Private Equity Spotlight: People-First Partnerships with Ran Ding & Chris Scullin

[00:00:00] Sean Mooney: Welcome to the Karma School of Business, a podcast about the private equity industry, business best practices, and real time trends. I'm Sean Mooney, BluWave’s founder and CEO. In this episode, we have an awesome guest. Conversation with Ran Ding, general partner and Chris Scullin, principal with Norwest. Enjoy.

[00:00:35] Alright, well I'm super excited to be here for this episode. This is gonna be a really fun one. And so in this one we've got a couple investment professionals from the same firm and this is gonna, it's a great opportunity to kind of banter and dig into things in a little bit different and deeper way. So, I'm very pleased to welcome Ran Ding and Chris Scullin from NorWest.

[00:00:56] Ran and Chris, thanks for joining. Thanks, Sean. Thanks for having us on.

[00:01:00] Chris Scullin: Yeah, we appreciate it, Sean.

[00:01:02] Sean Mooney: Absolutely. So, this will be fun. And as we do in these episodes, I'd love to hear first a little bit about each of your personal stories. Can you tell me how you've kind of came in, how you grew up maybe a little bit, how you got into this world of private equity?

[00:01:16] So, maybe Ran, you want to kick us off?

[00:01:18] Ran Ding: Yeah, sure, Sean. So, It's funny. I think I probably got here a little bit more by accident. My parents were immigrants from China. I moved here when I was three. It's kind of the classic American dream story. My mom was working the night shift at McDonald's. My dad was a janitor at a bank.

[00:01:36] I remember sleeping on the rug of the bank at nighttime cause they couldn't afford childcare. And so I think they did all that to pursue a better life in a different country. For me and eventually my younger sister. And I was really lucky that their hard work paid off. So I had a lot of opportunities growing up.

[00:01:54] I spent the first couple of years post college kind of wandering through the desert. I had a couple of finance and investment banking roles. And while I was looking around, I think what really resonated with me was being part of a platform or having an ability to help. People from all different types of geographies and walks of life, people with so called less pedigree, or maybe they didn't have the resume to show it, but it had a lot of potential just like my parents and we're adding value to their communities and to the people around them.

[00:02:24] And so it was sort of my small way of trying to find a way to pay it forward. Make an impact with people. Hopefully help their companies grow. Hopefully help them grow personally. And so very fortunate to have found Norwest. I joined probably about 14 years ago at the time the firm had a really rich history in venture investing.

[00:02:45] It had already been around for 50 years, really focusing on funding the best and brightest in Silicon Valley. But we were building out a burgeoning strategy, the growth equity practice where I was a third person on the team. And the focus on this side was really on working with founder owned, family owned, or what we would call owner managed businesses, mostly outside the Bay Area, really across the continent and to help them in their next stage of growth.

[00:03:14] And we've been pretty lucky, our strategy has worked over the last 15 years, the markets have been kind to us. I think in building on our success as well, we've thought about are there other ways for us to expand our strategy? Are there new sectors that we should be going after? Are there different stages of companies that we should be going after?

[00:03:33] And that's part of how we cross paths with Chris. Chris comes from a larger scale private equity background. We felt like it was an opportunity for us to expand our investment strategy towards bigger companies, later stage businesses. And so Excited to have him on the team. He joined about six months ago and he's really hit the ground running.

[00:03:54] He's actually already helped us close two investments here. So looking forward to a longer term partnership and expanding on our strategy even more.

[00:04:03] Sean Mooney: Two deals right out of the gates, Chris, that's a good pace. So, so well done. And maybe with that segue, I'd love to hear also your background.

[00:04:10] Chris Scullin: Yeah, Sean. No.

[00:04:11] And I think one of the reasons that Ran and I have partnered up so well to begin with is that there's a lot that rhymes in our background. I also didn't know what private equity was until surprisingly long after I started working in this industry. My dad trained as a Catholic priest, actually, for 12 years, and my mom was a high school teacher.

[00:04:32] They both eventually found their way into commercial real estate, and so I had them in the back of my experience as a kid. The sort of context that there was this thing called the business world. But when I went to college, I studied political science and philosophy. And I had this idea that if I could put myself in a position and make small changes that had a broad reach, that that might be a way I could create a big impact on the world.

[00:04:56] I initially thought government was a great way to do that. But as I worked in various roles in that environment, I just felt like it was very static and what mattered were elections or people and not building relationships. The side note, kind of the pivot point for me and my career and getting into private equity was that I ended up working in the white house during the Obama administration.

[00:05:15] It was the summer of 2009, kind of like the winter of business and everyone in the business world was on furlough working in the government. And when I described to people what I wanted to do, how could I build things with other really capable people and have an impact on the world? I had multiple people push me to look more deeply into kind of quote unquote business.

[00:05:35] And in particular consulting, that's kind of a business bootcamp to figure out if I like that. So I began my career just trying to figure out what businesses were and what, how this world works. I was fortunate enough to have Bain Company take a chance on me as someone with very little context at the time.

[00:05:53] And I got to work with several different businesses there, but I was also fortunate because Bain Company has an extensive private equity strategy. I spent a lot of time working with private equity firms, and it was really my first introduction to investing and really this, this idea that you can kind of put your money where your mouth is and go build with smart people and kind of see the results of all that work.

