Private Equity Resilience: Turning Adversity Into Opportunity

[00:00:00] Sean Mooney: Welcome to the Karma School of Business, a podcast about the private equity industry, business best practices, and realtime trends. I'm Sean Mooney. BluWave's founder and CEO. This episode is a special one where we talk about taking on adversity and reframing risk into opportunity. Enjoy.

[00:00:34] Today we're gonna talk about a topic that is front and center for, I think almost anyone right now who dares to read or watch the news. It's this whole idea of resilience, tenacity, and grit. I'll share a little bit about my perspective in this episode, and then we're gonna listen to two really harrowing stories told through friends of ours in PE that I think will change the way you think about a lot of things.

[00:00:58] as I reflect back on my own time in private equity and now serving a huge swath of the PE industry where we get to regularly interact with, you know, thousands of these top business builders in the private equity industry, I've always thought of the industry as having plenty of, you know, smart people.

[00:01:15] But its true. Superpower has been not only being smart enough, but having off the charts resilience, tenacity, and grit. And so let's define these. I think about resilience as being your immediate response to setbacks or difficulties. It's your ability to bounce back quickly when something goes wrong. It's foundational because it helps you manage the initial shock of adversity and positions you to move forward.

[00:01:40] Then as I think about tenacity, this comes next because you've now, you've recovered tenacity. What pushes you forward through, you know, these continuing series of obstacles. It's about maintaining momentum and determination after resilience gets you back on your feet. And then grit is kind of the overarching framework that you sustain over time.

[00:01:59] It's that long-term commitment and passion that you have to maintain and persist as challenges come and go. Grid always helps you kind of consistently push forward. Toward meaningful goals, reinforcing resilience and tenacity all along the way. So I think they all work really well together. And I, as I mentioned, I think this is kind of the secret sauce to the people in that industry of private equity.

[00:02:21] These are the private equity industries, more undercover strengths that let them not only overcome continuous obstacles, but also turns individual instances of risk and uncertainty into opportunity. So let's maybe dig into some of the more spectacular periods of risk in. Kind of our modern times that should be, I think within the, the consciousness of many of us, or certainly within, even if you were in a child during these times, you'll, you'll kind of get it and know it through the lens of just observing life.

[00:02:49] And maybe first I would go back to 2008 during the period of the great Recession. For those of you who are adulterer in this time, it felt like the world was coming apart. If you were younger and maybe you didn't get to see it as much, watch the movies, the big short or margin call, and you'll really quickly understand that During this time, the entire financial system globally was locking up and many of us thought that we were gonna plunge into the next Great Depression, which is why it was ultimately called the Great Recession because we didn't go all the way there.

[00:03:22] During this time, banks that were storied institutions were collapsing left and right. Credit was freezing, panic was spreading everywhere. I remember vividly there was a weekend, this is in greater New York City area. We all had kind of some inroad into getting kind of backdoor feedback from the Fed through people we went to school with or or friends of friends.

[00:03:44] There was a weekend where many people in the Federal Reserve and just broader in the financial institution thought. That there wasn't gonna be any cash in the ATMs by the time Monday afternoon was reached because there was gonna be a huge run on the banks. Everyone's playbooks were useless. And I remember vividly this time, 'cause where I was living at, we had companies all across the country in different sectors, and the industry at large was kind of freaking out.

[00:04:10] But then everyone reached a period of calm. And private equity in general stepped in. We sized up the chaos, we adapted quickly. We did whatever it took to keep our businesses alive, including injecting all sorts of capital. And then what happened? Many of those companies coming outta that era didn't just survive.

[00:04:28] Most actually became stronger, smarter, better prepared to handle whatever was next. They thrived. And then maybe if we turn back to the more recent one that I think is gonna be, unfortunately, I think within the consciousness of all of us. Let's go back to the Covid area, which is one of the areas I still wish I could kind of forget and wish it was a dream, but it was what it was.

[00:04:49] And I vividly remember during that week of mid-March in 2020, the entire world just very quickly locked down. I was getting ready to take my kids on a spring break trip. One trip got canceled and then we pivoted driving to a beach near Nashville. That one got locked down. They were gonna shut down I 65.

