Focus, Metrics, and AI: Dan Gaspar’s Private Equity Strategies

[00:00:00] Sean Mooney: Welcome to the Karma School of Business, a podcast about the private equity industry, business best practices, and real-time trend. I'm Sean Mooney, BluWave's founder and CEO. In this episode, we have a fantastic conversation with Dan Gaspar, partner with TZP Group. Enjoy.

[00:00:33] I am super excited to be here today with Dan Gaspar from TZP Group. Dan, great to be here with you. Thanks for having me. I've been looking forward to this. This is gonna be a fun one. As per usual, I think we're gonna learn a lot. It's gonna be insightful in many ways, which is good for me 'cause I need all the insights I can get.

[00:00:50] Dan Gaspar: Yeah, we all do.

[00:00:51] Sean Mooney: So maybe as we jump right into it, Dan, can you tell us a little bit about the story of you, kind of where you grew up, college, first job outta college, how you got into pe?

[00:01:01] Dan Gaspar: Yeah. I know you ask all these questions about how people get into pe and I love hearing all these interesting stories about all of these great people in my business who took the most unexpected and circuitous roots to get to where they are.

[00:01:15] But my story is, frankly, a bit more boring and straightforward. I grew up on the North shore of Long Island. I had a happy childhood. Uh, I'm one of four kids, tight-knit family. My parents both immigrated to the US from Eastern Europe when they were kids and grew up in New York City. So I always felt that I had a, a good mix of, kind of old world and new world perspective in my upbringing.

[00:01:37] But my dad spent the majority of his career in venture capital and private equity, and so I was exposed to the investing world at, at a young age talking about deals, seeing the ups and downs of his portfolio, and thought it was pretty exciting and, and frankly, I didn't really spend a lot of time.

[00:01:54] Pondering doing anything else than a PE career, and so my path to it was pretty straightforward because I kind of had the end in mind. I applied early to Wharton and never really looked anywhere else. As an undergrad, I loved my Wharton education and have amazing memories and friends from my time at Penn.

[00:02:14] At Penn, I received a, a summer internship in Morgan Stanley's investment bank and was lucky enough to get a full-time position out of school. And then after banking, I went to business school at Columbia and have been working in private equity now for the past 20 years. So that's probably the most tried and true path to a career in private equity.

[00:02:35] The one kind of turn of fate angle of it is that when I was an intern at Morgan Stanley, I got placed in the telecom group, which at the time in 2000 was one of the busiest and hottest groups. At the firm and I was only one, I was one of, I think 16 in that group incoming analyst class, which was probably the largest of the groups that year.

[00:02:58] And then following the telecom bust, within 12 months of my starting, I was one of six, and after two years of investment banking, I applied for associate roles at private equity firms. That's the typical path for someone who's interested in getting into private equity. And I heard a similar response from many of the firms that I applied to, which was that I wasn't a fit because they weren't interested in investing in telecom and their current funds, and they were hiring analysts outta different industry groups, which I thought was the most absurd reasoning.

[00:03:28] I was 24 years old. I was hardly a telecom expert. It had taken me two years to learn what all the acronyms stood for, but it taught me an important lesson about sector focus versus being a generalist, which is. Unless you're incredibly passionate about a particular sector, which frankly, I I've never been, then it's, it's better not to get pigeonholed.

[00:03:49] And, and that's not advice for everyone. You have to know what makes you tick. But for me, there's nothing more exciting than learning about new companies and industries every week and knowing that the management teams that I'm backing are gonna always know more than me. And so my help is coming from the outside and somewhat different perspective.

[00:04:07] So anyway, I, I ended up getting a, a couple of private equity job offers, but decided instead to go straight to business school and that allowed me to somewhat reset and, and separate myself a bit from the telecom label. I've been what I broadly define as a generalist investor ever since. So, while my journey was interesting and exciting for me, I recognize that college to investment banking, to business school to private equity is pretty much the textbook career arc.

[00:04:35] Or at least it was for people of my generation. I'm always interested to see the different roots that people take to get here.

[00:04:41] Sean Mooney: I love so much about what you share there. As I think about the path there, it reminds me of so many kids I went to college with. So, so I grew up in Texas and we didn't have any of that, but my, my friends were all grew up in kind of New Jersey, New York, Connecticut, long Island, and their family business was the business of Wall Street and Finance.

[00:05:01] And so they all grew up with that. And so when I was coming up and didn't know left from right and up from down, and I would, I was ask them like, what are you guys gonna go do after college? And they go, we're gonna go do investment banking. And then I asked, what is investment banking? And they're like, what?

[00:05:19] How do you not know this?

[00:05:20] Dan Gaspar: Right, exactly. And I

[00:05:21] Sean Mooney: was like, uh, and then I've, you're like, you better start preparing for those interviews, buddy. You don't even know like what EBIT does.

