Host Sean Mooney sits down with Marshall Phelps, a Managing Director at MidOcean Partners, to discuss his unique path to the private equity industry. Marshall also provides insight on value creation as it relates to business growth.
1:40 Marshall's story
7:27 Investment banking to PE
13:46 Unique perspective on driving value
18:52 How do PE Firms standout in the M&A process
23:05 A seller's perspective on IOI & LOIs
25:25 Biggest opportunities in the investment world
30:11 Marshall's book recommendations
33:47 Marshall's advice to his younger self
Sean Mooney:
Welcome to the Karma School of Business podcast. This episode is brought to you today by BluWave. I'm Sean Mooney, BluWave's founder and CEO. BluWave is the go-to expert of those with expertise. BluWave connects proactive business builders, including more than 500 of the world's leading private equity firms, to the very best service providers for their critical, variable, on-point and on-time business needs. In this episode, we have an awesome conversation with somewhat of a unicorn in the private equity industry, Marshall Phelps, Managing Director with MidOcean Partners in New York City. Enjoy.
I'm very excited to have my friend, Marshall Phelps, on today. For our listeners, Marshall and I go a long way back with, in kind of an interesting way, our relationship having gone full circle over time. So I first came to know Marshall as a client. When I was a private equity investor, Marshall was a top investment banker, and he was advising my firm and I on the sale of one of our top portfolio companies. Over time, we then became friends afterwards. We've kept in touch. And now, the coin has somewhat flipped with Marshall, the private equity investor. I've become an advisor of sorts, and Marshall is the PE client. So Marshall, really excited to have you here. Thanks so much for joining us.
Marshall Phelps:
I'm so happy to be here, Sean. You brought back a lot of memories in just that short intro. We have known each other for a long time, and that's kind of what it's all about, right? These relationships that you build in this industry over time, it makes it well worthwhile, so I'm excited to be here.
Sean Mooney:
Absolutely. And Marshall, what I love about having known you is not only are you a great person and really smart, but you've had kind of this great multi-faceted career, which leads to some great storytelling when we'd get together after work. So I think it would be great for the listeners if you could just tell us a little bit about your story.
Marshall Phelps:
Sure. I have a non-traditional entry into my current position at private equity, but I actually had a reasonably non-traditional entry into investment banking, too. So I was part of the vast swath of Liberal Arts college students, graduated from Colgate University with a Liberal Arts degree and not much of a plan after that, and just trying to figure out what was the right path for me. My family has a lot of attorneys in it, for better or for worse. My father had gone to law school. I was intrigued by the prospect of it. I liked to read and I did pretty well in school, so I was like, "Sure, I'll give law school a try." There's a lot of puts and takes in that decision, and it's not all positive, but rather than brave the job market immediately after college, I went to law school and spent three years in an institution that really should only make you go for two, but that's another story, but did the law school thing and had the standard experience of really busting your hump.
I will say, one of the things that I didn't like about law school was it's not a particularly team-oriented curriculum unlike business school, which really was just so much focused on team building. As somebody who grew up playing sports and somebody who is just generally a relationship-oriented person, law school was fairly lonely and really rigorous and really competitive. But I got through it and got onto the cycle of finding jobs at top New York City law firms and trying to figure out which one was better than the other and who paid what and just all this kind of thing that you get all swept up in.
And the law school recruiting process, particularly in New York, is very structured and it is very competitive. And I ended up working for a very large multinational law firm called O'Melveny & Myers in their corporate department. And what was unique about them, at the time, it's very different now, but at the time, O'Melveny had made a very significant foray into private equity. Now, I didn't know a thing about private equity at that point, but the firm itself, through an acquisition of a smaller firm, had developed some small but upstart clients like Apollo Global Management, JP Morgan Partners, and a whole host of other players that were in that first generation of private equity that just were just growing like a weed.
And so, I dove into that work not knowing anything, but getting a really rapid training on the legal side of M&A. I didn't particularly enjoy the work, but loved the people and really worked on a scale that just really kind of stunned everyone, including my mother, who just couldn't imagine that I was working as much as I was.
