? Like in a perfect world, how does that happen? Like, oh, Lee's 6 '5", he's brilliant. Like, I'll take his advice. I like the cut of his jib. Like, that's high beta. Some people like the cut of your jib. Some people don't even know what a jib is, right? I know what a jib is. How do you, like, what's the moves you guys make as operating partners to get that nine o 'clock Tuesday call, got a minute? I think it's like building a tech stack. You have to put the work in at first, building the foundation and building that trust. But it should be from day one.

33:48And you can't jump straight in with a hundred ideas. I think it's the empathy. It's sitting there and understanding the issues and maybe picking one or two where you think you can be helpful on straight away and ask them if they want the help. don't be you can't be the current relationships you can't be too forceful and i think you get a couple of wins under your belt as you do that the trust starts to build the conversations can become more open and then hopefully before long you have a very good working relationship where you're you're truly it's a partnership okay you've got the same goal yeah how do you do it same question you said two words that i completely agree with which is picking like selection like picking the first one or two things to work on is very important.

34:31And you said the more important word, which is helpful. And our friend Dave Kellogg likes to say help is defined in the mind of the recipient. So the tension you're going to feel if you're doing this right, if you're an operating partner listening to this now is the thing that you know is going to move the needle and actually create the most value in the investment on a dollar basis is probably not the thing that you should do first, especially if you're in a low trust environment. Because the thing that you should do first is the thing the CEO tells you is the most helpful. And if you do that, that is the path to go work on the big thing, the vulnerable thing, the kind of scary thing for the CEO that they're not quite ready to talk about yet because it might reflect negatively on them, or it's just too overwhelming to even address.

35:19But that to me is the path to a high trust relationship where you can actually create value is like, go be useful. Don't try to be smart early. You can have your backlog of value creation ideas, like keep it in the back, but pick one or two things that the CEO is like, you know what? That was great. And I really needed that done. And I would have never gotten to it unless Lee or Paul was helping me with that. All right. Next thing I want to know from you guys is how do you balance that, trying to build that trust by being helpful and not pushing too hard and not going after the biggest, hairiest rock first, right?

35:52If it's not the thing that the CEO asked you for. Uh, and the pressure you have from the private equity overlords, the deal team, uh, who wants it now, now, now, now, more, more, more. It's what I hired you to go, go do it. Um, who doesn't necessarily have the empathy you guys would have for the management teams because they've never been managers of companies. Uh, so that, uh, how do you manage that tension with your boss and the company you work with? And two, what do you choose to share and not share with the deal team? What remains private between you and the management team where you're like, okay, I'm going to handle this rather than everything I say gets filtered back immediately to the deal team.

36:34So tell me, one, how do you manage that tension? And two, where do you draw the line on this is between me and the executive and we're going to work through this before I go tattle on For me, it's always been about transparency. It just makes life easier. It's like efficiency. Don't try and hide anything. So I've always been transparent with the deal team. That's not telling tales out of school. It's like, look, here's how it is. I think that transparency will lead to what Paul just said to say, look, here's what I'd like to fix straight away, but you understand the tension and the dance. So here's what I'm going to fix straight away, because that's going to be the most useful, which is the right word, to the CEO.

37:13And I don't think there is that much pressure from the PE firm because they understand the dance. Okay. But the VCP says we're doing this first, this second, this third, a 100-day plan, we've got to hit it. And you're coming in saying like, hey, I just spent three hours in a cubicle and I'm seeing what's going on in the company. And like, we can't do that yet. Like, that's okay. You've got to have the trust with your deal team partners to say like, hey, I'm going to call an audible here. I think so, because I think they would understand that if you get the trust, you'll be able to smash that VCP a lot faster without the trust.

