1 00:00:02,040 --> 00:00:07,120 Speaker 1: This is Mesters in Business with very Renaults on Bluebird Radio. 2 00:00:09,119 --> 00:00:12,040 Speaker 1: This week on the podcast, I have an extra special guest, 3 00:00:12,240 --> 00:00:16,200 Speaker 1: Scott Sperling, co CEO of TH H LEE. He's on 4 00:00:16,239 --> 00:00:20,919 Speaker 1: the firm's management and investment committees. UH TH H LEE 5 00:00:21,120 --> 00:00:24,120 Speaker 1: is one of the top private equity firms. They've been 6 00:00:24,160 --> 00:00:29,240 Speaker 1: around since the nineties seventies. They've done countless, countless deals, 7 00:00:29,560 --> 00:00:33,720 Speaker 1: hundreds and hundreds of deals. Um, you might be familiar 8 00:00:33,760 --> 00:00:36,040 Speaker 1: with some of their bigger deals. They did to Warn, 9 00:00:36,080 --> 00:00:39,640 Speaker 1: a music deal that was a multibillion dollar deal about 10 00:00:39,640 --> 00:00:44,599 Speaker 1: twenty years ago. Duncan is a group of franchises from 11 00:00:44,680 --> 00:00:48,199 Speaker 1: Dunkin Donuts. Perhaps the biggest deal they did, or or 12 00:00:48,880 --> 00:00:53,199 Speaker 1: the most mind share was the Snapple deal. They bought Snapple, 13 00:00:53,280 --> 00:00:56,920 Speaker 1: they took him public, they facilitated the sale to Quaker Roats. 14 00:00:57,720 --> 00:01:01,280 Speaker 1: That was really the first time I had private equity 15 00:01:01,320 --> 00:01:04,360 Speaker 1: on my radar. It's like, really, someone just came along 16 00:01:04,400 --> 00:01:07,440 Speaker 1: and said, here's hundreds of millions of dollars for Snapple, 17 00:01:07,520 --> 00:01:10,720 Speaker 1: and let's sell them for a billion dollars, take them public. 18 00:01:10,760 --> 00:01:16,160 Speaker 1: It really fascinating, fascinating story. UH Sparling is as knowledgeable 19 00:01:16,240 --> 00:01:21,520 Speaker 1: about private equity and valuation and how that sector and 20 00:01:21,840 --> 00:01:26,040 Speaker 1: entire industry really is changing. Oh I forgot to mention 21 00:01:26,080 --> 00:01:30,399 Speaker 1: he ran alternative investments for the Harvard Endowment for about 22 00:01:30,400 --> 00:01:36,679 Speaker 1: a decade. Really super unique perspective and just uh fascinating 23 00:01:36,720 --> 00:01:40,319 Speaker 1: insights into the sector. If you are at all interested 24 00:01:40,959 --> 00:01:44,840 Speaker 1: in in private equity, in the nature of these transactions 25 00:01:44,880 --> 00:01:48,520 Speaker 1: and how alternatives are changing, then you're gonna find this 26 00:01:48,640 --> 00:01:51,800 Speaker 1: to be really a fascinating conversation. So, with no further ado, 27 00:01:52,480 --> 00:01:57,240 Speaker 1: my discussion with co CEO of th h Lee Scott Sperling. 28 00:01:59,400 --> 00:02:04,480 Speaker 1: This is mesters in Business with very Renaults on Bloomberg Radio. 29 00:02:06,400 --> 00:02:09,600 Speaker 1: My special guest this week is Scott Sperling. He is 30 00:02:09,680 --> 00:02:13,639 Speaker 1: the co chief executive officer at Thomas H. Lee, of 31 00:02:13,880 --> 00:02:17,000 Speaker 1: famed private equity firm. He's also a member of the 32 00:02:17,000 --> 00:02:21,959 Speaker 1: firm's management and investing committees. From four to two thousand 33 00:02:22,000 --> 00:02:25,840 Speaker 1: and six, th h L raised over twenty two billion 34 00:02:25,880 --> 00:02:29,799 Speaker 1: dollars in six institutional funds and completed more than a 35 00:02:29,880 --> 00:02:34,760 Speaker 1: hundred investments. Currently, their flagship funds has about five billion 36 00:02:34,800 --> 00:02:38,320 Speaker 1: dollars and the Automation funds about nine hundred million in 37 00:02:38,520 --> 00:02:44,799 Speaker 1: LP assets. Scott Sperling welcome to Bloomberg. Well, thank you. 38 00:02:45,919 --> 00:02:48,600 Speaker 1: It's a pleasure to be here with you. So let's 39 00:02:48,639 --> 00:02:51,079 Speaker 1: start a little bit with your background. You were at 40 00:02:51,120 --> 00:02:56,400 Speaker 1: the Boston Consulting Group long before Uh, you're an asset management. 41 00:02:56,840 --> 00:02:59,280 Speaker 1: Tell us about your years as a consultant and how 42 00:02:59,280 --> 00:03:04,800 Speaker 1: did that lead into private equity. Well, I joined BCG 43 00:03:04,960 --> 00:03:08,680 Speaker 1: out of business school. Uh, And there was no great 44 00:03:08,760 --> 00:03:11,680 Speaker 1: intent on my part. I was twenty three years old 45 00:03:11,720 --> 00:03:14,640 Speaker 1: and had lots of loans, and consulting was one of 46 00:03:14,639 --> 00:03:16,840 Speaker 1: the higher paying jobs you can get in those days. 47 00:03:16,880 --> 00:03:19,600 Speaker 1: But it was a great experience because it really put 48 00:03:19,680 --> 00:03:23,960 Speaker 1: somebody who was young and reasonably inexperienced in a place 49 00:03:24,000 --> 00:03:27,000 Speaker 1: where you can apply the kind of analytics that you 50 00:03:27,120 --> 00:03:29,920 Speaker 1: get used to in business school to the real world 51 00:03:30,360 --> 00:03:34,320 Speaker 1: working with C suite executives at very large companies around 52 00:03:34,360 --> 00:03:38,160 Speaker 1: the world. So the experience