But I did that for a couple of years, and just being frank, came to really not be very happy about where my life was. I was in my mid-twenties, coming into my late twenties, working six, seven days a week and doing important work for important clients, not much else really going on and in particular, not very excited about the work I was doing. I was much more interested in kind of value creation versus what I would call value insurance on the legal side. And there really wasn't much in terms of strategy, of relationships, and all the other stuff that I enjoy that that was happening for me.
So I decided to do the classic downshift into investment banking, which is not a thing. But it was 2007, it was the tail end of the big M&A boom, and I was lucky enough to know some people at some investment banks, and made the case for Lazard that they should hire somebody with dubious numeracy and no modeling experience to come in as a first-year associate into investment banking. So I wasn't coming in as a senior banker, I was coming in as a junior banker, so I had to really prove myself from a technical perspective. But that was 15 years, 15 years I spent at Lazard. And there's lot to unpack in those years, but that's the story of how I got into banking.
Sean Mooney:
I love that path. And it shows, I think a lot of people are familiar with this, you kind of get on these tracks and you just keep on going. And you eventually go to where you want to be, but sometimes it takes you on twists and turns.
Marshall Phelps:
Yeah.
Sean Mooney:
And I'd say it's probably even a lot more logical than mine, which was all my roommates in college were from the New York metro area and I said, "What are you guys going to do after college?" And they said, "Investment banking."
Marshall Phelps:
Right.
Sean Mooney:
And as a kid who grew up in Texas, I said, "What's investment banking?"
Marshall Phelps:
Yeah, exactly.
Sean Mooney:
I was like, "I guess I'll have to go do that."
Marshall Phelps:
Yeah.
Sean Mooney:
And proceeded to get turned down by half of the investment banks in New York and finally got one.
Marshall Phelps:
Yeah. Well, look, I think about this all the time. Inertia is a really powerful force, Sean, right? And so, I'm working as a lawyer. I'm making money. I have debt. And it was actually my girlfriend at the time and now my wife, who basically was like, "Look. You're not happy." She's like, "I signed up for you to work really hard, but I didn't sign up for you to work really hard and dislike it." Right? "So go find something else." And so, I give her all the credit for really giving me the courage at home to go out and try something different. And you're right. Breaking free of some of those tracks can be really important and really invigorating.
Sean Mooney:
That's such good advice for so many people who are on these tracks, and not often daring to look left and with the blinders on. And they're all really good problems to have, but these are things that you can do even more and better for yourself as you proceed.
Marshall Phelps:
Totally agree.
Sean Mooney:
One of the things I think, Marshall, that's also really interesting about your background is you had grown to have a really successful career with one of the top investment banks in the country, if not the world, rising to a very senior level. And then, it sounds like you looked left and looked right again and said, "There might be even something better and more."
Marshall Phelps:
Yeah.
Sean Mooney:
And that led you to private equity. So I'd love to hear about what led you on that, to jump from this one really successful career to starting down a whole new avenue, an exciting industry, but certainly different.
Marshall Phelps:
Yeah, sure. Very related, but very different in a lot of ways. So I had a great experience at Lazard. One of the things that was great for me is that Lazard was the kind of place where once you proved your competence and your ability to build relationships and develop a specialization, there were avenues at Lazard where you could and were encouraged to build your own client base.
So I was never really interested in being banker #10 on a super large buyout. I had done that work at O'Melveny. I wanted to have my own clients, and I really wanted to focus in areas that I found interesting just generally speaking, right? So for me, that became things like data and information services. It became things like media, entertainment, sports. When I could do some work there, it was great. And Lazard encouraged that, and I found that the work is super challenging, so you might as well do it in an area where you just have interest, generally speaking. If you're a curious person and you really want to dig into this kind of stuff and you like people, that's a great platform from which to build a career, so super appreciative and loved my time there.
Look, 15 years is a long time to do anything. And so, I had missed the traditional private equity recruiting cycle, right? So I had came over to banking as a first-year associate, and that's by the time private equity has already worked their way through the analyst classes and made their picks, and those people have made their career decisions to leave banking. So my path was, "Put your head down and go become an MD at Global Investment Bank and build your career." And that is no tragedy, believe me. That's a wonderful way to spend your life, it really is. And I had great relationships, great friends, and great clients along the way.