37:46All right, Paul? I think, you know, Jim and I talk a lot about the It Depends school of value creation, which I think we subscribe to here at Parker Gale. And I think we've done a really good job of recognizing that the plan changes after you spend a few months inside the business with the people who've been running it for a long time because you just learn a lot more it doesn't mean the levers are different it doesn't mean you feel different about the market or the basic underlying health of the business but the challenges and opportunities that you go attack first both to build trust and build momentum are going to be different than what you thought they would be in diligence for sure because the operations of the business is much messier you you haven't talked to a customer in a commercial setting yet you haven't gotten into the tech stack yet with your own login you just see more stuff and so i think we've done a good job over the last six or seven or eight years saying hey we kind of acknowledge that as a reality like we underwrite to a certain expectation for the business and we have to get a certain level of excitement going to say yes that this is going to come to be part of the the parkergale portfolio but like we also invest time and invest effort to get in there in the first couple months with the shared understanding that like we're gonna see stuff that we're gonna want to knock down together and i feel like we're in really good alignment that job number one is to put the right people in the right seats and get them to trust us because that's how we're going to move the needle so i don't know like if you haven't created that contract if you're an operating partner with your deal team or if you're a deal team and you see your operating partner kind of floundering that's the first place that i would look is like what is your expectation for how the value creation plan gets adjusted because if you never talked about that and the value creation plan is this like chiseled into a stone tablet immutable thing you're kind of kidding yourself because the name of the game is like this is emergent strategy that changes over time it is not defined concrete classic corporate strategy where it's like this is where we're going to be on the gantt chart in 24 months it just doesn't work like that and if you acknowledge that you're getting somewhere and if you haven't had that conversation yet you need to completely agree that the muck should be organic because you're right you just don't know you put these plans together you get surprised you get surprised every time you acquire a business no matter how diligent you are day one owning that business you'll get a few shocks and a few surprises and the vcp probably won't look like the same vcp in six months but you can't understand that until actually you get in the weeds and start working and building that trust and getting the business because it's not very often the terrain matches the map, but you can't understand the terrain until you get in three to six months.

40:54So let's hit that because like VCP value creation plan is another one of those terms that everybody likes to say it's become part of the zeitgeist in our industry. It's replaced 100 day plan 10 years ago or 100 day plan. But there's kind of made up versions of this. There's unuseful versions of this and there's useful versions of this. So when you think about like good VCP versus bad VCP? What do you think is true about funds or investors or operating partners that have made this thing useful versus those that are kind of pretending that the VCP is still in the room with them, but it's not really driving anything meaningful?

41:33It should be. So here's the thing. I think it should be organic. You should review that VCP every quarter and sit around the table and say, well, this is what we thought three months ago, but actually, this came up. Let's rethink this. So it should be organic and it should be as clear and as simple as possible. It shouldn't be a hundred page deck. It should be, here's five things. Let's back to the data again. It should be all based on data and it should be about knowing your business and saying, if we do these five things well, it's going to pull these levers. It's going to generate more revenue.

42:07We're going to have a much better business. So I think it's it's a clear and simple plan to say, these are the five things. Now, yes, there may be 20 more things behind each one, which you don't have to get into. So I think it's very, very direct, obvious, easy to understand. And I think the benefit of that is you can cascade it a lot easier too, right? Like when you do that, you have concretely linked what matters most for the company to what you thought you thought during diligence. And in general, the levers are not going to change, but how you impact those levers and the sequencing of all that and the stuff that comes up because stuff always comes up, that's going to stay pretty consistent, I think.

42:48But the reality is like a management team inside of one of our companies is, again, five, six, seven, eight people inclusive of the CEO. So if you're going to go move revenue or move gross margins or impact costs, that's going to take a lot more people than are in the room for a board meeting or a management team meeting. So you're going to have to get other people on board with that plan and working against those things. And if it's 40 initiatives in eight-point font, good luck getting the rest of the organization behind that plan. Like simple, simple, simple, uncomfortably simple, and organic is a great word.