[00:05:26] Dan Gaspar: Yeah. But times have changed, right? I mean, you grow up in Texas now, you're gonna get pretty good exposure to finance at an early age.

[00:05:33] The world is no longer Wall Street focused.

[00:05:36] Sean Mooney: In many ways. It goes to like your first point, like the telco boom, which was, you know, enabling the internet. The world is such a smaller place now. You don't have these ecosystems as much, but you still do. But it was great skills and what you, what you articulated, you said this is kind of the conventional path, but that is still a really hard path to go through the gauntlet of competition in, in the New York school system to get into Warden, which is.

[00:06:00] No easy. Well, you got half of New England and Mid-Atlantic applying to it, and then you would get into Morgan Stanley, which is another gauntlet in its own stealth because these schools and these companies still aren't gonna take everyone from Warden or everyone from Long Island. I was a massive beneficiary of what I call the Texas discount when I went to college.

[00:06:19] So I was like, I was like, they had to check a box from Texas, so they let me in, so I was like, Craig, this is good. You take what you can get. But yeah, you know. Exactly. Sometimes it's better to be lucky than smart. But I do know from my wife who grew up in kind of the tri-state area, it's a really hard kind of meat grinder to get through to get into those roles.

[00:06:38] So it may have been conventional, but it's certainly not an easy path.

[00:06:42] Dan Gaspar: Yeah, that's right. Having clarity on what you wanna do helps a lot. 'cause it helps focus. I'm always more impressed by the folks who were so smart at Wharton that they could wake up junior year and decide I wanna go into investment banking and still get all the plum jobs, so it's never too late.

[00:06:57] Sean Mooney: Maybe later in the conversation what we can go into is, I think your telco experience, but for a different reason as we think maybe about how this impacts ai. And I think we're probably similar vintage, and I would always tell the folks here, they're like, what was it like when the internet was starting?

[00:07:11] And they're, they're half joking, but they're half not, because then they're all born with it. And I was just like, no. It was in some ways what's going on now is has some correlates to what happened in the nineties and early two thousands. But this is just bigger.

[00:07:26] Dan Gaspar: Yeah, bigger and faster.

[00:07:28] Sean Mooney: Yeah, that's exactly right.

[00:07:29] So maybe let's save that for later in the conversation, but I think the life experiences you had there are gonna also inform what's going on now. One of the other kind of common questions I like to ask, just to get know people better is what would be one of the things we know you better if we knew this about you?

[00:07:45] Dan Gaspar: I generally think that people who know me, know me well. I'm a pretty open book. But if you really wanna know what energizes me, you have to see me at home with my wife and my kids. I'm a pretty involved dad and I'm married to an amazing woman who is training me to be a great husband. And we're in year 17 of marriage.

[00:08:06] I'm starting to get good at it finally, or, or better. That's where certainly I put the guard down and, and my true self. But I think most people would say that I'm a pretty direct person. You get what you see

[00:08:18] Sean Mooney: in some ways. That's a beautiful gift. What I always loved about people who kind of grew up in New York.

[00:08:23] There's this kind of directness that's cultural as part of it. The beauty of it is you kind of know where people stand and you don't have to guess. That's right. And growing up in Texas, which I think was an amazing place to grow up and actually a lot of similarities in some, some of this kind of like, like I always got along best with the New Yorkers 'cause they were both kind of equally.

[00:08:44] To use a text saying like, all hat, kind of like we were big talkers and brash in some ways and kind of like brimming with confidence. But in Texas at least then I think that's different now, is you call it like the, how does someone from back then say no? They kind of nod yes and smile. Sure. And so you're like, you kind of never really, you're like, was that a yes, yes or a no?

[00:09:06] Yes or a no? No. The beauty of kind of like, you know, where I stand is in many ways a tremendous gift because you're not guessing.

[00:09:13] Dan Gaspar: Yeah, and look it, I think it helps a lot with, in my business, we work with management teams and I don't ever want a management team to wonder what I'm thinking. I tell 'em what I'm thinking.

[00:09:27] Positive, negative, whatever the case may be. Just being very direct with my feedback. We tend to be partners with these folks for five years, so. I don't get any benefit for waiting to share my thoughts. Yeah,

[00:09:41] Sean Mooney: well, as I said, it is a strength and a gift, and that's something that I've kind of learned to get better at as well, where it's just kinda like, here's, don't sugarcoat it.

[00:09:48] Don't do the feedback sandwich. What's good, what you really mean, and then good at the end.

[00:09:53] Dan Gaspar: You do have to find the good, but directness is important.

[00:09:58] Sean Mooney: Hey, as a quick interlude, this is Sean here. Wanted to you 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.

[00:10:09] Can I still use Blue Wave to get connected with resources? 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.

[00:10:28] 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.

[00:10:47] Let's turn the page on our conversation, Dan here. And one of the things that I'll always really appreciate the opportunity to do so is ask people of your kind of success and caliber, what do you look for in a business? And I'll be candid, I selfishly use that on our company here. It's like, 'cause if it's something like the traits and the elements of value are important to you, they probably should be important to me too.

