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- [00:00]
A
Last time we chatted, you said that there's a lot of innovation going on in private equity. What exactly is innovating?
- [00:05]
B
I would think about innovation in three buckets. The front office bucket, which is origination, product distribution. A middle bucket, which is the portfolio company value creation component, and then the third, which is back office. And I think the most innovative people in the industry have probably been the biggest private equity firms today. The Apollos, the Blackstones. The people that grew the fastest were the ones that innovated the quickest.
- [00:32]
A
Which part is the chicken? Which part is the egg? Did they grow because they were innovative or were they innovative because they had the budget?
- [00:38]
B
That's a very good question. It's probably a bit of both. One feeds the other. But these are firms that have been innovating in the product area very quickly. And you look at an Apollo that built super innovative retirement services business in Athene, that's now the largest writer of annuities products globally. That was hyper Innov. So I think it comes down to culture a lot of the time.
- [01:02]
A
Speaking of innovation, I had the former partner of David Rubenstein Carlyle, and he told me the story about how David Rubenstein was the first partner to actually say, well, we could have two strategies in one firm. Back then it was you have a real estate fund or you have a private equity fund, or you have a credit fund. And no one had ever thought to have two different lines in a single fund.
- [01:19]
B
You have to think like that these days. But it's also important to stay true to what your North Star is and your vision. Very quickly, firms become asset gatherers. In an environment where fundraising becomes harder, performance is more important than ever. And the industry often needs to remind itself what its core product is. Its product is performance. A customer client gives you a dollar and expects two and a half, three dollars back.
- [01:43]
A
Do you really think that's true?
- [01:44]
B
Yeah, I do. I think it's really, really important. And I think asset gathering has become more about management fees than it has about performance. And that can be a dangerous mindset for the purist.
- [01:56]
A
Returns are the product. I had the former CIO of Calipers, Russell Reed, we talked about this very thing. What part of the LP market is chasing alpha versus beta? And by his summation, from a capital standpoint, it was more than 95% were actually going after beta. Now people call it smart beta, which is just a nice way to say beta and only really 5%. The single family offices, the high net worth, some very innovative endowments, some very innovative Pension funds, but only 5% of the capital is actually choosing alpha.
- [02:24]
B
I agree with that and I actually think that we're saying the same thing, which is value creation. And alpha creation to generate returns is something that is increasingly important.
- [02:36]
A
You're at Axis holdings, that has two and a half billion and you are competing one way or another with Apollos, the kkrs, the Blackstone. How do you compete with them?
- [02:44]
B
Well, I don't think we do compete with them. We're further down the market now. We might compete in some way or form for LP dollars, but we don't directly compete with them. And that's a good thing because those are some of the greatest, greatest firms in the world. But we operate at Access in the lower middle market. It is our laser focus. It's why I joined the firm. I wanted to focus the rest of my career on the lower middle market specifically. And I do believe that the ability to create alpha at the smaller end of the market is so much more prevalent. But it does require an incredibly hands on, incredibly labor intensive model. And it's not easy. It's easy to say it's easy to take 5, $5 million EBITDA to 50 than it is a 500 to 5 billion. But in practice it's really hard. Building businesses is difficult.
- [03:31]
C
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- [05:19]
A
three different places where there's innovation going on in private equity front office, mid office and back office. Which part of that stack really matters and where should GPs be focusing their time and their effort on innovating?