there was, you know, really 53 00:03:38,400 --> 00:03:41,560 Speaker 1: quite intensive, and for me, it was about three and 54 00:03:41,560 --> 00:03:44,880 Speaker 1: a half years of just being fed with fire hose 55 00:03:45,000 --> 00:03:48,640 Speaker 1: of exposure to senior managers who were running some of 56 00:03:48,680 --> 00:03:53,840 Speaker 1: the most interesting companies globally. And you eventually end up 57 00:03:54,160 --> 00:03:58,160 Speaker 1: running alternative investments for the Harvard Endowment funds. You were 58 00:03:58,160 --> 00:04:00,880 Speaker 1: there for more than a decade, how did you find 59 00:04:00,880 --> 00:04:04,520 Speaker 1: your way to the Harvard Investment Company. So it was 60 00:04:04,600 --> 00:04:08,160 Speaker 1: one of those moments in life where you get a 61 00:04:08,200 --> 00:04:10,600 Speaker 1: call out of the blue and you're asked to consider 62 00:04:10,640 --> 00:04:15,160 Speaker 1: something that you'd never considered before or even truly understood. 63 00:04:15,440 --> 00:04:20,080 Speaker 1: And Walter Cabot, who had started the Harvard Management Company, 64 00:04:20,160 --> 00:04:23,120 Speaker 1: it's one of the first third party managers of a 65 00:04:23,160 --> 00:04:26,600 Speaker 1: major endowment. It was wholly owned by Harvard but run 66 00:04:26,760 --> 00:04:31,479 Speaker 1: completely separately under Walter's leadership, had decided that rather than 67 00:04:31,560 --> 00:04:36,080 Speaker 1: sticking with a typical thirty five split of U S, 68 00:04:36,120 --> 00:04:39,960 Speaker 1: domestic equities, and and bonds, he wanted to expand in 69 00:04:40,160 --> 00:04:43,240 Speaker 1: some new areas. And he made the decision that rather 70 00:04:43,320 --> 00:04:48,039 Speaker 1: than bringing somebody in with the typical investment management background, 71 00:04:48,040 --> 00:04:51,320 Speaker 1: they want somebody with more of a business analytics background. 72 00:04:51,600 --> 00:04:55,159 Speaker 1: And I went in was incredibly impressed with Walter and 73 00:04:55,240 --> 00:04:58,440 Speaker 1: his vision for where he wanted to take the management 74 00:04:58,480 --> 00:05:02,479 Speaker 1: company and how he was looking for ways to really 75 00:05:02,520 --> 00:05:05,640 Speaker 1: give the endowment an ability to participate in areas that 76 00:05:05,680 --> 00:05:09,839 Speaker 1: he felt had higher risk adjusted returns go forward basis. 77 00:05:10,520 --> 00:05:12,880 Speaker 1: And he convinced me that this would be a great 78 00:05:12,920 --> 00:05:16,240 Speaker 1: thing for me to do, and I started there, and 79 00:05:16,360 --> 00:05:21,760 Speaker 1: we opened up activities in what in those days we 80 00:05:21,839 --> 00:05:24,560 Speaker 1: thought of private equity, mostly as venture capital, but then 81 00:05:24,600 --> 00:05:28,119 Speaker 1: moved into the buy out space, investing largely in funds 82 00:05:28,120 --> 00:05:30,640 Speaker 1: and then doing some co investing. There was some real 83 00:05:30,760 --> 00:05:33,320 Speaker 1: estate holdings at Harvard already had, but that was an 84 00:05:33,360 --> 00:05:35,680 Speaker 1: area that I was given and then what we ended 85 00:05:35,760 --> 00:05:38,560 Speaker 1: up calling commodities, which was largely oil and gas and 86 00:05:38,640 --> 00:05:42,320 Speaker 1: timber in those days. And so it started with almost 87 00:05:42,360 --> 00:05:45,880 Speaker 1: nothing and grew to a little over of the endowment 88 00:05:46,320 --> 00:05:48,880 Speaker 1: by the time I left eleven years later, so that 89 00:05:49,000 --> 00:05:51,200 Speaker 1: was more than a decade. When did you end up 90 00:05:51,279 --> 00:05:54,200 Speaker 1: starting there? What was the date? So I started in 91 00:05:54,480 --> 00:05:59,280 Speaker 1: UM eighty four and left in late we're recording this 92 00:05:59,480 --> 00:06:03,320 Speaker 1: not long after the David Swinson, who's been running the 93 00:06:03,400 --> 00:06:08,320 Speaker 1: Yale Endowment for decades has passed away. This seems somewhat 94 00:06:08,400 --> 00:06:13,600 Speaker 1: similar to the model that Yale was using under under Swanson. 95 00:06:14,200 --> 00:06:18,000 Speaker 1: How much competition was there amongst the ivys um for 96 00:06:18,080 --> 00:06:23,479 Speaker 1: performance and how much did each of the endowments that 97 00:06:23,560 --> 00:06:27,840 Speaker 1: you were familiar with, How aware were each endowment of 98 00:06:27,880 --> 00:06:31,120 Speaker 1: what the others were doing. Was it sort of collegial 99 00:06:31,240 --> 00:06:34,599 Speaker 1: or was it, you know, competitive, I would say it 100 00:06:34,640 --> 00:06:37,760 Speaker 1: was more collegial in those days. As we pushed into 101 00:06:37,800 --> 00:06:42,440 Speaker 1: some new areas, we would often not only cooperate, but 102 00:06:42,480 --> 00:06:46,440 Speaker 1: there was some level of collaboration. So we had pushed 103 00:06:46,480 --> 00:06:51,560 Speaker 1: into again venture capital and and early buyout. In that 104 00:06:52,720 --> 00:06:56,120 Speaker 1: eight five period, David was starting at Yale and he 105 00:06:56,320 --> 00:06:59,599 Speaker 1: was similarly doing some