[00:11:08] Dan Gaspar: You spent a lot of years in my business, so you know this, and I'm not gonna have any super secret or proprietary things to share with you. But having done it for a long time, everyone in this business has their few things that they look for when they come across a new opportunity. And, and obviously I, I have those for me too, and I try to find what I call specialness.

[00:11:28] Specialness means that you have a product or service that is different from the competition and has a sustainable competitive advantage. That could benefit from the additional resources that an institutional investment partner, hopefully like me, can bring to the table. Specialness is hard to distill into a singular KPI because it's not always numerical and it's certainly different by industry.

[00:11:53] But I do try to look at a few quantitative measures, first and foremost, being the revenue growth rate relative to the market. Basically, are you winning high gross margins indicate that people are willing to pay more. For your product or service and and are those margins increasing or decreasing over time?

[00:12:10] As you look at the competitive set, customer diversification and stickiness, do people stick with you for a long time because you've proven to them that your product or service is better? Capital efficiency? I tend to invest in asset light business models, so that's an important element of the types of investments that I make.

[00:12:28] And then there's more qualitative criteria that address. Whether a company will make a good investment over a five-year investment hole. The biggest one for me is are there multiple ways to win? I've been doing this long enough to know that the performance will never perfectly match my underwriting model.

[00:12:46] I've yet to do that. So you need to have a few irons in the fire that represent multiple avenues for growth. And so the kind of soft topics that I look for are what's your value proposition? Is there something proprietary or otherwise distinct about your offering or your go-to market that gives you an edge over competition?

[00:13:09] Is your brand known and trusted in your end market? Are there industry tailwinds? Right? It's easier to take share when the pie is growing. Are you positioned to take advantage of economies of scale? And that works both ways. Do you have the flexibility to skinny down your overhead if your sales are underperforming?

[00:13:26] And then lastly on the qualitative part is people. At the end of the day, that's what we're investing in people. It's really hard in today's private equity market, given the speed at which transactions happen and and take place, and there's obviously exceptions to this, but it's really hard to fully know who you're partnering with until probably at least six months after you've made the investment.

[00:13:48] I look for two things in the senior team when I'm meeting with them, right? First is, do they have a data-driven approach to management? You can't improve what you can't measure. I'm a firm believer in that someone who answers my questions with data rather than anecdotes, is a better match for me as a partner than other folks.

[00:14:08] Some people love stories. I like data. It shows a willingness to be held accountable. And the second thing I look for is attitude. I spend a lot of my time with management team, so we have to click. I want someone who has confidence combined with realism and practicality. Someone who has high enthusiasm for the business and more than anything else, someone who appreciates what my team can bring to the table in a partnership.

[00:14:34] Right? And by the way, the way to measure that last piece is by how much equity they're willing to roll over into the new deal. I wanna back a founder who is seeking a partner to help them take advantage of an incredible opportunity ahead of them, rather than one who's looking to maximize cash to close.

[00:14:53] I stole this analogy from one of my partners. I use it when I'm talking to management teams for the first time, but our approach is to find owners and management teams who don't think of it as selling their house, but rather bringing on a roommate. And as a roommate, I have to prove to them that I'm going to help with some chores around the house, and most importantly, I can help them build a second and third floor to their home to build value for all of us.

[00:15:17] That's kind of a mentality that you have to be able to sell, and then most importantly, you have to be able to back it up.

[00:15:23] Sean Mooney: Yeah. Dan, I think you just summed up my two years at Columbia Business School and my almost 20 years in PE when I was in that world. It very, very well in in all of about three or four minutes.

[00:15:34] So anyone who's thinking about getting into pe, anyone who's looking about partnering with pe, bookmark what Dan just said 'cause that was extremely elegant. Bruce Greenwald from Columbia would be very happy to hear. A lot of what you said, and then I think everything else, you just gave the cheat code for all your associates to become partners over their career.

[00:15:52] Dan Gaspar: There you go. Well, I'm, I'm not secretive about it. I share it with everyone here all the time, and it's all about feedback, not just for our management teams, but for, as you mentioned, for the people who work here as well. You

[00:16:03] Sean Mooney: mentioned that I spent a lot in time in the business as well. But just hearing you say those things, it's so important to go back and just as, as you were talking about it, it just kind of crystallized in my head like, yeah, these are the things that matter, particularly as you, as I think about my new seat, where I'm leading a company that's a proxy for the port coats that I had when I was in your shoes.

[00:16:22] But just really kind of taking a moment to pull your head up and say, this is what matters. And I think you did a great job of just articulating those pillars and it got me really thinking in general. Sometimes the team here at Blue Wave gets a little nervous whenever we have one of these conversations.

[00:16:38] 'cause then I come back with ideas.