[00:06:15] That was really exciting to me. And so from there, I joined a private equity firm first, I'd say as an operating executive. And I thought about myself coming out of consulting as someone who could build businesses. And so I spent more time. Working directly with management teams and helping to scale their ideas and build them into great businesses.

[00:06:35] Obviously, early in my career, I was mostly in listen mode and help in any way I could and put some Excel spreadsheets together and just, just sort of show up and try to be a partner to them and extra arms and legs. But it just gave me this incredible learning opportunity to work with all those really talented people.

[00:06:51] I shifted from that role to a direct investing role where I led application software efforts as Ran mentioned at a larger private equity firm for a number of years. And now coming to Norwest, I feel like it's really the culmination of everything I've done so far in my career. Our mission here is to find and partner with the best companies in the world, but also to roll up our sleeves and really help them to succeed.

[00:07:12] But I still come to this job with that core of political science and philosophy. How do I contribute to humanity by building great companies that do amazing things for their customers? Their employees, their management team, and their investors. I just fundamentally think that we don't live in caves anymore because we've built increasingly great technology over the span of time.

[00:07:32] And I feel privileged to be part of that just human project to build a more efficient society by building companies that make people's day to day lives better.

[00:07:39] Sean Mooney: I love both of your backgrounds and there's certainly some consistent themes, not only with some of my friends in the industry, but also even myself, you know, so my forebearers.

[00:07:49] Came over from Ireland and most people came in, they were maids and chauffeurs, it was kind of our family trade and then kind of went through college. I was interested in government, so I went to college in Washington, D. C., and then I worked for a couple of them and I'm like, whoa, this is tough.

[00:08:07] I'm going to go left. And then the reason I ended up ultimately ending up in private equity for most of my career before this. fit of entrepreneurial inspiration meets craze that I went on was because my college roommates were all from northern New Jersey. And I go, hey, what are you guys going to do?

[00:08:23] And they go, we're going to go do investment banking. And I said, what's investment banking? Because before that, I like, my summers were spent working in manufacturing plants. So I was like, okay, I guess I'll go do that. What is that again? And then away we go. So I love that background, but I also love this missionary sense of building something, and that's a common theme of why people get into this industry of PE.

[00:08:47] It's a value creation game and I think probably maybe when all of us started certainly when I started I was like, oh my gosh I wish I was 10 years older because it was an arbitrage Now it's about building things in many ways and maybe there's a little bit of both

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[00:09:23] Sean Mooney: Before we get into kind of the meat of our conversation, I'd love to also like peel the onion back just a little further and get to know something about each of you that we'd know you better if we knew this about you. So Ran, what would be maybe one of those things that we'd know you better if we knew this?

[00:09:39] Ran Ding: Yeah, Sean. So this is. Maybe a little embarrassing to share, but I grew up playing instruments and I enjoyed playing music and making music. And I got a couple of young kids running around at home now, so it's a little harder to find the time. But in my twenties, I produced a handful of songs that actually, I think people still enjoy today.

[00:10:00] They got a couple million views on YouTube. And so that was a pretty cool experience.

[00:10:06] Sean Mooney: That is insane. That's not embarrassing. That's the ultimate flex.

[00:10:12] Of course, one of the great perks of where we situated BluWave is it's in Nashville, and so music city here. I love music. I'm envious of those who have it, and I have absolutely zero, zero, zero skill. I don't think I can even snap my fingers in tune. And so I'm curious, like, what kind of music was it?

[00:10:32] What was the genre, if you will?

[00:10:34] Ran Ding: I

[00:10:34] Sean Mooney: think

[00:10:35] Ran Ding: nowadays it's probably a lot more common, but I was classically trained back in the day and I enjoyed listening to other types of music, pop music, rock music. So it was always about trying to fuse the two in some way. And I think nowadays there's a lot more genre bending music.

[00:10:54] There's mixing of jazz and pop and country and pop. And so that was sort of what I was trying to do back in the day, but very poorly.

[00:11:04] Sean Mooney: Oh, I'm going to have to salute this and see if I can find it on YouTube. That is really cool. Not many people can say they've got a couple million downloads. So how about you, Chris?

[00:11:15] Chris Scullin: I was going to say first shot. I mean, if this podcast provides no other value, I did not know that story myself. So I'm going to be joining you in the YouTube sleuthing. So I'm not sure Ran would have ever spontaneously volunteered that information. Now, I'd say too that we share a love of music. I actually keep a guitar in my office for any kind of downtime during the day because I grew up playing guitar and recording music and writing songs.

[00:11:41] And to this day, whatever free time there is, I do spend on music. 'cause I find it a, a way to use my brain in a different way and think through a more creative strain. Now, that's free time as it is, because that free time, as Ran mentioned, is increasingly small because I have a four year old, a two year old, and a ten week old at home.

[00:12:02] Oh, wow. And so, really, the majority of my time when I'm not working with companies or my colleagues and partners here at NorWest is spent with them. As I think about the goals in my life, being a great investor is really important to me. But really I prioritize being a great parent.

[00:12:18] Sean Mooney: That's awesome. And so no doubt there's going to be a Norwest band in the future.

[00:12:23] Ran Ding: Think about Chris's last six months, close to deals, have a baby. I'm pretty convinced he just doesn't sleep. You know,

[00:12:30] Sean Mooney: where every coffee machine is within a five minute walk. I'm sure.

