Episode 128
Laurens Goff on Focus, Visibility, and Driving Value in B2B Services
In this episode of Karma School of Business, Sean Mooney interviews Laurens Goff, Co-Founder and Managing Partner at Stone Goff Partners. Laurens shares insights from his path to private equity, the founding story of his firm, and how leveraging focus and visibility transforms lower-middle-market companies.
Key points include:
1:05 - Laurens’ journey: From early life in Providence to successfully navigating investment banking and private equity.
9:52 - Stone Goff’s evolution: Lessons learned as an independent sponsor and the foundation of a committed capital fund.
19:41 - The scorecard for success: Why visibility, recurring revenue, and vertical ecosystem focus create winning business models.
25:57 - Enabling value creation: The TEOS framework (Talent, Experts, Outsourced Resources, Support) and collaborative growth strategies.
34:52 - Supporting portfolio companies: Stone Goff’s management summits and thought leadership tools to foster executive collaboration.
For more information on Stone Goff, go to https://www.stonegoff.com/
For more information on Laurens Goff, go to https://www.linkedin.com/in/laurens-goff-ba47714
Key points include:
1:05 - Laurens’ journey: From early life in Providence to successfully navigating investment banking and private equity.
9:52 - Stone Goff’s evolution: Lessons learned as an independent sponsor and the foundation of a committed capital fund.
19:41 - The scorecard for success: Why visibility, recurring revenue, and vertical ecosystem focus create winning business models.
25:57 - Enabling value creation: The TEOS framework (Talent, Experts, Outsourced Resources, Support) and collaborative growth strategies.
34:52 - Supporting portfolio companies: Stone Goff’s management summits and thought leadership tools to foster executive collaboration.
For more information on Stone Goff, go to https://www.stonegoff.com/
For more information on Laurens Goff, go to https://www.linkedin.com/in/laurens-goff-ba47714
EPISODE TRANSCRIPT
[00:00:00] Sean Mooney: Welcome to the Karma School of Business, a podcast about the private equity industry, business best practices, and realtime trends. I'm Sean Mooney, BluWave's founder and CEO. In this episode, we have an amazing conversation with Laurens Goff, managing partner with Stone Goff. Enjoy.
[00:00:33] I'm super excited to be here today with Laurens Goff. Laurens, great to be here with you. Good morning, Sean. Good to see you. Absolutely. So I've been looking forward to this for a long time here. I think it's gonna be a fun, exciting, and formative conversation. And so maybe let's jump right in. And the way I like to start our conversations here is really just to share more with our audience, a bit of the story of you.
[00:00:57] And so can you tell us a little bit about kind of where you grew up, college, first job in college kind of way, points that ultimately led to pe?
[00:01:05] Laurens Goff: Without a doubt. I grew up in Providence, Rhode Island, and very, very passionate about that city. And state, so passionate that people in the office know and anticipate anytime they hear something about Rhode Island or the capital providence.
[00:01:26] We actually have a portfolio company based in Providence, but great upbringing. Mother was a librarian, father was a business person who very early on instilled. The power and the concept of being employed and eighth grade, ninth grade, probably March or April, the drum beats of get a job started. And that's pretty powerful in terms of committing yourself to something.
[00:02:01] And that first summer where I think I elevated into a true summer job from camp counselor. I was at McDonald's all summer and I was not in front of the cash register. I was at the grill. I was at the fryer later, and a great lesson and something I am very consistently trying to impart on my two daughters who are a little young, as they like to tell me for summer jobs, but went to high school in Providence, actually did not go that far for college.
[00:02:37] Went north. About 55 minutes to Boston College. A great institution. Had a fun productive four years there. Started out as a English major, and very quickly in my sophomore year, realized I needed to be a little bit more practical in my studies and transferred into the School of Management where you could actually major in finance and.
[00:03:06] A lot of my buddies from the school of Management dubbed me the rookie of the year, my sophomore year because put the nose to the grindstone and, and studied pretty hard. And that was really a, an awakening and a catalyst to think about a future career. In addition to studying the school of management, I did play lacrosse for Boston College Eagles and built a great.
[00:03:34] Network network that continues to be super robust in in what I do today. And after my fall of senior year where I started to interview with different firms, I actually was given a job offer at a very interesting, publicly traded asset management firm and financial services company in suburban Philadelphia and accepted that offer.
[00:04:03] Before Christmas my senior year and the next summer after graduated, headed off to to Philadelphia in July and joined SEI Corp. A really interesting business where I focused on doing due diligence on money managers around a specific style and size. Think large cap growth, small cap value. And that was a great first step into the business world.
[00:04:35] It took my CFA level one. It was a very collaborative environment. A bunch of young folks really getting up to speed on how to assess asset managers. Ultimately, I decided that the pace was not quite right for me and literally left the firm without a job. Moved to New York City. Started interviewing with the explicit purpose of trying to get into investment banking, which I ultimately did as a off-cycle analyst, maybe with just a titch, more maturity than the rest of the class, and had a really productive two years at a place called Furman Cells.
[00:05:20] That was my leaping off point for thinking about. Being enamored with and ultimately diving into private equity.
[00:05:29] Sean Mooney: I love so much of the background there and it, it resonates. One of the things that I've, I've seen is just from all these conversations, you start seeing some patterns, right? And it's one very often kind of academic parents, but combined with like a business thread somewhere in there, and then two early kind of onsets of entrepreneurial, kind of like, I'm gonna start working early and start understanding the levers of business.
[00:05:53] I love the kind of the restaurant job, and that used to be when I was in pe, everyone went to these great kind of academic institutions like Boston College and I went to Georgetown and then people would go to Ivy's and all these really good schools, and I was like, well, these kids and probably my former self, they're a little too empowered.
[00:06:13] Like, like they've been taught, you know, from day one, when they go to these great academic institutions, they become managing associates. So I also want someone who's done the hard jobs. And so I used to call it like, they have to work at a restaurant. They have to have had done landscaping, all that kind of fun stuff.
[00:06:27] And so I'm, I'm really proud with my daughter's going to college next year. She's working at a fried chicken restaurant this summer, so it's like,
[00:06:34] Laurens Goff: I couldn't agree more. And there is, and we're seeing it. And you're seeing it. This trend to having internships, which are phenomenal, fantastic experience.
[00:06:49] College students are very, very productive, but there is a little bit of a miss in terms of what a hourly wages and whether it be physical work or service work. I think there's some great lessons and skills in there, and so a lot of college students that come to me for advice, I try to balance practical landscape, private equity versus investment banking advice with a, you are a freshman or sophomore in college, you must have some fun, which I think is important, especially in this environment and world and current state.
[00:07:36] And having responsibility, dealing with customers, dealing with different types of people is so valuable. And so it's really interesting to hear people be able to balance an internship with a kind of a real life job. But that's great for your daughter.
[00:07:54] Sean Mooney: It really is good. 'cause you think we said it's like dealing with people who are not always the nicest people to you when you're working and sweeping up and closing out a place and making it ready and mopping floors and I had kind of a similar but different experience.
[00:08:08] I was working in manufacturing plants and it was the same deal. Where I got out of it was one, it's really hard work and so it helps with work ethic. Two, you really appreciate the people throughout the entirety of the organization or business to make it work. The people who are. Equally should be treated with such an enthusiasm and respect are the people who push the broom as much as the person in the corner office.
[00:08:31] So all of those things I think are just great life experiences and, and couldn't agree more. And then the other thing I love about your background is kind of the Rhode Island experience. So my wife's family lives in Rhode Island and so we would go up there every year and the one thing I won't do is talk too much about it 'cause we don't wanna ruin it for everyone else.
[00:08:47] Like, who's there now? Like don't, don't let the secret out. So kind of keep it on the dl. Hey, as a quick interlude, this is Sean here. Wanted to address one quick question that we regularly get. We often get people who show up at our website, call our account executives that say, Hey, I'm not private equity.
[00:09:05] Can I still use BluWave to get connected with resources? I. And the short answer is yes. Even though we're mostly and largely used by hundreds of private equity firms, thousands of their portfolio company leaders, every day we get calls from everyday top proactive business leaders at public companies, independent companies, family companies.
[00:09:24] So absolutely you can use this as well. If you want to use the exact same resources that are trusted in being deployed and perfectly calibrated for your business needs, give us a call. Visit our website@BluWave.net. Thanks. Back to the episode.