of the same things. We worked 106 00:06:59,600 --> 00:07:03,240 Speaker 1: together are on a number of oil and gas opportunities, 107 00:07:03,640 --> 00:07:07,600 Speaker 1: so there was a level of cooperation that underlined a 108 00:07:07,640 --> 00:07:12,040 Speaker 1: lot of what we did. UM. Now, I think Harvard 109 00:07:12,680 --> 00:07:15,360 Speaker 1: accelerated a little more quickly than some of the other 110 00:07:16,280 --> 00:07:20,160 Speaker 1: i'ves did into these areas. We had the strong support 111 00:07:20,400 --> 00:07:25,840 Speaker 1: of the Harvard Corporation UH to UM explore these kinds 112 00:07:25,880 --> 00:07:31,760 Speaker 1: of activities. I would UH often do presentations to them 113 00:07:31,800 --> 00:07:35,320 Speaker 1: about how it was going, and we had reasonable early success, 114 00:07:35,360 --> 00:07:40,240 Speaker 1: which which helps UM and UH I think is UM. 115 00:07:40,880 --> 00:07:45,920 Speaker 1: As it became comfortable for Harvard to do it, others 116 00:07:46,040 --> 00:07:51,160 Speaker 1: U others also jumped in UM. I think Yale about simultaneously, 117 00:07:51,280 --> 00:07:56,040 Speaker 1: and some of the other Ivy League endownments followed quite 118 00:07:56,040 --> 00:08:00,920 Speaker 1: in drinking, so the world of alternatives has certainly changed, 119 00:08:01,160 --> 00:08:06,960 Speaker 1: and your involvement dates back almost forty years what do 120 00:08:07,000 --> 00:08:10,480 Speaker 1: you see as some of the biggest changes that have 121 00:08:10,560 --> 00:08:16,120 Speaker 1: taken place in private equity? Well, I think the the 122 00:08:16,680 --> 00:08:20,760 Speaker 1: nature of what we have to do to drive superior 123 00:08:20,800 --> 00:08:27,840 Speaker 1: returns continues to get more labor intensive, requiring higher levels 124 00:08:27,920 --> 00:08:33,640 Speaker 1: of value add. Early on, I think there were lots 125 00:08:33,640 --> 00:08:38,680 Speaker 1: of opportunities UM that did not require the level of 126 00:08:38,679 --> 00:08:45,760 Speaker 1: intensity of UM, either operational value add or necessarily UM 127 00:08:46,120 --> 00:08:52,880 Speaker 1: UH the ability to use acquisitions as platforms for UM 128 00:08:53,760 --> 00:08:59,880 Speaker 1: UH consolidating industries. The returns were often driven by the 129 00:09:00,000 --> 00:09:05,920 Speaker 1: ability to enter at multiples that are significantly lower than 130 00:09:06,360 --> 00:09:10,160 Speaker 1: what we typically see today. UH. The use of leverage 131 00:09:10,280 --> 00:09:13,520 Speaker 1: was not all that well known, particularly in the early 132 00:09:13,559 --> 00:09:16,200 Speaker 1: part of the eighties and mid eighties, and so in 133 00:09:16,360 --> 00:09:21,680 Speaker 1: the the the buy outside of private equity UM, there 134 00:09:21,840 --> 00:09:27,520 Speaker 1: was an opportunity that that really doesn't exist today to 135 00:09:27,520 --> 00:09:31,520 Speaker 1: to buy things so very cheaply relative to their intrinsic 136 00:09:31,600 --> 00:09:35,080 Speaker 1: value UH, and then you were able to ride that 137 00:09:35,240 --> 00:09:40,600 Speaker 1: to relatively strong returns I think today UM. And you know, 138 00:09:40,640 --> 00:09:43,680 Speaker 1: really for the last decade, you know, pricing has been 139 00:09:43,720 --> 00:09:47,480 Speaker 1: anywhere from fair to frall fee UM. And in order 140 00:09:47,559 --> 00:09:50,760 Speaker 1: to generate the kinds of returns that we expect UH, 141 00:09:50,800 --> 00:09:55,439 Speaker 1: and that our investors expect UM. You know, our organizations 142 00:09:55,480 --> 00:10:00,559 Speaker 1: are dramatically larger, have much higher levels of that pertise 143 00:10:01,400 --> 00:10:05,640 Speaker 1: UH and much higher levels of specialization. So UM, you know, 144 00:10:05,800 --> 00:10:10,120 Speaker 1: it's still a really good business to be in UH, 145 00:10:10,520 --> 00:10:17,600 Speaker 1: something that I think has brings together both investment skills 146 00:10:17,880 --> 00:10:23,800 Speaker 1: and UM the ability to participate in UM growing really 147 00:10:23,840 --> 00:10:29,559 Speaker 1: important enterprises. UH. So you know, as an individual, UM, 148 00:10:29,600 --> 00:10:33,079 Speaker 1: you know, it's a it's a continues to be a 149 00:10:33,080 --> 00:10:36,200 Speaker 1: a fun and exciting place to be. But the nature 150 00:10:36,480 --> 00:10:39,080 Speaker 1: of an intensity of the work that we have to 151 00:10:39,120 --> 00:10:43,280 Speaker 1: do to as I mentioned, sustain these high returns has 152 00:10:43,360 --> 00:10:47,600 Speaker 1: certainly increased dramatically. So I know you didn't get to 153 00:10:47,600 --> 00:10:52,200 Speaker 1: Tom and h Lee until the mid nineties or so, 154 00:10:52,760 --> 00:10:56,600 Speaker 1: but I have a vivid recollection of the Snapple deal 155 00:10:57,240 --> 00:11:01,280 Speaker 1: that they did uh in two and really that was 156 00:11:01,440 --> 00:11:06,320 Speaker 1: my first recognition that hey, private equity has some real 157 00:11:06,400 --> 00:11:10,079 Speaker 1: firepower the and and back then these were all called 158 00:11:10,280 --> 00:11:12,240 Speaker 