Culture, Mental Health, Fundraising, Cash Flows, and more | Devin Mathews, ParkerGale

Sean Mooney (00:00:05):
Welcome to the Karma School of Business podcast. Today's podcast is brought to you by BluWave, an intelligent, highly curated B2B business network that is trusted by more than 500 of the world's leading private equity firms and thousands of proactive companies using technology, data, AI, and human ingenuity to connect them with the very best third-party resources they need to expertly assess opportunities and build value in their companies with speed and certainty. I'm Sean Mooney, the founder and CEO of BluWave. Today, we have a great interview with Devin Mathews, partner with ParkerGale. ParkerGale is a leading private equity investment firm focusing on middle-market technology companies, and Devin is truly one of the best of the best. Enjoy.

Devin, very happy to have you on today. For those of you who don't know Devin and ParkerGale yet, we think Devin and his team are some of the most thoughtful people in all of private equity. BluWave recognized ParkerGale last year as one of the top innovators in all of PE. They also have a fantastic podcast called the Private Equity Funcast that's incredibly insightful and actionable, and we recommend everyone listen to it. Devin, thanks for joining us today.

Devin Mathews (00:01:19):
Thanks for having me, Sean. You've been a big supporter from day one, and I think we were probably early customers as well, and you've been very valuable to how we conduct our business. And I don't say that to a lot of people, Sean, so thank you very much.

SM (00:01:33):
We appreciate it and learn things from you all every time we interact with you. And that's as valuable as anything. I think you have a very interesting background. You've been in the private equity industry for a long time and seen how it's evolved over time. And as a founder of a private equity firm, you got to kind of look at the business of private equity in a way that maybe you thought you wanted to do it differently. Can you share the vision you had when you founded ParkerGale, and how you thought the business of private equity should be going forward?

DM (00:02:04):
We started ParkerGale with a team that had already been together for a while. My operating partner and sidekick, Jim Millbury, he and I have been together largely since 1998, and then Ryan and Christina joined us in the early 2000s. And so we had been together for 10-ish years as a core group doing the same thing, and we figured we would take that and do it on our own. We'd always done it in bigger firms as being parts of a bigger thing. So I think the strong belief was that small-focus funds that were really hands-on and highly concentrated could perform well over time. Kind of good times and bad times, right? If you only make a few bets, if you’re really hands-on, really involved in the business, and you stay small, as a fund, that could drive outsize returns.

That was it. And that's what we thought LPs were looking for. You're going back to 2010, 2014 timeframe, right, kind of as we were having these thoughts, and we started the firm in 2015. And then, you know, we also thought we could do private equity better. So what does that mean? It means we could do it with people rather than to people, and that's maybe a little "haha," but I think it's true, at the end of the day. Management teams like working with us because of that approach. While we’re very hands-on and kind of very involved in the businesses, it’s very collaborative, and I think, you know, we're on a second or third generation of management teams working with private equity. So rather than like, "Oh, this is what it's like, I guess I have to put up with it," there are now a lot of very experienced executives who've been like, “I've done it before. I want to do it differently or better. I want a better relationship.” And we believed deeply then, and even more so today, that that’s true. We attract people like that, and that works really well for us. So those were the two things. And our name, ParkerGale, is a reference to Frank Lloyd Wright. In 1893, he spun out of Adler and Sullivan after designing seven houses for families in Oak Park. We did seven tech buyouts at CGP, a firm called Chicago Growth Partners, before spinning out to start our own firm. Two of those houses he designed were for the Parker family and for the Gale family. And while he wasn't revolutionizing architecture in any big way; he was bringing a new spin on something that was already being done and put his stamp of approval on it. So when you saw a Frank Lloyd Wright house, you’d know it was a Frank Lloyd Wright house.

Our hope is that when you see a ParkerGale company, you know what that looks like. There was some good symmetry there. We could also own ParkerGale.com, and we weren't going to name ourselves after any Greek gods, trees, bodies of water, or streets, so that limited us, but there was some nice symmetry there. I was an art and art history major in college, so, you know, I like the creativity around things, and I like aesthetics and how things feel and how things look. And I think that permeates a lot of what we do. It feels right. It's authentic. You can see it. You can sense it. When you walk in the room, when you come into our office, when you spend time with us, people walk away thinking that felt different. And hey, sometimes in business, just being a little bit different, right? You either need to be first, different, or better. And I think if you can be a couple of those things, you can do really well.

SM (00:05:28):
I love all that, and it resonates on a number of levels. One, the concept of specialization in private equity. I remember when I started in private equity in kind of the late 90s, early 2000s, and we had this business model where we could invest across every investment structure and level in a company, every industry. And that worked really well in the beginning. And then as the industry matured, I thought, “Man, it's hard to be good at everything.” And from that, I joined a very specialized fund after that. That seemed to help a lot. And the whole concept of culture that you're talking about in private equity is something that's, I think, catching up very quickly. But I think you were at the forefront of that, and that was one of the big things when we started BluWave, was how do you create a company where people smile and laugh and want to be there? And I think you all have achieved that as well. And then lastly, I think the naming construct intimately resonates with me, and the idea of finding something unique but that is also available. So I said, “Well, I'm not going to do what private equity does and name something after a Greek god or a geological feature and a color.” And then I've only recently realized I named our company BluWave, and so maybe I didn't achieve that goal, but I love all of that.

DM (00:06:41):
The culture thing is interesting. You know, everybody, our business is big on, “We back great management teams. We build great cultures. We have a great culture.” I'm not so sure. You know, ask a lot of people who work in our industry. Well, ask the few women that work in this industry, “Well, why has an industry with such great culture, supposedly, why can’t it attract and retain women? Why can’t it attract and retain minorities? Why can't it attract and retain introverts?” So I think if you say you have a great culture, and you don't have women, minorities, or introverts working in your company, I don't think you have a very good culture. I think you have a pretty monolithic culture that takes its cues from sports and the military. And they all read a book about the SEALs, and then they want to do workouts like the SEALs and run their firm like the SEALs, and learn things from the SEALs.

And that's no knock on the SEALs. I just did an event last night with a bunch of executives, and a friend of our firm just got out of the Navy SEALs. And he spoke to everybody about what he learned and how we could apply that to what we do. But it's kind of performative, the culture thing. And I think when you really get deep down into these companies, these private equity firms, they look like they're the people who run the firms. And I think we tried to create a firm that looks like all the people that work there, not just me and Jim and Ryan and Christina.

SM (00:07:56):
I think that's incredibly important, and it's not only important because it's strategically valuable. All the research shows that that kind of diversity of people and perspectives creates better outcomes.

DM (00:08:07):
For a bunch of data-driven people in private equity, we don't listen to the data that diversity drives better outcomes. But, you know, I'll leave it at that.