43:26I think those are the two qualities of a meaningful ICP. And if you haven't revisited yours in the last 90 days, it's probably not organic enough in my opinion. Yeah, we've got, you know, our requirement, we own 12 companies, is, hey, the first page of the deck is the three to five things we need to believe to get the return we expected to get here. And where we started, where are we today, where are we on that path? With the number. With the number. And what does it look like at the end? Like, what did we predict it should look like at the end? I would say maybe six or seven of our companies consistently put that.

44:03It shows up in the first board meeting deck, and then it slowly just fades away. Yeah, drift is real. Yeah, and just the constant, like, come on, guys, can we put that back? This is actually the thing we should be talking about. Again, I appreciate management teams are busy and distracted, but trying to get away from every board deck is its own unique thing. It should just be very consistent across the board. But even with 12 companies, it's hard to get all of them to put that in the front page. and to your point is we should look at every quarter and say, are these still the things? Are these still the metrics?

44:36Something changed. Everybody has a plan until Mike Tyson punches you in the face, right? And the market loves to punch you in the face and customers like to punch you in the face. So you should be adjusting that all the time. Well, here's a little cheat code that seemed to work well. I'd love one or two cheat codes from you too. Like, yes, create that page. First, you've got to agree on what the three or five things are. It's really hard to do that if you never show your management team the deck that you use to underwrite the business. That's step one, in my opinion. It's an alignment exercise.

45:05Then it's about making the data real. Like, can we even measure these things? Okay, we can't yet. Let's go do that foundational work. Then let's say, where are we today? Again, a sanity check on can you measure it today? But then our really good CEOs are starting to do something interesting, which is we want you to declare and take a stance on for each of those levers. top line growth, cost, cogs, whatever it is. We want you to declare the things that you are doing this quarter to impact that lever, but also the things you're not doing yet that either aren't important anymore or have to wait or just are too hard and put both of those things on the page.

45:47And when you do that, something kind of magic happens because we all agree that yes, these are the initiatives and how they map back to what we're all hoping this business looks like in a few years. But we're also giving you not implicit permission, explicit permission to ignore these things for a little bit longer. And it's that last part that it's like a little signal of like, it's okay not to do everything at once. I think that makes a huge difference. And it's this pressure release valve for our CEOs that I've had more than one of them say, I appreciate that column, even though it makes the text a little smaller on the slide.

46:21Yeah, I think it makes a big difference. Do you have any cheat codes like that? Well, I'd also just add to your points earlier. I think good CEOs will take that VCP and call it a mission or call it whatever they want to and make sure everybody in the company is behind it. That obviously makes a massive difference. I mean, everyone has their roles, CTO, CIO, CMO. There are many, many roles you could have. But at the end of the day, when you ask somebody, anyone in that business, what's our mission? You'd hopefully, they'd say, oh, these five things. we need to get done. I think that makes a massive difference.

46:55Yeah. With the assumption that the CEO or that management team has been involved in the creation of the VCP, that the operating partners at the private equity owner drove the VCP alongside management, right? And then it'll be organic and we'll change it along the way. I can't say in my experience, all those things are true. Oftentimes the deal team is off building the model, building the plan. The operating team has handed something after the deal's already been done and haven't had ownership in it. And if they're being charged out to the portfolio, if they're not in the carry, they're 1099s, they're just on boards and not actually in the business.

47:31It just makes it more, that friction is worse and worse and worse, in my opinion, to get something done. All right. Well, we couldn't have Lee McCabe on today without talking about the new way to brand yourself and to market in private equity and private equity adjacent businesses. so um you famously become super prolific on linkedin uh as cringy as me saying that is and for you to receive that actually cringy receive that information we've got a feeling uh we've got a saying here that everything good is on the other side of cringe yeah we started a podcast 12 years ago yeah two million people have listened to it we've started this youtube channel It's a slow burn, but like we've had thousands of hours of consumption of this.