1: l b o s or buyouts or what have you. 159 00:11:12,840 --> 00:11:16,040 Speaker 1: But but that seems to be like a real turning 160 00:11:16,120 --> 00:11:20,480 Speaker 1: point UM for pe. What what's your recollection of the 161 00:11:20,559 --> 00:11:23,640 Speaker 1: significance of that deal? Am I making too much of 162 00:11:23,640 --> 00:11:28,640 Speaker 1: this or was that like a really big moment No. 163 00:11:28,720 --> 00:11:30,840 Speaker 1: I think it was a really big moment. UM. You know, 164 00:11:30,880 --> 00:11:33,880 Speaker 1: I joined in ninety four. UM, the Snapple investment was 165 00:11:33,920 --> 00:11:42,760 Speaker 1: made in and monetized and the the ability to buy 166 00:11:42,760 --> 00:11:45,920 Speaker 1: a company and make your money on the growth of 167 00:11:45,960 --> 00:11:51,440 Speaker 1: that enterprise, as opposed to the traditional buy out up 168 00:11:51,440 --> 00:11:54,600 Speaker 1: to that period of time, which was to buy large 169 00:11:54,679 --> 00:11:58,040 Speaker 1: enterprises that might not be as efficient as they should 170 00:11:58,040 --> 00:12:04,520 Speaker 1: be often had a aggregation of dissimilar businesses where there 171 00:12:04,559 --> 00:12:09,720 Speaker 1: was value to disaggregating those businesses. You know, A model 172 00:12:09,760 --> 00:12:14,200 Speaker 1: that applied to the great majority of of of buyouts 173 00:12:14,240 --> 00:12:17,920 Speaker 1: that were done up through that period was something very 174 00:12:18,000 --> 00:12:23,480 Speaker 1: different than the ability to identify a company that had 175 00:12:23,520 --> 00:12:29,439 Speaker 1: the ability to significantly grow revenues where you can bring 176 00:12:29,800 --> 00:12:33,720 Speaker 1: at least some strategic direction uh to the founders of 177 00:12:33,760 --> 00:12:37,800 Speaker 1: that company that allowed for the growth to accelerate. And 178 00:12:37,840 --> 00:12:39,640 Speaker 1: that's one of the things that we saw on Snapple, 179 00:12:40,040 --> 00:12:43,560 Speaker 1: and that became a model for a lot of other 180 00:12:43,640 --> 00:12:47,840 Speaker 1: things that happened, UH in the industry. UM. You know 181 00:12:47,920 --> 00:12:53,120 Speaker 1: in the mid nineties. UM. You know, my UH partner 182 00:12:53,480 --> 00:12:58,160 Speaker 1: Tony donovi and I, UM we're involved in the UH 183 00:12:58,480 --> 00:13:02,800 Speaker 1: the buyout of the tr w H business, UM, the 184 00:13:02,920 --> 00:13:08,480 Speaker 1: information services business that became Experience uh, and some early 185 00:13:08,640 --> 00:13:12,880 Speaker 1: things like fish or scientific um where we were identifying 186 00:13:13,200 --> 00:13:20,040 Speaker 1: opportunities um uh where the ability to significantly grow the 187 00:13:20,200 --> 00:13:24,079 Speaker 1: enterprise was how you were making your money again, not 188 00:13:24,080 --> 00:13:28,600 Speaker 1: not just on buying something that was inefficient and uh 189 00:13:28,960 --> 00:13:34,240 Speaker 1: perhaps aggregated in ways that uh made less sense than 190 00:13:34,280 --> 00:13:40,000 Speaker 1: disaggregating them. So to clarify this isn't just saying, hey, 191 00:13:40,040 --> 00:13:42,640 Speaker 1: that's a good company, but it's inefficient and we can 192 00:13:42,640 --> 00:13:46,640 Speaker 1: make it run better. Are you really talking about strategically 193 00:13:46,800 --> 00:13:50,520 Speaker 1: redeploying the assets of a company in order to generate 194 00:13:50,640 --> 00:13:55,360 Speaker 1: a faster growth rate, a better return, etcetera. I think 195 00:13:55,400 --> 00:13:59,520 Speaker 1: that's a fair characterization. Yes. And before we get into 196 00:13:59,640 --> 00:14:03,439 Speaker 1: more details about private equity, I have to ask CO 197 00:14:03,679 --> 00:14:06,280 Speaker 1: C e O S, how how is that working out? 198 00:14:06,320 --> 00:14:10,040 Speaker 1: Some firms I know find it really challenging to do that. 199 00:14:11,200 --> 00:14:13,400 Speaker 1: I've been doing it for over twenty years. It's worked 200 00:14:13,400 --> 00:14:16,680 Speaker 1: out extraordinarily well. I think we try to bring together 201 00:14:17,160 --> 00:14:21,360 Speaker 1: talents that are complementary, and you know, when you're looking 202 00:14:21,400 --> 00:14:24,480 Speaker 1: at the broad range of tasks at hand with the 203 00:14:24,520 --> 00:14:27,480 Speaker 1: firm like ours, it's always nice to have a partner 204 00:14:27,600 --> 00:14:30,560 Speaker 1: to talk to, divide and conquer, makes it makes a 205 00:14:30,560 --> 00:14:34,640 Speaker 1: lot of sense. So mentioned earlier, some of the valuation 206 00:14:34,840 --> 00:14:38,400 Speaker 1: concerns that the market is certainly less cheap than it 207 00:14:38,440 --> 00:14:42,960 Speaker 1: once was. Let's talk about alpha in private equity in general, 208 00:14:43,400 --> 00:14:48,040 Speaker 1: and the idea that private equity had access to companies 209 00:14:48,120 --> 00:14:52,440 Speaker 1: at lower multiples across the board, lower than the public markets, 210 00:14:52,880 --> 00:14:56,440 Speaker 1: lower than a lot of private market pricing. Is that 211 00:14:56,720 --> 00:15:00,440 