- [05:30]
B
It's a great question. So at Access everything for us begins with research and data and we have a handful of capabilities that were built on those philosophies. Firstly, when it comes to origination, we have an in house research division business called NOAA Research and that business allows us to pick a thesis area and go really deep on it instantly. We generate a thesis report and what we call an EKG report, an engagement Kickstarter guide in a matter of minutes. It pull calls from multiple different agents talking to each other at the same time, including ChatGPT and Claude, and it generates a report that we also turn into a podcast so that our deal team can get up to speed on an industry really really quickly. That doesn't mean all the traditional work doesn't need to happen, but it does allow us to be prepared and to go deep on an industry. The engagement Kickstarter guide then pulls a one to one list. So if we're looking at pest control as an example, There might be 10,000 pest control companies, but there's probably only 200 that fit our criteria of EBITDA, of number of employees, of location, et cetera. And so we score these companies. We have a digital sophistication score that goes on their website and tells us how they're thinking about lead gen and analytics. We have 31 different data points that create that score and then populate our one to own list. So we then know which 200 companies we want to speak to. And that comes Back to Kevin McAllister, the founder of Axis Philosophy. We invest in businesses we want to own, not businesses that are for sale necessarily. This allows us to be that much more prepared and well read on the types of companies we want to own in a space rather than just being opportunistic.
- [07:16]
A
Is AI also telling you which industries to go after or is it you decide to go in an Industry or you decide an industry may be something worth pursuing, you do the EKG report and then you go after the target list. Talk to me about your process.
- [07:27]
B
Yeah. Whilst AI creates a lot of efficiencies for us, which we'll talk about today, the fundamental is that you still need to have the idea. AI doesn't do all the thinking for you now. It can help prompt ideas and we absolutely use our tools for that, but it doesn't do everything for you. One area that I think is particularly useful, where it does a lot of ideation and insight and analysis for us is with our portfolio analytics. So we built. And this, this should blow you away because it's pretty advanced. I don't think there are many organizations that are doing exactly this just yet, but we worked with an organization called Accordion who do office of the CFO activities for private equity firms. And we work with Snowflake to build a data warehouse. And we connect all of our common infrastructure at our portfolio companies, the ERP systems, HRIS systems, and using fivetran, an engagement layer, we take pull all the data out and we put it into the data warehouse that Snowflake built for us. That then allows us to query huge sums of data all the way down to say, a store level so that we can know real time data on cache management and how the call center might be operating. We know that maybe at our pet care business we're not answering the phones regularly enough, so we're losing out on leads or we're paying invoices too early and taking working capital out of the business. Or as one example that we actually just were talking about yesterday, our car wash business we can look at of the 250 car washes we have, which performed worse last month, we can then look at that specific store and say it's one in Philadelphia. And we can see that the rainfall last month was really high and so that's why we missed budget. But we can also look at last year's rain data that tells us that actually it was the same as last year. We just miss budgeted. And we can also then fast forward and use it predictively so we can see if there'll be rain, heavy rainfall next month. And then that allows us to do a handful of things. One, we could think through how do we lower costs on resourcing because it's going to rain more. Two, how can we think through supply chain and procurement adjustments? And three, how do we think through dynamic pricing? We could, as an example, focus more on interior car washes than Exterior and do offers around that to try and mitigate the weather. And then finally on pricing, another tool we have at the moment is a scraping pricing data tool. So we look at every single car wash in the United States every month, we refresh the data and we can then price match based on all of the car washes in the United States.
- [10:19]
A
That's on the third layer. So that's after you invest. That's the value add. We talked about the first layer, which is figuring out whether the industry is sexy enough to pursue. Although it's pest control and car washes, sexiness is a relative term and then which targets to go after. So you have your target list your 200 out of the 10,000 pest control businesses and then the next step is winning, Winning that business and going into the company with the right entry point. How do you use AI to win?
- [10:47]
B
The private equity industry has historically in some situations been painted with a brush of corporate raiders and sharks and people
- [10:59]
A
going back to barbarians of the gate.
- [11:00]
B
Exactly. People you don't want to sell your business to. So we use our insights to not be smarter than the management team, but to use it to be prepared and to engage and develop relationships. And that's a cultural philosophy that we have. As an example, we have a large sports asset in the sports infrastructure space called Playfly. We pulled just yesterday a report through our research business on hot topics. And it used social listening tools to pull information about the name, image, likeness discussions that are happening online between all the athletic directors so that we could engage in conversations knowledgeably about their perspectives. Not necessarily the facts and figures, but just understanding what their perspectives are going into conversations. That stuff helps you win because it allows you to have empathy. And this is an industry where sometimes empathy has been a little bit lacking. The other thing I want to talk about in terms of winning deals is an area the industry has also had a very low bar in, which is media. Now, understandably, the first word in the descriptor for the industry is private. So it hasn't been a marketing forward industry, although I do enjoy some of the Christmas videos that the bigger firms put out each year. But I don't know if I call that marketing per se. One area that is a really big part of the industry and growing as we see more consolidation is the independent sponsor market. It's formalizing thousands and thousands, thousands of them.