48:16We're a small little firm in Chicago, Chicago, not known for tech. And, you know, in a world of massive consolidation and kind of, you know, firms getting bigger and bigger, we've stayed small. I feel like we punch above our weight. We got on your radar screen early. You got on our radar screen as an independent guy. Now having started Claymore Partners and building that organization out to help private equity owned companies. what are the tools available to you and why is nobody using them it's a good question and maybe it's that cringe mounting people are afraid to put themselves out there on social media and that's what holds them back but look i always looked at it as it's never a bad thing to build an audience for yourself it's never a bad thing to build top of funnel because if you build top of funnel you build a big audience.

49:05That gives you optionality. New opportunities will come across. And it's never been easier. It's never been easier than right now to do that. I chose LinkedIn to do it. Obviously, there are many platforms you can choose, but it's easier than ever to create a big audience. And I think in PE, you guys are way above everyone else in PE doing this. And when I think about the opportunity there. P should look at what VC are doing and the standouts like Andreessen and 20VC when they will openly say we're a 50 % investment firm, we're a 50 % media company. It's like that makes perfect sense because if you look at 99 % of P websites, they're a pitch deck for LPs and they probably don't need to be a pitch deck for LPs.

49:54There should be a pitch deck to founders. There should be a pitch deck to companies. There should be, they should have podcasts like you guys do. They should have founder stories. They should be transparent. They should be authentic. They should be showing people what's gone wrong in the portfolio. Way more interesting and important than what's gone right. And I think you build a media brand for yourself in PE, I think it creates deal flow. Because when I think about the average business, if you ask them, one, who's ready to buy you in PE? They'll probably say, they can probably only name five PE firms.

50:28They'll say Blackstone, KKR, Apollo, Carlisle. Those firms are not going to buy them. So what happens is they'll get into an auction. They might meet three PE firms. They get wine and dined, but these are all cold meetings. They don't know these guys. They've never met them before. It would be way better if they said, well we know Parker Gill, we've been listening to PE Funcast for the past few years they seem like very down to earth guys not like we would expect from PE they've been sharing stories we feel like we know these guys before we even get to meet them in person that has massive value and could be a massive outlier because no one else in PE is doing that so I think, again building an audience is no harm building a differentiated brand aiming at founders building that brand of trust and transparency and authenticity is killer.

51:18But there are plenty of people on LinkedIn posting about operating in private equity and how to do private equity better. Often service providers to private equity. You seem to have struck a chord. You made a choice on how to do that. Yeah, look, I made a choice. I post about things I've been thinking about for the past five years, past several years working in PE, but I couldn't say them because I worked for a P firm and I was locked down by GC. You can't even engage on social media. And I started by accident. One day I was in a coffee shop in the UK, killing time. And I thought, oh, I've been thinking about actually this topic.

52:01What would a new type of P firm look like? And I think I called the post, if I was building a P firm from scratch, here's what I'd do. So I sat down, posted it and it blew up. I think it got half a million impressions and the light bulb went off and I went, ah, okay, maybe there's something to this LinkedIn. So I started posting more of my thoughts and it got more and more traction. And I think why I was different was because most people in PE can't do it. Most people in PE can't post on LinkedIn. If they can, they're not talking openly. And I'm a sarcastic British guy. I talk like I write and I think I write hopefully insightful posts will love them a provocative and test people's thinking and believes and that gets a lot of traction yeah the you can on your personal account post we have a full time yeah we have a full-time compliance officer because we care a lot about compliance I married a compliance officer so I'm very compliant in my personal life as well.

53:06Uh, so. You could take that in many directions. Hey, I'm the middle child of a big Irish Catholic family. He did 12 years, you know, nine years of Catholic school. So it's in there somewhere. I want to behave. I want to do the right thing for fear of punishment. But, uh, no, from your, from the corporate account, hard to do. Sure. Lots of rules from personal accounts. The rules have changed and certainly you can't talk about, we never talk about returns on deals. We never talk about like, Oh, we're the best or anything like those are verboten. and anything we ever put out goes past our compliance officer.