[00:05:09] So everyone had was told to get back to your houses and lock up. And if you remember, back to that time, businesses stalled. Decisions seemed impossible. No one knew what you know, the next day was gonna look like. Let in the next year. Again, just seeing this through the advantage of the front lines here through what the business builders of private equity were doing, it was fascinating to see how private equity leaned in.

[00:05:38] They formed war rooms. They got together with their management teams. They quickly pivoted operations. They embraced digital transformation. They adopted to remote work and they found entirely new ways to stay competitive. Amid chaos. They brought in capital. They were rapidly repositioning their position for success.

[00:05:54] In retrospect, when we pulled back the lens and saw what was happening in a, in a higher altitude, it was really, really fascinating. We looked at our data and said, okay, how do the business builders of private equity take on periods of uncertainty? It was probably one of the most interesting case studies I've ever seen and lived in real life.

[00:06:12] And as we looked at this, our data showed that first private equity got real quiet. They all paused. And for us, we were wondering, whoa, what's going on here? And then since then, we've seen the same sequence, by the way, happen time and time again. But there was a peer of quiet, and then what we saw was waves, and waves and waves of action.

[00:06:32] I. So first, what did private equity do really in the beginning of April? They started hiring all sorts of strategy firms that they normally were hiring for, doing due diligence on prospective companies, but they were using 'em on their own businesses to understand the lay of the land. Understanding that business from here on out was gonna be fundamentally different than it ever had been.

[00:06:53] So they gathered all sorts of information on what they could do in order to not only provide safety to the companies, but also look for areas of success. Then what did our data show they did next? They started hiring people in droves to equip these new strategies. And then next we saw them starting to hire tons and tons of technology groups that could bring in the digitalization that we heard.

[00:07:16] And then what happened? Global supply chains were all locked down, so they were hiring in procurement groups. And then what happened? Remember then waves of inflation started coming through. They started hiring pricing strategists and then more procurement groups, and then lean six Sigma groups to make themselves more efficient.

[00:07:33] It was unbelievable. But what it was is they were calm, they gathered information, they took action. It gets me thinking, why does private equity thrive in this moment? It's because they don't panic. They capture information, they protect their downside, and then very quickly they pivot towards opportunity.

[00:07:49] Hey as a quick interlude, this is sean here wanted to address one quick question that we regularly get We often get people who show up at our website call our account executives and say hey i'm not private equity Can I still use BlueWave to get connected with resources?

[00:08:05] And the short answer is yes. Even though we're mostly and largely used by hundreds of private equity firms, thousands of their portfolio company leaders, every day we get calls from everyday top proactive business leaders at public companies, independent companies, family companies. So absolutely you can use this as well.

[00:08:23] 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. Visit our website@bluewave.net. Thanks. Back to the episode.

[00:08:39] And I remember during this time I was trying to understand frameworks to equip my own decision making, and so I was. Talking to everyone I could. I was gathering all sorts of information and I came across a gentleman named Colonel John Boyd, and he was very famous coming out of World War II for informing basically our heir doctrine in terms of fighting in the air during the war, and then subsequently in the Korean War.

[00:09:03] And he came up with this framework called OODA Loops, and it's really quite simple. It's ooda LOOP stands for observe, orient, decide, and Act. What each of those means is, you know, for observation, you're gonna pay close attention to a situation. You're gonna gather information, and then Orian says, understand what's happening, spot the gaps, quickly form a strategy, analyze what's going on.

[00:09:26] And a lot of people will do the observe and then the orient part, and then they don't even get to the next part, which is decide let's make a clear, informed decision about what you're gonna do next. And then a lot of people will do those first three, but very few actually do the next. It's act. Act decisively, take a step, be ready to adjust, see what happens, and then you rapidly iterate back to observe, orient, decide, act, observe, orient, decide, act.

[00:09:52] It struck me as I was looking at our data and trying to inform my own decisions. As we look back months later, I go, oh, what the private equity industry does is an OODA loop. And they use it to inform action, in turn risk into opportunity during great periods of uncertainty. I. So it was really, really, I think, amazing.