- [12:35]
A
The last McGuire woods conference had 2,000 independent sponsors.
- [12:38]
B
It's extraordinary. It's been growing at a 52% CAGR over the last five years, 25% of deals in the lower middle market will be done by independent sponsors this year. And so as the industry grows and becomes more institutional, they're no longer called the derogatory fundless, they are independent sponsors. That's an area we think we'll see a lot of good deal flow. And Kevin and I were talking before Christmas about how we can participate in that deal flow, not just more proactively, but how can we be a leading firm that participates in that deal flow. And Kevin was a three times independent sponsor before raising funds at Access Holdings. He did a fantastic job, but he's had that lived experience and he unpacked for me all the things that he wished he'd had as an independent sponsor. And one of the big areas, despite quoting facts, there's not a lot of quantitative data in this space. So the data isn't there and there isn't a single source of media entity. So an aggregation of news and what's happening in the industry. And then the final part is services. All these independent sponsors, they aren't in a position like Access where they can build infrastructure and build a.
- [13:53]
A
They don't have the management fees to support.
- [13:54]
B
Correct. They don't have the ability to build a 25 person value creation team or a 5 person talent team. And so an independent sponsor needs that stuff if they want to continue growing and being ahead of the field, as well as equity and credit and all sorts of other things. And so our answer to that was building, which launched recently independent sponsor News isn. You can think of that like Preqin or With Intelligence meets cnbc with a marketplace of services from providers who want to serve the independent sponsored community that allows us to participate in the flow of information to and from the industry. And I didn't think as a private equity firm when I first got into the industry I would ever be launching a media platform. But that's what we've done. And the idea here is it helps us serve the industry, both as Access holdings and our strategic partners to serve the industry. But it also helps us be better at what we do, which is find great deals.
- [14:53]
A
When we started the media franchise three years ago, it was a very contrarian move. Having institutional investors jump on a podcast was probably for 80% of institutional investors, probably their biggest nightmare. And the way that I liken it is kind of like mental math. Before we had the calculator or the calculator before we had AI, you could either go out and spread your message one to one, which is also. There's obviously room for that. It's important. Or you could do a one to ten thousand or one to a thousand. I was just talking to a manager about jumping on podcasts and he's like, I'm busy building my fund. And I took a step back and I thought, well, what does a fund manager do? He raises capital and he sources deals. And there's some kind of obviously decision layer on top of that. Yeah, what does a podcast do? Raise capital. We've had over 5 trillion NAOM on the POC on this podcast, for example. And two is find deals because people want to hear. We've talked about this decommoditization of every private market. So before I had Professor Steve Kaplan from University of Chicago.
- [15:53]
B
He's one of our advisors.
- [15:54]
A
Awesome guy. And in the 90s he said people would come into University of Chicago and they would talk about their private equity fund and he would ask them, what's your differentiation? And most of the speakers would actually kind of look at him weird. And like, we don't do that. Like it was almost a dumb question. In the 2010s, everybody had differentiated by focus. We're a private equity fund, lower middle market, focusing on $10 million to $20 million EBITDA businesses with a 20 to 40% growth rate. Of course, when you peel that back, that's not really differentiation. That's just essentially giving a banker a mandate on which auctions you want to be part of. So now we're in this third evolution, which is how do we actually differentiate? By providing value and focus to the companies. That's why you see these niches in the private market. Some of These niches are $100 billion like continuation vehicles. As an industry becomes more competitive, you naturally have this evolution from we're one of 10 firms. We don't really do that differentiation thing. That's weird to now we focus on 5 to 10 million, we focus on this space and here are the five different services we have for our portfolio companies. And by the way, we also have a really good reputation top to these 20 previous investments. So it's really kind of downstream of a hyper competitive market.