[00:09:43] And so then went into from Furman Cells. From there, what led you to ultimately kind of founding Stone Goff? Yeah.
[00:09:52] Laurens Goff: The various steps included one year into Furman sell, being offered, invited to join their private equity group internally, which was small, highly appealing, really interesting in terms of portfolio, and the team was wildly seasoned and smart and includes some people that are doing.
[00:10:21] Really great things today within financial services, but I didn't go, the people that I worked for in the advisory side said, you have a two year commitment. And so that dynamic actually probably fueled the fire a little bit because as I was at least discussing with the investment professionals on that side of the business, my intrigue rose and obviously.
[00:10:48] And talking to young finance collegiate students about the difference of dispensing advice and making principal investments, it's all very clear in terms of where people's passion lie. And I think very early on in investment banking, I realized making investment decisions and effectively being an expert in certain business models and industries was wildly compelling.
[00:11:17] And so. After two years of being an analyst, that was my immediate goal. And interestingly enough, halfway through my time at Furman Sells, they were bought by ING. And I actually ended up joining a firm that maybe for a hot minute was called ING Equity Partners, but very quickly became Hampshire Equity Partners and was there as a generalist for eight years and.
[00:11:47] Made some amazing relationships and had some fun, interesting, really, really compelling investments. One business actually went public and after a couple years actually rejoined the board of that company just last year stepped off of it. So a real tie back to my first private equity job was that public company, but after eight years.
[00:12:16] There were questions around the next step slash fund at that firm, and I decided to do something pretty entrepreneurial, which was become an independent sponsor, which at the time was an evolving marketplace, evolving strategy without a ton of respect and without maybe the slight glamor that it has today.
[00:12:45] And. There is no more difficult thing to do than invest when you don't have any money, and you have to convince various constituents that you are the right person to shepherd a business into its next phase of growth. And that process was highly rewarding. Very, very, all encompassing, but a core to. Really our firm today and specifically because my partner for really 20 plus years, Hannah Stone Craven was doing the same thing as I was unbeknownst to me, but we had worked together when I was in banking and she was in private equity and we happened to be on a panel together.
[00:13:38] As two single asset independent sponsors and very quickly reconnected and started looking at deals together, both from the standpoint of kinda shared resources and aligned value creation initiatives, but also around getting scale. And we ultimately looked at a deal together. Not as Stone Goff, but as two independent sponsors where we got very, very close to doing the deal.
[00:14:12] It did not happen late in the game, which was a lot to process, but it was a great dry run. And about a week after we realized that deal wasn't gonna happen, we sat down in soho in Manhattan at a coffee shop that was still. Go to and said, let's give this a whirl. And so in July of 2010, we started Stone Goff with the idea that eventually we wanted to raise C committed capital and build a firm where ultimately we would partner with lower middle market companies and create a lot of value for our investors.
[00:14:53] And so that was the original vision. There were steps. Obviously then and where we are today and for a handful of years we operated, continued to operate as independent sponsors and having two people as opposed to one was really powerful from a bunch of different standpoints, but being really, really attuned to the entrepreneurs that we were partnering with and continue to partner with as entrepreneurs ourselves.
[00:15:26] No one. Handed us a big pool of capital and said, just spin out and here's money for your operating costs and here's money to invest. Everything that we've done from the start has been quite resourceful, earned, and I think that resonates. When we talk to entrepreneurs, our focus really is partnering with them.
[00:15:51] What does that mean? We are the first institutional capital. In an investment in a business, and what we really like is those founders or founder to continue to run the business. And so having that kind of aligned, I would say scrappiness, but also the ability to collaborate with these founders is core to kind of what I would say is our professional upbringing.
[00:16:19] Both Hannah and I really talk about it. As a north star in terms of what we've done and what we will continue to do.
[00:16:28] Sean Mooney: I love so much of that second part of your story there, to use your word. It resonates with kinda the way I came up. So I started off at Houlahan. Loki in their financial reconstruction group in the nineties.
[00:16:38] Right. And they too had a private equity firm within there, and they kind of grabbed me by the collar and said, okay, we're gonna take part of your time. Similar. The restructuring group said, well, you owe us 90 hours a week. And so I had gone from my 120 hours a week as an analyst to my late analyst period.
[00:16:55] I was just back up to a hundred. I was like, all right, I can give you 30 hours, but I'm gonna go back up to like 120 a week. And then similar, I went to a private equity firm that was originally part of a larger bank holding company, and one of the MDs from Houlahan kind of grabbed me by the collar. I was like, come on kid.
[00:17:10] We're gonna go get this PE firm going. And so I appreciate that background. And then what I really liked about your, your story also similarly resonates with me, as you do with the independent sponsor world, which today is a big part of the industry. Then it was more kind of undercover. And the way I make it sense in my mind that maybe compares is that it's like you're bootstrapping a startup, right?
[00:17:34] And then so many people today, they'll take maybe a GP steak to get it going, right? And then you can get it going, but then forever you're like, oh my goodness, I took all this dilution. And so in some ways what you did there was similar, like at BluWave, I took a little bit of money from friends and family, but we've bootstrapped it all the way thus far to here, and we were so much better off for it because it made us become clever and it made us think about every dollar that we're gonna use.
[00:18:00] And there's so much power of constraint in terms of building businesses where you have to innovate because of that. Versus when the world is like pouring cash on you, you sometimes you're just kind of throwing it back at the wall and seeing what sticks. Hi, this is Sean. Wanted to take a quick moment to tell you a little bit why BluWave exists.
[00:18:19] It's based on this whole notion that assessing opportunities and building businesses is really hard. We all know third party expert service providers can dramatically help. But at the same time, it's hard to know who's good, usually leaving you like I would do and call friends and ask, do you know someone who does this?
[00:18:38] Or just go the square peg, round hole route. So after nearly 20 years in PE, I decided to solve my own problem and create a BluWave. Today, many hundreds of PE firms, thousands of port codes leading public companies, private companies. All call BluWave to instantly get connected with the exact third party service provider they want that's pre credentialed by BluWave and perfectly calibrated for their need and really good.
[00:19:03] You too can give us a call or visit our website@BluWave.net. We're free to use and you can benefit the same way other top PE firms do act the show. With all these kind of great experiences in mind, Lauren, and, and you've seen at this point probably thousands of companies. One of the things I'm always very curious about is kind of successful investors', personal kind of scorecard.
[00:19:26] The things that you look for in companies when you're saying this is a really good company, or probably more importantly, could, should and will be a really good company. So what are those kind of foundational elements of value that you look for when you see a company for maybe the first time?
[00:19:41] Laurens Goff: Great question.
[00:19:42] And I think the evolution of our firm parallels with these two themes that I'll highlight. One is visibility in the business model, and what is that visibility in the business model historically really was stability and a platform that we can really help grow. I think as we have evolved, expanded, and really for the last 10 years, focus solely on B2B service companies where technology can play a role.
[00:20:18] Visibility has become recurring, reoccurring long engagement lengths or another characteristic to give us comfort and the management team comfort that they can plan, execute on a strategic vision because their ability to serve their customers is somewhat locked in, and that is a trait and a feature.
[00:20:47] That does not always appear, is not always emphasized, but our ability to bring that to the top of the list in cases where there are at least green shoots around it, or in cases where it's fairly well developed and we can prioritize it has been meaningful really since our founding. So visibility as a characteristic in a business model.
[00:21:15] And something that we have consistently aligned around, continue to look for, and in some cases try to recreate within our portfolio is vertical or ecosystem focused. What does that mean, Sean? In the lower middle market, which is our core market and will always be our core market, the ability to be efficient and focused.
[00:21:46] An expert creates so much momentum and lack of doubt around execution from a bunch of different standpoints. Namely, business development is something we've had a lot of success with. And so what practically does that mean when I say vertical or ecosystem? Vertical is an industry that a B2B service companies.
[00:22:14] Serves almost exclusively. And because of that, they're experts in whatever service outsourced IT consulting that they're delivering to that vertical. That vertical in the spectrum of growth and visibility needs to be something that we institutionally support. And historically, and. Life sciences, it, rural telecom, media, technology, marketing.
[00:22:49] Those verticals have been powerful for us, and businesses focused exclusively in those verticals have succeeded efficiently and in a way where we can position them for the next investor as a dominant player in that space. Ecosystem has been a add-on as we've seen more models, service models that may play in.