SM (00:08:14):
But it's also important to LPs. We were recently talking with a friend of ours at Kirkland & Ellis on the podcast chair, and he was saying, “The LPs are looking for this, so you better get on it fast if you’re not.” And so I think the point is, you know, you should do it out of altruism, but even out of selfish altruism, it's important to do so. Devin, as you think about your vision that you had when you and the team were getting ParkerGale going, what do you think has been realized, when you originally thought about what the future of your firm could be, versus maybe what happened differently and what surprised you?

DM (00:08:48):
I'd say a couple things. One is I think we had a clear vision of what we were trying to do. We had a core five of us who had worked together closely. Six if you include our office manager Sharon, who has been with me since 1995. We had a clear idea of what we were trying to accomplish, from how we executed our business, how we conducted ourselves, what we were looking for, the types of companies that fit ParkerGale. We've been able to pull that off. We haven't strayed from that core belief from day one. And then we had to add a team to it. So now we're 20 people from the six that started. We've made some changes as we've brought people on, we've realized like, “Oh that's not the right fit,” or, “We thought we needed this, but we needed that, and this person isn't the right fit for this,” or, “We changed our mind, and this person didn't like what the job evolved into.” So many LPs over the years are so focused, and a lot of GPs are scared of turnover.

And while we haven’t had a lot of turnover, literally a couple people here or there over, you know, now 10 years, we're not scared of that. Any company that has no turnover and doesn't evolve, like, we swap out CFOs. We've had a company we did quite well on that had four CFOs from beginning to end, just the way it worked. We got it wrong, or they got it wrong, or we made adjustments along away, or the first two years of the investment needed very different skills than the last two years, so we had to swap people out. So this idea that turnover is bad and evolution is bad, I totally disagree with. So I'd say one is, you know, we've adjusted along the way, to the better of the firm and to the benefit of our LPs. So if you had asked me back then, I'd be like, “Oh no, we're going to nail the team thing right out of the gates. We'll hire the perfect people because we're so good and, you know, intuitive about those things.” But as things changed, as we evolved, we've made some changes on the team. That's one, internal. Externally, I think I'm most surprised that LPs have backed up the truck on mega funds in tech. I think LPs know, in their heart of hearts, more small-focus funds outperform large funds. And I think the math will back that up too. If you just think of when we raised our first funds. So 2015-16, when we raised our first fund, $22 billion was committed to sub-$500-million tech funds. In the time we've raised and invested our second fund, 2019 to 2021, so those three years, $12 billion has been invested in tech funds. It's down 50%. In that same time. $5-billion-plus tech funds have increased, allocations have increased $100 billion. So $10 billion taken away from sub-$500-million funds, $100 billion of it increased to $5-billion-plus funds.

One, that's good for us. Our market's less competitive. And the people who come into the sub-$500-million fund, tech size, I think are tourists, because they're only there to get to their bigger fund. That may slow down now, with the recession we're in and heading into even deeper. That may reduce fund sizes, but LPs have gladly moved way upmarket into very large funds. I'm not saying large funds can't perform well. I don't think the data shows that over time, over long periods of time, they outperform small-focus funds. It's just a math issue, right? One deal in a very large fund, very hard to move the deal on a very large fund, where it can in a small fund if you're right. And GPs, I guess I'm not surprised that GPs have gladly moved upmarket as fast as they can along with the LPs. So it'd be interesting to do the postmortem in five, six years on that move. Was that a move, and is it a self-fulfilling prophecy, when LPs are thinking, “Well returns are going to come down, they have to, it's getting more competitive,” and it's like, “Oh yeah, and you backed up the truck on huge funds that just can't produce the type of returns that smaller funds can.” But hey, here we are. Life goes on.

SM (00:12:38):
I agree with that. It seems like particularly on the smaller businesses, certainly there's very fundamental and basic opportunities to improve value. You can do the kitchens, you can do the bathrooms. The house hasn't been fixed up multiple times by the time you get it. So your ability to impact value creation seems to be so much more tangible in these smaller companies if you know how to do it.

DM (00:12:56):
Yeah. Oh, I think there are a lot of big companies that are poorly run, no doubt. A lot of big public companies that the operating expenses are way out of whack. You know, the Thomas and the Vistas and Clear Lakes are going to make a lot of hay doing that in the next few years, and they should. You know, I just think it's harder at times to do the smaller companies. You don't have as many resources; you don't have as much margin; you know, there's just not enough there to go with. But you know, I did nine years of Catholic school, so I like hard stuff.

SM (00:13:23):
That's a good transition. And so one of the things that I've always liked about the private equity industry is that it's filled with smart people. But I don't think that's its defining characteristic. One of the things I think is the most defining characteristic of the industry is the tenacity and grit of the people that are there. If there's a storm, they run towards it. If something gets in their way, they go around it, above it, below it, et cetera. And so as you think about and reflect on your life, what was one of the harder things that you've encountered in business or life, and how did you take on that challenge? What was an approach that you took to kind of overcome something that got in your way?

DM (00:14:01):
Uh, yeah. Well in May this year, my mom passed away unexpectedly, and pretty immediately. and I was there when it happened, so it was pretty traumatic. I'm one of four boys, very Irish Catholic family, packed the kids in real tight, four kids in their twenties, so we grew up with our parents. It was super traumatic for me. I kind of very quickly started having the, “What's the point of all this?” thoughts, for the first time in my career. I'm on 100 to 120 flights a year for 25, almost 30 years. My wife raised our kids. I've got one in college, one about to go to college. So kind of coming out of COVID, being home all the time, which was pretty awesome, personally, for me. It was brutal for work, because the work just ramped up and never stopped.

But I was home, I wasn't away. And then my mom passing away, you know, I just had this like, “What is the point?” So I did a lot of work. I've had a coach for 10 years, very close friend of mine, and my wife and I have become very close friends with he and his wife. He was Phil Jackson's team psychologist for a long time, among other things. So he comes from that very grounded, spiritual, zen, 1960s, very hippie approach to life, but an amazing businessperson and has built some great businesses himself. That felt a lot like the way my parents raised me, so that's been good. And then I had him give me a therapist, because I've haven't been a therapy in a while, and just rolled that out pretty aggressively. Like I'm having these feelings I haven't thought before, what's going on?

Talked to my wife a lot about it, talked to my three brothers a lot about it, talked to my friends a lot about it, and my coach was like, “Hey, are you crying about it?” “Yes.” “Are you talking about it?” “Yes.” “And can you sleep?” “Yes.” So I was checking those boxes, so at least I wasn't in the danger zone. So yeah, I'm still working on it, but I think a lot of my motivation in life was to fill my mom's expectations in me. She didn't go to college, she was a very active mom, very driven, wound up being very successful professionally later in her life, like out of sheer will. I mean she wasn't like one of these book smart people. She was very bright, but she just like, sheer will, force. And you know, I was on food stamps when I was born.