53:37So there's a way to do it. We have found the seam to do it. So one is, well, I can't do it because I'm not allowed to. Not true. Well, you're not going to do it because you don't want your boss to see it because your boss is like, what are you doing? This is ridiculous. You're making us look stupid or this is dumb. What's the point? No, we wait for Goldman and Morgan Stanley and, you know, Evercore to come in and pitch us deals. We don't go pitch ourselves. Andreessen has talked about this from day one. Day one, we're a media business with a fund attached to it. They have it written on their website, the new media strategy for their portfolio companies and for themselves.

54:14You can just read it and copy it. And in the venture business, you can create a company from scratch, right? So the challenge for them is they need to know the guy leaving Meta or the guy, the woman leaving NVIDIA who wants to start a new company. they want to be the first call. Because if they don't get the first call, then Accel gets the first call or Sequoia gets the first call. And they don't have the opportunity to back the best person. And when Andreessen says, no, we're not going to back you, then Sequoia and Accel and others get the call. In private equity, it's a zero-sum game. You're buying an existing business.

54:49You either own it or you don't own it. And most people are waiting for the banker to call them, hey, this is in market. You want to take a look at it. And they spend all their time trying to create connections before the company goes to market in the hopes that they will just sell to them one-off. Most companies won't. Or that when they do meet the company, there's already been some established rapport. Okay, that's one at a time. I mean, we can communicate through this machine we've built over a decade. 1 ,000 at a time, 10 ,000 at a time. Like you said, it's never been easier. No. But it's embarrassing if you let yourself be embarrassed that your high school prom date is going to see you on LinkedIn.

55:31Yeah. Talking like you know what you're talking about and roll their eyes. Yeah. And screenshot it and send it to their snarky friend who's like, look at Devin, he's on LinkedIn again. And you just have to get over that. You do. That is the problem in private equity. Because private equity people like to look smart. Yep. That's one. And too is they think that because they have$5 or$10 billion or a billion dollars under management, people already know who they are. I promise you, no business owner out there who's not already backed by private equity has any idea who you are. They may have heard of Blackstone, KKR, Apollo, because they read it, because it was quoted in the Wall Street Journal or whatever.

56:10They don't know what they do. The other 4 ,000 firms, they've got no idea. They have no idea who you are. So nobody knows who Parker Gale is, right? But. Well, a lot more than the other firms. A lot more than should. Yeah. But like they oftentimes, if they haven't heard the podcast, which I mean, a lot of our audience is private equity. Not a founder running a business because they're heads down running a business. But when they do lift their head up, they find us easier than other places. Yeah. And they can spend a lot of time with us, hundreds of hours if they choose. Yeah. Listening to what we think and what we say and how we do it.

56:48Paul's been super prolific on Substack with his writing and built a massive audience to where people call him and say, I just want to work with you guys someday. I'm working in another company. When we sell this, like, can I come work for you next time? So his recruiting job is way easier. Cass, same thing. Like CFO is like, you don't necessarily have to recruit him because he's got a list of people who want to work with us because they like how she talks and what she talks about. So, Paul, how do you think about this? Because, I mean, you and I share a brain on this. and yeah, you have your own way and style of doing it.

57:20And yeah, so why aren't other, what do we do? How do we do it? What do you think about it? And why aren't other firms using this machine? Well, I think we've attacked the limiting beliefs that hold anybody back from doing this. So you talked about a couple of the reasons that people don't do it, both administrative and personal, but like there are limiting beliefs in the way of everybody who feels like this might be a good idea or knows that it's important, but haven't gotten started yet. I think there's administrative limiting beliefs, which is literally I'm not allowed to do this. And I probably haven't asked the question about where is the seam or where is the line.