[00:23:18] For example, we have a web hosting business that almost exclusively serves the WordPress CMS content management services community. And that ecosystem focus has a ton of similarities to the vertical focus, and so high level. Back to your original question, Sean. Visibility and vertical and ecosystem focus are things that we are constantly looking for, and in some ways, as we evolve, are building ways to identify those early on and in cases where they appear not fully developed.
[00:24:02] Providing the resources to portfolio companies to fully develop a vertical or ecosystem focus, or to lean into some sort of visibility strategy. Those are really important and things that we will continue to look for for the next 20 or 30 years that we're operating.
[00:24:22] Sean Mooney: I really appreciate that perspective and that kind of scorecard that you've developed for a number of reasons.
[00:24:28] One. It's this whole idea of having the visibility of what's gonna happen. It give does so much for you as an investor and a business builder, right? You can see further into time, and then it gives you more optionality, more capability to bend space and time as it goes forward, right? You can see what's coming.
[00:24:46] You're not finding out about it 30 days after your close so you can see what's gonna be happening, and then you can change the future to be its best self. And that's really hard to do. Even when you do have long relationships. And so what I really also appreciate is you've coupled it with the word and it's like, and ecosystem expertise.
[00:25:03] And so if you're better at fewer things you can see into the future, that enables you to change the future in a way that it's really hard to do if you're kind of spreading the peanut butter really thin across a bunch of things.
[00:25:15] Laurens Goff: Extremely well said, and I will borrow some of those terms. Bend the future.
[00:25:20] Sean Mooney: As our listeners know, I only know how to speak metaphorically, so I've, I think I did several in that. That's so
[00:25:26] Laurens Goff: our industry needs more of those and, and new versions of them. So I have a running list. Nice job, Sean. There should be a push email, finance or private equity phrase of the day.
[00:25:38] Sean Mooney: I'll add that to my, what I wish I knew.
[00:25:40] Email that I send around cliche metaphor, phrase of the day. So Laurens, one of the things I'd love to get another kind of like lens into is how does your firm, how does Stone Goff approach value creation? What are you doing to kind of support the journey of your portfolio companies?
[00:25:57] Laurens Goff: Absolutely. A priority and a priority from day one.
[00:26:01] We did it early on really just by being present physically and mentally with our portfolio companies and trying to, as independent sponsors. Support every initiative that work cos needed, wanted or viewed as strategic. And so that's core to what we do. As we have scaled, we've done two things. We've hired around that service.
[00:26:29] So internally we have head of portfolio value creation, and we have created a framework that we call tes, which has meant just to capture. The different areas that we think we can help founding teams, management teams, and I'll talk a little bit about that framework, but I think most importantly because of the nature of our transactions, where founders tend to own a significant portion of these businesses going forward, usually in a minority situation, but because they have a large.
[00:27:09] Seat at the table. From an equity ownership standpoint, our view is that strategic planning, tactical support needs to be collaborative. And I believe value creation has really evolved throughout our industry. And at some level, and this may be mega or middle market or upper middle market, it's become quite prescriptive as it should be.
[00:27:34] Our view is it's gotta be collaborative and the way that we think about it. Is we lead with a menu that is becoming more and more formalized in terms of the different places where we think we can help. This framework though, that we call Teos, really is meant to introduce the concept and the teos, the T for talent, the E for experts, the O for outsourced, and the S for support.
[00:28:07] Is really to help these teams think about the different places where we can bring value. And in the lower middle market. The T is very, very consistent. Talent is a real leverage point as companies are scaling. A lot of times it's in the finance and accounting role, but it can be all over the place and to some degree entrepreneurs.
[00:28:33] Have done really well with adding talent. In some ways, they may have hit a ceiling and in some cases, thinking about the different levers to pull to identify talent, whether it's pure network or executive recruiter, those decisions haven't always been easy or comfortable for operators, and so we try to bring that.
[00:28:57] To the table. Table in our T category, the ease really are experts and those are folks that we think could be great board members in a lot of cases. And those board members are really discussions and candidates that both we Stone Go and the operator have. And so perfect place to be collaborative from day one, but to find incremental experts who can.
[00:29:23] Offer a viewpoint and help guide the company next to founders and leaders outsource. There's an awful lot as you think about lower middle market companies, scaling from technology, from services, from technology implementation, from soft skill strategies, and having both an opinion. What I would call a vetted list around those things can be really valuable to entrepreneurs, especially when we spend a lot of time vetting and really getting comfortable with those service providers and knowing how they operate and knowing how to maximize the value as as support.
[00:30:06] Is really core to what we do as a, a sponsor in the lower middle market companies that we partner with. And so great concepts within the S category are things like m and a helping source, helping execute, helping diligence, helping integrate compensation, equity packages all fall into that s that support.
[00:30:33] And so as we've scaled, we have put a lot more structure in this framework. We've obviously named it, we talk about it a lot with prospective and existing portfolio companies, and internally, everyone. Understands respects, and quite frankly, is adding to the concept either within the TDE though in the S category or different ways to really support our companies going forward.
[00:31:03] So it's become a real interesting internal culture here at sg. Portfolio companies have really embraced it, but the exciting piece will continuing to evolve it and really use it. Consistently across all port coasts today and future port coasts,
[00:31:23] Sean Mooney: I very much appreciate how you've calibrated and constructed your business system here.
[00:31:28] Right? It's, it's this idea that you're not gonna necessarily try to be Danaher where you're like pushing a system down, but you have a framework to drive value with core pillars, but also that allows kind of flexibility and optionality for these little race boats that you're investing in, right? It's not hammer and and looking for nails.
[00:31:48] It's like, no, we're gonna, we have the whole toolbox. We have some areas that we're gonna focus on. It very much jives with what we're seeing here. For every one call we get for AI today, we still get three from PE firms. For people. The people really, really matter, particularly in these lower companies that you're transforming.
[00:32:06] You're bringing in new skill sets, you're top grading. You're adding all across these organizations so they can in some ways be a company they were never envisioned to be, but always had the potential. The outsource thing, I think is something that's so powerful, particularly in a constrained environment.
[00:32:21] Even large companies are constrained. This idea that you can bring in a really expert resource who's been there, done that they can get in, help you not have to learn everything from like step one, and then you can insource that capability to extent it makes sense and the extent it doesn't. You don't have to take that permanent cost on.
[00:32:40] We created an entire business around that. One of the secrets of ourselves is we use ourself on ourself. So it's this whole idea of bringing in exports that you can do that, and then you're bringing resources and support along the way. And so I really appreciate how you have these core pillars, but also enable the flexibility that you can apply to every individual company that you're partnering with.
[00:33:01] Laurens Goff: Sean, you are in a unique place to comment on that because you have invented. Aspects of that service. And so I should have said that from the outset. You guys are a model and we appreciate the partnership we have with you. It's really powerful. And quite frankly, as a gp, if we're not trying to maximize that offering, then we're not doing our job.
[00:33:28] So using you as a inspiration, as a model has been helpful and, and a partner.
[00:33:33] Sean Mooney: Oh, and I appreciate it. And likewise, I think you were one of our earlier kind of believers in us and what I always share is like, we're kind of like a magic toolbox for business builders, but you have to know how to use the tools.
[00:33:45] And so what we really appreciate is getting to watch your firm, like artfully come up with the design and the architecture, and then you're like, put this in my hand, put that in my hand. And then you have your own network as well. And the admiration is, is highly mutual because it's really how you use those.
[00:34:00] In concert with the unique strategies that you are putting together, and so it's a privilege for us to be able to watch it in motion, if you will. One of the things I'm curious about you, you've got this business system, we've got this highly dynamic environment and it's always been dynamic. I was just talking with some of our younger folks, they're like, has it ever been easy?
[00:34:21] Like, it's been pretty wild the last four years for sure, but I'm like, no. Maybe there's a period in nineties when, you know, it was like we didn't have some sort of crazy thing happening. But it's, it's always been kind of something and so I think part of it is like, how do you kind of engage with, now you have a community of business builders in your portfolio.
[00:34:42] So I'm interested to learn Laurens, like how are you all kind of working and engaging with your portfolio companies today to kind of maybe manage through the times and look forward into the future?
[00:34:52] Laurens Goff: Timely question and it syncs out of the ability to support and create value. Two weeks ago, we brought most of the management teams and fairly deep in certain organizations together physically for our third SG management summit.