- [16:58]
B
Touching on your first point around the evolution of media, if you'd asked that manager, would you like to be on the front page of the Wall Street Journal? They would have jumped at the opportunity. And it's an evolution of mindset. Now individuals are their media channel and some managers are better than others at this. But that doesn't just mean that the managing partner needs to be the person out front. There's responsibility for all Senior employees. In fact all employees in general. We have a dedicated social media manager at Axis. Not many small firms have that. I hired someone who's an expert on LinkedIn. Specifically on LinkedIn, the algorithms change every week and she's plugged into how the algorithms change so we can maximize our exposure and our team. They are our greatest champions. They should be. And so they should be posting and championing our portfolio companies and our platform and our culture. Now you have to be appropriate and everything is reviewed by compliance and there's processes wrapped around it.
- [18:01]
C
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- [20:16]
B
But it's really important. Just not doing it's not an option anymore. And for senior people in an organization, I think being a vocal champion of what you're building is really important. Like this podcast. I love what we do and I'm very fortunate to have joined Kevin's firm because I think his vision for the firm is totally unique. I'll give you another example of something I thought was unique. Kevin has had this vision for a long time of us using technology across every part of our investment process. So we're looking at doing a deal in the towings. We've identified a platform and they were out meeting with a number of potential add ons so that we can out the gates, do two or three deals and double the EBITDA in very short order. And as we were thinking through what type of add ons and where should we do it, how do we create that market densification? One of our senior team members using Claude ingested four different types of information. One, where are the towing stores today? Two where are the M&A targets on our one to own list towing stores? Three what are the routes that they run today? And four what is the using all sorts of publicly available sources, what are the other towing company routes and where are the biggest volumes? Driven through and using that data we could then identify how do we densify our market? Where do we want to do deals. So we then created this market map that I was reviewing this morning. It's fascinating. Telling us where would be most logical from a growth perspective to invest and in what sequence?
- [21:56]
A
Access holding is very tech forward. It's literally in your DNA. A lot of private equity firms, or venture capital firms for that matter, they feel overwhelmed and they ask themselves the question where do I start? Where can I start integrating AI into my process? What's the lowest hanging fruit and what's a way to start integrating AI today?
- [22:13]
B
Yeah, it's such a good question and it's really hard. I think it's particularly hard for the big firms. Firstly it comes down to culture. We have a very innovative culture and that really begins with Kevin as the managing partner. He pushes all of us incredibly hard to be curious and to Be innovative and to think through how to leverage technology to do things more efficiently. And so we had one of the earliest instances of enterprise grade ChatGPT. We rolled it out across the full company and all senior employees in our portfolio companies every month. And I don't know if Kevin would thank me for saying this, but every month we score our whole firm 50 employees and we score them based on how many prompts are they doing. Now that allows us to see how much time on a kind of best case basis we've saved using ChatGPT, which is statistically the stuff that I quite like. But it also shows us by prompts who the person who's using ChatGPT the most is all the way down to the least. Now it's unsurprisingly relatively correlated to age, youngest people using it, more older people using at least and we share it with the organization. Is it shaming to some extent? Yeah, sure, maybe. But it encourages people to use it, encourage me to use it. I was at the bottom of that list when I joined and now I'm somewhere in the middle. I don't know how these guys are using, doing tens of thousands of prompts a month. Maybe they've got an agent doing it for them. But it's yeah, that you have to change the culture and don't just teach someone, say to someone, you've got to use AI, you've got to teach a person how to fish. So we do AI training courses with external providers. We did one two months ago and we all learned how to build digital twins. So we now all have digital twins doing stuff for us in the background.