[00:12:33] Chris Scullin: I'd say Sean too. It's like the parenting and music come together increasingly as my kids get older as well. Like last night I was sitting down, I'm experimenting with some electronic stuff and I had some equipment in front of me and my son came up and started playing and.

[00:12:46] It's just really cool to see how universal that language is, that even as my kids are small, they can really start to appreciate not just consuming, but creating something. And I think it's just a good discipline for us all to have.

[00:13:00] Sean Mooney: It's so good for life and mood and mental health. And there's even a lot of research, if you listen to some of the Huberman Lab episodes that are so good for all this.

[00:13:09] So I, I appreciate it and I'm jealous. If we turn the page here and we get into some of the meat of the conversation. Let's just set the stage a little bit about like what types of companies you're working with together at Norwest. So Ran, you want to give us maybe a quick overview?

[00:13:24] Ran Ding: Yeah, sure. So as I mentioned before, the primary focus here is on working with founder, family owned, owner managed, and what I would call like pretty capital efficient businesses, Chris and I work mostly on software data, maybe some tech enabled services sectors, but.

[00:13:43] That strategy extends beyond that to consumer brands, to franchises, industrial services, to healthcare, a number of different areas. What's interesting about these sort of companies is most of them because they've been run by founders or they've been run by people who have meaningful stakes in the businesses, the incentives have been aligned all along to kind of grow in a sustainable way.

[00:14:08] Usually what we find with these businesses is that they're really, really strong. In certain areas, they've established themselves in their respective market niches. And they're kind of growing really nicely on their own without any outside help, which is impressive in its own right. If you compare that to a lot of companies who receive funding early and I'm sure they could grow on their own as well, but they've had help all along the way.

[00:14:35] What we also noticed with a lot of these businesses, though, is. Time is limited, right? And so they've prioritized certain things, oftentimes serving the customer, building a good culture. I think a lot of these businesses are very good at these things, but they've probably also de prioritized other areas.

[00:14:55] And those are things that may not have hindered growth at an earlier stage for them, but as they turn the corner on, let's say, 10 million of revenue or 20 or 30 of revenue, in some cases higher, you experience a lot of different growing pains. And we've been lucky to sit courtside, so to speak, at a lot of companies that have gone through that journey.

[00:15:19] And so what we try and do is we apply a little bit of pattern recognition to that, help these companies in those ways, Hey, maybe before you think about doing this, have you thought about maybe adding a bit of guardrail here, right? Or you might encounter this issue in 12 months. So let's start planning for it now.

[00:15:36] And those end up being the companies that we work with. The other attribute I'll mention is again aligned with sort of these founder family owned owner managed businesses because these companies haven't necessarily had access to outside partners or capital and in a lot of cases they didn't necessarily want.

[00:15:56] Access to outside partners. They've taken a much more long term oriented approach to thinking about growing their business, scaling their business. We're unique here. We have one single limited partner. We've been working with the same limited partner for over 60 years. What that allows us to do is have a lot more timeline flexibility with companies.

[00:16:20] So if you think about a typical private equity investment horizon, that might look like three years or five years. And certainly we have a number of companies that end up going through that type of life cycle with us, but we also work with companies that. Want to grow for 20, 30 years. And maybe we're along for that journey for a decade or two and having that flexibility allows for a lot better alignment with some of these companies, especially the ones that are going to be more long term oriented.

[00:16:49] Sean Mooney: That's a huge advantage. If you can go longer. And have that perspective and that flexibility and that intimacy with your LP so that you're also not on kind of that three to five year sprint that I found myself in so many times where you're like, raise, deploy, raise, deploy kind of a thing. So that's wonderful.

[00:17:08] Hey, as a quick interlude, this is Sean here. Why did you dress one color? Quick question that we regularly get. We often get people who show up at our website, call our account executives and say, Hey, I'm not private equity. Can I still use BluWave to get connected with resources? And the short answer is yes.

[00:17:24] Even though we're mostly and largely used by. Hundreds of private equity firms, thousands of their portfolio company leaders. Every day we get calls from every day top proactive business leaders at public companies, independent companies, family companies. So absolutely you can use this as well. If you want to use the exact same resources that are trusted and being deployed and perfectly calibrated for your business needs, give us a call.

[00:17:48] Visit our website at BluWave. net. Thanks. Back to the episode.

[00:17:56] As we kind of take this a step further here, Ran, one of the things I'm always curious about. And really not only to understand how you think, but also as a CEO and a founder now myself, like what's important to building a business so I can think about here's things that I should be thinking about. What are some of the things that you look for in maybe traits or like a scorecard as you look at companies saying, Oh, this is a good company or can or will be.

[00:18:23] Ran Ding: I think if you look at any business 101 textbook or your first investment class, what they talk about is. Market, it has to be a good market. The business model has to work. There has to be sustainability around it and management. And for the first two things, for sure. I mean, we dive deep. We want to make sure that the companies are set up for success before we get involved.

[00:18:48] I think because of our emphasis on these founder or owner managed businesses, we probably do end up spending an outsized amount of time really working with management and evaluating. And it's a bit of a two way street, right? We're evaluating them and they're evaluating us. I find that to be one of the most important ingredients to having a good investment partnership and having a good investment outcome is The people who are managing this business do we think about the world the same way are we both looking to achieve the same goals and then there's a lot of.