But look, the fact is, is that over the course of 15 years or so, you do tend to develop patterns. You do tend to start seeing the same types of things again and again. And you start saying to yourself, "Okay, I'm really focused on these certain parts of the job. I love the hunt, I love relationship building, I loved closing deals. And if I'm being honest with myself, there's lots of swaths of the middle parts of transactions which," as you know better than me, "could be a real slug." And I was always curious about, as I mentioned before, the value creation side, right? "How can I lend myself more into the world of building companies, of utilizing the network that I've built over the course of my career to find interesting opportunities?"
One of the things that I found myself doing as a banker that I really enjoyed was introducing people to each other where I thought there could be a great combination, and then watching those people flourish in relationships with each other. I'd introduce a CEO, for example, to a private equity fund, and they support that CEO in buying a company; or introducing an acquisition opportunity to a sponsor and having them actually do the deal. Those are great feelings.
But then you say to yourself, "Well, shit. I'm having a lot of success here at the agent side. What about on the principal side?" And so, I think every banker kind of says that to themselves. When the opportunity comes, it's few and far between, particularly as you get more seniors. So I think at the time the discussions started with MidOcean, my current employer, I was feeling some desire to go out and just kind of expand my world and try to be more proactive in value creation. And that's what really got me interested in making the leap.
Sean Mooney:
I think that resonates a lot with me and I'm sure a number of others, in that I, too made the jump from investment banking to private equity for the exact same things that you're talking about, Marshall, where it is you want to be more, you want to see how the story ends, you want to be part of that story. And then, if I turn the lens even further on myself, I then didn't even kind of want, where I had worked my entire career to get to this job of a partner at a PE firm, and I was working with great people in a really smart firm, and then, I decided to do a startup.
Marshall Phelps:
I remember. I remember, Sean. We had so much success working with you. And I was so happy for you guys, because I think it was the first exit, right? We did the first exit together, right?
Sean Mooney:
Yeah.
Marshall Phelps:
And what an amazing result. And I know now, particularly on the private equity side, the amount of work it takes to go from the initial acquisition to all the business building to the exit, and the thrill of having a successful result and then having you call me and saying, "Hey, let's grab a beer. I want to tell you about something I'm thinking about." And it's, "I think I'm going to do my own thing." I've got to tell you, it was a shock, but I get it. You've got to niche, you've got to scratch it.
Sean Mooney:
Yeah. You only go around the track once.
Marshall Phelps:
I agree.
Sean Mooney:
And probably, as you were thinking, I think as everyone else in the New York metropolitan area thought, I was broadly accused of having the worst midlife crisis in the history of private equity. But you only go around the track once.
Marshall Phelps:
I agree.
Sean Mooney:
So luckily, it's turned out okay, but there were some times when it wasn't so clear.
Marshall Phelps:
I agree. And the phrase that always echoed in my head was, "If not now, when?" Right?
Sean Mooney:
Yeah.
Marshall Phelps:
And for me, now in my forties, there's not a lot of opportunities to make this kind of meaningful leap. Of course, other things may have come up, but for me it was, "Look, this is a real chance to come in, and in a business that's in growth mode and really expand my portfolio, so to speak." Right? So that was how it all worked.
Sean Mooney:
Yeah. And I like how you've done it too, because you've chosen, as you've gone along this career path, it's not only kind of really attractive, interesting, intellectually curious paths of earning a living and working to live and living into work. But it's also, you're choosing great firms with really good people, and MidOcean is certainly one of the best of the best. And so, I really applaud kind of that choice. If you're going to make these changes, do it with really good people.
Marshall Phelps:
Agreed. Yeah, agreed.
Sean Mooney:
So you've seen, I think during your career, and it's probably fair to say thousands of businesses.
Marshall Phelps:
Sure.
Sean Mooney:
Longtime investment banker and private equity investor. And as one of these kind of leading investment bankers and now a private equity leader, my sense is you probably have a pretty unique perspective on business and what leads to value. And so, I'd be curious, if you were talking to business owners out there and business builders, what would be some of the most important value creation drivers that they should focus on?