[00:35:11] And this year we evolved the offering, expanded the time period, and had an amazing day. And specifically to your question, the idea was continuing to cross-fertilize across portfolio companies with the idea that executives, CEOs, CFOs, CROs, have a built in network to consult. On certain problems. And with the mass of the 60 or 70 people that we had in Boston two weeks ago, we were able to bring in content experts to talk about, I think we talked about 11 different topics in a round table format.
[00:36:00] And those topics range from having tough conversations, managing ai, thinking about. A segment, leaders actually reporting in board meetings, a concept of a leader, a seller, and a doer. So clearly business development strategies. And those were an hour and a half long and each executive sat at two of those round tables and in some cases actually provided a lot of insight compensation and.
[00:36:37] Different types of incentive compensation. It is a consistent carrot that obviously is important in these companies, and being able to talk about frameworks around that was another roundtable topic, but that whole day was really phenomenal in terms of bringing everyone together, but also getting them to understand what our goals are.
[00:37:03] In addition to the two round tables, we had one of our earlier leaders talk about her journey, which has included multiple investors after us in her company, and she had a couple great themes for the audience and has an amazing amount of credibility having done it multiple times successfully and done m and a, and built a team and and tackled all of the challenges that the lower middle market.
[00:37:33] Really both offers and, and creates for leaders. And then we did some structured one-on-one networking. And so it was a great day, Sean, and it, it's something that we will continue to do and I know other folks do it. I think doing it consistently and really interacting both before and after to get feedback and to get people's thoughts about how to maximize effectiveness has been core to how we've set it up.
[00:38:02] And after two round tables of speaker and force networking, we did a, a very important kind of in mass group outing around a concept called margaritas. So that's a really important aspect to the lower middle market.
[00:38:21] Sean Mooney: Yeah. That's perhaps the most favorite part of these conferences. Mar
[00:38:24] Laurens Goff: Margaritas on a rooftop where we thought it was gonna rain, but it didn't rain.
[00:38:28] That was a win.
[00:38:29] Sean Mooney: Victory was yours. You know. But I, I, I love that approach because I've been to a large number of these client value creation summits, and they'll ask us to come for various reasons. And what I love about what you're doing is there's, there's a number of ways to do these things. A lot of them, I think, tend to be more towards.
[00:38:46] Presentations to the audience and there's a place for that for sure, but a lot of 'em kind of stop there. What I really like that you've built out and consistently that I've like as I thought about it myself, is like the best parts are the interactive parts. You have this expert network within your portfolio company.
[00:39:05] You have these true kind of like top of their game business builders there. Why not put 'em together? And I love that you've broken it up across categories and so, and then you have the social part, and so it, it seems like you're indexing more on the interactivity and using these leaders to kind of give 'em a safe place to learn and share from each other as much as someone may be going through large presentations.
[00:39:28] Now, there's a place for that in those meetings, but it sounds like you're indexing more so on this kind of interconnectivity and, and shared learning.
[00:39:35] Laurens Goff: Agreed. Well said. And we are definitely figuring out and evolving it, but feel like we have. Momentum around people leaning into it and really enjoying it.
[00:39:45] And then once again, the feedback is amazing in terms of making it more and more productive into the future.
[00:39:52] Sean Mooney: No, I, I think your approach is, is spot on. That is the way to do it. So maybe as we kind of round out our conversation here, Laurens, one of the things I'm constantly a, a consumer of is other people's wisdom, life hacks, like ways of getting things done.
[00:40:09] I think anyone who knows me knows me well enough to know that if I had to figure it out myself, I would've been in a lot of trouble. Someone didn't show me how to get through that paper bag. You know, it would be a, a tough run. And so I love borrowing other people's kind of life hacks, methods, processes, et cetera.
[00:40:26] And I'm curious if you have one of those that you could share that, that I can borrow and then copy paste on myself.
[00:40:33] Laurens Goff: Sure. And I would say disclaimer here is I have. Really figured out anything, but at least for me and, and I think there is some aspect of this concept that ultimately applies to definitively business and managing, interacting with a portfolio.
[00:40:56] I have found a concept that maybe I knew internally, but maybe it was elevated after reading this book, atomic Habits by James Clear. This kind of routine, both in personal habits, physical habits, athletic habits, diet habits is for me, something relatively easy to lean into because it's did you do whatever the desire task is in this time period?
[00:41:26] And in a lot of ways, for me, it's become a daily thing, whether it's working out, whether it's a diet thing. And then habit stacking, which is another concept in the book. So I know that's a quite a, a hot concept from an Atomic Habits brand, and I know the author has really pushed that. I found it really effective if I am trying to tackle something, change a habit to have that.
[00:41:52] Did I do this on a daily, weekly, monthly basis? And that link interacting with. Managing a portfolio is very much KPI based. Can we see daily sales? Can we see cashflow forecast? Can we see new customer wins on a regular basis? And so maybe a little bit robotic, but a nice overlap between kind of my personal life and, and how I try to manage changing of habits and.
[00:42:32] How we watch and interact with portfolio companies. So I'm aspirational about habit stacking, but I feel like I've had some degree of success around changing by saying I'm gonna do something different. Every single fill in the blank time period, daily has been really easy and helpful around doing something athletically, but it's been pretty productive.
[00:42:57] Would I figure that out without the book? I don't know, but the book is pretty powerful and. That first chapter is pretty awesome in terms of also optimizing all variables. So that's my hack.
[00:43:09] Sean Mooney: I think it's great, and I think one of the traits that draws people to private equity is kind of extreme curiosity, and that's what I always loved about.
[00:43:18] It's like, oh, I get to look at a hundred companies a month. You know, not, not that many, but like a lot of companies month. And you can always learn in gad, gizmo and Gadget. And I'm constantly kind of like walking through parking lots, and it used to be Google Mouse Chat, GPT, like what is this thing? And the strength of that is, is great because you can be really curious, but I think you can, as I turn the lens on myself, there's probably a lot of like half started things that I've done where I'm like, oh, this.
[00:43:41] And then I dabble in. My wife's like, oh, can you like learn that first one before an Amazon box shows up again? And I'm like, well, yeah. So some ways I, I can be like a moth drawn to different lights. And so I'm curious on, on a topic habits, like what's your kind of abridged, kind of like takeaway of how you go from a dabble to, to a habit.
[00:43:59] Laurens Goff: Daily. It's the daily dynamic, whether it's some sort of physical activity or some sort of intellectual activity, some sort of artistic activity. To me that has really worked. It probably does not work for a bigger concept, but very precise little changes, diet, et cetera. It's worked really well.
[00:44:23] Sean Mooney: So to go from dabble, you just have to build time into your schedule every day, and then it just becomes rote and it's gonna be just your timestables, but you have to be intentional about like every day you're gonna have it on your checklist of, I'm gonna do this.
[00:44:37] How do you do it consistently?
[00:44:39] Laurens Goff: Therefore, it can't be too much, can't be too little, or else you won't move the needle, as they say. But I've tried to impart some of those concepts to my kids and. We'll see if they eventually embrace them.
[00:44:53] Sean Mooney: If they listen to what you say. Tell me how you did that. So, because I, I'm, I'm, I'm still curious.
[00:45:01] I think some of it gets absorbed, but I'll never get credit for it.
[00:45:04] Laurens Goff: I'm about to default to, to PowerPoints, but I don't even know if that will be successful.
[00:45:09] Sean Mooney: Laurens, this has been a great conversation. I've learned all sorts of things that I wish I knew before. It's a tremendous gift to kind of share these things.
[00:45:18] I. That come from, no doubt, lots of lessons that have been hard earned and learned over time. And if you can save our listeners and, and also me, the time from having to skin my knee on all these things first, I'm just super appreciative. So thank you. Thank you so much for taking the time and sharing these things with us today,
[00:45:36] Laurens Goff: Sean.
[00:45:36] Fantastic conversation, great questions and great reactions. So thank you. Keep doing great things and. We will continue to chat with you on a whole host of opportunities in our portfolio.
[00:45:50] Sean Mooney: Likewise. Thank you. I, I appreciate you and your team and the opportunity to see how P'S done so well, and look forward to speaking again soon.
[00:46:08] That's all we have for today. Special thanks to Laurens for joining. If you'd like to learn more about Laurens Goff and Stone Goff. Please see the episode notes for links. Please continue to look for the Karma School of Business Podcast anywhere you find your favorite podcast. We truly appreciate your support.