[00:10:13] I think it's not only a good business lesson, but it's a life lesson. It's this idea that you can couple resilience, adaptability, and grit with a framework for making decisions that enables you to be calm, gather information, and have a bias towards action. So for periods like now. There's a lot of uncertainty going on.

[00:10:34] I think all of us have an opportunity to kind of replicate what these business builders are doing and apply it to your own lives up next, what I'd love to do is listen to two remarkable stories from two prior guests on the Karma School of Business Podcast, where they tell stories about what, tenacity, grit, resilience, taking action, responding turning risk into opportunity, looks like under extreme circumstances.

[00:11:00] First, you're gonna meet Andrew Joy again. Andrew is a partner with Hidden Harbor Capital Andrew's childhood, as you'll hear during the story was marked by chaos. As a young kid, he was shot at point blank range with a 12 gauge shotgun. He faced what seemed like an impossible path going forward. Really, no.

[00:11:24] Parenting after the injury, he was unable to walk. He was unable to attend high school, and he watched his future narrow with every setback and really reached a point like, how can I even proceed? But as you'll hear from Andrew, he refused to quit. He rebuilt his life. One small victory at a time.

[00:11:46] Eventually earning his way into Emory University, one of the top institutions of learning in our entire country, if not world. And he graduated as a valedictorian, having self-taught himself through high school. So give this a listen, and it's gonna change how you think about taking on adversity.

[00:12:05] Andrew Joy: When I interview executives, I always start with like, tell me about your parents, right? Cause I think that. That really shapes a lot of, how a person grew up and the experiences they had. And so I'll start with my parents.

[00:12:23] Which I think shapes the rest of my story. So, neither of my parents graduated from college. My dad didn't graduate from high school and they were together since, really high school, but they were career long criminals. My dad was.

[00:12:39] A drug dealer and not the type of drug dealer that, is on the corner, slinging nickels and dimes, but moving significant weight, in the 70s, in the 80s. So there was this big dichotomy of growing up, early on where. Literally living multiple houses, raceboats, spurt drums, from a unique lifestyle.

[00:13:07] And then the other side of the dichotomy is, where the feds arrested my dad for possession and intent to distribute 15, 000 pounds. And so, that really started the downfall of, the other side of the life. And so we've very, two very different lives.

[00:13:30] From an outside in perspective when I was young, but, at its core, it was nothing but chaos, whether we had, money or not, both my parents were, alcoholics, addicted to drugs, went through the divorce, just bounced around. just a whole bunch. And so, there's, there's tons of stories that you can get into when you go through that, as a child and, the trauma that you experience, but I'd say the most formidable happened when I was, I guess, 14 years old.

[00:14:12] So, in the context of, not a lot of parental oversight, kind of just running the streets, doing what I want, in and out of the house, staying out all night, that type of stuff. buT I was, I was shot with the 12 gauge shotgun at at close range, about five, seven feet away.

[00:14:36] And really blew my leg, almost off, you know, it was hanging by, some tendons, some muscle, a little bit of skin. And the story there is, it was with my buddy. Who is similarly young and wanted to stop by his buddy's house. And so we go over there and as soon as we go in, guns pulled on me and pointed at me and I turned to run and he pulled the trigger and hit me in the back of the leg and came out the front.

[00:15:10] The kid whose gun it was was killed about six months after I was shot. And so it didn't get, the full story of how it all happened, but, it was really the pivotal point, in my life, not just from a growing up quick and a reflection perspective, there's the reflection of in the moment.

[00:15:39] And what I mean by that is, it shot out my femoral artery, bleeding to death you know, fading out, is this it right? Is this going to be my life and you really think about not what you've done in my experience, but what you didn't do, what you didn't get to experience as you're.

[00:16:01] As you're bleeding out and dying, especially at that age. And so, went from there, was airlifted to a trauma center and spent months and months in a hospital, battling infection. 25 surgeries just kind of, you name it. I really couldn't walk for years after getting shot.