- [23:52]
A
Access holdings is an interesting use case because you guys started using AI very early in the private equity space. Was it some combination of bottoms up, top down processes, meaning you started 24 year olds started using it for sourcing and then they figured out this process and then they took it up to senior management and senior management created this protocol or was it kind of top down? How do you create these firm wide competencies?
- [24:14]
B
It's not easy and we haven't found it easy by any stretch. I think we are doing stuff quite on the leading edge, but it's a really deliberate way of living. Like this.
- [24:27]
A
Market mapping. Is this something you do now as a process for every company or is this just something you, Sam, are doing yourself?
- [24:33]
B
No, this is, this is something we're doing for all of our portfolio.
- [24:35]
A
So somehow it was institutionalized, Correct? Talk to me about that process.
- [24:37]
B
It begins with a vision. So you can't just Try to acquire data from a portfolio company and then analyze it. That's what the industry's been doing forever. And it all lives in spreadsheets. So we created the vision was to have a unified architecture so all of our portfolio companies are on the same ERP system as an example and that NetSuite as an example pulls all the information out and through fivetran connects into Snowflake and puts all the data into Snowflake. But it's direct to source, so we're pulling everything from one place. Now we have all sorts of data governance and guidelines around it and we're not pulling all data, so we're not saying bank account data for payroll as an example. But what we put into Snowflake we can then analyze and assess. Snowflake have this cortex tool chatbot that I think they built on Claude Opus 4.6 that then allows us to query the data that we have and it starts making recommendations to us and so it starts being self fulfilling. But you can't get to that point without going through an incredibly labor intensive process of getting everyone onto netsuite as an example. So it begins with a vision, but it needs to have a real plan and you need to have a team executing against it. We have an internal head of AI who used to run McKinsey's transformation group. I wanted to bring in some outside perspective as well so that you know, we don't all drink our own Kool Aid and someone who could really challenge us. And so I spoke to a great friend of mine, Mark Porat, who's the co founder and CEO of a company from the 1990s called General Magic and they built the original iPhone. If you have, if you haven't watched the movie, you must watch it. General Magic and Mark built, when he built the first iPhone 12 years before the iPhone existed, he built the infrastructure layer that went with it, including cloud and intelligent agents and all sorts of stuff. And so he's one of the originals to build Magentix. Mark critiques everything we're doing. He tells us where he thinks we're going wrong, where we should be pushing harder. And having that outside person also looking at this for us as an advisor is really, really useful.
- [26:44]
A
Just had the founder of Model ML, a three time YC backed founder, raised $100 million to go after Agentic AI. It's essentially Harvey and Magora for finance and he introduced you to him. He's a fellow Brit as well.
- [26:55]
B
Love it. Amazing. I mean if you fast forward and I don't mean to frighten anyone. But in five years time, this industry looks nothing like it does today. It'll be the same amount of change as it happened over the last 50 years.
- [27:09]
A
Double click on that. It's 2031. You walk into your office, what does the future of private equity look like?
- [27:15]
B
Human beings won't be replaced. Someone needs to be doing the prompting and coordinating the technology. But it looks very different. These aren't. Private equity firms that are technology enabled won't be growing by headcount, that's for sure. And if you fast forward into a world of AGI and then super intelligence, the power of superintelligence and I don't think people truly yet understand this, just go watch some YouTube videos on Quantum technology. But superintelligence is a world where you can query how to cure a disease and it goes and solves it instantly. If we think the private equity industry isn't going to change, then we're wrong. But the question is how? So what type of new and innovative products are we building? We talked about secondaries earlier, semi liquids and evergreen structures, Zodiac funds. All this stuff is relatively new and will continue to advance through products that are much more bespoke. When we think about the capital raising environment, all of the larger firms are investing heavily in distribution into the global wealth channel. RIAs high net worths $87 trillion is going to change hands in the next 10 years. So how does, how's technology going to innovate around that part of the market as well?
- [28:25]
A
95% of capital from retail has flowed to five firms in the world today. 95% Apollo. Mark Rowan is recently said that he's going to invest a billion dollars into the retail channel. Not into investments, but into figuring out all the infrastructure, all the tooling and all the human resources to go after that channel.