[00:46:24] If you like what you hear, please follow five star rate, review and share. This is a free way to support the show and it really helps us when you do this, so thank you in advance. In the meantime, if you want to be connected with the world's best in class private equity grade professional service providers, independent consultants, interim executives that are deployed and trusted by the best business builders in the world, including many hundreds of top PE firms and thousands of their portfolio companies, and you can do the same whether or not you're in the PE world.
[00:46:53] Give us a call or visit our website@BluWave.net. That's B-L-U-W-A-V-E, and we'll support your success onward. The views and opinions expressed in this program are those of the individuals presenting and do not necessarily reflect the user positions of any other persons or entities, including those referenced herein. No representations, warranties, financial, legal, tax, or other advice are made herein. Consult your advisors regarding any topics discussed during this episode.
[00:00:33] I'm super excited to be here today with Laurens Goff. Laurens, great to be here with you. Good morning, Sean. Good to see you. Absolutely. So I've been looking forward to this for a long time here. I think it's gonna be a fun, exciting, and formative conversation. And so maybe let's jump right in. And the way I like to start our conversations here is really just to share more with our audience, a bit of the story of you.
[00:00:57] And so can you tell us a little bit about kind of where you grew up, college, first job in college kind of way, points that ultimately led to pe?
[00:01:05] Laurens Goff: Without a doubt. I grew up in Providence, Rhode Island, and very, very passionate about that city. And state, so passionate that people in the office know and anticipate anytime they hear something about Rhode Island or the capital providence.
[00:01:26] We actually have a portfolio company based in Providence, but great upbringing. Mother was a librarian, father was a business person who very early on instilled. The power and the concept of being employed and eighth grade, ninth grade, probably March or April, the drum beats of get a job started. And that's pretty powerful in terms of committing yourself to something.
[00:02:01] And that first summer where I think I elevated into a true summer job from camp counselor. I was at McDonald's all summer and I was not in front of the cash register. I was at the grill. I was at the fryer later, and a great lesson and something I am very consistently trying to impart on my two daughters who are a little young, as they like to tell me for summer jobs, but went to high school in Providence, actually did not go that far for college.
[00:02:37] Went north. About 55 minutes to Boston College. A great institution. Had a fun productive four years there. Started out as a English major, and very quickly in my sophomore year, realized I needed to be a little bit more practical in my studies and transferred into the School of Management where you could actually major in finance and.
[00:03:06] A lot of my buddies from the school of Management dubbed me the rookie of the year, my sophomore year because put the nose to the grindstone and, and studied pretty hard. And that was really a, an awakening and a catalyst to think about a future career. In addition to studying the school of management, I did play lacrosse for Boston College Eagles and built a great.
[00:03:34] Network network that continues to be super robust in in what I do today. And after my fall of senior year where I started to interview with different firms, I actually was given a job offer at a very interesting, publicly traded asset management firm and financial services company in suburban Philadelphia and accepted that offer.
[00:04:03] Before Christmas my senior year and the next summer after graduated, headed off to to Philadelphia in July and joined SEI Corp. A really interesting business where I focused on doing due diligence on money managers around a specific style and size. Think large cap growth, small cap value. And that was a great first step into the business world.
[00:04:35] It took my CFA level one. It was a very collaborative environment. A bunch of young folks really getting up to speed on how to assess asset managers. Ultimately, I decided that the pace was not quite right for me and literally left the firm without a job. Moved to New York City. Started interviewing with the explicit purpose of trying to get into investment banking, which I ultimately did as a off-cycle analyst, maybe with just a titch, more maturity than the rest of the class, and had a really productive two years at a place called Furman Cells.
[00:05:20] That was my leaping off point for thinking about. Being enamored with and ultimately diving into private equity.
[00:05:29] Sean Mooney: I love so much of the background there and it, it resonates. One of the things that I've, I've seen is just from all these conversations, you start seeing some patterns, right? And it's one very often kind of academic parents, but combined with like a business thread somewhere in there, and then two early kind of onsets of entrepreneurial, kind of like, I'm gonna start working early and start understanding the levers of business.
[00:05:53] I love the kind of the restaurant job, and that used to be when I was in pe, everyone went to these great kind of academic institutions like Boston College and I went to Georgetown and then people would go to Ivy's and all these really good schools, and I was like, well, these kids and probably my former self, they're a little too empowered.
[00:06:13] Like, like they've been taught, you know, from day one, when they go to these great academic institutions, they become managing associates. So I also want someone who's done the hard jobs. And so I used to call it like, they have to work at a restaurant. They have to have had done landscaping, all that kind of fun stuff.
[00:06:27] And so I'm, I'm really proud with my daughter's going to college next year. She's working at a fried chicken restaurant this summer, so it's like,
[00:06:34] Laurens Goff: I couldn't agree more. And there is, and we're seeing it. And you're seeing it. This trend to having internships, which are phenomenal, fantastic experience.
[00:06:49] College students are very, very productive, but there is a little bit of a miss in terms of what a hourly wages and whether it be physical work or service work. I think there's some great lessons and skills in there, and so a lot of college students that come to me for advice, I try to balance practical landscape, private equity versus investment banking advice with a, you are a freshman or sophomore in college, you must have some fun, which I think is important, especially in this environment and world and current state.
[00:07:36] And having responsibility, dealing with customers, dealing with different types of people is so valuable. And so it's really interesting to hear people be able to balance an internship with a kind of a real life job. But that's great for your daughter.
[00:07:54] Sean Mooney: It really is good. 'cause you think we said it's like dealing with people who are not always the nicest people to you when you're working and sweeping up and closing out a place and making it ready and mopping floors and I had kind of a similar but different experience.
[00:08:08] I was working in manufacturing plants and it was the same deal. Where I got out of it was one, it's really hard work and so it helps with work ethic. Two, you really appreciate the people throughout the entirety of the organization or business to make it work. The people who are. Equally should be treated with such an enthusiasm and respect are the people who push the broom as much as the person in the corner office.
[00:08:31] So all of those things I think are just great life experiences and, and couldn't agree more. And then the other thing I love about your background is kind of the Rhode Island experience. So my wife's family lives in Rhode Island and so we would go up there every year and the one thing I won't do is talk too much about it 'cause we don't wanna ruin it for everyone else.
[00:08:47] Like, who's there now? Like don't, don't let the secret out. So kind of keep it on the dl. Hey, as a quick interlude, this is Sean here. Wanted to address one quick question that we regularly get. We often get people who show up at our website, call our account executives that say, Hey, I'm not private equity.
[00:09:05] Can I still use BluWave to get connected with resources? I. And the short answer is yes. Even though we're mostly and largely used by hundreds of private equity firms, thousands of their portfolio company leaders, every day we get calls from everyday top proactive business leaders at public companies, independent companies, family companies.
[00:09:24] So absolutely you can use this as well. If you want to use the exact same resources that are trusted in being deployed and perfectly calibrated for your business needs, give us a call. Visit our website@BluWave.net. Thanks. Back to the episode.
[00:09:43] And so then went into from Furman Cells. From there, what led you to ultimately kind of founding Stone Goff? Yeah.
[00:09:52] Laurens Goff: The various steps included one year into Furman sell, being offered, invited to join their private equity group internally, which was small, highly appealing, really interesting in terms of portfolio, and the team was wildly seasoned and smart and includes some people that are doing.
[00:10:21] Really great things today within financial services, but I didn't go, the people that I worked for in the advisory side said, you have a two year commitment. And so that dynamic actually probably fueled the fire a little bit because as I was at least discussing with the investment professionals on that side of the business, my intrigue rose and obviously.
[00:10:48] And talking to young finance collegiate students about the difference of dispensing advice and making principal investments, it's all very clear in terms of where people's passion lie. And I think very early on in investment banking, I realized making investment decisions and effectively being an expert in certain business models and industries was wildly compelling.
[00:11:17] And so. After two years of being an analyst, that was my immediate goal. And interestingly enough, halfway through my time at Furman Sells, they were bought by ING. And I actually ended up joining a firm that maybe for a hot minute was called ING Equity Partners, but very quickly became Hampshire Equity Partners and was there as a generalist for eight years and.
[00:11:47] Made some amazing relationships and had some fun, interesting, really, really compelling investments. One business actually went public and after a couple years actually rejoined the board of that company just last year stepped off of it. So a real tie back to my first private equity job was that public company, but after eight years.
[00:12:16] There were questions around the next step slash fund at that firm, and I decided to do something pretty entrepreneurial, which was become an independent sponsor, which at the time was an evolving marketplace, evolving strategy without a ton of respect and without maybe the slight glamor that it has today.