[00:16:29] And the other part of why, , I say it's pivotal and probably one of the best things that ever happened to me is the best thing that ever happened to me is it just forced me to say. There's only one asset I have left, meaning, , I was going to go into the Marines or the military or do some labor job, like that's, that's out the window.

[00:16:57] The only asset I have left is, , now I have to use my brain. anD so really started to focus on school a little bit. I think back then it was like I'm focusing on school a lot, but the bar is different, right? But again, parents weren't educated. So and I had to homeschool myself so couldn't go to school because I couldn't walk still doing surgeries.

[00:17:25] And so homeschool myself took about five years to finish high school between, , hospital homebound program and homeschooling myself. And then I did some homebound program. Classes at local private school that I worked for the church to help pay the tuition. Just really buckled down to do everything I could to finish high school in those circumstances.

[00:17:51] I took the at that point I was in a body cast literally from, , my chest all the way down to my ankles. And did okay. And through all this, , the guiding light or the beacon that was at least helping me see of what could be was my older sister. Like, she dealt with trauma on the home front through, , studying, reading, just locking herself in the room and that was her outlet.

[00:18:23] Was was education, so, get, around to senior year and I'm like, my sister's name is Michelle, you know, Michelle, what's next? Like, well, now you got to do this thing called an application and you have to you have to apply to, schools and, , take the standardized tests and okay, Michelle, where should I apply?

[00:18:45] And, well, there's some good schools in the south, there's one called Emory and kind of good business school. So, I didn't know what Emory was. I didn't know what, any of the path really was, but, you Really relied on my sister. Luckily got full scholarship financial aid to to Emory up in Atlanta and was a wonderful experience.

[00:19:08] I went to college. Not to have fun, not to party, not to drink, but I was there on a mission and the mission was make something happen so I don't have to go back to where I came from. So that's a lot, , I covered a lot there in a short amount of time. , but A lot of volatility and a lot of things happening, but maybe I'll pause there and

[00:19:36] Sean Mooney: it's it's one of the more amazing stories.

[00:19:39] I think I've heard of kind of being in as much not only physical pain is possible, but also just kind of, probably holistic pain, and then rising up and finding a way and digging deep and, particularly times like now, I think, that your story kind of puts things, at least for me personally, into perspective in terms of what's big and what's not and I agree. Yeah, I'd be curious. , like, how did you, how did you make that mind shift? when you're kind of you're sitting there, going through probably, I don't even know if you had the experience where you're looking at yourself, from above, as you hear some of those things.

[00:20:20] But now you're saying I can't walk. I can't go to school. I can't do anything. How did you dig yourself out and kind of get going?

[00:20:28] Andrew Joy: So I didn't get the out of body experience from above. But what I would say is if I think back to that, those few minutes.

[00:20:40] When I think of the definition of peace and like comfort, before, my heart stopped before blood out before I got brought back to life. And there's just this overwhelming sense of comfort and peace, that comes over you. So wasn't looking at myself from above, but, whatever happens after we leave here, at least you leave here with a.

[00:21:08] Pretty similar experience with like a good sense of of peace, but I'd like to say that, to your point on kind of pull yourself up by your bootstraps, I'd like to say you know, it happened right away. And I just all of a sudden, I just got super disciplined. But I think it was, it was more likely just a series of.

[00:21:33] Series of small wins. Series of accomplishments that started to build confidence I never thought of myself as being smart or intelligent. But, when I had to, teach myself algebra and pre calculus and the teachers that check your work when you're doing homeschool, not teachers, but administrators are like, wow, like you, you taught yourself this? and so there's a set of like small confidence boosters over time that really, then, , even parlayed into emory, which I felt very out of place at 1st, , I remember, , 1st day on campus. Some guy asked me, it's like, what happened? Your leg, , I get up in his face and I'm like, if you, you want to fight, like, and people are looking at me, like, I'm like, oh, that's not how things get solved here.

[00:22:37] You know, I'm in a different I'm in a different environment, yeah. Yeah. Yeah. And so that I feel very out of place, very, but that turned into competitiveness to like in this, this chip that's been on my shoulder to kind of prove and so, again, I was, , at Emory for a reason.