- [28:47]
B
It's not surprising. I mean Mark is one of the most innovative people in the industry. I had the fortune of having a front row seat to some of that with my prior firm when we partnered strategically with Apollo. And they're working around the clock to innovate and build new products, to think through different ways to leverage technology for execution, value creation, distribution, everything. But yeah, the biggest firms will have the biggest budgets to do this stuff. It's much the same as banking. JP Morgan for many years was the biggest investor in technology. And look at it today, it's got a moat.
- [29:22]
A
One way to think about private equity in five years is to think what remains. Two last things to remain will be decision making and relationship management. So all the operations, all the monitoring, all the reporting, which many large organizations, the bulk of their people are today, is probably going to be automated by AI. What remains is the decision, also the fiduciary responsibility as well as the relationship building. So if you think about Apollo, they might have a relationship with a foundation, endowment, pension fund. And now they could do, in theory, they could have 700 products with that one LP. It seems crazy to say, but if you take away operations and execution as a cost vector and as a friction, that's what we're likely looking at in the future.
- [30:10]
B
And it totally changes the paradigm of how you have that conversation with an lp. Today it's still GP sits in front of LP saying this is a product we have in market, would you like to invest in it? At no point does the GP sit in front of the LP and say what are your investment goals and how can we support your goals? When you're in Apollo and you have 30 different products in market, you can have that conversation much more dynamically. And over time, products will get increasingly bespoke to ensure that they do meet the LP's needs. So that when an LP is looking to deploy 100, 200, $300 million into something, they can put it into something that's really working for their portfolio construction. And wasn't just the first thing they found on the shelf that kind of fit what they were looking for?
- [30:53]
A
I had the CIO of the Doctors company, which is an insurance company. And one of the things that he talks about and really complains about is the lack of gps that understand the insurance vertical. There's very specific things that they need, they need certain packaging. I also had a consultant in the Taft Hartley act funds. Most people have never heard of the Taft Hartley act funds. I believe it's close to half a trillion dollars in capital that no one's really focused on to your point, because everybody has one product, one solution. And also ironically, a big underserved part of the LP world is the tax taxable investor. Everybody that's not a foundation, endowment, pension fund. And completely new products today are being built around that. Whether it's the most famous is the tax loss harvesting product done by the aqrs and Quintinos of the world. But now there's real estate. I was pitched a crypto tax aware strategy. Everything's now being served towards this tax aware investor, which, which is mostly going to be this. These retail channels are coming online. So this product market fit AI allows you to really serve the right product to the right market. And in theory, there's no reason why you can't have a product for one lp, especially if that one LP has billions of dollars. But in the future, when the friction goes further down, you can in theory have one product for one type of taxable investor. In this city, with this jurisdiction, with this retirement age, that doesn't break the laws of physics, but something like that might be down the pipeline totally.
- [32:18]
B
And I think as we go further down and we see the democratization of private equity, one of the big responsibilities is education. These are complex, illiquid, for the most part, products. And as a high net worth or even further downstream starts to invest in products like this, they have to be aware of what they're investing in. And a lot of the times the RAAs don't know enough about the products either. Two big distributors into the RAA channel are iCapital and CASE. CASE, in fact, does a fantastic job of educating the RAAs. It's one of their big points of differentiation. So I do think whilst there's an exciting, brave world out there with lots of capital to go after, there is a responsibility to make sure that the people investing really understand what they're putting their money into.
- [33:06]
A
Access holdings, you guys today are $2.5 billion. What do the next couple years look like? And how do you look at evolving the firm to where it needs to go?