[00:19:26] What i would consider to be more qualitative attributes that we look for are people competitive but not sharp elbowed are they open to feedback are they open to accepting help are they willing to push back i think on the other side right when they feel like we're wrong and we want it to be a proper kind of peer to peer dialogue and so we do probably end up spending a ton of time on that beyond sort of the market and the business model pieces.

[00:19:53] Sean Mooney: I like that approach, having now been on both sides, right? Most of my career prior was as a partner on an investment team at a PE firm. And now as a founder of a business, having those relationships in sync are so important. In some ways, they're like a marriage for a period of time and having that alignment is something that at some point, BluWave will have a capital partner and the things that you're talking about resonate because everyone's capital is green.

[00:20:22] Everyone brings kind of things to the table, but having someone that really thinks about that alignment intentionally is also super, super important. So I love how you all Really prioritize that because at the end of the day, if you're not pulling on that or together from the board meetings to the day to day meetings to what happens on your Monday morning meetings at both the OpCo and the P firm, you're going to start zigzagging all over the place and it's just going to be so much harder than it should.

[00:20:48] So, I love how you kind of set that and frame that. Chris, how about yourself? What would you maybe add to that?

[00:20:54] Chris Scullin: Yeah, Sean, I was just going to add. The emphasis that Ran laid out, we find ourselves talking about it often, right? That this is a people business. It's a relationship business. I think from the outside in private equity seems like kind of a mechanistic things look like this.

[00:21:10] Therefore we will do these things and therefore we will sell it at this time and we will get this outcome. Like that's not at all really what we show up to work to do. This is a people and relationship business and we build those relationships. It's also incredibly Clarifying, from our perspective, in terms of which situations we engage with, how much time do we spend with each of the companies we're getting to know, really comes down to what we think of the relationship that we're building.

[00:21:36] And do we think that that's going to both allow us a higher percentage chance of winning the deal? But also allow us once we own the company to have a differentially great outcome because of the basis of trust that we're building and oftentimes that takes a long period of time. And so I think the median time from an initial introduction to a deal is something like 18 months here often.

[00:22:02] And a lot of those deals are sort of just direct conversations, proprietary deals as a result of that relationship building. And then I'd say to Sean, maybe just outside of that, as we think about maybe some of the business schooly things, obviously we think about retention, all the good metrics that everyone else thinks about.

[00:22:18] But one of the things that I think people often overlook, though it should be incredibly obvious, is just how much demonstrable value is the company adding to its customers on a regular basis? So is this actually the best technology solution? Is the business earning the trust of its customers over time and giving them the right to sell them more over time?

[00:22:37] Are they building for the long term success of both the business and their customers? As we think about those kind of things and just kind of the fundamentally, what does this look like to the end user? It's something that's natural to us because we're both here to try to build great businesses and create efficiencies.

[00:22:53] And so as we work with these founders and think through these things. It really is the fusion of that. Are they doing the right things in the world and are we able to build a great relationship with them? And it becomes incredibly clear to both parties to move forward with a relationship.

[00:23:10] Sean Mooney: That's another, I think, just great foundational perspective.

[00:23:13] Chris, if you think about your business, are you solving a problem or are you adding value? And it's so often people get caught up in everything else, a lot of times I'll, I'll get younger folks who are coming and they're thinking about starting a company and you talk to them. Well, what problem you solving?

[00:23:29] You want to know? Is there a market? I think, but don't be like, what are you solving? What's the value you're adding? And like, well, I just want to start a company. And you see this like I'm sure you see this much more than I but you'll see companies particularly in certain segments of the economy where they will just hire up the most expensive sales team and just push this rock uphill the whole way and they'll brute force ARR to a certain level over time at the expense of hundreds of millions of dollars and then as soon as you take that capital away the sheer momentum of the thing unwinds.

[00:24:05] And that was maybe more of a vestige of like the last peak of the economic cycle where money was free. But what you're talking about, I think, is so foundational. Like, build a business that people want. It's pull versus push. It's something that solves a problem and creates value. For all the business builders that are listening to this, do as Ran and Chris have said.

[00:24:27] Be people first and solve a problem and add value.

[00:24:30] Ran Ding: One of our partners here talks about this idea of vitamins versus painkillers. I think that's a really good analogy. It's ironic because actually on our venture team, we have a investment in a vitamin company that's doing extremely well. But just generally speaking, are these companies really solving for the pain points?

[00:24:48] And is this something that you just, you can't go about your day without, right? And I think that underscores some of the. Areas that we would have the most interest in. Yeah.

[00:24:58] Sean Mooney: I

[00:24:58] Ran Ding: love that. I'm

[00:24:59] Sean Mooney: going to borrow that saying, by the way, I think it's a really good one. And so maybe as you talk about this, so you've found the business, you've reached the partnership, you have this alignment that you've talked about.

[00:25:11] There's a reason for both of you to be together in this symbiotic value creating relationship. Now, how does your firm, how does Norwest go about kind of value creation? What resources are you supporting? So Chris, can you maybe weigh in a little bit on that? Sure,

[00:25:28] Chris Scullin: Sean. Yeah. And look, I think strategy 101, right?

[00:25:31] So we line up all of our activities with what our core strategy is in building these relationships and partnerships with founder owned businesses. And so. That extends to our value creation. So if we approach every deal as a partnership, then it's really incumbent on the lead partner or partners, maybe Ran or I, and some of our other teammates are involved, really incumbent on us to take principal ownership for that relationship with the portfolio company.