Marshall Phelps:
Ultimately, when I think about the middle market where we all play, it's really all about growth, right? It's about taking a business from A to B and then from C to D, and continuing to have a strategy that evolves, a human capital base that can scale and adapting to market conditions along the way. And so, one of the things that we always talk about internally is that growth is never linear. It's always a step function. Sometimes it even goes backwards before it can restart itself. But the best businesses, the ones that we see that have real value, real sticking power, all that kind of thing, are fundamentally strategic in their orientation, have business leaders that understand the value of investing in their own company from a human capital perspective, and frankly, have the patience to say, "We're investing here for at least the medium term, but the longer term, too in mind." Right?
And so, that's a generic descriptor of how we think about growth in the middle market, because every sector has its own peculiarities. But having a growth mentality and particularly how that influences your human capital decisions for us is so important, and I know for other investors as well. Do you have the people and the resources and the infrastructure in place to support growth? And can we marry a viable strategy on top of it? Right? The middle market is all about growth. And so, that's the orientation I would encourage business owners to think about as they build their companies.
Sean Mooney:
I think that's a hundred percent on target. And this was probably a Lazard deck that I'm recalling at some point, but growth is the number one correlate to valuation.
Marshall Phelps:
Exactly.
Sean Mooney:
And so, if you're trying to figure that out. But what I like about what you point out though, is that it's not this linear path-
Marshall Phelps:
No.
Sean Mooney:
... to the beach. On any of these businesses that you're building, they go in phase gates. And certainly, I appreciated that when I was in your shoes today of you need different resources and offering different people with unique and varied skillsets to break through each one of those phase gates.
Marshall Phelps:
Totally.
Sean Mooney:
And so, I think that point in bringing it through is really important, and that's part of the beauty and the fun of business. It's this three-dimensional chess game that's always changing and never stays the same. But you've got to play it. As the moves progress in the game, they all change up.
Marshall Phelps:
Oh, yeah.
Sean Mooney:
And you've got to continue to evolve, so I think that's a great point.
Marshall Phelps:
Yeah. People have asked me, "What's the biggest surprise you've had since you've come over to private equity?" And one of the surprises, to me, is the amount of time and the intensity with which we talk about human capital decisions. It is every day, for every one of our businesses, we're talking about our management teams, even below the management team level, "Do we have the right people in place? Who needs support?" And we have incredible infrastructure here and other firms do as well. That's a big part of your business, too, is helping people bring the people into place. It is absolutely cliched, but these decisions are the most important. Ultimately, we don't run these businesses, right? We own them and we control them, but we don't run them. And so, the people you're putting in place to do these types of things, it's the most important thing we do, right?
Sean Mooney:
A hundred percent. And as I even look at the data from the demand patterns, working with really, really excellent firms like MidOcean, if I were to go back to 2018, still a large percentage of the project demand from the best businesses builders in the world like you all was human capital. But it was about 20%, which is still probably the biggest category. Today, it's upwards of 40%. And I think that just shows the evolution in PE. And as the game turns from optimizing to transforming businesses, we see firms like yours hiring, hiring, hiring.
Marshall Phelps:
Yeah.
Sean Mooney:
It's not what you might see in a 1980s movie.
Marshall Phelps:
Yeah. The winners of private equity going forward are going to be the firms that have a cohesive strategy around human capital, and I mean that across the entire portfolio, even at the individual level. How do you think about it across your portfolio? And it is a huge amount of time for us in that area.
Sean Mooney:
Absolutely. So Marshall, one of the things I love having you is because of this unique career you've had on both investment banking and private equity. And we would obviously interact on two sides of the coin back in my old world, where we would work and you would help us sell our companies. But then, we'd be on the other side in trying to buy the companies.
Marshall Phelps:
Sure.
Sean Mooney:
And I always had all these questions that I wanted to ask and never did, and I probably should have.
Marshall Phelps:
Yeah.
Sean Mooney:
You're like, "No asky, no getty." I should have learned that by then.
Marshall Phelps:
Yeah, yeah.