- [33:16]
B
I joined Axis for a handful of reasons. My prior firm, I was part of the formation of it and I loved it. It was a great business and a great place to learn and to grow. But I always wanted to spend time in the lower middle market. And as we grew, I realized that that might not always be in our future. And so Kevin, who I met six years ago through one of the Ty Price leadership team members, said to me he was always going to be focused on the lower middle market for his whole career. Nothing was going to change that. And that meant not raising funds bigger than say, a billion dollars and having a unique level of infrastructure for that fund size. Because of the ability to invest in processes and technology and so on, you don't find the amount of infrastructure we have in the lower middle market very often because those that can afford it tend to size out and go further upstream. And so when I joined, there were a few things that Kevin and I wanted to achieve together with our other partners. Firstly, it was continuing to build a value creation division that was, that served the portfolio management teams and genuinely helped them grow. Not nice to do stuff and bells and whistles, but things that were focused on building businesses. And our strategy is a build and buy strategy and we use it in that order. Build and buy intentionally because you do have to build a business when you're investing between 5 and 20 billion of EBITDA. And so our value creation division will be a continued area of material focus for us across platforms and how we the technology we onboard our portco to and an organic and inorganic growth alongside seven functions we have in our value creation division. The other area that's of huge focus for us is talented. So despite a massive focus on AI, we're also still very much focused on the human element. Kevin had a vision long ago to bring world class talent into the lower middle market. If you go and invest in a pest control company, it's really hard to get someone from BCG or Bain or McKinsey who's been trained to be a ninja to go and work for a pest control company unsurprisingly. And same goes for executives. So Kevin wants to build a junior operating partner program called the ACE program across where we have four different types of roles and put those aces into those companies but rotate them and you create this opportunity for younger people to go and work in our portfolio companies and to get private equity experience but at the operating partner in an operating partner model. And we now have 35 aces across the portfolio.
- [36:05]
A
Today when they're going out, they have their profile. Instead of saying pest control, they can now say private equity. In the age of AI do you look at talent differently in that maybe pre AI talent was maybe the hardest working or the most niche focused but now it's almost like an AI first talent or is it just any smart person could kind of get up to speed on AI.
- [36:24]
B
We were just on a call immediately before this conversation with an industry leading headhunter and we were talking about curiosity. The person has to be curious. Curious to challenge the status quo and to dissent with a level of EQ that is appropriate. They have to be curious to hustle and find opportunity. They have to be curious to test new technologies. Curiosity is such a wonderful quality when you find it. But it's amazing how often curiosity does.
- [36:54]
A
It's underrated because a lot of people talk about grit, but not as many people talk about curiosity. What's upstream of curiosity? Why are people curious?
- [37:03]
B
Kevin will always look back at people's past, their heritage, their, you know we, I can give you some examples but we were looking through a specific CV not long ago and he loved that this person played national level squash. Hard game, requires fitness, strategy, great game Loved it. But the person grew up in Greenwich and so maybe the person was more privileged, they went to a private school, they probably had better coaches, they had better opportunities. So does that take away from the grit? And there were all these different variables that he was extracting from this person's resume that then allowed us to dive into some, some slides. So I think curiosity is something that's generated early on in people's lives.
- [37:46]
A
I think it's like a subset of non conformity. So you look at conformity, somebody that's always been the same culture, always, you know, third, fourth, fifth generation doing the same thing, their parents did the same thing, that's highly conformist. And then you have the non conformist. Traditionally in the US it's been a lot of immigrant entrepreneurs. Second, first and second generation immigrants raised up at some point 50% of all venture capital dollars, which is crazy if you think about just what they had to overcome to do that. I'm also a first generation immigrant and then. But within this non conformist, you also have to have agency. So I think it's a combination of non conformity and agency. So you have to think different. But instead of being, well, I'm different and nothing will happen, you have to be like, I'm different and I could do things.
- [38:22]
B
Totally agree with you. I often think through these kind of three areas as I'm interviewing someone. Iq, EQ and tq. Iq. We know obviously everyone in the industry has a very high IQ and they'll tell you about it pretty quickly. Less people have good EQ in private equity, typically. So that's always something I'm on the lookout for. And particularly not just the emotional intelligence, but the ability to truly empathize with people you're in dialogue with. And then the third is tq. Tenacity question. So to your point on grit, but I do think maybe there's a CQ in there that we need to add as well.