I was really professionally driven. I was an art history major in college, because that's how you get good jobs in finance, right? So they let me just explore education, and that was a really good gift for me. So kind of what I've realized is like, okay, I was doing a lot of this, I think, for my mom to be like, “Yeah, see Mom? I, you know, I did good.” And then so now that she's gone, like, what's the motivation? So what I've tapped into in the last few months is really, you know, I'm now doing this for myself, and that'll evolve over time and what that looks like and where I spend my time and my energy, but I haven't lost the drive. It's just a different motivation. And then kind of really thinking of fitting my work into my life, rather than my life into my work.

And kind of how you spend your hours is how you spend your days, and how you spend your days is how you spend your life. And I think I'm like, okay, now that I've got 19 other people on my team who are all amazing, there are some things I probably should be doing, that'll drive the organization forward, that I don't do because I get caught up in the day to day, and then there's some things I should stop doing, to let these 19 other people really thrive, that I'm probably getting in their way. So it's just kind of finding that balance. But the only reason I'm here talking to you about this, and able to talk about it, is because I asked for help, and I wasn't scared to ask for help.

SM (00:17:35):
I think that's such an important point. And reflecting back on my time in private equity, and just looking at the industry as a whole, the first word in private equity's private. And I think that pervades so much of how the industry does things, it's kind of put your head down, work really, really, really hard and just keep going, going, going, but don't look left or right. Just kind of constant, onward, look forward and progress and take the hill. And as you think about what you're talking about, this idea of don't be afraid to ask for help, and use your words, and kind of explore things, and look left and look right. One of the biggest things that we're seeing, in terms of some of the tools they're using, is coaches. That's never really happened before, other than probably the last few years, within PE.

But I think even things like therapists, and if you go back to the private equity world, where you talk about how they think through sports. Tom Brady has seven coaches. Why can’t someone in the PE industry have one, or one person to talk to, or a therapist or two, or the portfolio company managers? And I think that's coming along a lot, but it's something that needs to, and should, and probably will happen more. So I appreciate you sharing that, because I think a lot of people will get a lot of inspiration and value out of that.

DM (00:18:48):
Yeah, everybody on our team as a coach, every CEO has a coach. We have coaching for middle management that Jimmy Holler on our team has built from scratch. I mean we built a whole development program for middle managers, not just, you know, focused on the CEO or the ELT. So I think if you work for a ParkerGale company, you're going to get a lot poured into you and how to develop yourself. I would say I see a lot of coaching in our industry around optimization, and I think the cult of optimization is destructive. I think it feeds into the type-A, rise-and-grind personality. All these guys who basically sit at their desk on Excel wearing WHOOPs, you know, measuring their heartbeat and measuring their sleep and measuring all these things, and it's like, yeah, when you measure stuff, it gets less fun, right?

When you like, put data against it, and it's like, you know how you sleep better? You exercise, you eat better, you take time for yourself, you probably meditate, and you don't have ruminations and intrusive thoughts. That's how you sleep better. You know, I get nine-plus hours of sleep a night. My wife could sleep for 13 hours if the alarm didn't go off. And that's not because we optimize our lives. I think it's because we've created space for quiet, and calm, and there isn't a lot of quiet and calm in our industry, especially during COVID, and especially now. Yeah, we take more cues at ParkerGale from Brené Brown than we do from Ben Horowitz or the optimizers of the world.

SM (00:20:13):
I really like that, particularly as it relates to finding space and meditation. And one of the things that I think really made a big difference in my own mind frame was embracing mindfulness meditation years ago, particularly as I was going through this kind of entrepreneurial craze thinking about should I, you know, dare to jump off the hamster wheel of private equity. And as I was thinking about doing BluWave and leaving a partner position at a really good firm with really good people, everyone I spoke with thought I was insane. And so I was going through this kind of existential crisis like well, you know, I always dreamed as a kid I was going to start a company one day, and by the way, this is the only good idea I've ever had, so this is probably my only chance to do BluWave.

But the stress level was off the charts, and my brother-in-law actually could see it on me, and he was a longtime special forces guy. And he goes, “You’ve got to really start dialing it in. I can see the stress. You should try out mindfulness, you should try out meditation, transcendental meditation, anything it is to try to get control of this.” You know, your brain is almost like any other muscle in your body. You’ve got to learn to let it rest, and you’ve got to learn to give it space. And so that made a big difference in kind of my mindset, and every day I try to do it well, and I think every day I kind of fail at it. I try to get a little better and find those moments of letting the circular narrative kind of pause. I don’t know how successful I am at it, but you know, you try.

DM (00:21:37):
Yeah you want to get into like TM and stuff. It’s like people say, “Look, oh I’m not good at meditating,” and, “Oh, my mind wanders, and then I start thinking about work,” and all that stuff. And it’s like, the whole point is not to beat yourself up that your mind goes there. It’s to like have some compassion and just let it go, and drift back into your breath or whatever it is that your mantra is or what keeps you in that headspace, and it doesn’t take much. So we’ll look back and be like, “Man, this optimization stuff we did to ourselves,” and then how that trickles down to our kids. Don’t get me started on how people in our business raise their kids. But my wife’s and my favorite pastime is judging other people's parenting habits and choices.

SM (00:22:17):
I'm very fortunate to have a great wife who has done an excellent job raising our kids, and I'm on that path towards humanity, I think becoming better at it.

DM (00:22:26):
Yeah. Oh, last night we had 50 CEOs, tech CEOs, private equity people, and some private equity-adjacent people in a room in Chicago. And we do this a lot; we did it a lot before COVID, and it’s the first time we've done it since. And I had Ben Strahan, who's the chief superintendent for the El Dorado Hot Shots, so basically the elite firefighting team for the National Forest Service, and a friend of ours who just got out of the Navy SEALs and now is starting at Kellogg after 11 years with the Navy, and we mostly talked about mental health. That was it. We talked a little bit about team, kind of motivating a team and getting a team to feel like they're owners rather than renters. It quickly turned into like, “How do you come down from the stress? “How do you get your team to like not always grind, grind, grind?” and “How do you set very high expectations but have equal amount of love for your team?” and “How do you get them to know it to build trust really fast?” It turned into a pretty deep conversation around mental health, that everybody in the audience was like, “What the hell? I thought I was here to find out how to optimize my life, man.”

SM (00:23:30):
It’s like, “That's how you do it.”

DM (00:23:31):
Exactly. I was like, “Yeah, actually, you are here for that, and that's what we're talking about.” So, anyway.

SM (00:23:37):
I mean particularly after the last several years we’ve all gone through, this is such an important topic. As we think about the world changing, and times being fluid, and the private equity industry evolving, what do you think are going to be some of the most important evolutionary changes in the private equity industry in the days ahead?

DM (00:23:57):
Yeah, despite how I started this podcast, I think the private equity world is going to continue to bifurcate and bifurcate hard. So all that money going to $5-billion-plus funds, you know, it's going to $15-billion funds and $50-billion funds. I mean, that's where we're headed, and especially in a time like today, where the LPs are freaking out. And I don’t know this to be true, but I'm getting a sense of it. If I was an LP, I'd be a little freaked out. You know, I just pumped $300 billion into the venture capital industry last year, and they spent it all, when in 1999, $30 billion was pumped into the venture capital industry, I wouldn't know which way is up. You've got all the currency stuff, all the commodity stuff, you've got global geopolitical stuff going on that we haven't seen in a long time, that I think is probably underreported.