Sean Mooney:
But one of the things I'd always be curious about is, from this kind of dual lens that you have, is how does a private equity firm during an M&A process distinguish themself from all of the other firms in these processes?
Marshall Phelps:
Well, they just pay more.
Sean Mooney:
That's true. All right, next question. No.
Marshall Phelps:
No, it's actually an interesting question, because we talk about that all the time, too. Because one of the things that's happened, of course, over the last 20 years, 25 years or so, is the institutionalization of the middle market, right? It is extraordinarily rare, it does happen, but it is extraordinarily rare to get opportunities that are unbanked, or where you're dealing with just with a founder or a family-owned business. Of course, there are exceptions, but by and large, the investment banking community has done a very good job of penetrating the middle market and offering advisory services to private companies.
So we always used to say on the banking side, if we got a call to come pitch a sale mandate, for example, and we had never heard of the company before, well, that's a bad fact, right? That's a really bad fact. And we're probably going to lose. And we're probably being brought in as a market check because some other banker or bankers has invested the time to get to know those businesses in that sub-category and we're behind the eight ball.
And I think the same is true in private equity. We're trying to be known as the smartest money in our investment thesis. We're trying to be outward-facing with the areas where we spend time: consumer, business services, media, whatever it is. And some firms are really good at that, some firms are less good. Some firms are very outward-facing with their investment thesis. I actually think it's really interesting. If you go to some firm's websites, you'll see them specifically lay out what they're interested in, the type of businesses that they like to invest in beyond just, "We look for growth," very specifically laying out investment theses and perspectives.
And the way we approach things is to try to do as much market mapping and as much business introductions as we can before there's the sale process. We try to develop relationships with CEOs. By the way, this is not original thinking, but it really does matter.
Sean Mooney:
Yeah.
Marshall Phelps:
It really does matter. And if you can walk into that first management presentation and you already know the management team and you've already sat down with them and talked, these things make an enormous amount of difference, right?
Sean Mooney:
They do.
Marshall Phelps:
And like many firms, we are thesis-driven. The idea of being thesis-driven is that we should know the companies that are coming to market. We should know their pros and cons and how we think about them from an evaluation perspective. And therefore, we should be able to act quicker than any other firm when there's opportunities that we really like. Now, somebody could always outbid us, right? but we should have already done our work. We should know the category, we should know the management team.
And if you put valuation aside, which I agree, I stipulate is a very big thing to put aside, but if you put it aside for a minute, the ability to act definitively and quickly and have a vision for what the business could be, those are meaningful. And in my view, because private equity has become so institutionalized, being sector experts, being known as the smart money, gets you those phone calls, right? It gets you into those interesting opportunities. It sometimes gets you one-on-one discussions, right? And so, that's the goal, right? That's certainly the goal at MidOcean.
Sean Mooney:
I really like that answer. It has this multi-faceted set of layers to it. And one of the things at BluWave that we always talk a lot with our team is that we're going to live in the world of and, not or. And I think so often, whether it's private equity investors or businesses in general, they view the world through or. If you're a private equity firm, we can be the smart money or we could be the relationship firm. And it becomes so much more powerful if you switch or with and. We're going to be really thoughtful about our theses and mapping markets and knowing who we want to be and where we want to invest, but we're also going to have relationships with people.
Marshall Phelps:
Yes.
Sean Mooney:
And that's hugely differentiating. I really appreciate that perspective.
Marshall Phelps:
We have to be outward-facing. You can't just sit behind your computer and run analysis over and over again. You have to get out there. You have to meet with CEO founders. You cannot be reliant on investment bankers to introduce you to businesses. A little shoe leather can make a big difference.
Sean Mooney:
Yeah. I love it. So here's the next question I want to ask. So, one of the things when I was in PE is we would toil over every word of every IOI, or indication of interest, in every LOI, or letter of intent, that was involved in an M&A process. And we would manicure every single word and really think about whether they are going to read into every sentence and as ours? And so, here's the big question. Do sellers even read those or do they just flip to the last paragraph and see where price is?
Marshall Phelps:
Oh, man. It's a great question. I will tell you, at the indication of interest level, it is really less about what the words on the page are, and it's more about who the party is and ultimately what they put on the page from an evaluation perspective that carries the day.