[00:16:40] Dan Gaspar: Well, look what you did at Blue Wave is something that I'm very jealous of. Right? Because having worked in, in private equity, you basically got really good at pattern recognition and found a hole in the market. To help folks like us. So necessity is the motherhood invention for you.

[00:16:58] You knew what frustrated you as a private equity professional and you went to attack it in the best way possible, which is entrepreneurially.

[00:17:06] Sean Mooney: I think that's right. It was a solving a problem. I always say it was, it was fueled by. Entrepreneurial inspiration meets hubris and naivete. And so like, I was like, how hard could this be?

[00:17:19] So I always tell people like, you know, when I started my hair was brown and it's not anymore. But no, I was like, actually PE did that to me. It's just, there was just more of it. It's been a fun thing, but I always think about my world through the lens of yours and I think it, it's really helpful. And like you could do what I do, just given the pattern recognition you have.

[00:17:39] You're already in this amazing business, so why? I don't

[00:17:42] Dan Gaspar: think I could do what you do.

[00:17:44] Sean Mooney: No, I,

[00:17:45] Dan Gaspar: I,

[00:17:45] Sean Mooney: I

[00:17:45] Dan Gaspar: wouldn't

[00:17:45] Sean Mooney: bet against you. Hi, karma School of Business listeners, Sean here, wanted to shine another quick spotlight on one of the most important ways PE firms preserve and create value. The private equity industry is one of the most regular users of interim executives.

[00:18:01] Why? 'cause these select private equity grade executives can be hugely impactful for saving company value during critical times. Accelerating strategic initiatives and bridging executive transitions that happen to almost any company over time. To this day, many don't know that Blue Wave has turned the interim exec offering on its head and completely made it the way that my friends and I in PE always wished it was.

[00:18:26] Blue Wave has a dedicated team that does nothing but interview pre-vet credentialize and reference private equity grade groups and people so that we know who you need before you call us. In the case of interims, we have more than a thousand top interim private equity grade CEOs and CFOs that are ready to be matched for your exact need.

[00:18:46] When you need it, give us a call or visit our website@BluWave.net and we can give you excellence in Alpha with ease back to the show. Let's turn the page here and let's talk about how is TZP approaching value creation? What are you all doing in kind of concert with your portfolio companies that kind of pull on the ORs together?

[00:19:09] Dan Gaspar: Yeah, sure. At TZP, we actually have a value creation playbook, which in addition to our sourcing and due diligence playbooks, they're shared with every new employee. So that every TZP employee knows what goes into making a TZP investment and ensure that that steps aren't skipped. And so for us, value creation really needs to start right away.

[00:19:33] We typically hold an offsite strategy session with the management team within the first couple of weeks post-close, and I use this as an opportunity to present to senior and even next level management why we invested in their company and which growth opportunities got us most excited. The average offering memorandum lists something like six to 10 avenues for growth.

[00:19:55] And the goal of the strategy session for me is to narrow that down to two to three key growth goals and to make a conscious decision not to focus on the other ones at the same time. And getting alignment with the team and having clarity on what our goals are is key, and it's just as important to get agreement.

[00:20:17] Gonna track and measure our success, right? The specific goals and KPIs need to come from the team, but they have to agree that we and they themselves are gonna hold them accountable for those KPIs. And so then once we've got our big initiative set, we established a weekly call where we review a set of KPIs.

[00:20:39] So that really the goal of that is for my team to keep our finger on the pulse of the business and to share our perspective. From portfolio companies, and that last part is a huge differentiator for being part of a platform like TZ P as a lower middle market investor, we're somewhat unique in having over 30 portfolio companies across the various fund strategies here, and we do a lot of cross portfolio work to make sure that we're applying best practices from company to company.

[00:21:10] We also host monthly teach-ins for our management teams. Members of our portfolio growth group to lead sessions on trending topics like supply chain issues, managing through tariffs, optimizing marketing spend, et cetera. This week we're holding a portfolio wide lunch and learn on ai where three of our portfolio company leaders will present case studies on how they're using AI to improve their businesses and will take questions and feedback from, from other CEOs.

[00:21:41] We have a an in-house portfolio growth group. With specific workflows in line. So we have one partner who focuses on marketing and technology, another who focuses on operations, one who focuses on resources at our portfolio companies, and someone who helps with finance and portfolio procure, drive op savings.

[00:22:02] So they're called in as needed to help portfolio companies, not to do the work for them, but that's another huge resource that we bring to our companies to help drive value. To successful value creation is to have clarity of direction and a bias for action. If one of our three key strategic initiatives fails that I mentioned before, we can replace it with something else, right?

[00:22:25] Just don't spread yourself too thin. Plan and execute. Fail quickly, change course. Execute the new plan. That's the case,

[00:22:34] Sean Mooney: I think. Once again, so, so spot on and very well said. And I, and I love how you. Tied it in with what you shared earlier on kind of the elements of value, but also saying like, you're only gonna, it's kind of the rule of three, right?