It's bad. It's getting worse. So I feel for the LPs. So what do you do when times like that happen? You go to safety. So what's safe? Really big funds with huge infrastructure and lots of reach that can zig and zag and do lots of different things. What's risky? A small fund that just does one thing in one geography. So I think you're going to have the boutique firms, and maybe I'll put ourselves in that category as I'm selling my own book here, right? I think you have boutique firms that look like ParkerGale, craftsmen, custom suit makers, that do one little thing really well and are comfortable doing it, aren't here as a stopping point on the way to the big thing. And you only have the very big firms that already exist, and then people that are ambitious for those very big firms that will be creating those by spinning out or having performed at kind of the small, medium, large and continue to go do that.

So I think the caught-in-the-middle side, it used to be caught in the middle like the just-another-middle-market buyout fund, right? In 2009 when you're raising a fund, if you were a jambo you were toast, right? That was the multi-sector, four partners doing four different things and they do everything except aerospace and defense, but they cover everything else. I think the new jambo is going to be that mid-size firm that's like no differentiation on deal flow, how they create value, they’re just buying companies from other funds, and they're not big enough to kind of play these global trends in interesting ways or hide in places when things are bad and take advantage of dislocation. So my sense is you've got the mega allocators and then the families and endowments, and they split. And so if you're in that middle, $2-billion fund that kind of just does what 25 other $2-billion funds do, it's like, “I'll just go give that to one of the big guys who has a $2-billion fund, and I can allocate a big chunk of money to them and they'll decide where to put it for me.” I don't think it's evolutionary, I think it's probably happening now, and it's going to happen even harder over the next 24 months where PE’s going to bifurcate heavily. So fundraising for small funds is going to get very hard, because it's going to be $2, $5, and $10 million at a time, because the guys who are allocating fifties and hundreds are going to go upmarket for safety, in my opinion.

SM (00:26:56):
In the next economic transition period.

DM (00:26:59):
Yeah. If you're out raising a fund next year in the teeth of a recession, “We put in all the work in the frothiest time, we haven't returned much of it, but we feel great about the portfolio, and we’re raising another fund. Oh it's the same size, we're not getting too big, and we’re going to do the same thing over again in a completely different economic environment.” Like no, I'll just give that to Clearlake or Thoma or Vista, in my world. I'll give it to them, because they’ll figure out what to do with it, and they can put it anywhere, right? Small deals, big deals, credit, public. The big all allocators, it only makes sense that they would go there rather than being like, “I think these guys have still got the fire in their belly, and they've got the, you know, I know I don't love the diversity, but they had a good last fund,” and I think that gets harder and harder to do for the big all allocators.

SM (00:27:40):
And it's interesting as you think about the business of private equity turning into a business, as the class matures in some ways, we're in this, you-never-get-fired-for-hiring-IBM kind of phase of the industry, and almost like the conglomerations that are occurring. Inevitably those pendulums tend to swing back, but I guess the question is when, particularly for the big LP allocators, how do they understand correlations within their broader portfolios when it's going into a big machine?

DM (00:28:07):
Yeah. Well and it's like, okay, everybody's been running the Swenson play for a long, long time. Took a while for people to catch up. Now they've caught up. So what's the next big innovation on the LP side? I don't know. Maybe the guys at Wash U you are doing some interesting cool things, which they are, but like, I'm not running into a lot of LPs who are like, “Wow you're doing that? That's really interesting,” because it's really hard to scale really interesting. And the GPs, based on my math, are just chasing the big funds. Like, “I can buy bigger software companies, let me go do that.” “I've got to buy more software companies, let me do that.” And the LPs are following them up that way. Next year and the year after that, probably going to be very hard to go to an LP with something very unique that isn't like, some distressed asset class that you have a particularly amazing insight into. I think going to them with like the same old, same old is going to be a pretty tough ask.

SM (00:29:02):
As you think about the whole notion that you have, we're going to do fewer things better in a more specialized, kind of deliberate way, when you look at companies, what are two or three of the traits that you look for when you say this is a company that's really interesting, and this is why?

DM (00:29:19):
We say we invest scared, but that's a Howard Marxism. I've had LPs look at me like, “What? That sounds so pessimistic.” And it's like, “Well, I've got half a billion dollars of your money. Don't you think I should be a little scared to like, you know, make the right decision, rather than so confident that I'm so good at my job?” So we say invest scared. What does that mean? We buy businesses that are hard to hurt. We are buying $10- to $30-million software companies owned by families or founders who are retiring. We say aging-but-ancient companies, you know with aging, and sometimes ancient, founders. We bought a company from a 91-year-old at the end of last year. So we're the exit for the founder. So when you're stepping into somebody else's business, you're bringing in a whole new team, and you're trying to bring all this private equity medicine to improve and optimize things, you could hurt it. You could give it too much medicine and really hurt the patient.

So it has to be hard to hurt. So what does that mean? You said three, so I'll give you two plus one. No customer concentration. We bought a company, $26 million of revenue, 1700 customers, no customer more than 2%, and been around since the mid-80s. So we can look through multiple cycles of churn and retention. So that's helpful. There are a lot of companies today that have never, you can't look at how they performed in the recession, because they didn't exist before then, and they're worth a billion dollars, right? And they're all subscription. Well how does that perform in a downturn? I don't know, because it wasn't around the last one. And then two, mission-critical, right? And that's a judgment. Is this mission-critical, is it must-have or need-to-have versus like-to-have, we're going to find that out soon enough. You've gotten probably a little taste of it, maybe in 2020, in those few months where everybody thought it was all over.

But so, mission-critical, B2B software. So enterprise-y stuff, that’s probably $50 to $500,000 average selling price, and then no customer concentration. So those are the characteristics we would look for. We also buy profitable companies, so that’s just a given for us. And then the plus one is price valuation. Imagine that, that valuation would be on the list. I think 50 to 95% of the value in the ultimate exit is how much you paid for the company. Sorry to spoil everybody’s, you know, operating teams, including my own. But you can't fix price. Just because you paid more for it doesn't mean it's going to be worth more when you sell it. And I know a lot of VPs out there are adjusting their model during the IOI-to-LOI process to say, “Well, if we paid another 10 or 20%, I think I could grow it more and get a three- to four-x return.”