I will say two things about that, though. One is, it's always depended on who your client was, right? If your client is a founder or family-owned business, and perhaps they're new or relatively inexperienced in the world of M&A, those are very different mandates than advising Sean Mooney on the sale of a private equity backed business that he bought, right? You get it. You understand the way the world works, right?
I liked working with founders and family-owned businesses because the value you could add was significant in this regard. You would spend time with them walking through what an indication of interest is, what's meaningful on this page and what's fluff? Right?Who these parties are? Do we know them? How do we know them? Is this a credible firm, less credible firm? Whatever it is, we would go through all of that analysis. For our private equity clients, they're so sophisticated. Most of the times they know the firms that are bidding on these assets and they're able to make assessments just as we are, although we usually hope to add more value there. But with the founder businesses and the family-owned businesses, they would read every single word, and giving them perspective on what was meaningful and what was not was actually part of the value prop. So it really does depend on who your client was.
Sean Mooney:
Okay. Well, in the "what I wish I knew" category that makes me feel better and worse. And so, my takeaway is for family-owned businesses, I think those midnight oil hours were absolutely worth it.
Marshall Phelps:
Definitely.
Sean Mooney:
When we were bidding on PE firms' businesses, what a waste of time.
Marshall Phelps:
I think that's probably right.
Sean Mooney:
So I feel good in saying that.
Marshall Phelps:
Good. Good.
Sean Mooney:
But that's good. But the quotient is more towards good, so that's good. All right. All right. So we'll flip the page. I'd be really curious, Marshall, where do you see the biggest opportunities today in the investment world?
Marshall Phelps:
The fact is is that it's, in my view, a great time to be in private equity. At least, it better be, because I bet the future on it.
Sean Mooney:
That's pretty great, bet the future on it.
Marshall Phelps:
I guess gone are the days of where, I guess, it felt like easy pickings for private equity. Now you've really got to be operationally and sector-specific operationally efficient and knowledgeable. Anyway, I think where we see the great opportunities are expanding the vision for what we see as a private equity firm, what the private equity firm can be, right?
So MidOcean specifically, we have a traditional private equity arm and we have a credit arm. And our credit arm does a lot of different things, everything from originations to acting in hedge fund-like capacity, too, right? Those are complimentary, and it's awesome to have that part of our firm there.
When we sit down in our Monday meetings and in our partner meetings, we're also talking about other fund strategies. And again, this isn't new. Other funds are thinking about this too, but we're thinking about ways to take private equity discipline, private equity tactics, and apply it into more niche-type vehicles, more sector-specific vehicles, partnering with executives to create funds; not just buy a company in a space, but to partner with an executive or an executive team to develop a fund structure in a space, and build a portfolio in particular areas where we think that that's conducive to do so.
So what I really see as the opportunities for private equity are to leverage your institutional knowledge, your investor base, and use that credibility and capital base to build out new ways of deploying capital. So beyond just the traditional leveraged buyout, what else is out there? Now I'll tell you, in this market where the traditional banker, sell side LBO are few and far between, the ability to be creative, the ability to put lots of different types of capital to work, whether it's structured equity or debt or otherwise, we think is a competitive advantage.
And so, when I think about the future for private equity, I think it's going to be going far beyond traditional LBOs and trying to expand into asset management in a way that continues to drive private equity, like returns in new and exciting areas. So that's what we talk about as a partnership group and where we're trying to put our best thinking against.
Sean Mooney:
I agree with your perspectives there, Marshall. And it's interesting, just even thinking about my own experiences in PE. And when I first started in the industry, every day I'd say, "Man, I wish I was 10 years older." 10 years ago, it was so great. And then, 10 years would go by and I'd go, "Man, 10 years ago was so great." And then, 10 years would go by and I would say the same thing.
And what I came to learn is, like any industry and any business is, what happens is it was always easier 10 years ago.
Marshall Phelps:
Yeah. Sure.
Sean Mooney:
But the world evolves. And the PE industry is still really interesting and really compelling. And I think the return opportunities for limited partners, it still presents by far the best opportunity for risk-adjusted, stable, and attractive returns versus any asset class.