[00:23:00] And , my first semester I got all A's and I was like, second semester got all A's. And I was like, well, maybe I can do this. And I ended up graduating with. A 4. 0, not a single a minus number one in my class. And so I look at that and, all the way back, it was just a series of just like. I mean, one foot in front of the other at a time, build the confidence, build a skill set.

[00:23:32] Still , a philosophy I have, , throughout my career is just, You're learning something new every day, , if you don't need to know where you're headed, but as long as you're enjoying what you're doing, you're learning things, you feel like you're contributing, you don't need to know where you're going, but you are bettering yourself and it'll end up, , somewhere positive for you.

[00:23:55] Sean Mooney: I mean, it's just, you hear that and 1, it's like we said, it just puts so much things into perspective, but also this philosophy that's transferable. It's like, just little victories 1 step at a time. You don't have to make it. I'm sure you didn't start off with how do I become the valedictorian of memory, but, , that's why it's just like, little bits at a time and take a step.

[00:24:19] Andrew Joy: All it is, is just taking the step, , it's one foot in front of the other and the top of the mountain isn't even visible for most people at the time that they start out and, my story is somewhat unique, but it's somewhat isn't right, like, unfortunately, there's so many instances of children, kids in our society that, they look around and their only way out is, , playing ball, selling drugs or joining a gang.

[00:24:54] There's no, role models to show them that, hey, , there's this other way that if you, , really work at it, it can be achievable. But but it just starts, , kind of. One foot in front of the other.

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[00:26:00] In the case of interims, we have more than a thousand top interim private equity grade CEOs and CFOs that are ready to be matched for your exact need when you need it. Give us a call or visit our website at BluWave. net. And we can give you excellence and alpha with ease back to the show.

[00:26:19] Next we're gonna hear from Rob Konrad. Rob's a former NFL star and running back, and now chairman and managing partner with the Alterna equity partners. Rob's gonna tell an astonishing story of survival. Rob was out fishing off the coast of Florida by himself, and he'll tell you, you shouldn't do that.

[00:26:35] But people do that. That's life in Florida, he fell off his boat miles and miles off shore. He found himself alone in the open ocean with no one knowing where he was and no one there to help. I think a lot of people would kind of say, well, I'm done for, but Rob with no rescue in sight, made a decision. He thought of his family.

[00:26:57] He goes, I'm gonna make it back. What came next was a 16 hour grueling swim, covering more than 25 miles through darkness, waves, weather exhaustion until he finally reached safety, clawing his way onto a beach at four 30 in the morning. Rob's experience is also another kind of masterclass in clarity, grit, determination when survival seems impossible.

[00:27:24] The story is gonna tangibly show how resilient you can be when your medals tested.

[00:27:31] Rob Konrad: It's interesting We're I think this January is your anniversary of that event and I'm happy to talk about it. It was actually In hindsight, a real positive experience in my life. I would encourage anybody listening not to necessarily do this, but a lot of people fish by themselves here in South Florida.

[00:27:50] Caught a fish, boat was on autopilot, thought I had the engines off, one of them was in gear, and hit a wave, a large fish, and ended up outside the boat in the water, and the boat was Heading due east towards the west end of the Bahamas, is about 10 miles offshore and to save all the details of a 16 hour swim overnight in the ocean through some pretty interesting weather and was able to make it back to shore and it was a situation where we have a lot of time to think about things and reflect on things and I think about, and people have asked me before if I had not played football before, Do I make that swim?

[00:28:34] And I'm not sure if I do, to be honest with you. I mean, you know, the one thing the game does for you is it teaches you that you can push yourself and you can push your body farther than you would think possible. It teaches you how to make critical decisions under pressure. For you're out in the middle of the ocean, you can't see land, which way do you swim?

[00:28:55] You're out in the ocean in the middle of the night. How do you keep your mind focused and clear? Be able to think critically about swimming at the right tempo, not cramping up, heading in the right direction and trying to pace yourself to have the best opportunity to have a outcome where you survive. So all those things came into play and a lot longer story than we probably have to tell here.