- [38:58]
A
If you could go back in time, you had graduated uni, and you could give yourself one piece of timeless advice that would have helped your career accelerate or helped you avoid costs and mistakes, what would that one piece of advice be?
- [39:10]
B
Everything I've ever achieved in my life has been because of other people. And that's the same for everyone. Everyone listening to this. Same for you. A lot of people like to think it was because of them. Everything we do and we achieve is because of other people in some shape or form. Someone said yes to something. Someone challenged you and pushed you in another direction. Someone encouraged you. Someone signed a contract, whatever it may be, it's always because of other people. And the second you realize that, life becomes a lot easier because you index heavier on the relationships. And that's what I've realized. I think, going through my career. Relationships are everything. I love people. I love people. Everyone's way smarter than I am. I've had to pedal really hard to keep up in this industry, but relationships are always the differentiator.
- [39:58]
A
So what's the takeaway? What would be the piece of wisdom?
- [40:02]
B
Be curious about other people. Lots of people think they're good with people, same way I do. Maybe I'm not. But be curious and genuinely interested in other people. You've got to be interested in others to be interesting to others. And lots of people would rather talk about themselves than really dive into someone's background or what motivates someone.
- [40:23]
A
A lot of times people reflect back on their life and I reflected three years ago, I had a three and a half hour dinner with Eric Thornberg, who I started this podcast with. And we decided to start this podcast and it really changed the trajectory of everything. And I just think about what's upstream of that. I guess maybe it's saying yes to things with really talented people. That may not be obvious. Why? I think there's a mix of putting yourself in opportunities and also having the neuroplasticity to be open to new opportunities. As we get older, we become very fixed in our thinking. Going back to the private equity innovations. Being mostly fixed in your thinking is actually, I think, a positive thing. But if you could leave 20% of your neuroplasticity open for new opportunities, I think really great things could present themselves, sometimes in completely unexpected ways.
- [41:07]
B
That's an incredible point. If you always do what you've always done, you'll always get what you've always got. And that one's always really rung true for me, especially in today's day and age, especially in a world of AI, if you are not willing to change and to adopt new technologies, you will be left behind instantly. This world is moving so fast and it will never move as slowly as it does today. I recently spoke to our interns and they said, what advice would you give us? And the only thing I could think of really was pick something that's new and go really deep on it. Because there are new products in this industry that no one's yet an expert on. You could eclipse a managing director at Blackstone or a partner at Apollo in knowledge of a product within a year purely because it's new. So be curious, learn, embrace, change are all things.
- [41:56]
A
I think you could be the number one expert on private equity sourcing in a lower middle market, which sounds like so many niches, but how valuable would that be? Literally any lower middle market firm on the planet would want to hire you.
- [42:07]
B
Exactly right. And when you know a new product comes out, you know it's something that maybe provides greater liquidity. Go be an expert in that product. Go really deep on it. That's what will make you most attractive to other firms.
- [42:19]
A
Thought a lot about operationalizing this, like, how do you stay open? And part of it is to think of it as a portfolio. 10 to 20% of your time should be spent on testing completely new things. This is how top marketers do. They'll do something completely crazy. That's how Coinbase came out with this CR code in their super bowl ad. Most of these will fail. 90% of those 10% bets will fail. Most of the time. It's just something that takes a couple hours. And 10% of those could end up 10xing and just growing your business considerably.
- [42:51]
B
100%. The moonshots are critical. Yeah. And you've got to be willing to fail. I think America does that much better than the uk. Failure is embraced here. It's what creates such an entrepreneurial environment. It's one of the reasons I love spending so much of my time in the U.S. it's exhilarating and intellectually stimulating because everyone's willing to try and to fail.
- [43:11]
A
Well, Sam, this has been absolute masterclass. Thanks so much for stopping by.
- [43:14]
B
Well, you're kind and thank you for having me. It's been a real pleasure. I love this podcast. And so it's been a dream come true to be here today with you.
- [43:22]
A
Thank you, Sam. If you found this conversation valuable, please
- [43:25]
C
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