Marshall Phelps:
Totally.
Sean Mooney:
And I really love how you talked about not only the opportunity, but how your firm is evolving with it and kind of playing where the puck is going versus where it was. And it makes me kind of think, one of my favorite books has always been this book called Who Moved My Cheese?
Marshall Phelps:
Right.
Sean Mooney:
It's this great little parable about change and mice. And the cheese moves, and you can either go to it and get it and continue to get modestly overweight like I am today, or not go get it and get emotional about it.
Marshall Phelps:
Right.
Sean Mooney:
And then, maybe I need to not go after the cheese as much. But I don't mean to mix metaphors here. But that point aside, it's this whole idea of the world's changing, and the PE world is changing with it. And it's a book that we give to every member on our team. And I think it really helps get past the emotion of change, not only in the PE world, but business in general. And it sounds like that's part of your DNA at MidOcean.
Marshall Phelps:
And whenever I hear people talk about, "There's nothing new under the sun," right? "No more good ideas." I just laugh. We're just getting started. There's just too much intellectual energy, too much dynamism, too much interesting opportunity, particularly, we're so blessed to be in this day and age, and living in a country that allows us to really get creative with how we deploy capital and build businesses. I don't know. I don't want get overly jingoistic here, but we're bullish, we're bullish on private equity going forward, for sure.
Sean Mooney:
Absolutely. And I think that's the way to think about the world and be open to it and move with it as the world changes and progresses, so that's fantastic.
Marshall Phelps:
Yeah, absolutely.
Sean Mooney:
So Marshall, one of the things, speaking of Who Moved My Cheese? and books in general, I'd really be curious, what are one of the books that you think everyone should read? Or what are some of the things that you're reading now that you think would be impactful for others?
Marshall Phelps:
I love to read. I wish I could read more. Is it General Mattis who just said, "If you're not reading every day, you're functionally illiterate." Right? And he's right. And so, now that I am back commuting to the office every day, I actually have some more concentrated reading times, so actually really try to make it a part of my day.
I'm a big fan of biographies. I am not a huge fan of business books. So I try to read as much biography as I can. Right now, I'm currently going back in time and reading a book about our first president, George Washington, who I realized I didn't know much about and thought of as this kind of legendary figure who didn't lie and something about a cherry tree. I don't know.
But it turns out this was a real human, and making real human decisions and frustrated by challenges and thrust into an incredibly challenging role managing multiple constituencies, whether it was his own people, including an incredibly headstrong but amazing Alexander Hamilton, but also dealing with his French allies, his Native American allies and enemies, and of course, his enemies, the British. And then, just really an expert, this is the Ron Chernow book by the way, just an expert treatise on what leadership means, and what it means to be leader and how being a leader could be incredibly lonely. So that's just a book I'm reading right now, it's just kind of fascinating.
I also am a huge fan of a writer by the name of Ryan Holiday, and I've mentioned him to you before. I discovered Ryan because I picked up a book that he wrote a couple years ago called Conspiracy, which is about the Peter Thiel takedown of Gawker. And if you don't know this story, you should look it up. It is absolutely fascinating. It involves professional wrestling, digital media, libel and slander, intricate plots with billionaires, and it's just a really well-written book.
I was curious about the author, and have come to know Ryan more now as an incredible proponent of stoic philosophy, which has meant a lot to me as I've navigated being a business professional, a husband and a father, and trying to have a right attitude towards life. Ryan puts out a newsletter every day called The Daily Stoic, and then more important, one called The Daily Dad, which I just found to be incredibly thoughtful in channeling a stoic philosophy into what it means to be a good man, a good husband, a good father, and a good professional, a good employee. And I think he's great. I'd encourage your readers to check him out.
Sean Mooney:
I think it's great. I'm going to sign up for both of those, because heaven knows I could use help on all those fronts.
Marshall Phelps:
Yeah, absolutely.
Sean Mooney:
It's the life's a journey, not a destination, and I try every day.