So you can play with the model all you want, but just because you paid more for it and you have to pay more for it in a competitive process, doesn’t mean you can sell it for more. So what you pay for something matters a lot. And I think that’s been completely lost in the last few years in private equity. It’s always been kind of lost in venture, you know, at the mid-to-late stages, because it’s such a power law game. But it hadn’t been lost until recently in private equity. And I think there are a lot of great software companies owned by private equity firms right now that are going to be really hard to get a reasonable return on. They’ll perform really well, they’re great businesses with no customer concentration, mission-critical, good margins, and you’re like man, “We just paid too much for it, and now I’m trying to sell it, and I can’t get a great return for the risk,” and the pref, and all that stuff that you require when you invest in private equity. Just look at Microsoft. From 2004 to 2014, Microsoft stock didn’t move between $26 and $32 a share. And what did revenue do during that time, Sean? Five x.

Microsoft, five x their revenue over those 10 years, and the stock price didn’t move. “Oh, but that was before SaaS, and that was oh, blah blah.” No. I’m sorry. Stock investors have been around for a long time. Public market investors are way smarter than private market investors, in general, in my opinion. They may not hustle as hard, they may not have as many tools in their tool belt, they may not be in a market that’s still inefficient. Public investors, stock investors, are very smart. Everybody lost their mind for a few years, and they’re coming back to normal, and there’s a lot further to go down from where we are today.

SM (00:33:32):
It’ll be very interesting as we think about this last, almost like the Bernanke era, where we are going to just fuel money supply, we’re going to keep rates low, and that’s how you avoid Great Depressions. And in the meantime, we forget to take the break, take the foot off the gas, and just keep on hitting the accelerator from ’08 to now. Now all of that is kind of coming to roost, and it’s really easy to see multiples go up across pretty much every asset since then. And now it’s going to be unwound. It’s going to take a lot of agility.

DM (00:34:04):
Yeah, and I’ve called eight of the last three recessions, so my track record’s pretty good. They don’t call me Dr. Gloom in the office. But hey, man, you can’t predict, you can only prepare. Another Howard Marxism. So again, that’s why we invest the way we invest. We’re never going to max out the return when things are good, but the play is when things are tough, you’re going to be happy that you are in that fund with us, would be the goal.

SM (00:34:28):
A good question here as relates to the economy and a recession, and I’ve found a life hack around how to get away with calling a recession without calling a recession. I’m calling it a transitionary economy. No one can argue with me on that.

DM (00:34:41):
Yeah, that’s true.

SM (00:34:42):
And so instead of saying whether we’re in a recession or not, during a transitionary economy, like now, what would be some of your advice to give business leaders in terms of here’s how you approach this time so that you can not only navigate through it with safety, but also success, and find opportunity.

DM (00:35:00):
Yeah, I’d say one is set very clear expectations with your team. So this can’t be a surprise, because what’s going to happen is you’re going to whipsaw everybody. “Hey, grow, grow, grow. Er, you know, hit the brakes, scratch the record.” “Nope, we’ve got to be profitable,” or “ Nope, we can’t break even. We need to now be 20% profit margin,” or whatever the goal would be. So I think one is pull your team together and say, “Hey guys, it's changed. It's wartime now, and here's what I'm thinking. We need to do this, this, and this.” So explicit. Like write it down, have everybody read it. Geez, I would say have everybody sign it. “I read this, I understand what the goals are, I'm going to sign it, and I understand what my role in this transitionary economy is going to be.” That's one, so you don't freak everybody out or surprise anybody.

Just be super explicit, even though it's going to be hard. And then I'd say start laying a bunch of people off and cutting all your costs. Zero-base budget, nothing that was in the budget last year survives unless you can defend it, and probably go find 10 points a margin, or maybe 20, or maybe 30. But yeah, you just need to get through to the other side, because Google is not going to miss its earnings estimates if it can avoid it. So guess what? It's taking it out on you, on what you're paying Google for AdWords and all the other things. Facebook is going to try real hard not to miss their numbers, though it's going to be hard. Salesforce, Microsoft, those guys are going to protect their margins wherever they can, and they're taking it out on you. So if you don't think your costs are going up, you're crazy.

Everybody's going to stretch everything, and DSOs are going to go up, so you’ve got to go find some safety. And I'd say most software companies, in my opinion, that I see (and we see hundreds of software companies a year that we get outbid on, regularly), is they're all too fat. They’ve got way too many employees, their margins aren't good enough, they have no profit discipline, and they all think they're doing great. Margins went up five points last year, and it's like, well they're already 20 points too low for a software business. Orlando Bravo's all over this, if you follow on Twitter, he’s just like, “Hey guys, cash flow, cash flow, cash flow, margin, margin margin.” And they've obviously got a phenomenal track record, and, you know, they're probably pretty contrarian, like us, that cash flow matters and margins matter and profit disciplines matter, and yeah, test the limits of your customers’ commitment to you on how much you can increase prices and how much they believe in you and will stick with you.

So I think that's what I would do. Tell everybody this is going to be really hard, and then do the hard stuff fast. Oh, and then one other thing that Peloton seems to have missed, which is uh, just do one big cut. Don't do five cuts in the same year. The five or 10% cut — you know this; your fund was a lot like our fund. Do one big cut, shock and awe, move on, dust settles, everybody will be happy they kept their job, and if you treat the people on the way out with respect, give them a good severance package, people will get over it. If you do five cuts over a year, like Peloton’s doing right now, it's just, I'm not predicting their demise. I am a subscriber, still, but that's just a really bad way to run a company, in my opinion.

SM (00:37:59):
Yeah. And so once you address kind of Maslow's hierarchy, where you've got food, water, shelter, you've got safety -

DM (00:38:05):
Wi-Fi and battery, I think, are my children's Maslow's hierarchy needs. It starts with Wi-Fi and battery life, and then it goes to food and shelter, I think.

SM (00:38:15):
Exactly. Bandwidth is certainly top on my family's list, which is why I only lasted in our home for one week during COVID and realized that our office had unimpeded Wi-Fi that no one was using and no one was there.

DM (00:38:30):
Oh, the Switch and the PS5 and everything weren't sucking all the bandwidth out of your house like my house, yeah.

SM (00:38:35):
Exactly. Are there areas where you look to say okay, now that you've got your liquidity shored up, you've battened down your hatches, you've lightened the load, are there areas where you say here's where you find opportunity?

DM (00:38:45):
I mean I think for us, shore up your cash flows and pay down your debt faster. So guess what? Hey, if you’ve got profitability, and if you've got EBITDA in debt, you can pay down debt, and your net debt goes down, and your value, your business goes up. The value of the preferred and the common goes up, that's one way to do it. Two is, you know, cut the things that are like, “Oh, this is going to pay off in three or four years,” and just focus on the here and now. And so maybe you can cut some moonshots and then increase sales or marketing and kind of go after vulnerable competitors. And then M&A, I think there are going to be a lot of venture orphans, a lot more than there ever have been, given the number of companies that have been invested in the last few years.