[00:12:45] And. There is no more difficult thing to do than invest when you don't have any money, and you have to convince various constituents that you are the right person to shepherd a business into its next phase of growth. And that process was highly rewarding. Very, very, all encompassing, but a core to. Really our firm today and specifically because my partner for really 20 plus years, Hannah Stone Craven was doing the same thing as I was unbeknownst to me, but we had worked together when I was in banking and she was in private equity and we happened to be on a panel together.
[00:13:38] As two single asset independent sponsors and very quickly reconnected and started looking at deals together, both from the standpoint of kinda shared resources and aligned value creation initiatives, but also around getting scale. And we ultimately looked at a deal together. Not as Stone Goff, but as two independent sponsors where we got very, very close to doing the deal.
[00:14:12] It did not happen late in the game, which was a lot to process, but it was a great dry run. And about a week after we realized that deal wasn't gonna happen, we sat down in soho in Manhattan at a coffee shop that was still. Go to and said, let's give this a whirl. And so in July of 2010, we started Stone Goff with the idea that eventually we wanted to raise C committed capital and build a firm where ultimately we would partner with lower middle market companies and create a lot of value for our investors.
[00:14:53] And so that was the original vision. There were steps. Obviously then and where we are today and for a handful of years we operated, continued to operate as independent sponsors and having two people as opposed to one was really powerful from a bunch of different standpoints, but being really, really attuned to the entrepreneurs that we were partnering with and continue to partner with as entrepreneurs ourselves.
[00:15:26] No one. Handed us a big pool of capital and said, just spin out and here's money for your operating costs and here's money to invest. Everything that we've done from the start has been quite resourceful, earned, and I think that resonates. When we talk to entrepreneurs, our focus really is partnering with them.
[00:15:51] What does that mean? We are the first institutional capital. In an investment in a business, and what we really like is those founders or founder to continue to run the business. And so having that kind of aligned, I would say scrappiness, but also the ability to collaborate with these founders is core to kind of what I would say is our professional upbringing.
[00:16:19] Both Hannah and I really talk about it. As a north star in terms of what we've done and what we will continue to do.
[00:16:28] Sean Mooney: I love so much of that second part of your story there, to use your word. It resonates with kinda the way I came up. So I started off at Houlahan. Loki in their financial reconstruction group in the nineties.
[00:16:38] Right. And they too had a private equity firm within there, and they kind of grabbed me by the collar and said, okay, we're gonna take part of your time. Similar. The restructuring group said, well, you owe us 90 hours a week. And so I had gone from my 120 hours a week as an analyst to my late analyst period.
[00:16:55] I was just back up to a hundred. I was like, all right, I can give you 30 hours, but I'm gonna go back up to like 120 a week. And then similar, I went to a private equity firm that was originally part of a larger bank holding company, and one of the MDs from Houlahan kind of grabbed me by the collar. I was like, come on kid.
[00:17:10] We're gonna go get this PE firm going. And so I appreciate that background. And then what I really liked about your, your story also similarly resonates with me, as you do with the independent sponsor world, which today is a big part of the industry. Then it was more kind of undercover. And the way I make it sense in my mind that maybe compares is that it's like you're bootstrapping a startup, right?
[00:17:34] And then so many people today, they'll take maybe a GP steak to get it going, right? And then you can get it going, but then forever you're like, oh my goodness, I took all this dilution. And so in some ways what you did there was similar, like at BluWave, I took a little bit of money from friends and family, but we've bootstrapped it all the way thus far to here, and we were so much better off for it because it made us become clever and it made us think about every dollar that we're gonna use.
[00:18:00] And there's so much power of constraint in terms of building businesses where you have to innovate because of that. Versus when the world is like pouring cash on you, you sometimes you're just kind of throwing it back at the wall and seeing what sticks. Hi, this is Sean. Wanted to take a quick moment to tell you a little bit why BluWave exists.
[00:18:19] It's based on this whole notion that assessing opportunities and building businesses is really hard. We all know third party expert service providers can dramatically help. But at the same time, it's hard to know who's good, usually leaving you like I would do and call friends and ask, do you know someone who does this?
[00:18:38] Or just go the square peg, round hole route. So after nearly 20 years in PE, I decided to solve my own problem and create a BluWave. Today, many hundreds of PE firms, thousands of port codes leading public companies, private companies. All call BluWave to instantly get connected with the exact third party service provider they want that's pre credentialed by BluWave and perfectly calibrated for their need and really good.
[00:19:03] You too can give us a call or visit our website@BluWave.net. We're free to use and you can benefit the same way other top PE firms do act the show. With all these kind of great experiences in mind, Lauren, and, and you've seen at this point probably thousands of companies. One of the things I'm always very curious about is kind of successful investors', personal kind of scorecard.
[00:19:26] The things that you look for in companies when you're saying this is a really good company, or probably more importantly, could, should and will be a really good company. So what are those kind of foundational elements of value that you look for when you see a company for maybe the first time?
[00:19:41] Laurens Goff: Great question.
[00:19:42] And I think the evolution of our firm parallels with these two themes that I'll highlight. One is visibility in the business model, and what is that visibility in the business model historically really was stability and a platform that we can really help grow. I think as we have evolved, expanded, and really for the last 10 years, focus solely on B2B service companies where technology can play a role.
[00:20:18] Visibility has become recurring, reoccurring long engagement lengths or another characteristic to give us comfort and the management team comfort that they can plan, execute on a strategic vision because their ability to serve their customers is somewhat locked in, and that is a trait and a feature.
[00:20:47] That does not always appear, is not always emphasized, but our ability to bring that to the top of the list in cases where there are at least green shoots around it, or in cases where it's fairly well developed and we can prioritize it has been meaningful really since our founding. So visibility as a characteristic in a business model.
[00:21:15] And something that we have consistently aligned around, continue to look for, and in some cases try to recreate within our portfolio is vertical or ecosystem focused. What does that mean, Sean? In the lower middle market, which is our core market and will always be our core market, the ability to be efficient and focused.
[00:21:46] An expert creates so much momentum and lack of doubt around execution from a bunch of different standpoints. Namely, business development is something we've had a lot of success with. And so what practically does that mean when I say vertical or ecosystem? Vertical is an industry that a B2B service companies.
[00:22:14] Serves almost exclusively. And because of that, they're experts in whatever service outsourced IT consulting that they're delivering to that vertical. That vertical in the spectrum of growth and visibility needs to be something that we institutionally support. And historically, and. Life sciences, it, rural telecom, media, technology, marketing.
[00:22:49] Those verticals have been powerful for us, and businesses focused exclusively in those verticals have succeeded efficiently and in a way where we can position them for the next investor as a dominant player in that space. Ecosystem has been a add-on as we've seen more models, service models that may play in.
[00:23:18] For example, we have a web hosting business that almost exclusively serves the WordPress CMS content management services community. And that ecosystem focus has a ton of similarities to the vertical focus, and so high level. Back to your original question, Sean. Visibility and vertical and ecosystem focus are things that we are constantly looking for, and in some ways, as we evolve, are building ways to identify those early on and in cases where they appear not fully developed.
[00:24:02] Providing the resources to portfolio companies to fully develop a vertical or ecosystem focus, or to lean into some sort of visibility strategy. Those are really important and things that we will continue to look for for the next 20 or 30 years that we're operating.
[00:24:22] Sean Mooney: I really appreciate that perspective and that kind of scorecard that you've developed for a number of reasons.
[00:24:28] One. It's this whole idea of having the visibility of what's gonna happen. It give does so much for you as an investor and a business builder, right? You can see further into time, and then it gives you more optionality, more capability to bend space and time as it goes forward, right? You can see what's coming.
[00:24:46] You're not finding out about it 30 days after your close so you can see what's gonna be happening, and then you can change the future to be its best self. And that's really hard to do. Even when you do have long relationships. And so what I really also appreciate is you've coupled it with the word and it's like, and ecosystem expertise.
[00:25:03] And so if you're better at fewer things you can see into the future, that enables you to change the future in a way that it's really hard to do if you're kind of spreading the peanut butter really thin across a bunch of things.
[00:25:15] Laurens Goff: Extremely well said, and I will borrow some of those terms. Bend the future.
[00:25:20] Sean Mooney: As our listeners know, I only know how to speak metaphorically, so I've, I think I did several in that. That's so
[00:25:26] Laurens Goff: our industry needs more of those and, and new versions of them. So I have a running list. Nice job, Sean. There should be a push email, finance or private equity phrase of the day.