[00:25:58] We don't believe in sort of handoffs to other folks. Once a deal gets done, the midnight call is to the partner on the deal. And we're always available to the people that we've. Built this relationship with, cause that's just part of being a good partner and extending that relationship. As we approach that relationship, we do it through what we consider an invited guest approach.

[00:26:20] So, in that approach, we respect the deep history of the business before we arrived, and we expect to leave an even better business when we exit. So during the time that we're partnered with the business, which we hope is a long period of time, we want to be strong partners and create differential outcomes, but without having to do things, quote unquote, our way.

[00:26:41] We believe every business has its own set of challenges and its own unique path. And we want to tune our approach to that particular situation. So with those principles in mind, what that looks like tactically is that the lead partner on the deal, the deal team works with the business and pulls in the resources of our platform on what we describe as a pull versus push model.

[00:27:05] You were just mentioning that, Sean. And that's based on the priorities of the business. And so some of the key areas where we have full time resources, a deep library of senior advisors kind of demonstrated team capabilities, I'd say include things like go to market, customer success, talent and recruiting, core operations, metrics, tracking, dashboarding, and financial reporting.

[00:27:30] And then acquisitions, just to hit a little further on that last point, often the companies that we're partnered with have gotten to where they are organically. And we believe wholeheartedly in continued organic growth for those businesses. And we don't often pursue a strategy where it's just okay, we can go buy a bunch of other stuff and put it together.

[00:27:50] But our job is to go find great businesses. And we are speaking to about a thousand family founded businesses per quarter. And through that volume of conversations. We're identifying a lot of interesting other businesses that might make strategic sense, both for individual platform investments, but also as potential combinations with the businesses that we've already partnered.

[00:28:15] And so the result of that is oftentimes we can create a sort of one plus one equals four with a highly strategic and synergistic. Combination play that allows some of our companies to have a differential outcome than they might have had on their own or with another partner, just given the sort of emphasis that we put on deal sourcing and company sourcing.

[00:28:37] So that's an area where we tend to go deep and where we have capabilities that we can kind of directly add that tend to be very complimentary to the businesses that we partner with. So overall, putting that together, I'd say it's not a playbook where you go do X, Y, Z and get a specific outcome. We really think about from the first conversation through to our eventual exit, a collaborative dialogue with the founders and the team to align on the right things to do, and then pull in resources accordingly, just keeping that relationship at the center of everything.

[00:29:10] Sean Mooney: I love that and for me since i grew up in texas i only know how to speak metaphorically so everything has a like and an as and so as you're talking as a mind is it like real life and this will be relevant for younger kids to or is this like a real life kind of story where you get invited over for a barbecue and you being the invitee you're bringing a bottle of wine they're inviting you in and then you're cooking up the burgers and and whatnot and you say hey i notice there's that trampoline over there you And it's half assembled.

[00:29:38] You want some help? Yeah. It's like real life story. You know, you go to your friend's house and the trampoline assembly process is insane, by the way. That's a

[00:29:48] Chris Scullin: good version, John. The bad version is you're just standing by the barbecue commenting on the effectiveness of the meat cooking, right? So

[00:29:56] Sean Mooney: you guys are coming in, you're helping flip the burgers and you're like, Hey, I got my tools in my trunk.

[00:30:02] You want some help with that trampoline? And they're like, yeah, that'd be great. I love that. It's a good approach. There's different approaches, certainly in private equity. Some are very prescriptive. This seems to get that middle right. Like, where do you need help? And then we're here to provide that, and we're going to be partners with you through it.

[00:30:21] And at the end of the day, we'll probably also help with the dishes. Right before you leave. That's a great example. So maybe, as we kind of turn the page here again, every time is a fluid time. The only constant in this world other than like death and taxes and a couple other things are change. And so maybe, what are some of the things that you speak with and collaborate and give advice to maybe perhaps your colleagues do?

[00:30:47] With the companies that you've partnered with to kind of manage through times like now we're changing times in general.

[00:30:54] Ran Ding: Yeah. Sure. Sean and I would say situations are always changing. The earth is moving beneath our feet. And so we do have to have a level of nimbleness and adaptability with our companies.

[00:31:06] I think the starting point is. Even as we enter into a partnership, we're trying to align with companies and operators around what our goals are collectively. That's number one. And then number two is what are the tactics to allow us to achieve those goals? And probably the most important piece of coordinating towards a successful outcome for both sides is having constant dialogue around these things.

[00:31:35] We understand that things will change. What we would love to be able to do is hear about the changes or anticipate the changes sooner. And that kind of goes both ways. And that can only happen if we have a really strong foundation of trust. So a lot of the advice or suggestions that we give to our team.

[00:31:57] Upfront and throughout our partnership is really just around, Hey, this is going to be a long term marriage. Like we are here to support you. We made this investment, not just because the business is interesting, but because we really want to back you as operators. And the best way for us to help is to make sure that there's consistent transparency and communication.

[00:32:20] You share the good news, but you also share the bad news as early as possible. And that allows us to really maneuver and prepare for things in a way that's probably going to help all of us collectively, more so than keeping things back or not being nearly as transparent or in some cases, even just waiting a beat to see how things play out.