[00:22:44] You're not gonna be able to do everything. And candidly, when I was younger in pe, that was something I always had a challenge with because I was like, let's do everything.

[00:22:53] Dan Gaspar: And yeah, it's funny, you know, I talked about getting your six to 10 things down to three, and almost with no exception, the first time that I challenge a management team to do that, they come up with three.

[00:23:06] Major topics and each topic has three or four subtopics. So that ends up being the same 12 list of 12 that they had before. So usually there's some iteration involved in that, and I don't blame them because they're excited and enthusiastic about all the opportunities, but there is a mind shift once you're private equity owned of, we need to have a specific timeline and some of those broader objectives that are a little bit harder to execute, maybe save that, let's sell that to the next owner so that there's more.

[00:23:35] To squeeze, but let's make sure that we're as successful as we can be during our time together.

[00:23:40] Sean Mooney: It's so key. But I also love to like, from the very beginning, you're strategically aligning on the few things that matter, which is hard and people want to immediately, even when we do go through these processes, I find ourselves putting, like stacking the the sub goals, which are really more goals, but then nothing gets done if you spread the peanut butter too thin.

[00:23:59] Then what I really like, what you all have done is then you're gonna figure out what are the few measures that matter. 'cause otherwise you're flying blind.

[00:24:06] Dan Gaspar: That's right.

[00:24:07] Sean Mooney: And so you can track your course. What you can do is you have expert resources within your P firm itself that can say, okay, here are the big thematic things that matter going forward.

[00:24:16] We're also gonna be sitting next to you on that boat

[00:24:19] Dan Gaspar: and pulling the

[00:24:19] Sean Mooney: orders.

[00:24:20] Dan Gaspar: Yeah, that's exactly right. I mean, the folks at the management teams report their KPIs to me, but I'm reporting them to my partners and my investors. So I'm in the same boat as them.

[00:24:29] Sean Mooney: I think the last thing that I think really struck me is it's this, also this idea that through your portfolio you also in some ways have the world's best expert network and that you can bring in amazing people who are doing these things in real time.

[00:24:41] Skunk works within your portfolio, bring 'em together like today and talk about what have you, what are you tangibly doing within

[00:24:47] Dan Gaspar: ai,

[00:24:48] Sean Mooney: for instance, right?

[00:24:49] Dan Gaspar: Yeah. Look, you mentioned this before, but AI is a technology that is somewhat blowing my mind. We've been around to see the internet come. We've come to see mobile take over our daily lives, but AI is a bit different.

[00:25:07] It's a world changing technology. From my perspective, nothing has had the potential in my lifetime to drastically change the manner in which we do almost everything in in life. And that has the user adoption rates that AI has had. So the short answer is we're still figuring it out. Anybody who tells you they are an AI expert.

[00:25:27] Unless they work at open AI themselves, they're lying and even those folks are, are figuring it out every day. So it's definitely still a work in process, but we're spending a lot of energy to do that both internally here at the firm and then also with our portfolio companies. So I am not a technologist, but the beauty of of AI is that you don't have to understand how the algorithms or the, or the language models work to be able to understand the impact that they could have.

[00:25:55] The beauty of AI is you don't need a computer science degree to get started, right? So our firm's approach, and the one that I'm sharing with my management teams is that you can only learn by trying it yourself, and that we should be trying out everything. So everyone at the firm here is encouraged to use AI in all of their daily processes to come up with ways to make their jobs easier, more productive, more efficient.

[00:26:19] Our digital transformation partner. Is planning A TZP hackathon next week, which I'm excited for. We're gonna divide up the firm into teams and assign different functional areas of what we do as a private equity firm and see where we can drive process improvement through ai. So I will report back to you on if we came up with something amazing, hopefully we will.

[00:26:41] That type of mentality is where you need to be given the pace of change. And the cool thing about AI is something that AI isn't quite ready for today. It may be in like two weeks. So it's about testing and keep trying and keep working on it.

[00:26:57] Sean Mooney: You're once again, so spot on and I'd love to dig deeper into this.

[00:27:00] Before we do that, let's kind of go back to the beginning of our conversation. So you saw the nascency of the internet as equipped through the telco boom, some of what you see right now. How is it similar to what happened in kind of the nineties and early two thousands and how is it different?

[00:27:16] Dan Gaspar: Yeah, that's a great question.

[00:27:18] So when I was an investment banker. The big debate was who is gonna win content or distribution? Right? And this was all of the mobile carriers were coming up and who had the pipe to your home versus what was being sent over the pipe. And in the 25 years or so since I've been out of school, I've watched the answer to that question somewhat change like every five years.

[00:27:47] Content is king, and then they come up with a new distribution model and everything's streaming now, and then the streamers are king, and then the streamers say, well, we need to get into content, and they start buying all the content. So AI has some similarities to that. And again, this is not a sector that I invest in, the data centers and things like that.