And given the power law dynamics of venture where maybe 10, 15 years ago venture funds would be like, “Ah, we're going to kind of hang onto this one, because we think next year is going to turn around or next year is going to be the profitable year,” or, “Hey, the series D guy and the series B guy disagree on the valuation.” My sense is in the next few years it's just like, “Hey, this isn't a winner, just sell it.” “You mean I can get $10 million, and get my DPI up, and it's one of my 37 portfolio companies? Yeah, sell it, and get me some money.” LPs, at the end of the day, it's DPI's DPI, right? Whether it was a lost half your money or made 10 times your money. So I think some venture guys are going to have to show some returns, some DPI, before they go raise the next fund.

And maybe doing that is not selling your winners at a lower value, but just getting rid of your losers. And I don't mean, for me it would be like, “You got the company to $15 million and break even, the CEO and the team are really good, you’re not going to give them any more money, right? Because you’re going to save it for some other company. And you're not going to let them raise any more money. Let me buy you guys out, and we'll take it from here, because we've got an M&A strategy or some other strategy that you're not going to go deploy. We’ve got the make-three-times-your-money strategy, not 30-times-your-money strategy. So we'll invest in that, and give this team a chance to go win a different way, given that the market changed on them.” And I think there are a lot of companies out there that look like that.

Now, we have tried that in the past. I mean,believe me, we tried it in 2002, 2003. We tried it in 2009, 2010, and venture guys, it takes them a long time to capitulate. My sense is maybe this time around — I'm an optimist, Sean, at the end of the day — this time's different. Venture guys are going to capitulate and punt on some of their, not the losers that were obviously zeros. We wouldn't touch those, given our strategy. But the ones in between, they're not going to return a whole lot of the fund. And the valuations were probably way too high, but they could salvage some cash. We buy them out, maybe they roll a little for schmuck insurance, they don't get a board seat, you know, they're subordinate to our pref, and then we go, or hey, maybe we roll a pari-passu, they can roll with us. We're open to suggestions. But I think that's how it probably plays out on the venture side for the middle-of-the-road stuff.

SM (00:41:28):
Yeah, I think there's a lot of opportunity, hopefully, right? And I think every recession, I always wished I hung around the hoop longer. I'd fold my cards on something, and then I'd see it traded a price like, “Oh, I would've invested at that price!” So I think part of that is like, if you stick around the hoop, there will be spots of value.

DM (00:41:45):
Yeah. And some of these middle-market software companies can buy some innovation, like “Hey, okay, I can buy a really good tuck-in product here with a really good, clean tech stack and a lot of subscribers.” Maybe it didn't live up to the dreams of the VCs, so there could be some good add-on acquisitions for software companies in ventureland, and maybe a platform or two, but that's probably a little harder.

SM (00:42:07):
That's great. You know, one of the things I love about BluWave and working here is I get to work with all these people like you, where every day I learn things that I wish I knew before. And literally every day I'm like, “God, why didn't I know that when I was 22 years old, or 30 years old, or 40 years old?” And so I'm kind of a sponge in in that way. I kind of embrace this Walmart form of innovation in my life, where I just try to learn from others who figure things out while I figure it out myself. And so if you were to go back in time and talk to your former self and say, “Here's one of the things I wish I knew then,” what would be one of the pieces of advice you'd share?

DM (00:42:46):
Be yourself. The early part of my career, again I was an art history major from SUNY Binghamton. I didn't have the resume you see in a lot of private equity firms. I moved out to Chicago, got a PhD in sociology. My brothers were living out in Chicago at the time. I grew up in Upstate New York. So I was living in a one-bedroom apartment with my two older brothers. We had shared a bedroom for most of our childhood in Upstate New York, so that was fun. And they were both English majors working for Morningstar, the mutual fund rating company when it was quite small. And they were like, “Wow, this is great. I get paid, you know, it's interesting enough, I'm learning something new,” but you know, kind of was a means to an end. So I saw that, and I applied for a job at William Blair & Company, one of the toniest, white-shoe investment banks there is.

Still a pure partnership, one of the few left, like a mini Goldman Sachs at that point, a few hundred employees. And I got hired by the head of research to help him cover the video game industry. So I here am 22, getting paid $25,000 a year, which was pretty darn good, for me, to play video games and write research, public company research about it. And my brothers were like, “What the heck? That's a job?” And he was really kind to me. And he was a blue blood, East Coast, Yale, Dartmouth MBA. He was a rich guy. And I was raised in a union household, the very Irish Catholic family that like, when you do well, God punishes you for it, so don't do too well. Watch out for rich people. This guy was so kind to me and kind of guided me through the first part of my career.

So what I did early in my career, though, I had kind of adapted to that where I was like, “Okay, don't be yourself. Be this version of the young William Blair guy in the suit and tie.” And, you know, as an art history major, I was a bit of a pretender, so I kind of was like, “Don’t show them too much of who you are. You’re not a Cubs fan or a White Sox fan, you’re not a Yankees fan or a Mets fan. You’re nothing, you’re who, what you need to be in that room, at that time.” I was good at connecting with people. My dad was a therapist, I know how to talk to people. I was a middle child. Like I was, you know, the comedian of the family, so I could connect with people, and I could connect with them authentically.

But I certainly was like, playing the role of, you know, investment banker. And then I moved into private equity, and I had even more opportunities to interact with people, and I could play that role. Not until maybe my late thirties, after I had a couple kids and some confidence, and probably when I met Jim Millbury, my co-founder, I was like, “Oh, I could just really be myself, and that's probably going to be a lot-" Well, it felt better. I was tired of being somebody else, and that's when things really started to take off. So if I look back, I mean, I had a good run for the first half of my career, but the second half has been way more fun, and a lot more authentic, and a lot less stressful. So easy advice for an old guy who's kind of made it to say, oh yeah, be yourself.

If I had been myself from the get-go, I may not have lasted at William Blair, but I may have wound up somewhere even better sooner. We started ParkerGale so people didn't have to edit themselves at work. And I edited a lot of myself for the first chunk of my career just to like, stay safe, because I was getting paid well, and I was making a lot more money than anybody in my family ever had made. And I didn't want to screw that up. But once I kind of settled in, so my 20-year-old self was like, “You're going to be fine, it's going to be fine.” Be yourself and trust your instincts rather than, you know, kind of play the game.

SM (00:46:10):
I think that's great advice, and it certainly resonates on a number of levels. I can remember throughout so many iterations of my life having kind of imposter syndrome. Growing up in a similar kind of Irish Catholic clan, showing up at this really nice, high-end college where I was like, “Oh I wonder if they're going to figure out if I don't belong here.” And then getting into this investment bank and realizing, “Oh they're going to find out I don't belong here,” and then private. And each time I would realize, “Oh I'm just as sharp as these people, and if I just be myself, it's so much easier.” And as we talk about even that narrative in your mind that goes and spins and spins and spins, that's certainly something I wish I figured out a lot earlier in life. And you know, it's this whole idea that if you make life simpler, it becomes simple.