[00:32:42] So that's a lot of what we talked to our management teams about is just making sure that there's constant dialogue that we can problem solve as a team. And behind Chris and I, there's a. Broad set of resources and network where we can bring in to help address certain problems, most likely problems that other people that we know have dealt with before.

[00:33:04] And so having that village behind us is going to make it so much easier for us to navigate these challenges together, whether it's today or in the future. And so having that really strong two way dialogue is probably what we emphasize here. I think

[00:33:18] Sean Mooney: that's great. And it's this whole idea of. You got to put your cards face up.

[00:33:23] No problem. Share is a problem halved. Right. And as I reflect back when I was in your shoes, where it would go wrong is you would have maybe your executive team where a it's super lonely at the top of these companies and trying to figure this all out yourself with these incredibly dynamic organizations is I know personally now super hard, but then also is this idea that where I would see relationships go wrong and prior investments made was where there wasn't that communication and it was almost like Hope is the strategy it'll just get better and I just want to sit on the bad news and sit on the bad news and and then it gets bigger and bigger and then you're showing up at the company like looks like there's some little bit of challenge there and like no no it's nothing and then the next time you see him is bigger and then bigger and bigger and then it probably makes some of us think about some of our childhood stories of like trying to dig out of getting in trouble and just got worse and worse.

[00:34:14] And so the way that you're, I think, articulating it, I think is really important. It's like, be open and also like the point, like, share the good news, too. I think a lot of people have a hard time, like, patting on the back and celebrating the small things, and I know I have that problem. I think that's really good, anyone thinking about taking capital from a private equity firm, a growth equity firm, a venture firm, any kind of capital.

[00:34:37] What Ran said here is so foundational in how you should approach that relationship. So put a little sticky note on this part of the conversation when you take capital, and that's going to make things go so, so much better. So Chris, how about you? What would you add to that?

[00:34:51] Chris Scullin: I think Ran said it well, and so much of what he's talking about is trust.

[00:34:54] And if you have the right basis of trust and open dialogue, you can do a lot of great things. And the question presupposes that now is a much different time of change than others. I mean, certainly Markets are dynamic and managers and teams founders just have to be reactive to the environment around them, but they also have to build for the long game and managers who focus on the next quarter cycle are often just missing the forest for the trees.

[00:35:22] And we spoke earlier about our sort of longer term investment horizon. Part of the benefit of that strategy is that we can sort of look through some of these near term disruptions and think about, are we building to the right end state and doing the right things for the customers? So that we can all win together, and what is this going to look like 5, 7, 10 years from now is a lot more important than what it looks like one year from now in most cases.

[00:35:50] Sean Mooney: Another piece of like timeless advice, one of the metaphors that are too often used in PE, play chestnut checkers. Right. And like, play the long game, don't just like move one move ahead. You have to do that as part of execution on a strategy, but like, where are you going to be? Who do you want to be when you grow up?

[00:36:08] 3, 5, 7. Ultimately even 10 years, right? Even if you're on a five year investment cycle, you're selling to the next five year cycle to the next person. So I love that piece of advice as well as like play the long game is we bring our conversation full circle here. I'd love to kind of go back to some of the things that I also personally love as I've tried to Frankenstein myself, as I try to do the Walmart form of innovation on myself, because if I have to come up with things, I'm in trouble.

[00:36:35] And so one of the things I love to get personal advice on is. If you were to go back and meet your 22 year old self, and you'd give yourself a piece of advice that you wish you knew then, what would one of those things be?

[00:36:49] Ran Ding: I mean, just reflecting back, first of all, I'm not sure if the 22 year old version of me would listen to this advice, but certainly, as I think about Our industry and a number of other, what I would consider to be fast moving industries, it invites a certain personality type.

[00:37:09] I mean, just to generalize, I think we're all pretty competitive. We're all pretty goal oriented. Early on, it starts with, Hey, this person that I know is doing X over time. It might become this company that I know is doing X and we're always trying to solve for X. And there's always a new goal or a new milestone on the horizon for us to go and strive for.

[00:37:32] I think that's all great, but. I think time also moves pretty quickly. You'd blink of an eye, 10 years goes by 20 years goes by. When I think about my journey from 22 to now, I wish I had spent a little bit more time, maybe enjoying the process, enjoying the journey. I was so focused on hitting that next goal and looking back on it.

[00:37:54] I think some of those moments, even though it felt like a struggle at the time, I look back on them fondly. I just wish we were able to all collectively appreciate the journey a little bit more and I think to go along with that there's always going to be some other benchmark that people can go and push towards and I think having goals is good, but.

[00:38:19] Each person is, is unique. Your strengths and weaknesses are unique. Your personal interests are very unique. And when you're young, it's a little bit harder to figure out what that is that you want to do until you end up looking at templates and what other people are doing. I love it. If people were able to just have the courage to run their own race a little bit more, I think ultimately not only does it make them more satisfied through their career, it probably also makes them more successful.

[00:38:50] It allows them to really cater to the things that. Give them energy and is more attuned to their own superpowers versus just trying to force fit their skill set into something that someone else is probably more uniquely advantaged to do. And so I think both of those things tie back to just, yeah, hey, take a breath.

[00:39:10] Life is long, but it's going to go by pretty quickly. Like You gotta enjoy the time that you have and hopefully you're doing it in a way where you're fulfilling your own personal interests as opposed to just striving for somebody else's goals.