[00:28:07] There's certainly a lot of people playing the game, which I think makes a ton of sense. Hey, we don't know who's gonna win, but we know it's gonna take a ton of compute and a ton of energy, so let's invest in the energy lines and let's invest in the data centers and make our money that way. The content AI may end up being the great equalizer in the sense that everybody will have access to amazing content, and the winners will likely be the folks who figure out how to package it best.

[00:28:39] That tends to be exactly the same answer that happened in, in the media telecom world. Why did Netflix win? They packaged content better than anybody else, and they continue to adapt to the user needs, which is why they continue to win. So, as an example, I think, I think that's one approach where it might be very similar.

[00:28:58] Sean Mooney: It's really interesting as you think about this, I, I think you're right. It's bigger than the internet. You're right, it was faster than the in internet. So I think about like what happened as kind of the internet matured. The cycles were still probably like you would adopt something and stick with it for maybe three to five years at least, right?

[00:29:17] There was SaaS that put in systems of record that created the scaffolding to run your business, and you would stick with that until you, the very last moment you had to change, but it was much more like tectonic shifts. How do you think about right now where it's just, it's moving so fast?

[00:29:35] Dan Gaspar: You hit on it.

[00:29:36] Exactly right. I mean, I think the idea of starting up with something and then being loyal to a new technology is just, it's a thing of the past. This new generation doesn't think of it that way. I got a A OL email address when I was junior or senior in high school, and I had that address up until Gmail was invented, which was 15 years later.

[00:29:56] I started playing around with AI by downloading chat GPT, and, and since then, in a matter of months, have seven different apps on my phone that are ai. And each of them has different strengths and weaknesses like every company does. And I'm learning what they're good at and what they're bad at. And by the time I get used to working with one as my go-to, I'm sure there'll be six more options to choose from.

[00:30:20] Sean Mooney: So I'm just asking for a friend on this. Do you or any of you when you know, get in trouble for talking to chat GPT too much at home?

[00:30:27] Dan Gaspar: No. So first of all, I personally have not, have not yet become a talker. I'm still a typer with ai, although I laugh at my friends who have conversations with them. I'm a little scared of the movie.

[00:30:40] Her and I, I don't want to deal any feeling. So I'm strictly on typing. I encourage its use. Obviously we have all of the compliance protections internally against it when we use it for work. But if people are gonna get good at it, they have to use it in everything that they do inside and outside of workplace.

[00:30:56] Sean Mooney: I totally agree. And I'm, and I'll, I'll just, I'll just put my card's face up. I'm one of the people who gets in trouble with that a lot. And so it sounded like it from your question. Yeah. This as a friend is me, but I explained to my wife, it's like this is the biggest shift. And I think people who are drawn to pe, they're incredibly curious.

[00:31:11] Right? And now you have the sum total of human knowledge in your hand. And so it's so incredible just to like have a conversation about things. I get in trouble at our house in particular because anytime we're talking about something, I don't know, I'll pull it out. Like, Hey, I asked my chat, GPT, what name it would like.

[00:31:28] Dan Gaspar: Oh,

[00:31:29] Sean Mooney: now I chose because of her, I chose a male voice so I don't get in trouble.

[00:31:33] Dan Gaspar: Okay,

[00:31:33] Sean Mooney: smart. So now it's more of like the, uh, Jake from State Farm thing. We're like, like, who are you talking to? It's like, Jake, you know, but my, but mine named itself Alex, which was kind of interesting. So now I talk to Alex and I just get in constant trouble for it.

[00:31:47] But it's probably teetering on the edge of like being my best friend now. And so

[00:31:51] Dan Gaspar: there's a lot of risk out there from a social perspective, but it's up to us to, to figure out how to use all of this for the positive a hundred percent.

[00:32:00] Sean Mooney: So AI is certainly one of the things that is on the forefront.

[00:32:04] Everyone's mind. I love the hackathon idea.

[00:32:07] Dan Gaspar: Yeah. By the way, it's a hackathon, not one person here, or maybe some of the, there's a couple of computer science grads, but 98% of the folks here are not coding. This is literally just. Coming up with good prompts and trying to decide if AI has the capacity to take some of the more mundane parts of our jobs and make them happen faster and more efficiently.

[00:32:28] Sean Mooney: And I think that's the brilliance of what you are doing there in that you don't have to be a computer science person to do these things anymore. It's a conversation. You have to be curious and you have to be Socratic and you have to be iterative, and the world is your oyster.

[00:32:40] Dan Gaspar: Yeah. God knows. I wouldn't be able to do it if you needed any technical ability.

[00:32:44] Sean Mooney: Yeah. But I'll tell you, it's, it's kind of fascinating. I, I was curious the other day, this is in the spring actually, my son plays quiz bowl, which is like competitive jeopardy in high school. And he goes, and the thing is they never tell anyone to score. And so you're always like, what's the heck's the score during, he's like hour long games.