DM (00:46:52):
People want this work-life balance and stuff. And it's like, no, I think it's a life balance, because if you’ve put work (and I'm stealing this from a friend, Ben), if you're putting work on the same level as life, that's pretty sad. And then, you know, kind of bring home to work with you. I didn't do a lot of that early in my career, so I don't think people knew exactly who I was. I thought they thought I was funny and maybe smart, a good coworker, but I'm not sure they really knew who I was. So maybe I cut off some paths along the way. If I could go back, be myself early in my career, and wind up exactly where I am today, I'd be very happy. I just finished Dan Pink's The Power of Regret. He did a big study on regret, which hadn't been done before. Yeah, I say that's definitely something I regret. I was probably, I was a little bit playing the part for a while, and when I stopped doing that, you know, things were good, and things just got better. I don't trust people who say they have no regrets. “Oh, I don't look back, man, I have no regrets.” It's like, “Really? That's so sad.”

SM (00:47:53):
They just put it into a little ball and shove it down into the deepest recesses of their soul. That’s what I did.

DM (00:47:58):
Yeah, exactly. It's like in Book of Mormon, just put in a little box and crush it.

SM (00:48:03):
Yeah. And then eventually, you know, I have a bottle of wine at night. So that's great advice. And my dad would say to us every day as a kid, “Today's the first day of the rest of your life.”

DM (00:48:14):
I like it.

SM (00:48:15):
So just grab it and run with it.

DM (00:48:17):
I mean, if you dig into like the Angela Duckworth Grit stuff, which really came out of Carol Dweck's mindset work. Well, when they did all the work on first years at West Point and Teach for America, right, people who joined Teach for America, and they looked at who made it through and who left. Those are two very hard tasks, right? Making it through Beast Barracks at West Point. After a very rigorous selection process, why do so many kids still drop out? Same thing at Teach for America. Very rigorous selection process, a lot of kids drop out. And it's like, “Oh, grit, grit, grit. You know, these people have grit.” It's like, well, they actually couldn't separate grit from optimism in the data. Optimistic people, or gritty people, perform the same. Your dad gave you some really good advice there, which is like, “Hey man, what else do you have besides optimism?” Now, toxic optimism and like, brightsiding people all the time, I'm definitely guilty of that, as my kids tell me. Gets a little toxic where you're just like, “Oh, look at the bright side. Oh yeah, you had a horrible day. But, but, but.” It's like, okay, easy, maybe you should just listen and shut up and let somebody talk. But I do believe there's a lot of power in optimism, if you can balance it. For sure.

SM (00:49:26):
Yeah. If you have grit, humility, optimism, and self-awareness, and you put that together, life becomes easy. But it's easier said than done, I guess.

DM (00:49:36):
Yeah, knowing the difference between skill and luck is a powerful force as well.

SM (00:49:40):
Absolutely. So we have just a couple minutes left here, Devin, and one of the things that I always love is gizmos and gadgets, and just little things that make your life a little easier or better or fun. Do you have any kind of life hacks or gizmos, gadgets, et cetera that you employ in your life that you think, you know, this is something that just makes things a little better?

DM (00:50:00):
I don't have any gizmos or gadgets. I do have a PlayStation 5 that I bought during COVID and having like, you know, I was a video game junkie, and a Dungeons & Dragons kid and all that. So I do like that. I wouldn't say I'm a gamer, but you know, nothing like spending a couple hours in the metaverse, in Assassin’s Creed or Red Dead Redemption or something. I think that's, for me it's very relaxing and kind of is an escape, which is good. So that’s one. Two, during COVID, I was like, “Okay, what am I going to do here? I used to be on the road all the time. I'm not on a road. So what would a guy in my position do?” Become an alcoholic, basically, right?

SM (00:50:46):
Yeah. Yep. I did the same.

DM (00:50:48):
I come from a long line of functioning and nonfunctioning alcoholics, and I chose to go the other way. I don't have the gene. I'm lucky, I just don't have it. Pure luck. Luck of the draw. So I was like, “Okay, I'm not going to do the habitual drinking thing.” I also married a woman who was raised Mormon, and not practicing anymore, and I'm not practicing Catholic, but she wasn't raised around habitual drinking, like, oh, open a bottle of wine every night for dinner. So I started the pandemic with like, “Hey, let's have a bottle of wine. Hey, let's open a bottle of wine. Hey, let's open-” You know, I was cooking a lot, I'm a pretty good cook and I cook for the family, so that was fun. I was like, “What am I doing?” And then I would start cooking dinner and like, my taste buds would tingle, like I needed to open a bottle of wine and have a glass of wine while I was cooking.

I was like, “What is this?” And this is kind of the self-awareness, mindfulness, and being in touch with myself, which I've worked hard on. And I was like, “What am I doing?” And I didn't like it. So I was like, all right, basically going to stop drinking. I maybe have one or two drinks a week max, and don't feel good after I do. I'm way out of practice, and my body doesn't like it, and I don't sleep as well. So that's been very helpful, and I don't miss it. I don't miss it at all. But it is interesting, now back socially, not ordering a drink or not having wine at a business dinner, it's a really interesting tell. People are just like, “Oh, he's an alcoholic.” I was like, “No, I'm not. I just don't drink that much anymore.” I might have had periods in my life where I drank too much, and it was out of habit.

So that's interesting, and it's interesting to watch, and my wife's a good governor on that. I mean she drinks, but it isn't a habit. Like in my house, growing up, and around my family reunions, it was just like, yeah, everybody just had a beer in their hand at all times. That's one. And then two is I gave up transactional relationships. So if you read all the happiness studies, the Harvard Happiness Study, Galloway basically kind of shrunk it down to The Algebra of Happiness, which is a quick read if you can stomach Scott Galloway for an hour or two. Yeah, it's basically, well how are you happy? As you get older, what makes you happy? Well, you're not an alcoholic or a drug addict or addicted to something, right? I mean that is guaranteed unhappiness if you have addiction problems. And that's sad, and we need more support for people in those positions, and more empathy for them.

And two, are you loved? Do you love people, and do they know you love them? And are you loved back, and do you know you are loved back? So I've got three brothers I love, and I want to spend a lot of time with. I've got a wife and two kids I love deeply and want to spend more time with. I've got four of my best friends from age three to 13 that I just spent a weekend with in New York City and I go to away with every year, and we text every day. I've convinced them to use Wordle as a way for us to text every single day. And as we're sitting here, I have 27 texts about Wordle and other things. You know, I found out a friend of mine was laid off from that. I found out one of their moms was sick.

They found out my mom died from that. So we're texting with my friends every day and we see often. So I've basically said if I spent time with all of those people I just listed throughout the year, there's not a lot of time left, plus work stuff and all those other things. So why am I going to the cocktail party down the street, or why am I going to the theme party at some friend of a friend's house? Because people are bored and they're empty nesters and they want to get together and have fun and drink. That's all great. I just have cut all that out and given myself the grace to say no to those things. So I don't do any of that anymore, because it was taking away time from all those other things I do. So I've really concentrated my time with the people I care about most. And the thing I'm most proud of is that at 51, I've got really strong male friendships that I've kept for a very long time, and I'm not friends with my wife’s friends’ husbands.