57:55I think we've invested a lot of money and a lot of time thinking about how do we do this responsibly? How do we do it within the letter of the law, but still making it feel authentic and open and sharing what we know because that's a core value of ours. Blackstone has a quarter million followers on Instagram. You can do this. You can do it. If they can have figured out a way to do it, you can do this. And the rules are pretty clear if you go research them. They weren't for a while. They have become extremely clear of what's doable. So if you're being told you can't do this, I mean, you can choose to have that battle or not.

58:33Institutionally, a lot of firms are like, we just don't do this. It's unsavory to some degree. It's insane that they would think this. It's like, you've got this machine you can get literally to millions of people a day if you do it well. And you have to be responsible. And in general, you have to do the right thing for your customers or consumers. So you can't mislead people. You can't advertise in a way that's hyperbolic. I think the real limiting beliefs for most people are more personal, which is, I'm afraid I'm going to look stupid, which I promise you, you are. And that is the path. Get over it.

59:04Go write 20 things that you hate, but that is the evidence that you are finding your voice, figuring out what you want to say and figuring out how to take the thoughts that seem so clear when they're in your head and so terrible when they're on paper and connect those two things. And the third thing we were talking about at dinner last night, which is if I give all this away, will people still need me? This is especially important for people who are doing what you're doing, which is hanging out your own shingle and trying to give away bits of the playbook, like we're invoking the wire, like you give people a taste and hope they come back.

59:37There's a lot of people out there who have the incorrect belief that if they give it away, they're not going to need you. And it couldn't be further from the truth, right? I mean, I know you have strong feelings on this. I mean, there's no secret sauce in this. The benefit you get from just sharing the knowledge, The benefit you get in building that brand and building trust in you as a person and your company way outweighs anything you think you're going to give up or going to give away an IP. Because, and I'm saying this out, there's no IP there in the first place. Like I said, there's no secret sauce.

1:00:10Ideas are overrated execution, highly underrated. And if you give away the execution, this is a kind of hard thing that you agree is important that I know exactly how to do it my way. write all that stuff down and put it on the internet and there's a couple reasons for that distribution is free yeah if this was 50 years ago you'd be taking out an ad in a publication somewhere or a newsletter and you'd be paying for that these platforms are incented to blast your stuff out to probably thousands of people if you think about the average reach of a decent linkedin post right the distribution is free and the the impact that it's going to make you're going to get one of two reactions, which is I disagree with you and I'm going to tell you where I disagree.

1:00:54Great. You just created the surface area for a conversation about what this could look like inside your business. Or I agree with you. That seems hard and I'm not sure I could do it myself. Perfect. I'm the guy that can help you do it. Yeah. Just get going and do something. Not everybody is going to like you. Not everyone's going to like you in real life. Social media is the same. But that's the point of this. If you have an authentic voice and you put yourself out there, some people disagree with you. That's fine. It creates conversation. It creates more traction. It creates more engagement. That's actually what you want.

1:01:28Yeah. What's the quote from Naval? You escape competition through authenticity. I think that's so true in positioning a software product that looks a lot like another software product out there. And it's so true in building a personal brand if you have if you have zero complaints you're way too vanilla yeah way too vanilla for me it's it's very simple three things be insightful be authentic don't be boring yeah get over cringe mounting quickly start posting test and learn yeah i would say be kind be generous when no one's looking uh and be memorable because a lot of people put a lot of stuff out there it's not very memorable now yeah you've tested the edges of you know being provocative I mean so it's so plain vanilla like because nobody's provocative in our industry but like you've tested the the edges of that and then authentic is hard for people there are a lot of people in their 50s that are still living a life that they're like sure just playing a game we can get into that and a lot deeper later but like that's hard for people what does authentic mean?

1:02:36What is that? I mean, you obviously had this spark where you're like, okay, it just had been hiding for a little while, or you weren't able to be fully yourself until you're off on your own. But the only people who do this less than private equity firms are private equity owned companies. And which for me, that's a whole other podcast we'll get into another time with you is like why companies should be taking a stand, building community, being authentic, and not just trying to sell you stuff all the time. They should kind of build some, yeah, build a relationship with their industry and then deals will come their way.

