Podcast Summary: Acquiring Minds

Episode: From Search Misery to Successful CEO

Host: Will Smith
Guest: Steve DeVitkos
Date: October 28, 2021

Episode Overview

In this episode of Acquiring Minds, host Will Smith sits down with Steve DeVitkos, who shares his complete journey as a traditional search fund entrepreneur—from raising capital, through a “miserable” search, to acquiring, operating, and ultimately selling a software company, Microdea. The episode goes deep on the emotional realities of searching, nuanced advice for new CEOs post-acquisition, and actionable wisdom for managing the delicate transition with a business’s previous owner.

Key Discussion Points & Insights

1. Steve’s Background and Search Fund Decision (02:40–07:54)

• From Private Equity to Search Fund: Steve started his career in private equity, realizing he preferred being an operator and entrepreneur over being an investor.
  • Quote:
    “I could buy my way into entrepreneurship utilizing the skills I already developed as an investor.” (04:22)
• Entrepreneurship as Risk Mitigation:
  • He dispels the myth of entrepreneurs as natural-born risk-takers.
  • Quote:
    “The biggest myth about entrepreneurs is that they're born risk takers. That's wrong. Entrepreneurs are risk mitigators.” (06:01)

2. The Emotional Reality of Searching (10:54–16:53)

• The Search Process Is Often Miserable:
  • Steve found the search phase lonely, feedback-poor, and full of rejection.
  • Quote:
    “I'm quite unapologetic about the fact that I hated every moment of the search process.” (14:00)
• Imposter Syndrome & Fear of Failure:
  • Enduring repeated founder rejection amplifies feelings of inadequacy.
  • Quote:
    “You talk to 40 business owners a month and 29 of them laugh you out of the room…” (15:07)
• Universality of These Challenges:
  • Even self-funded buyers, not just traditional searchers, experience these same emotional hurdles.

3. The Mechanics of the Search (Interviewing Interns, Deal Sourcing) (17:47–19:12)

• Interns in the Search Process:
  • Steve worked with a small number of interns (maximum 2 at a time), reflecting his own working style.
• Finding Microdea:
  • Microdea was found through proprietary outreach—a combination of calls, emails, and physical letters every month for eight months.
  • Quote:
    “I did a combination of a phone call and, or an email and or physical snail mail once a month, every month for eight months, until the owner… finally decided to pick up the phone and call me…” (19:16)

4. Why Microdea? (21:37–23:45)

• Enough Right and Enough Wrong:
  • The business had a strong customer base, profitability, and retention—reducing “rookie CEO” risk.
  • But it also had “opportunities for improvement” (no management team, never raised prices, lack of focus) that Steve could address.

5. Early Changes: Strategic Focus (24:38–25:39)

• Major Strategic Pivot:
  • Fired 20%+ of customer base to focus solely on transportation and logistics.
  • Quote:
    “The returns to focus would exceed the returns of an attempt to diversify beyond a single vertical.” (25:07)
• Demonstrates Confidence Despite Early Imposter Syndrome

6. Wisdom for New CEOs: Lessons from the First Month (26:59–39:57)

A. Managing Seller Relationships (26:59–34:08)

• Most Overlooked Yet Critical Area:
  • Toxic seller relationships can harm the business more than any competitor.
  • Remember: After closing, you need the seller more than they need you.
  • Employment Agreement Duration: Err on the side of shorter terms (e.g., one year with renewal).
  • Balancing Deference and Decisiveness: Be respectful, let seller feel heard, but be ready to make your own calls.
    • Quote:
      “Pick your battles and be thoughtful as it relates to the sellers.” (34:08)

B. Day One/Month One: What To Do (34:36–39:57)

• Steve’s Approach:
  • First two weeks: 1:1 meetings with every employee (33 total).
    • “I learned more about the company in those two weeks than in six months of due diligence.” (35:44)
  • No substitute for personal connection—unlocks real questions and to-do list.
  • Importance of Quick Wins:
    • Example: New software system for a team, small gestures like a radio for reception, changing a light bulb.
    • Quote:
      "Do not discount the small things, because the small things are everything." (39:35)

C. Attitude and Posture for New CEOs (40:18–45:33)

• Be Humble, Honest, and Action-Oriented:
  • “Diagnose before you prescribe”—focus on listening, not on immediate action.
  • Don’t pretend to know what you don’t.
    • “Everybody knows you're inexperienced… You might as well be honest about what you do know and what you don't know.” (41:09)
  • Don’t “overshare” your ignorance, but frame it honestly as a commitment to learn.
• Balancing Humility and Decisiveness:
  • Problems will present themselves before you’re “ready”—seek outside counsel, take action when required.
  • Example: Letting go of a problematic manager sooner than planned, based on team feedback and board input.

Notable Quotes & Memorable Moments

• On the Myth of Entrepreneurial Risk:
  “Entrepreneurs are risk mitigators.” – Steve DeVitkos (06:01)

• On the Emotional Toll of the Search:
  "I hated every minute of searching for a business." – Steve DeVitkos (13:38)

• On Fitting Business to First-Time CEOs:
  “You need a business that has enough right about it such that the mistakes that you're going to make are not going to sink the business.” – Steve DeVitkos (21:42)

• On Seller Transition:
  “You desperately need their help and they don't need your help at all.” – Steve DeVitkos (28:05)

• On Early Employee Engagement:
  “I learned more about the company in those two weeks than I did in the six months of due diligence…” – Steve DeVitkos (35:44)

• On Small Things Matter:
  “Any trained monkey can say that. But to actually do it, to roll up your sleeves… That speaks a lot louder than any words ever can.” – Steve DeVitkos (39:24)

• On Asking for Help:
  “I called many of my investors, many of my board members and asked them, hey, here's the situation, what do you think?” – Steve DeVitkos (45:19)

Timestamps for Important Segments

• 02:40–07:54 – Steve’s Background and Why Search Funds
• 10:54–16:53 – The Emotional Reality and Misery of Searching
• 19:12–21:37 – Finding Microdea: Persistence and Outreach
• 21:37–25:39 – Why Microdea? Business ‘Buyer Fit’ and Early Strategy
• 26:59–34:08 – Managing the Seller Relationship and Transition
• 34:36–39:57 – First Month On The Job: Actionable Steps for New CEOs
• 40:18–45:33 – CEO Mindset: Humility, Learning, and Decisiveness

Further Resources

• Steve’s Blog & Podcast: inthetrenches.net
• Books Mentioned:
  • Good to Great by Jim Collins
  • The Outsiders by Will Thorndike

Steve offers a frank look at the human side of acquisition entrepreneurship, reinforcing that self-awareness, humility, relationship management, and decisive action are as critical as any analytical skill. This episode is an essential listen for anyone considering the search and acquisition path to entrepreneurship.