Speaker 1: just now a historical footnote and we'll never see that again, 212 00:15:00,920 --> 00:15:04,360 Speaker 1: or is this one of those cyclical things that rises 213 00:15:04,360 --> 00:15:08,440 Speaker 1: and falls with like everything else. Well, I've I've long 214 00:15:08,840 --> 00:15:13,080 Speaker 1: learned the hard way that I'm not great at predicting 215 00:15:13,080 --> 00:15:16,360 Speaker 1: the future in lots of different ways. So I can't 216 00:15:16,360 --> 00:15:19,000 Speaker 1: tell you that will never see it again. What I 217 00:15:19,040 --> 00:15:22,200 Speaker 1: will say is that there is an awareness on the 218 00:15:22,240 --> 00:15:26,160 Speaker 1: part of sellers of the value of leverage. That was 219 00:15:26,240 --> 00:15:30,000 Speaker 1: something that was less well known in the eighties and 220 00:15:30,440 --> 00:15:34,920 Speaker 1: even in the early nine nineties, And the nature of 221 00:15:35,080 --> 00:15:39,920 Speaker 1: what we do really is much more dependent upon picking 222 00:15:40,280 --> 00:15:45,000 Speaker 1: industries and sectors and subsectors wisely and then having the 223 00:15:45,080 --> 00:15:53,520 Speaker 1: ability to drive operational value improvements at these portfolio companies. 224 00:15:54,160 --> 00:15:57,760 Speaker 1: That is a skill set that requires a large number 225 00:15:57,800 --> 00:16:04,400 Speaker 1: of expert individuals who have specialization both in domains, the 226 00:16:04,440 --> 00:16:08,320 Speaker 1: subsectors or industries that we focus upon, and also a 227 00:16:08,400 --> 00:16:12,840 Speaker 1: high degree of expertise in being able to improve the 228 00:16:12,920 --> 00:16:17,080 Speaker 1: key business processes of companies in ways that allow that 229 00:16:17,160 --> 00:16:21,880 Speaker 1: company to increase its competitive position such that we can 230 00:16:21,960 --> 00:16:25,280 Speaker 1: drive higher rates of growth on the revenue side, make 231 00:16:25,320 --> 00:16:27,880 Speaker 1: the company more efficient so that we can drive even 232 00:16:27,960 --> 00:16:31,360 Speaker 1: higher rates of growth on the profit and cash flow side. 233 00:16:31,800 --> 00:16:34,400 Speaker 1: So so let's stick with this topic because it's really, 234 00:16:34,840 --> 00:16:38,040 Speaker 1: you know, a key issue underlying markets these days. There's 235 00:16:38,040 --> 00:16:41,560 Speaker 1: an observation and I'm not sure if I'm paraphrasing or 236 00:16:41,760 --> 00:16:45,080 Speaker 1: this is an exact quote, but quote, it is problematic 237 00:16:45,080 --> 00:16:50,720 Speaker 1: for asset valuations when company multiples are disproportionately high when 238 00:16:50,760 --> 00:16:54,720 Speaker 1: compared to the company's true growth rate unquote. Give us 239 00:16:54,720 --> 00:16:57,440 Speaker 1: a little more flesh on that. So, you know, generally, 240 00:16:57,560 --> 00:17:02,520 Speaker 1: we're trying to buy companies reflective of what you might 241 00:17:02,520 --> 00:17:05,840 Speaker 1: call the intrinsic or fair value of the company. And 242 00:17:06,000 --> 00:17:09,280 Speaker 1: as we've looked back over time, the key drivers of 243 00:17:09,400 --> 00:17:14,359 Speaker 1: that would be the return uninvested capital characteristics of the 244 00:17:14,400 --> 00:17:19,320 Speaker 1: specific company, and more broadly, the industry and Secondly, and 245 00:17:19,520 --> 00:17:24,040 Speaker 1: perhaps you know over a broader range of calculated outcomes, 246 00:17:24,080 --> 00:17:28,159 Speaker 1: it would be the sustainable growth rate of the company. 247 00:17:28,400 --> 00:17:33,360 Speaker 1: So we're very focused on buying companies where the acquisition 248 00:17:33,440 --> 00:17:37,760 Speaker 1: multiple is reflective of what we believe to be the 249 00:17:37,840 --> 00:17:41,960 Speaker 1: sustainable growth rates of that enterprise might be. And one 250 00:17:41,960 --> 00:17:44,920 Speaker 1: of the things that we have learned over time is 251 00:17:45,000 --> 00:17:47,639 Speaker 1: you can pay a reasonably high acquisition multiple if you 252 00:17:47,720 --> 00:17:53,440 Speaker 1: believe that sustainable growth rate is about that same category 253 00:17:53,800 --> 00:17:57,800 Speaker 1: as the acquisition multiple. So for example, you know you 254 00:17:57,800 --> 00:18:00,760 Speaker 1: could pay fifteen times for a company, but you would 255 00:18:00,760 --> 00:18:04,320 Speaker 1: like to believe that that's growing at about k you're 256 00:18:04,560 --> 00:18:07,800 Speaker 1: on the EPIDA or cast flow side. What you don't 257 00:18:07,800 --> 00:18:10,119 Speaker 1: want to do is pay fifteen times for something growing 258 00:18:10,520 --> 00:18:13,960 Speaker 1: five or seven percent. And so you know, as we 259 00:18:13,960 --> 00:18:16,879 Speaker 1: look at the world, there are enterprises out there that 260 00:18:16,880 --> 00:18:20,000 Speaker 1: that are in the sectors that we think have very 261 00:18:20,040 --> 00:18:24,080 Speaker 1: significant growth opportunities going forward, and um you know you're 262 00:18:24,080 --> 00:18:27,520 Speaker 1: going to pay a multiple that is reflective of that. 263 00:18:27,760 --> 00:18:33,200 Speaker 1: Just try to stay away from paying um uh multiples 264 00:18:33,600 --> 00:18:37,960 Speaker 1: on the d A of the company that is um 265 00:18:38,560 --> 00:18:43,520 Speaker 1: a much higher number than that sustainable growth rate. So 266 00:18:43,520 --> 00:18:48,080 Speaker 1: so capital these days is both plentiful and cheap. What 267 00:18:48,200 --> 00:18:51,800 Speaker 1: does all this cheap availability of debt due to the 268 00:18:51,840 --> 00:18:56,040 Speaker 1: playing field, how does it affect both the availability of deals, 269 00:18:56,080 --> 00:19:04,439 Speaker 1: the attractiveness is of deals and competition? Well, the uh, 270 00:19:04,480 --> 00:19:07,560 Speaker 1: you know, it's a funny thing people, UM say, what's 271 00:19:07,560 --> 00:19:10,000 Speaker 1: going to happen when interest rates go up? Is it's 272 00:19:10,000 --> 00:19:12,879 Speaker 1: going to make your business much tougher. And what we 273 00:19:12,960 --> 00:19:16,919 Speaker 1: normally see when interest rates rise is the obviously the 274 00:19:16,960 --> 00:19:20,280 Speaker 1: inverse on multiple side. And that's because there's a clear 275 00:19:20,520 --> 00:19:23,679 Speaker 1: relationship between you know, the cost of capital and the 276 00:19:23,760 --> 00:19:26,680 Speaker 1: multiple you can afford to pay for a company. So 277 00:19:26,840 --> 00:19:29,840 Speaker 1: I think those things tend to self correct UM if 278 00:19:29,880 --> 00:19:36,640 Speaker 1: we move away from UM this UM uh relatively inexpensive 279 00:19:37,240 --> 00:19:43,680 Speaker 1: debt debt capital that we are currently seen. UH. Clearly, 280 00:19:43,760 --> 00:19:47,960 Speaker 1: the very low base rates that we have UM have 281 00:19:48,119 --> 00:19:53,639 Speaker 1: allowed the markets to achieve overall multiples that are higher 282 00:19:53,680 --> 00:19:57,480 Speaker 1: than on an absolute basis than we've seen it UM 283 00:19:58,080 --> 00:20:01,080 Speaker 1: at many points in history. And I would expect that 284 00:20:01,240 --> 00:20:04,359 Speaker 1: if the base rate increases that you're going to see 285 00:20:04,359 --> 00:20:08,320 Speaker 1: some contraction in market multiples and that will flow through 286 00:20:08,359 --> 00:20:10,600 Speaker 1: to to what we see on the buy outside as well. 287 00:20:11,400 --> 00:20:15,480 Speaker 1: M really really quite interesting. So so I mentioned the 288 00:20:15,520 --> 00:20:19,040 Speaker 1: Snapple deal from nine two. You guys picked that up 289 00:20:19,560 --> 00:20:24,400 Speaker 1: for a song before bringing in public and then eventually 290 00:20:24,400 --> 00:20:28,600 Speaker 1: having it UH taken over by Quaker Roads. UM, and 291 00:20:28,640 --> 00:20:31,760 Speaker 1: I think the initial price was something like three million dollars. 292 00:20:32,080 --> 00:20:35,240 Speaker 1: Today we see deals in the billions of dollars all 293 00:20:35,240 --> 00:20:39,280 Speaker 1: the time. How different is pe deals in terms of 294 00:20:39,320 --> 00:20:44,479 Speaker 1: size compared with a decade or two ago. Well, a 295 00:20:44,520 --> 00:20:47,480 Speaker 1: decade ago we were seeing some very large deals. Are 296 00:20:47,720 --> 00:20:53,320 Speaker 1: you were seeing some billion dollar buyouts. A decade before that, 297 00:20:53,880 --> 00:20:56,880 Speaker 1: you were orders of magnitude lower. So you know, it's 298 00:20:56,920 --> 00:20:59,560 Speaker 1: your point. Most deals were being done less than a 299 00:20:59,560 --> 00:21:03,639 Speaker 1: billion of enterprise value. In the nineties. There were a 300 00:21:03,640 --> 00:21:07,240 Speaker 1: handful of deals that were done that were significantly larger 301 00:21:07,280 --> 00:21:10,280 Speaker 1: than that, but that was those were more anomalous than 302 00:21:10,800 --> 00:21:16,040 Speaker 1: the than the norm. UH. Today, UM, you're seeing again 303 00:21:16,080 --> 00:21:20,800 Speaker 1: a return to transactions that are in that UH five 304 00:21:21,000 --> 00:21:24,800 Speaker 1: to billion dollar enterprise value range. And there are a 305 00:21:24,840 --> 00:21:28,600 Speaker 1: lot of things being talked about that are actually larger 306 00:21:28,680 --> 00:21:33,920 Speaker 1: than that. So you know, UH, private equity UH will 307 00:21:34,320 --> 00:21:41,120 Speaker 1: UM continue to look for transactions. UH. Individual firms will 308 00:21:41,160 --> 00:21:44,720 Speaker 1: look for transactions that are appropriate relative to the size 309 00:21:44,720 --> 00:21:48,119 Speaker 1: of their funds. UM some of us are focused on 310 00:21:48,560 --> 00:21:52,320 Speaker 1: what we would call middle market. Uh, we are focused 311 00:21:52,359 --> 00:21:55,640 Speaker 1: on middle market growth companies. There are other firms that 312 00:21:55,800 --> 00:21:58,880 Speaker 1: are spanning into you know, what you would call very 313 00:21:59,520 --> 00:22:04,040 Speaker 1: very large enterprises. And again that reflective of the fun 314 00:22:04,160 --> 00:22:07,840 Speaker 1: sizes that some of them have raised or our targeting. 