[00:25:38] Sean Mooney: I'll add that to my, what I wish I knew.
[00:25:40] Email that I send around cliche metaphor, phrase of the day. So Laurens, one of the things I'd love to get another kind of like lens into is how does your firm, how does Stone Goff approach value creation? What are you doing to kind of support the journey of your portfolio companies?
[00:25:57] Laurens Goff: Absolutely. A priority and a priority from day one.
[00:26:01] We did it early on really just by being present physically and mentally with our portfolio companies and trying to, as independent sponsors. Support every initiative that work cos needed, wanted or viewed as strategic. And so that's core to what we do. As we have scaled, we've done two things. We've hired around that service.
[00:26:29] So internally we have head of portfolio value creation, and we have created a framework that we call tes, which has meant just to capture. The different areas that we think we can help founding teams, management teams, and I'll talk a little bit about that framework, but I think most importantly because of the nature of our transactions, where founders tend to own a significant portion of these businesses going forward, usually in a minority situation, but because they have a large.
[00:27:09] Seat at the table. From an equity ownership standpoint, our view is that strategic planning, tactical support needs to be collaborative. And I believe value creation has really evolved throughout our industry. And at some level, and this may be mega or middle market or upper middle market, it's become quite prescriptive as it should be.
[00:27:34] Our view is it's gotta be collaborative and the way that we think about it. Is we lead with a menu that is becoming more and more formalized in terms of the different places where we think we can help. This framework though, that we call Teos, really is meant to introduce the concept and the teos, the T for talent, the E for experts, the O for outsourced, and the S for support.
[00:28:07] Is really to help these teams think about the different places where we can bring value. And in the lower middle market. The T is very, very consistent. Talent is a real leverage point as companies are scaling. A lot of times it's in the finance and accounting role, but it can be all over the place and to some degree entrepreneurs.
[00:28:33] Have done really well with adding talent. In some ways, they may have hit a ceiling and in some cases, thinking about the different levers to pull to identify talent, whether it's pure network or executive recruiter, those decisions haven't always been easy or comfortable for operators, and so we try to bring that.
[00:28:57] To the table. Table in our T category, the ease really are experts and those are folks that we think could be great board members in a lot of cases. And those board members are really discussions and candidates that both we Stone Go and the operator have. And so perfect place to be collaborative from day one, but to find incremental experts who can.
[00:29:23] Offer a viewpoint and help guide the company next to founders and leaders outsource. There's an awful lot as you think about lower middle market companies, scaling from technology, from services, from technology implementation, from soft skill strategies, and having both an opinion. What I would call a vetted list around those things can be really valuable to entrepreneurs, especially when we spend a lot of time vetting and really getting comfortable with those service providers and knowing how they operate and knowing how to maximize the value as as support.
[00:30:06] Is really core to what we do as a, a sponsor in the lower middle market companies that we partner with. And so great concepts within the S category are things like m and a helping source, helping execute, helping diligence, helping integrate compensation, equity packages all fall into that s that support.
[00:30:33] And so as we've scaled, we have put a lot more structure in this framework. We've obviously named it, we talk about it a lot with prospective and existing portfolio companies, and internally, everyone. Understands respects, and quite frankly, is adding to the concept either within the TDE though in the S category or different ways to really support our companies going forward.
[00:31:03] So it's become a real interesting internal culture here at sg. Portfolio companies have really embraced it, but the exciting piece will continuing to evolve it and really use it. Consistently across all port coasts today and future port coasts,
[00:31:23] Sean Mooney: I very much appreciate how you've calibrated and constructed your business system here.
[00:31:28] Right? It's, it's this idea that you're not gonna necessarily try to be Danaher where you're like pushing a system down, but you have a framework to drive value with core pillars, but also that allows kind of flexibility and optionality for these little race boats that you're investing in, right? It's not hammer and and looking for nails.
[00:31:48] It's like, no, we're gonna, we have the whole toolbox. We have some areas that we're gonna focus on. It very much jives with what we're seeing here. For every one call we get for AI today, we still get three from PE firms. For people. The people really, really matter, particularly in these lower companies that you're transforming.
[00:32:06] You're bringing in new skill sets, you're top grading. You're adding all across these organizations so they can in some ways be a company they were never envisioned to be, but always had the potential. The outsource thing, I think is something that's so powerful, particularly in a constrained environment.
[00:32:21] Even large companies are constrained. This idea that you can bring in a really expert resource who's been there, done that they can get in, help you not have to learn everything from like step one, and then you can insource that capability to extent it makes sense and the extent it doesn't. You don't have to take that permanent cost on.
[00:32:40] We created an entire business around that. One of the secrets of ourselves is we use ourself on ourself. So it's this whole idea of bringing in exports that you can do that, and then you're bringing resources and support along the way. And so I really appreciate how you have these core pillars, but also enable the flexibility that you can apply to every individual company that you're partnering with.
[00:33:01] Laurens Goff: Sean, you are in a unique place to comment on that because you have invented. Aspects of that service. And so I should have said that from the outset. You guys are a model and we appreciate the partnership we have with you. It's really powerful. And quite frankly, as a gp, if we're not trying to maximize that offering, then we're not doing our job.
[00:33:28] So using you as a inspiration, as a model has been helpful and, and a partner.
[00:33:33] Sean Mooney: Oh, and I appreciate it. And likewise, I think you were one of our earlier kind of believers in us and what I always share is like, we're kind of like a magic toolbox for business builders, but you have to know how to use the tools.
[00:33:45] And so what we really appreciate is getting to watch your firm, like artfully come up with the design and the architecture, and then you're like, put this in my hand, put that in my hand. And then you have your own network as well. And the admiration is, is highly mutual because it's really how you use those.
[00:34:00] In concert with the unique strategies that you are putting together, and so it's a privilege for us to be able to watch it in motion, if you will. One of the things I'm curious about you, you've got this business system, we've got this highly dynamic environment and it's always been dynamic. I was just talking with some of our younger folks, they're like, has it ever been easy?
[00:34:21] Like, it's been pretty wild the last four years for sure, but I'm like, no. Maybe there's a period in nineties when, you know, it was like we didn't have some sort of crazy thing happening. But it's, it's always been kind of something and so I think part of it is like, how do you kind of engage with, now you have a community of business builders in your portfolio.
[00:34:42] So I'm interested to learn Laurens, like how are you all kind of working and engaging with your portfolio companies today to kind of maybe manage through the times and look forward into the future?
[00:34:52] Laurens Goff: Timely question and it syncs out of the ability to support and create value. Two weeks ago, we brought most of the management teams and fairly deep in certain organizations together physically for our third SG management summit.
[00:35:11] And this year we evolved the offering, expanded the time period, and had an amazing day. And specifically to your question, the idea was continuing to cross-fertilize across portfolio companies with the idea that executives, CEOs, CFOs, CROs, have a built in network to consult. On certain problems. And with the mass of the 60 or 70 people that we had in Boston two weeks ago, we were able to bring in content experts to talk about, I think we talked about 11 different topics in a round table format.
[00:36:00] And those topics range from having tough conversations, managing ai, thinking about. A segment, leaders actually reporting in board meetings, a concept of a leader, a seller, and a doer. So clearly business development strategies. And those were an hour and a half long and each executive sat at two of those round tables and in some cases actually provided a lot of insight compensation and.
[00:36:37] Different types of incentive compensation. It is a consistent carrot that obviously is important in these companies, and being able to talk about frameworks around that was another roundtable topic, but that whole day was really phenomenal in terms of bringing everyone together, but also getting them to understand what our goals are.
[00:37:03] In addition to the two round tables, we had one of our earlier leaders talk about her journey, which has included multiple investors after us in her company, and she had a couple great themes for the audience and has an amazing amount of credibility having done it multiple times successfully and done m and a, and built a team and and tackled all of the challenges that the lower middle market.
[00:37:33] Really both offers and, and creates for leaders. And then we did some structured one-on-one networking. And so it was a great day, Sean, and it, it's something that we will continue to do and I know other folks do it. I think doing it consistently and really interacting both before and after to get feedback and to get people's thoughts about how to maximize effectiveness has been core to how we've set it up.
[00:38:02] And after two round tables of speaker and force networking, we did a, a very important kind of in mass group outing around a concept called margaritas. So that's a really important aspect to the lower middle market.