[00:39:25] Sean Mooney: I think those are great pieces of advice, one of which I think I took your advice on when I was a younger version of myself, one of which I still struggle with.

[00:39:32] And so this whole like, enjoy the road is something that I have not mastered, but I know it and I try to be better at it, but it's an imperfection that I struggle with. And so, I don't know that 22 year old Sean would listen to it, but certainly nearly 50 year old Sean is still struggling with it. But it's such good advice.

[00:39:51] I mean, you go around the track once. And so, take moments to look left and right and breathe in the fresh air. Doesn't mean you can't be racing. You don't have to have polar thinking. And then run your own race. I was on the same hamster wheel that everyone's on and then when I was in my younger forties, I decided to do what everyone thought was the worst midlife crisis in the world and start a company.

[00:40:14] It has aged me supernaturally, but it's, it's been, it's been a ton of fun. I love both of those pieces of advice. So Chris, how about you?

[00:40:22] Chris Scullin: I would say the other thing that folks probably listening to this podcast, the type of folks that Ran was describing at 22. Or to being pulled into something that feels somewhat programmatic of, Hey, like you go to an investment bank for a year and a half, you recruit two months into it.

[00:40:41] You then do two years in this job and then you do this and then you go here. And I always felt like I was getting the next achievement or the next golden ring that I could reach through as my merry go round came around to put it in like the catcher in the At some point in my career, I realized that it was less about my career being like an elevator that just kept going up and I was always worried I'd get off on a floor and the elevator would just keep going and I'd kind of be stuck there.

[00:41:10] But I realized at some point it was less that and more a series of adventures and experiences. As long as those experiences were true to me and what I was getting energy from. As long as I was learning things through those experiences, as long as I can articulate all of that to someone else, I was going to get the pass to try something else in a few years.

[00:41:29] And so in my career, I've been a consultant, and then I was an operating executive investor. At some point I was, I started working on bigger deals. I decided to want to work on smaller deals. Like I've sort of tried to take this approach over my career to try to take on new adventures is a way of staying energized.

[00:41:47] But I didn't realize that till a few years ago. That I had that flexibility. And so I just encourage people to think about a little bit to Ran's point, where you get energy is where you're going to be the most successful. And the most important thing you can do is finding the thing that gives you that energy.

[00:42:03] That's going to be the accelerator on your career. And it's going to be much better than just following someone else's footsteps. You're going to find the best adventure for you.

[00:42:12] Sean Mooney: And it's another great piece of advice. Like you said, people in the pea industry, they're kind of cut from similar pieces of cloth and it's just like this insatiable need for ribbons and medals and badges and trophies and it was like, I described my wife.

[00:42:25] It's like, it's kind of like a sickness. I can't not, but the way I think two things you said is like, I would get caught in this mindset of like, I'm looking at whatever my lifespan is, is like, that's what I'm going towards. And it's just this one journey. It gets exhausting at times, right? And so, one, I think your point about, like, finding the places that give you energy is really important, because, like, you just can't keep, no matter how supernatural they are, I try, it's like, but you just get exhausted.

[00:42:55] And then to your point, I really like the other part as well, where it's like, break it up. It's a series of adventures, it's not like one elevator vertical. If you break it into little adventures, then it's not so like, wow, I got so far to go. It's way over that horizon.

[00:43:10] Chris Scullin: It's more like lily pads, I think, you're jumping from one thing to the next.

[00:43:13] Yeah,

[00:43:13] Sean Mooney: no, I think it's another great piece of advice. And so is we kind of bring our conversation for loop the other thing i want to get your perspectives on his books is we all know really good business builders everyone kind of reads veraciously through a whole sorts of medium but also kind of shares this kind of perspective because once again like the only way i've gotten.

[00:43:36] As modestly far as I have is by just kind of copy pasting other people's figuring out stuff. Maybe with that in mind, Ran, what would be something that you've read that has made an impact on you and maybe some of the takeaways?

[00:43:51] Ran Ding: So the first one is called The Outsiders. It's written by this person named Will Thorndyke.

[00:43:57] He actually was a multi decade successful investor. He's been a professor and he wrote this book profiling a handful of CEOs, icons in their industries that were able to generate outsized returns. And I think a core thesis around it was just that these people were doing things slightly differently.

[00:44:17] That's why they were outsiders, right? But also another ingredient was that beyond being good operators, they're really good capital allocators. And when I think about that term, it's really just applying an ROI mindset to not just deploying capital, but also deploying resources, deploying time. And they had unique ways of doing that.

[00:44:38] This was a pretty foundational book for me. I read it probably when I was just starting out in the industry. I'm very lucky because on a full circle moment, 10, 15 years later, I actually share a board with whale today. And so I'm very privileged to get additional insights from him around CEOs, but also other ones that he's come across.

[00:45:00] So that's definitely one that I recommend to people, especially as they're coming into the investment industry, trying to understand just how businesses work and how operators work. And then the other one is a little bit more on the personal side. It's this book called The Obstacle is the Way. It's a set of short stories and statements about people just encountering obstacles and challenges, and it ties back to ancient philosophy and certain business case studies, but I think the core tenant of the book is just, look, everybody is going to come across challenges and for something to happen to you is very objective, is unchangeable, but The way that you react is completely within your control.