315 00:22:09,200 --> 00:22:11,960 Speaker 1: So when the Warner Music deal was done, I think 316 00:22:12,000 --> 00:22:14,560 Speaker 1: that was two point six billion. That was a pretty 317 00:22:14,560 --> 00:22:18,640 Speaker 1: big deal for for Thomas Lee back then you were there, 318 00:22:18,680 --> 00:22:22,800 Speaker 1: what do you recall of that that deal, which many 319 00:22:22,840 --> 00:22:27,040 Speaker 1: observers have said is has been transformational for a lot 320 00:22:27,080 --> 00:22:30,199 Speaker 1: of the music industry. Well, we were looking at the 321 00:22:30,280 --> 00:22:37,280 Speaker 1: opportunity to buy a iconic company that had been part 322 00:22:37,520 --> 00:22:41,399 Speaker 1: that clearly was was a key part of the history 323 00:22:41,800 --> 00:22:46,280 Speaker 1: of Time Warner, but where the parent had kind of 324 00:22:46,280 --> 00:22:51,760 Speaker 1: moved beyond that particular sector. And we believed that the 325 00:22:51,840 --> 00:22:55,840 Speaker 1: ability to see a transformation in the way music was 326 00:22:56,040 --> 00:22:59,960 Speaker 1: distributed presented a broad set of opportunities that we could 327 00:23:00,280 --> 00:23:05,200 Speaker 1: reasonably quickly take advantage of. And so we and our partners, 328 00:23:05,359 --> 00:23:09,360 Speaker 1: particularly Edgar Bronfman, who we brought in as the CEO 329 00:23:09,440 --> 00:23:12,800 Speaker 1: of the business and who had a long and deep 330 00:23:13,040 --> 00:23:17,800 Speaker 1: experience base in music and entertainment more broadly, had a 331 00:23:18,400 --> 00:23:21,560 Speaker 1: plan that we were able to implement very quickly that 332 00:23:21,640 --> 00:23:25,400 Speaker 1: allowed us to see a significant growth in the cast 333 00:23:25,400 --> 00:23:28,360 Speaker 1: flows of the company. And you know, it was one 334 00:23:28,359 --> 00:23:32,280 Speaker 1: of the deals that was a precursor in many ways 335 00:23:32,359 --> 00:23:35,440 Speaker 1: to the model we see today, which is be able 336 00:23:35,480 --> 00:23:40,639 Speaker 1: to add significant operational value to a company in ways 337 00:23:40,680 --> 00:23:44,160 Speaker 1: that that allow it to that allowed it to significantly 338 00:23:44,280 --> 00:23:47,960 Speaker 1: increase its cast flows and sustain higher rates of growth 339 00:23:48,040 --> 00:23:52,359 Speaker 1: in those cast flows than it otherwise might m interesting 340 00:23:52,400 --> 00:23:56,840 Speaker 1: and one of the areas that h L specializes in 341 00:23:57,320 --> 00:24:02,000 Speaker 1: is uh financial services were you've had several exits in 342 00:24:02,080 --> 00:24:04,879 Speaker 1: that space. Tell us a little bit about how you 343 00:24:04,920 --> 00:24:08,160 Speaker 1: guys developed on expertise in that area, how do these 344 00:24:08,160 --> 00:24:11,800 Speaker 1: deals take shape, who are the buyers, etcetera. We had 345 00:24:11,840 --> 00:24:16,800 Speaker 1: long participated in different parts of the financial service world, 346 00:24:17,200 --> 00:24:22,760 Speaker 1: early on looking at opportunities in balance sheet driven businesses, banks, 347 00:24:23,240 --> 00:24:28,119 Speaker 1: reinsurance companies and had developed a successful track record there 348 00:24:28,720 --> 00:24:32,119 Speaker 1: and that migrated to looking at companies in more of 349 00:24:32,119 --> 00:24:36,080 Speaker 1: the fintech area. And you know, as I think it's 350 00:24:36,600 --> 00:24:41,160 Speaker 1: you know, all publicly known, we were the key financial 351 00:24:41,200 --> 00:24:45,400 Speaker 1: partner in the f I S transaction that was done 352 00:24:45,440 --> 00:24:50,280 Speaker 1: with Bill Foley and Fidelity National, UM, A couple of 353 00:24:50,280 --> 00:24:53,960 Speaker 1: our partners, Tom Haggertyness Row, plus a number of others 354 00:24:54,119 --> 00:24:58,400 Speaker 1: have been very involved in a broad range of transactions 355 00:24:58,440 --> 00:25:01,919 Speaker 1: since then in that sector. And uh so, as you 356 00:25:01,960 --> 00:25:05,199 Speaker 1: point out, it has been an area of specialization for us. 357 00:25:06,160 --> 00:25:09,399 Speaker 1: Let's talk a little bit about health care and some 358 00:25:09,560 --> 00:25:13,280 Speaker 1: of your funds. I'm familiar with the flagship funds and 359 00:25:13,359 --> 00:25:16,639 Speaker 1: the automation funds. Tell us a little bit about what 360 00:25:16,760 --> 00:25:22,359 Speaker 1: their focuses are on and how they differ. Our strategy 361 00:25:22,760 --> 00:25:27,439 Speaker 1: has been to identify certain subsectors that we think have 362 00:25:27,840 --> 00:25:31,840 Speaker 1: pretty extraordinary growth characteristics. And one of the ones that 363 00:25:31,920 --> 00:25:35,159 Speaker 1: we have been involved in and have have talked about 364 00:25:35,280 --> 00:25:37,639 Speaker 1: a lot over the course of the last five or 365 00:25:37,680 --> 00:25:41,640 Speaker 1: six years has been automation, where we believe that there 366 00:25:41,640 --> 00:25:46,880 Speaker 1: are very strong, sustainable secular growth drivers that are going 367 00:25:46,960 --> 00:25:52,080 Speaker 1: to be sustained for probably at least a decade. And um, 368 00:25:52,440 --> 00:25:55,000 Speaker 1: we we are in a