1:03:12Now, it's a slow burn and you can't measure it in 90 days. It's going to take a while. Maybe it doesn't fit into the VCP timing, but yeah, I'm shocked that people aren't doing this more. No, look, attribution is always going to be hard with this, but it's brand building and you've got to believe good things will happen. If you spend the time on building that brand, You've seen the audience. Audience is a vanity metric. I hate vanity metrics, but LinkedIn doesn't give you very many metrics to go on. But you see you're building a bigger audience and your engagement goes up. Over time, that's going to benefit your brand.

1:03:46And in these smaller industries, like you guys doing in PE, PE's a big industry. That's the opportunity. No one's doing it. But if you go into these smaller industries, in manufacturing and automotive, there's never been an easier time for you to build a really strong brand for yourself. and there'll be multiple benefits come along if you take the time to do it. Yeah, and we talk about unique access, unique insight, unique skills. How do you create unique access? Yeah, you expand the surface area of your brand so more people can latch onto it and they say, hey, I like what you said. Can we talk?

1:04:20It's just been an amazing machine for us. All right, so two closing questions. One is, what's something in the private equity industry, some change or some trend or something you'd bet your bonus on? like this is happening or this is going to happen and I'm confident of it? I'm confident a lot of PE firms have raised their last fund. They just don't know it yet. And I'm confident there has to be a change in PE. You'll see an emergence of a new type of PE firm that does things differently. I'm not confident that's going to happen fast. I kind of see the seeds of that happening. I think there'll be a lot of big firms who have raised their last fund will be slow to wither away.

1:04:57But I think we'll see the emergence of a new type of firm. I think you guys are a new type of firm. Even though you've been around a while, you act like a new type of firm. But everything that's new is old again. I mean, it was old to begin with. Like, it was already happening. We just kind of, you know, stuck with it long enough, which is also hard, you know, to say, like, this doesn't seem to be working. Oh, all of a sudden, now it seems to be working. And that first two years of us doing this, we're, you know, kind of shouting into a canyon a little bit. All right, is there anything that you think about the industry that other people would think you're crazy?

1:05:30You have a big contrarian view. That's a good question. Nothing I don't think I've outlined. I mean, I think the industry is ripe for disruption, but it's really about doing the basics well. Doing the basics well, like we outlined in the beginning, what Apollo said, which for me is just common sense. Yes, you buy a company and you add alpha to the business. You can't rely on financial engineering anymore, the market re-rating assets. You buy a company and you put the effort in to build it. So, yeah, everything I think about P is common sense. Now I think they're coming around to it because they have to because the wind has changed.

1:06:07Yeah, and the alpha comes from broken windows, sweeping up the trash, the simple basic things every day, the donkey work that nobody gets excited about. Yeah. You rarely get credit for. There's no big flourish. There's no big strategy. No. ideas are easy, execution is really hard, and execution is a little bit every day, kind of in a very three yards and a cloud of dust approach. The vast majority of businesses are not sexy, and the vast majority of work is not sexy, but boring is very lucrative. If you put the hard yards in and get it done and build the foundation, it works, and you'll be successful.

1:06:48That's a great way to end it. So, Lee, this started from just like a reach out on LinkedIn a year ago. Right? So there's value in being authentic and being out there and expanding your value. So Lee McCabe, see him on LinkedIn. Is it worth a follow? Sure. 50 ,000 other people follow you there. You've also started your own firm, Claymore Partners, where you work with private equity-owned businesses on all the stuff we just talked about. Yeah, everything we just talked about. And is there anything, how do people contact you? You can find me on LinkedIn. That's the easiest way. Perfect. All right.

1:07:19Join the Lee McCabe army. Bye for now. technology issues middle market peep back companies they bicker with each other and they don't take themselves too seriously it's not venture capital it's private equity it's the private equity funcast pour yourself a drink and have a seat