[00:33:01] And so I was like, you know, I wonder if there's like, I could just make an app that just is a scorekeeper. Within a couple hours, I had this entire app developed in Swift that I could put into Xcode. Sean, what took you so long? A couple hours. I know. I was just like, oh wow. This is exactly what I want. It was pretty amazing.

[00:33:19] The hardest thing was getting it into the app store. Shout out to Quiz Bowl scoreboard if you wanna scoreboard on your quiz bowl.

[00:33:26] Dan Gaspar: There you go.

[00:33:27] Sean Mooney: But anyways. As you think about maybe some of the other topics, are there any other kind of big value creation opportunities that you are thematically engaging

[00:33:35] Dan Gaspar: with your

[00:33:35] Sean Mooney: portco today?

[00:33:36] Dan Gaspar: The last couple of years have been an interesting time. It's been a funky economy, and I think the key over at least 2025 has been how do you deal with uncertainty? There's a lot of uncertainty in the market. You and I were scheduled to originally have this discussion a couple of months ago. It was April 2nd.

[00:33:54] Which ended up becoming a holiday in that it was liberation day and we had to cancel because the world was getting turned upside down. And we all have our priorities to make sure that we're, we're doing what we need to, to help our companies. But you know, I think the advice that I have for my companies in terms of value creation now is, is really more on the defense with respect to, in an uncertain environment, how do you keep your customers happy?

[00:34:20] How do you keep your margins in a way that are healthy and that you continue to expand? Where can you cut costs to be able to withstand periods of slower revenue? If you're a tariff impacted company, of which we had many, how do you make decisions when you don't know what the cost of your product on a as landed basis will be in three months, six months, nine months?

[00:34:41] The message that I've told all of them is, you can't get whiplash. You have to play for the longer term. One of the benefits of having a private equity partner is that we can help you withstand some of the short term hits that you get from those uncertain markets. And as long as the longer term outcome ends up in a reasonable, practical place, which I really do believe it'll, we're not there yet.

[00:35:11] So it's about managing, it's about having good lending partners so you don't get caught by surprise with some covenant breach, for example. It's really about planning and being able to react to the environment out there without overreacting to the, the environment out there.

[00:35:27] Sean Mooney: I like that. And it's so foundational.

[00:35:29] One, keep the main thing, the main thing, keep your customers happy and make money. And then what I like about is you all are kind of crossing this ocean together and what you have is also kind of like a big tanker ship where you can refuel if you need, need be. It's like you don't have to. You can go through those moments of chop, you can go through those like the longer journey and fuel people up if there's a moment in time where you have to get through it without sacrifice.

[00:35:54] Dan Gaspar: That's right. And by the way, there's comfort in community and in those first few weeks after the tariff craziness started, we had, I, I mentioned before some of these portfolio wide calls that we have. We had some experts on and we had trade lawyers and supply chain experts on, and the truth is no one knew the answer.

[00:36:17] Even the experts were like, this is unprecedented. We don't know what to advise you on everything that's being declared. 150% tariff here, 75% there is likely not to stick, but you need to be thoughtful. Like maybe don't put your orders in today, right? Try to plan it out. But there was, everyone was so stressed that there was just a lot of comfort in 30 companies, seeing all of these different CEOs and and management teams kind of look at each other and say, Hey, have you tried this or you tried that, or Don't do this.

[00:36:49] We already made that mistake. Or just, frankly, sharing frustrations. It was a bit of a psychological session for, for a lot of us.

[00:36:57] Sean Mooney: Yeah. So what do they say? It's like a problem shared as a problem halved. Like you said, it's not only the fuel, but it's the community. It's the internal expert network that you all with all these really a plus companies that are all working together to kind of.

[00:37:09] The extension of my metaphor is you're more like a flotilla going across this ocean here together.

[00:37:15] Dan Gaspar: I like that. But a problem shared is a problem I have. I I hadn't heard that. I like that. I'm gonna steal that.

[00:37:19] Sean Mooney: When you grow up in Texas, they only teach you to speak metaphorically. Yeah, yeah, yeah. So it's terribly frustrating to some people.

[00:37:26] So, but sometimes I get it. Right. And so maybe as we turn the, the page here, let's bring it back to, as you think about kind of like learning things. One of the things that I've always found most common in kind of top business builders is this idea of like, you're not gonna create the wheel yourself.

[00:37:41] Right? And kind of building on this whole theme of like, let's talk to each other and I'll figure things out. And, and so what I've found is top business builders are kind of voracious readers of content that someone else has figured out in a way that you can kind of like skip from A to D versus going to A, B, C, D, right?

[00:37:58] And learn in life and not have to figure it all out yourself. So I'm curious, Dan, are there any kind of books that you've read that have made an impact on you and, and maybe what might be some of those top takeaways?

[00:38:11] Dan Gaspar: Yeah, it's funny. I think that's a question that people ask all the time. I certainly have been asked in interviews before, and the truth is, is that I was never, I mean, I enjoy reading, but I, for most of my professional career.