Marshall Phelps:
I'll tell you, I'm not some massively dedicated stoic, but before I really got to read Ryan's stuff, I thought of it as this almost marshal, military approach, where you were unfeeling and everything was just unemotional. And it's really not that at all. It's just, it's a means of looking through the world with reason as your guide. We build our lives, we work in high pressure careers, we're trying to be good fathers, good husbands, good wives, good sisters, whatever it is, just simple stoic philosophies like "Do not suffer imagined troubles" becomes incredibly thought-provoking, right?
Sean Mooney:
Yeah.
Marshall Phelps:
"Don't make your world something that it's not." So anyway, it's a great resource for me.
Sean Mooney:
I think those are all added to my reading list and I've written them down, so that's great. Thank you. So last question for you, Marshall. One of the things that I've really appreciated here at BluWave is I get to work with a large number of people like you who have all figured out the way that the world works, and in many ways see it in slow motion. So every day I'm learning things that I wish I knew days ago, even like today, right? And so, I'll write an email to our private equity clients, "Here's the last thing I wish I knew. What was I thinking?" And I'd be really curious, as you kind of take that lens and turn it on yourself, is there anything that now that you said, "If I could go back to my younger former self that I wish I knew then, this would be one of them"?
Marshall Phelps:
Yeah. There's a bunch of things I would tell that young man. But from a professional context, what I would say is, "Be patient." Right? There's two things, really. "Be patient. Keep your head down and you do good work, build relationships, and good things will happen." I would drill down more on the relationships part, and I've tried to tell my junior and mid-level folks over the years about this point. "This is a human-oriented business, and the relationships that you build are absolutely essential to your career arc. And the better you are at it, the higher you will go in your chosen profession."
But there's an important caveat to that. Some people collect relationships like trading carts, but they're bullshit or they're ephemeral. It's like you hear these people start talking off all the people they know, and it's such a turn off, right? You know the kind of people I'm talking about.
Sean Mooney:
Mm-hmm.
Marshall Phelps:
So investing in real relationships, right? You don't have to be everybody's best friend, but try to give somebody, when you talk to them, try to give them some value as much as you're trying to take value from them.
And the other thing I would tell my younger self is, "Try to develop those meaningful relationships with the people at your level." Right? Because you're going to go through your careers together. So if you're a young investment banker, build relationships with people in the private equity community that are your age and similarly, in corporates and otherwise. Because what happens is, in 10 and 15 years, those relationships that you've built, that value exchange that you've had over the years, develops into a real trust-oriented relationship. And I can't tell you how valuable that is as you get more senior, because you can dispense with all the, "Who is this person? Do I trust them? Can I get into business with them, et cetera." And you can really get on to trying to make things happen, right? So as I've moved over to private equity, that's been a huge boon for me, and that's what I would tell younger me. "Build those relationships as meaningfully as you can."
Sean Mooney:
I think that's spot on advice. And other than maybe the last couple few years, we've been a tribal species for thousands and thousands of years.
Marshall Phelps:
Yes.
Sean Mooney:
And life isn't necessarily transactional by any means, but certainly, it is something where you get out of things what you give in turn. And that's in some ways the reason for the name of this podcast.
Marshall Phelps:
Yeah. Yeah.
Sean Mooney:
It's just kind of this Karma School of Business in life, where just do good things with and for good people, and it spins in the right direction. And I think you encapsulated that very eloquently there.
Marshall Phelps:
Yeah. Well, thank you.
Sean Mooney:
Thank you so much, Marshall. It's been great having you on. I can't wait to catch up in real life. So next time I'm in New York or the next time you're in Nashville, let's catch up.
Marshall Phelps:
Absolutely, Sean. I'm so proud of what you've built. You did one of the most daring things I've seen done in the corporate world.
Sean Mooney:
That's one word for it.
Marshall Phelps:
And you're pulling it off. It's just awesome, just a huge amount of respect for you, so thanks for having me on.
Sean Mooney:
Thanks so much, Marshall.
Special thanks to Marshall for joining. I had a blast catching up with him. That's all we have for today. For more information, go to bluwave.net/podcast. That's B-L-U-W-A-V-E. Please continue to look for us anywhere you find your favorite podcasts, including Apple, Google, 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.