[00:38:21] Sean Mooney: Yeah. That's perhaps the most favorite part of these conferences. Mar
[00:38:24] Laurens Goff: Margaritas on a rooftop where we thought it was gonna rain, but it didn't rain.
[00:38:28] That was a win.
[00:38:29] Sean Mooney: Victory was yours. You know. But I, I, I love that approach because I've been to a large number of these client value creation summits, and they'll ask us to come for various reasons. And what I love about what you're doing is there's, there's a number of ways to do these things. A lot of them, I think, tend to be more towards.
[00:38:46] Presentations to the audience and there's a place for that for sure, but a lot of 'em kind of stop there. What I really like that you've built out and consistently that I've like as I thought about it myself, is like the best parts are the interactive parts. You have this expert network within your portfolio company.
[00:39:05] You have these true kind of like top of their game business builders there. Why not put 'em together? And I love that you've broken it up across categories and so, and then you have the social part, and so it, it seems like you're indexing more on the interactivity and using these leaders to kind of give 'em a safe place to learn and share from each other as much as someone may be going through large presentations.
[00:39:28] Now, there's a place for that in those meetings, but it sounds like you're indexing more so on this kind of interconnectivity and, and shared learning.
[00:39:35] Laurens Goff: Agreed. Well said. And we are definitely figuring out and evolving it, but feel like we have. Momentum around people leaning into it and really enjoying it.
[00:39:45] And then once again, the feedback is amazing in terms of making it more and more productive into the future.
[00:39:52] Sean Mooney: No, I, I think your approach is, is spot on. That is the way to do it. So maybe as we kind of round out our conversation here, Laurens, one of the things I'm constantly a, a consumer of is other people's wisdom, life hacks, like ways of getting things done.
[00:40:09] I think anyone who knows me knows me well enough to know that if I had to figure it out myself, I would've been in a lot of trouble. Someone didn't show me how to get through that paper bag. You know, it would be a, a tough run. And so I love borrowing other people's kind of life hacks, methods, processes, et cetera.
[00:40:26] And I'm curious if you have one of those that you could share that, that I can borrow and then copy paste on myself.
[00:40:33] Laurens Goff: Sure. And I would say disclaimer here is I have. Really figured out anything, but at least for me and, and I think there is some aspect of this concept that ultimately applies to definitively business and managing, interacting with a portfolio.
[00:40:56] I have found a concept that maybe I knew internally, but maybe it was elevated after reading this book, atomic Habits by James Clear. This kind of routine, both in personal habits, physical habits, athletic habits, diet habits is for me, something relatively easy to lean into because it's did you do whatever the desire task is in this time period?
[00:41:26] And in a lot of ways, for me, it's become a daily thing, whether it's working out, whether it's a diet thing. And then habit stacking, which is another concept in the book. So I know that's a quite a, a hot concept from an Atomic Habits brand, and I know the author has really pushed that. I found it really effective if I am trying to tackle something, change a habit to have that.
[00:41:52] Did I do this on a daily, weekly, monthly basis? And that link interacting with. Managing a portfolio is very much KPI based. Can we see daily sales? Can we see cashflow forecast? Can we see new customer wins on a regular basis? And so maybe a little bit robotic, but a nice overlap between kind of my personal life and, and how I try to manage changing of habits and.
[00:42:32] How we watch and interact with portfolio companies. So I'm aspirational about habit stacking, but I feel like I've had some degree of success around changing by saying I'm gonna do something different. Every single fill in the blank time period, daily has been really easy and helpful around doing something athletically, but it's been pretty productive.
[00:42:57] Would I figure that out without the book? I don't know, but the book is pretty powerful and. That first chapter is pretty awesome in terms of also optimizing all variables. So that's my hack.
[00:43:09] Sean Mooney: I think it's great, and I think one of the traits that draws people to private equity is kind of extreme curiosity, and that's what I always loved about.
[00:43:18] It's like, oh, I get to look at a hundred companies a month. You know, not, not that many, but like a lot of companies month. And you can always learn in gad, gizmo and Gadget. And I'm constantly kind of like walking through parking lots, and it used to be Google Mouse Chat, GPT, like what is this thing? And the strength of that is, is great because you can be really curious, but I think you can, as I turn the lens on myself, there's probably a lot of like half started things that I've done where I'm like, oh, this.
[00:43:41] And then I dabble in. My wife's like, oh, can you like learn that first one before an Amazon box shows up again? And I'm like, well, yeah. So some ways I, I can be like a moth drawn to different lights. And so I'm curious on, on a topic habits, like what's your kind of abridged, kind of like takeaway of how you go from a dabble to, to a habit.
[00:43:59] Laurens Goff: Daily. It's the daily dynamic, whether it's some sort of physical activity or some sort of intellectual activity, some sort of artistic activity. To me that has really worked. It probably does not work for a bigger concept, but very precise little changes, diet, et cetera. It's worked really well.
[00:44:23] Sean Mooney: So to go from dabble, you just have to build time into your schedule every day, and then it just becomes rote and it's gonna be just your timestables, but you have to be intentional about like every day you're gonna have it on your checklist of, I'm gonna do this.
[00:44:37] How do you do it consistently?
[00:44:39] Laurens Goff: Therefore, it can't be too much, can't be too little, or else you won't move the needle, as they say. But I've tried to impart some of those concepts to my kids and. We'll see if they eventually embrace them.
[00:44:53] Sean Mooney: If they listen to what you say. Tell me how you did that. So, because I, I'm, I'm, I'm still curious.
[00:45:01] I think some of it gets absorbed, but I'll never get credit for it.
[00:45:04] Laurens Goff: I'm about to default to, to PowerPoints, but I don't even know if that will be successful.
[00:45:09] Sean Mooney: Laurens, this has been a great conversation. I've learned all sorts of things that I wish I knew before. It's a tremendous gift to kind of share these things.
[00:45:18] I. That come from, no doubt, lots of lessons that have been hard earned and learned over time. And if you can save our listeners and, and also me, the time from having to skin my knee on all these things first, I'm just super appreciative. So thank you. Thank you so much for taking the time and sharing these things with us today,
[00:45:36] Laurens Goff: Sean.
[00:45:36] Fantastic conversation, great questions and great reactions. So thank you. Keep doing great things and. We will continue to chat with you on a whole host of opportunities in our portfolio.
[00:45:50] Sean Mooney: Likewise. Thank you. I, I appreciate you and your team and the opportunity to see how P'S done so well, and look forward to speaking again soon.
[00:46:08] That's all we have for today. Special thanks to Laurens for joining. If you'd like to learn more about Laurens Goff and Stone Goff. Please see the episode notes for links. Please continue to look for the Karma School of Business Podcast anywhere you find your favorite podcast. We truly appreciate your support.
[00:46:24] If you like what you hear, please follow five star rate, review and share. This is a free way to support the show and it really helps us when you do this, so thank you in advance. In the meantime, if you want to be connected with the world's best in class private equity grade professional service providers, independent consultants, interim executives that are deployed and trusted by the best business builders in the world, including many hundreds of top PE firms and thousands of their portfolio companies, and you can do the same whether or not you're in the PE world.
[00:46:53] Give us a call or visit our website@BluWave.net. That's B-L-U-W-A-V-E, and we'll support your success onward. The views and opinions expressed in this program are those of the individuals presenting and do not necessarily reflect the user positions of any other persons or entities, including those referenced herein. No representations, warranties, financial, legal, tax, or other advice are made herein. Consult your advisors regarding any topics discussed during this episode.
THE BUSINESS BUILDER’S PODCAST
Private equity insights for and with top business builders, including investors, operators, executives and industry thought leaders. The Karma School of Business Podcast goes behind the scenes of PE, talking about business best practices and real-time industry trends. You'll learn from leading professionals and visionary business executives who will help you take action and enhance your life, whether you’re at a PE firm, a portco or a private or public company.
BluWave Founder & CEO Sean Mooney hosts the Private Equity Karma School of Business Podcast. BluWave is the business builders’ network for private equity grade due diligence and value creation needs.
BluWave Founder & CEO Sean Mooney hosts the Private Equity Karma School of Business Podcast. BluWave is the business builders’ network for private equity grade due diligence and value creation needs.
OTHER RECENT EPISODES
Connect with a PE-grade Resource
1
Contact BluWave
2
Connect with BluWave-vetted service providers in hours
3
Select and hire a PE-grade resource that fits your needs