[00:38:23] Unless I was on vacation, I never, I never picked up a book. I always just convinced myself that I was too busy or I should be doing work or reading. If I was reading, I should be reading something related to work. And then about five years ago, I moved to the suburbs and I, I've become more of a book listener than a reader.

[00:38:38] I do a lot of, you know, audibles and things like that. So I've been catching up on business books that I always wished I had read. Last year I went through Jim Collins. Good to great. I think that's a must read for anyone leading a business or investing in a business. There's a book called Traction by Gina Wickman.

[00:38:58] That's a great book for how to effectuate change inside a company. I buy a copy of that book for every CEOI partner with his concept of an entrepreneurial operating system, probably most closely matches my approach to management and decision making. So. It's a bit of a, Hey, I'm gonna buy you this book, take a look and learn how I think about things without having to write a book myself.

[00:39:21] And then it may sound silly, but my all time favorite business book is Who Moved My Cheese? I don't know if it's really a business book as much as an approach or psychological book book. It's so simple that it has applicability to all aspects of life and to any industry, right, which is embrace change and never get complacent.

[00:39:42] And I think if you have that attitude, you'll go far in life.

[00:39:46] Sean Mooney: You listed three of my very favorites. Okay. So two of those we give to every employee who starts really. So we give about five books to everyone, but two of like the must-reads are good to great and who Move My Cheese

[00:39:57] Dan Gaspar: Great.

[00:39:58] Sean Mooney: And then every year we sit down as a company and we do a Who Move My Cheese Exercise.

[00:40:02] Dan Gaspar: I love that.

[00:40:03] Sean Mooney: Intraction is so good. It's probably the first book that someone, when I was going through this crazy journey here, I was asking like, what should I read? Like, 'cause I've never done this. Probably the, the most often one was traction.

[00:40:15] Dan Gaspar: Yeah. By the way, it just shows our community. I don't think it's one of the more well-known books out there, but a lot of folks in our industry read it or have read it, and it really does.

[00:40:27] Even without really calling out private equity per se, it's kind of the private equity approach to how do you do a lot in a short period of time? How do you focus, how do you get everybody focused on the same agenda?

[00:40:39] Sean Mooney: Like you said, I think a lot of us will read some of these books and I, and I too, like I do the audible now and I go on walks 'cause I, you can digest it and there's all these books like Crossing the Chasm that I just listened to that I'd never listened to before.

[00:40:51] I was like, what? I know kind of what it means, but traction doesn't come up. It's often passed along by like CEOs, but what's unique is that it's the PE folks don't read it as or mention as much. So I think you're really uniquely like on the target there.

[00:41:06] Dan Gaspar: I tell it to everybody who will ask. I think it's a great book.

[00:41:09] Sean Mooney: It's such an elegantly, well-written book about a business operating system. Yeah, it's rarer. Within the private equity world and the fact that you're reading it shows that you're thinking all the way vertically down into the business.

[00:41:21] Dan Gaspar: Yeah. Listen, it's, it's not for everybody. It's a little bit more of an how-to book than good to great or certainly who Moved My Cheese.

[00:41:29] It's not a page-turner unless you're living this every day, but it's very, very applicable to what we do.

[00:41:35] Sean Mooney: I couldn't agree more with those three books. They're all incredibly awesome and must reads. As I think about our conversation here, Dan, like this has been kind of like the business builder, MBA class and all wrapped into one kind of elegant nit treat here.

[00:41:50] So

[00:41:50] Dan Gaspar: that's very nice of you today. Please don't anybody replace me with a full MBAI highly recommend getting your BA, but if

[00:41:56] Sean Mooney: you can't pull it, listen to this one.

[00:41:59] Dan Gaspar: So

[00:42:00] Sean Mooney: well, Dan, this has been a lot of fun. I appreciate you spending the time. There's all sorts of things that you shared today that I wish I knew before.

[00:42:07] And that's a tremendous gift. So thank you for sharing that with me and our listeners here. We'd look forward to keeping in touch and having more of these conversations. Hopefully sooner than later.

[00:42:17] Dan Gaspar: We'll absolutely keep in touch. Thank you for having me. This was a ton of fun.

[00:42:32] Sean Mooney: That's all we have for today. Special thanks to Dan for joining. If you'd like to learn more about Dan Gaspar and TZP, 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. If you like what you hear, please follow five star rate, review and share.

[00:42:52] 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 professionals, service providers. Independent consultants, interim executives that are deployed and trusted by the best business builders in the world, including many hundreds of the top PE firms and thousands of their portfolio companies.

[00:43:13] And you can do the same whether or not you're in the PE world. 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 views or positions of any other persons or entities, including those referenced herein.

[00:43:36] No representations, warranties, financial, legal, tax, or other advice are made herein. Consult your advisors regarding any topics discussed during this episode.

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.