SM (00:54:29):
That's an accomplishment in itself.

DM (00:54:31):
And cognitive decline, I think, is accelerated by the fact that you're spending most of your time in your wife's friend’s husband's backyard talking about stuff you don't care about. And in private equity, unfortunately, everybody wants to talk to you, because they want a job in private equity, they want a job in a company you own. They want to talk about private equity, they want to talk about software, they want to talk about the markets or whatever it is. Especially when you live in a town like Winnetka where I live, which is you know, like the Westchester or the Marin County or the Atherton of Chicago. And I just like, I can't do that. It's not very interesting, and it's draining me. So I've surrounded myself with people who've known me since I was a child and can call BS on me all the time, and we just bust balls.

SM:
I love it.

DM (00:55:17):
That's my love language. My kids tell their friends, “My dad's a really good guy, but his love language is busting balls. So if he is busting your balls and giving you a hard time, that's how he shows you he loves you, and then he is going to cook you a really good meal, and you're going to be really happy and full and all that.” So like I'm a pleaser, I'm a middle child, I'm all those things, and I've embraced all of it, and I'm the kind of glue that tries to keep some of those things together, and it's been really, really satisfying. So that's my life hack. If you're thinking of reaching out to your friend but you're like, “I don't want to bother him,” guess what? Reach out. He'll be more happy about you reaching out than you are worried that you shouldn't reach out. And there's lots of science that backs all that up. So if you're not reaching out to your close relationships, daily, you're doing it wrong.

SM (00:56:02):
I think that's amazing advice I think everyone can take to heart. And I'm probably going to make some calls tonight, instead of watching Netflix by myself when everyone goes to sleep.

DM (00:56:13):
Chef's Table: Pizza on Netflix is really good. And it's really intense too. I mean like, basically, if anybody watches Netflix Chef's Table, I love to cook, our CFO loves to cook, a few people on our team love to cook. We talk about it all the time. Like basically you watch this season of Chef's Table and you're like, “Oh, to be the best in the world at something, you have to sacrifice everything.” And it’s literal. Like, you know, you watch The Last Dance. To be the best, you have to sacrifice everything. Not that private equity is even close to professional sports or cooking in terms of the joy it brings to the world. But it's like, yeah okay, and I've sacrificed a lot to get here, and it was worth it because I had a great partner in doing it, and we've stayed together and stayed tight.

But you know, there are some times, and I'm committed to it for a long time because I've got an amazing team of people around me that were really great. But it's like okay, how much will you sacrifice to be the best? Right? And when is enough enough? What are you chasing? Are you chasing something, or are you running from something? And a lot of chefs have a lot of issues that I think are similar to anybody trying to do something great. So hey, if you want to watch it, less as a cooking show or more as a psychological view of excellence, I highly recommend it.

SM (00:57:30):
I've seen one episode, and it was the Italian chef who had the fissure with his brothers to chase the excellence and then came back full circle and got together, and it was a fantastic episode. And the show The Bear on Hulu. I don’t know if you’ve seen that.

DM (00:57:43):
Oh yeah, it was very stressful.

SM (00:57:45):
That reminded me of my analyst days in investment banking, and I had, I think, some post-traumatic stress from that.

DM (00:57:52):
Yep. I know a lot of people in the service industry, in the restaurant industry, have a hard time watching The Bear because it's so stressful. I mean it's literally just a series of what could go wrong will go wrong. And you're just like, “Man, can't these guys catch a break?” The Bonci episode is quite good as well, the pizza episode. And there's a Bonci, the only Bonci in America is this Italian pizza chef who's quite famous, is in our building in Chicago.

SM (00:58:15):
Oh really?

DM (00:58:17):
Yeah. So basically it's like our commissary, we know all the people that work there and kind of what goes into what they do, but it's very intense. Like he basically talks about creating this persona early in his career, much more dramatic than I ever did, and then ha he had to kill that character to become who he really is, in a very dramatic fashion. So I'm not making any connections to my life, I'm just saying that those two episodes are quite good, kind of what somebody does to themselves and then what somebody does to their family. I mean it's really, again, if you're an introspective person, there's a lot to glean from both those things.

SM (00:58:47):
Well, that's great. Well, next time I come visit you all in Chicago and see Cece and Jimmy and Paul and Jim, it would be great to grab some Bonci, because I've never had it.

DM (00:58:57):
You literally have to walk through it to get to our office. So, uh, that may account for the extra 20 pounds I carry regularly, but it's well worth it. Well worth it.

SM (00:59:06):
More life to your years instead of years to your life is my line.

DM (00:59:08):
Amen.

SM (00:59:10):
If you're a business owner in the technology space and you want to learn more about how they could potentially work with you and your team, and receive the capital and the tutorship and the support to build and grow and evolve, how would someone get ahold of you and your team?

DM (00:59:26):
Yeah, devin@parkergale.com. One of the things we strive to do is open-source private equity. Very similar to what you guys do is like, if you give away the answers to the test, then you have to compete on something else. And we compete on relationships and authenticity and approachability, because I think at the end of the day, private equity's not that hard of a business. We're all doing very similar things, and it's harder and harder to differentiate, and “My fund's bigger than your fund,” or, “I do more deals than you,” like, who cares? Especially with founders. They've never heard of us, and they've never heard of the a hundred other funds that call them every day. So we differentiate ourselves by basically saying, “We're going to tell you how this works. You sell your company once in your lifetime. We buy companies every year. Let us tell you what it's going to be like, feel like, and you can make a choice based on all the information rather than asymmetry of information.” Just send me an email and say, “Let’s get together.” And if you're in Chicago, dinner's on me.

SM (01:00:24):
Go get some Bonci.

DM (01:00:25):
Bonci’s good. That's a lunch thing. There are better places to eat dinner in Chicago that aren't the steakhouses.

SM (01:00:31):
Hit Devin up for Alinea in Chicago.

DM (01:00:34):
That's the closing dinner.

SM (01:00:35):
All right, so with that, Devin, it was great having you on the podcast today. Thank you so much. We've learned a ton today and very much appreciate everything you've shared here today.

DM (01:00:47):
Thanks, Sean. I don't do this a lot, other than our own podcast, but it's an absolute pleasure, and I always really enjoy talking to you. And thanks for hopefully getting good stuff out of me through the conversation.

SM (01:00:57):
This has been amazing. Thank you so much, Dev. Thank you for joining the Karma School of Business for our discussion with Devin Mathews, partner with ParkerGale. For more information about BluWave and this podcast, please go to BluWave.net/podcast. Please continue to look for us anywhere you find your favorite podcasts, including Google, Apple, and Spotify. We truly appreciate your support. If you like what you hear, please subscribe, review, and share. In the meantime, let us know if there's anything we can do to support your success. Onward.

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.