[00:29:17] But for me, I had 2 young girls at the time. I think I hit shore at 5 30 in the morning. I was in pretty bad shape to be here 10 years later to be able to watch my girls grow up. I tell people, I wish I could share this with them, but to wake up every day and be on borrowed time and really feel blessed to have every day to spend with your family, to Work with your partners to be present and actually enjoy it and appreciate it every day is something that's really special and something I've taken away from it.

[00:29:48] It really was a positive experience in my life. It's hard to believe it's been 10 years. I can remember like it was yesterday, but it puts things certainly in perspective. And I'm sure a lot of people have had similar sorts of. Incidents would tell you the same thing

[00:30:04] Sean Mooney: when the initial shock hit. How did you just find the calm.

[00:30:08] To kind of orient and put a plan together.

[00:30:11] Rob Konrad: You're in the water, you realize that there's no one around you, there's nothing to necessarily swim to. Again, I'll go back to being in a lot of pressure situations and having to think clearly and try to think about what you can do to put yourself in the best scenario to be successful.

[00:30:31] For me it was, first things first, okay, no one knows I'm in the water, I didn't get a chance to call off, I don't have a phone in my pocket. And my boat's off to the Bahamas, so what do I do? Coast Guard would tell you to sit there and wait to be rescued. I didn't have a life preserver or anything on. That wasn't going to happen.

[00:30:50] So the decision to A, swim. B, what direction to swim. Which was, in hindsight, was something that was challenging and was quite important. But was able to figure out, at the end of the day, chasing the sun west. My new land was west, kind of keeping the weather that was coming from the north on my right hand side.

[00:31:12] And then at nighttime, I'd recommend if anybody wants to be slightly scared to go out in the boat at two in the morning, jump out in the middle of the Gulf stream and have that driver drive away. Sitting there in the middle of the ocean, the dark, it was quite an experience. And so it was a lot of mental gymnastics to get yourself to a place that you can keep.

[00:31:39] Working the effort and making progress and trying to find the light pollution on shore to keep heading in the right direction. And for me, look, I had two young daughters and anybody that has kids and especially daughters, I was gonna do everything humanly possible to get back to shore, to be with them.

[00:31:59] And luckily I did, I'll tell you this, I wouldn't want to try it again. I've been through some challenging things in my life. That was certainly. The most challenging, but at the same point, look back now and no one got hurt. I look back at it as a real positive experience and something I'll take with me for the rest of my life.

[00:32:21] Sean Mooney: Well, thanks for sharing that story, Rob. We'd heard of it and it was kind of. This legendary story, but I can't imagine being put in a similar situation and how I'd respond. So thank you for sharing that. I think Andrew Rob should both remind us of something that many of us know well and we see every day through professionals in the private equity industry, the business industry, and just life. And that setbacks aren't endings, their invitations to adapt, grow, transform, reframe, risk and opportunity. Right now, I think a lot of people are looking at this uncertainty ahead and might be wondering if we're really up for it.

[00:32:59] Right? It's exhausting. It seems like we've had something new every single year since 2020. For me, these two stories teach me that what we're going through is almost nothing compared to what things could be like in that. We all have so much more capacity to take on these challenges than we think we do during times like now.

[00:33:19] We all need to purposely do our own OODA loops and turn this period of fear into opportunity because opportunity's out there if we dare to look and take action That's all we have for today. Please continue to look for the Karma School of Business Podcast anywhere you find your favorite podcast. We truly appreciate your support. If you'd like what you hear, please follow five star rate, review and share. This is a free way to support the show and it really helps us when you do this, so thank you in advance.

[00:33:47] In the meantime, if you want to be connected with the world's best in class private equity grade professional service providers, independent consultants, interim executives that are deployed and trusted by the best business builders in the world, including many hundreds of PE firms and thousands of.

[00:34:04] Portfolio companies and you can do the same. Whether or not you're in the PE world, give us a call or visit our website@BluWave.net. That's B-L-U-W-A-V-E and we'll support your success. Onward.

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.