[00:45:42] And so nothing is necessarily good or bad unless you make it. So, and every situation. Even if it's a very challenging situation can be thought of as a potential opportunity. And so that's something that I go back to often. I mean, I think we all encounter different challenges in our life and there isn't necessarily always a solve for it.

[00:46:04] But I think having the right mindset allows you to navigate these situations. In a lot more effective way, at least for me personally,

[00:46:13] Sean Mooney: those are sound like two great recommendations. 1, I can see from outsiders, almost the synergy of your prior point about running your own race. Don't just kind of do as everyone else does and try to think outside of the box and then the obstacles away, like, what a great thing to read right now with the world changing quickly.

[00:46:33] And the obstacles seemingly everywhere, right? At least many places. And that's something we work on here every day with our team is. It's human nature, for so many anyways, is if something gets in your way, do you stop? And so it's like, how do you go now? It's how do you go to the left, to the right, above it, below it, and keep on moving?

[00:46:52] And just to your point, I love how you added was, it's not a good thing or a bad thing, it's a thing. So let's just go around it. I'm looking forward to reading both of those. I haven't read either. So those will be, hopefully, just one Amazon brown bag that shows up for two bucks. All right, Chris, how about you?

[00:47:08] What's something that you're thinking through, or a couple?

[00:47:10] Chris Scullin: Yeah, maybe I'd have two more for your basket, Sean. On the business side, for me, kind of foundational was this book, The Innovator's Dilemma, probably not rare or unheard of amongst your audience, but I spent a year while I was in business school working with Clay Christensen and just sort of soaking in his worldview.

[00:47:30] And the thing that I took away from that, beyond just the lessons in the book, is just the overall mindset of, he would describe Michael Porter's Five Forces as a sort of static view of the world. Obviously it's not, that's one interpretation, but this idea that really you should be thinking about things in addition to just how they are today, but also dynamically.

[00:47:50] And what Clay was always trying to capture was this idea that things are always changing. And as the environment around you changes, as the forces that you're subject to buffet you in different ways, you have to be mindful of what's going on around you and change your tactics so that you can maintain the same outcomes.

[00:48:08] And so competition changes, different people are going to come into your life and ask you to do different things and always centering yourself on what am I trying to do? Or if I'm a business leader, what is my business trying to do? And reacting to that environment dynamically, I think was the big lesson that Clay left us with.

[00:48:25] On the personal side, there's this book, The Happiness Hypothesis by Jonathan Haidt. He's since become well known for some of his later books. I believe this is his first book. And the idea that he had was that The things that we can most reliably lean on to develop personal happiness are things that science has validated make us happier, but also that human traditions have enshrined for millennia as making us happy.

[00:48:53] And when you combine those two observations, there's a very clear framework on both managing the kind of baseline of your happiness through things like mindfulness, um, things like centering yourself and approaching your day in a more positive perspective. But then also surrounding yourself in a positive environment and learning, as Ran was discussing, to understand that your environment doesn't control you and that you can shape the environment around you with your attitude and with your response to things.

[00:49:22] And that led me toward more mindfulness. And I've been on a few meditation retreats. It led me toward stoicism and some ancient philosophy as a philosophy major that kind of resonates with me. So, There's some real lessons to come out of taking a proactive approach to managing your happiness.

[00:49:39] Sean Mooney: Two other great Recommendations and perspectives that I need to add to my new year as well and somehow it's just thinking about this.

[00:49:46] Like, how have I never read the innovators dilemma yet in the grand like bibliography of like the pillars of business? I was like, I've never read that yet, but it's that whole idea. You point to is like life and business. It's a three dimensional multiplayer game. It's not like points in time and you gotta be mindful of that.

[00:50:05] And then speaking of mindfulness, that's another thing that like, how do you kind of just find your center and calm? I've got an obscene amount of minutes on my headspace app. And so it's, let's just say for me, it's a, it's a journey, not a destination. And so, but I'm For everyone. I love those. So now it's going to be four books that show up.

[00:50:26] Hopefully all in one brown bag. It might be four, but we'll find out in a couple of days. So, so Ran and Chris, this has been a really, really fun, insightful conversation. I feel like I've gotten a free MBA class in business and life here. I do appreciate that. And I've learned all sorts of things I wish I knew before, and that's really a tremendous gift.

[00:50:46] So thank you so much for spending your time with us here today. Thank you, Sean. Yeah, this

[00:50:51] Ran Ding: was fun. And I really appreciate just all that you offer as well to certainly the investment world, but also the community. Right. And yeah, it's been fun. So hopefully we can revisit this sometime in the future.

[00:51:03] Chris Scullin: Yeah, Sean.

[00:51:04] Hopefully it's clear. We resonate with your mission to sort of humanize this industry and we believe it's a people business. And so thanks for doing what you're doing.

[00:51:11] Sean Mooney: Oh, a thousand percent. Thank you all for taking the time because I know you have crazy schedules speaking of like the journey and the destination and the craze.

[00:51:19] And so for you all to do this is tremendously impactful and giving. So thanks so much.

[00:51:33] That's all we have for today. Special thanks to Ran and Chris for joining. If you'd like to learn more about Ran Ding and Chris Scullin and or Norwest, please see the episode notes for links. Please continue to look for the Karma School of Business podcast anywhere you find your favorite podcasts. We truly appreciate your support.

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[00:52:21] Give us a call or visit our website at BluWave. net. That's B L U W A V E and we'll 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.