world where um we know 369 00:25:55,080 --> 00:25:59,960 Speaker 1: that there are significant labor shortages, UM, where there are 370 00:26:00,200 --> 00:26:04,160 Speaker 1: um uh strong secular trends like to move to e commerce, 371 00:26:04,640 --> 00:26:08,960 Speaker 1: all well known to everyone. UH. And we've seen the 372 00:26:09,000 --> 00:26:14,720 Speaker 1: ability of companies that have developed capabilities and technologies to 373 00:26:14,840 --> 00:26:19,320 Speaker 1: automate a whole series of processes, both industrial and on 374 00:26:19,359 --> 00:26:24,040 Speaker 1: the distribution warehouse side, that enable us to fill the 375 00:26:24,080 --> 00:26:27,480 Speaker 1: gaps that can't be filled because of the difficulty of 376 00:26:27,560 --> 00:26:32,800 Speaker 1: finding employees, to automate jobs that are more mundane and 377 00:26:32,920 --> 00:26:37,320 Speaker 1: allow employees to be really focused on the higher value 378 00:26:37,480 --> 00:26:42,720 Speaker 1: aspects of their of the tasks at hand. And these 379 00:26:42,760 --> 00:26:48,240 Speaker 1: companies continue to uh to find new areas to expand into. 380 00:26:48,320 --> 00:26:52,280 Speaker 1: So we're going to see much more automation in the 381 00:26:52,359 --> 00:26:57,000 Speaker 1: office space, and financial services and healthcare, all again things 382 00:26:57,040 --> 00:27:02,480 Speaker 1: that will improve productivity, fill gaps unemployment, and allow employees 383 00:27:02,600 --> 00:27:07,159 Speaker 1: to see the benefit of that improved productivity through higher 384 00:27:07,160 --> 00:27:11,040 Speaker 1: wages that can accrue to the existing employee base because 385 00:27:11,080 --> 00:27:15,720 Speaker 1: of the improvements in productivity and profitability. So we've been hearing, 386 00:27:16,400 --> 00:27:18,720 Speaker 1: i don't know for a century, maybe longer. May go 387 00:27:18,800 --> 00:27:22,960 Speaker 1: back to malthis that automation and technology is taking jobs 388 00:27:23,000 --> 00:27:26,120 Speaker 1: away from people and pretty soon half the society will 389 00:27:26,119 --> 00:27:29,520 Speaker 1: be unemployed. That hasn't really seemed to happen. You you 390 00:27:29,560 --> 00:27:33,960 Speaker 1: mentioned the skilled service shortage and and the difficulty and 391 00:27:34,040 --> 00:27:38,200 Speaker 1: filling not just entry level positions, but you know, high 392 00:27:38,320 --> 00:27:42,200 Speaker 1: level technical positions. Why is there such a skills gap 393 00:27:42,800 --> 00:27:46,680 Speaker 1: and what is automation going to do to fill that gap? 394 00:27:47,280 --> 00:27:50,240 Speaker 1: The you know, the skills gap has been, as you 395 00:27:50,280 --> 00:27:52,720 Speaker 1: point out, well known for quite some time, and I 396 00:27:52,760 --> 00:27:56,760 Speaker 1: think there is a enormous and appropriate focus on making 397 00:27:56,800 --> 00:28:00,840 Speaker 1: sure people get the education and the training to allow 398 00:28:00,960 --> 00:28:06,000 Speaker 1: them to fully participate in the technologies of the future 399 00:28:06,200 --> 00:28:09,840 Speaker 1: and the the job sets that are opening up in 400 00:28:10,400 --> 00:28:14,560 Speaker 1: those areas. Automation again is going to be able to 401 00:28:14,600 --> 00:28:17,679 Speaker 1: fill in for the jobs that um, you know, people 402 00:28:17,960 --> 00:28:22,880 Speaker 1: really don't want to do, and also allow for improvements 403 00:28:22,880 --> 00:28:28,359 Speaker 1: in the projectivity that will allow companies to sustain higher 404 00:28:28,440 --> 00:28:32,639 Speaker 1: levels of compensation for their employees and still deliver the 405 00:28:32,640 --> 00:28:37,320 Speaker 1: profitability that their shareholders and other stakeholders are looking for. 406 00:28:37,640 --> 00:28:41,959 Speaker 1: And so automation will play an increasingly important role in 407 00:28:42,440 --> 00:28:46,720 Speaker 1: broad range of industries as we go forward, and allow 408 00:28:46,960 --> 00:28:52,920 Speaker 1: for the retraining of employees into areas that again are 409 00:28:53,760 --> 00:28:58,760 Speaker 1: higher value and are being sought after by employers both 410 00:28:59,080 --> 00:29:01,760 Speaker 1: in this country and on the world. So let's talk 411 00:29:01,800 --> 00:29:06,280 Speaker 1: a little bit about the healthcare space. Obviously, the vaccine 412 00:29:07,000 --> 00:29:10,160 Speaker 1: changed the way a lot of people think about, uh 413 00:29:10,240 --> 00:29:14,040 Speaker 1: the sector. What opportunities do you see in in healthcare, 414 00:29:14,560 --> 00:29:22,280 Speaker 1: including pharma and biotech. Well, I think we we have seen, UH, 415 00:29:22,320 --> 00:29:24,960 Speaker 1: you know, something pretty amazing over the course of the 416 00:29:25,040 --> 00:29:30,760 Speaker 1: last fourteen months, which is the ability from a standing 417 00:29:30,880 --> 00:29:38,600 Speaker 1: start to rev into a pretty amazing product. When you 418 00:29:38,640 --> 00:29:45,080 Speaker 1: think about the the number of effective vaccines that we 419 00:29:45,320 --> 00:29:49,320 Speaker 1: now have, UM, I think most interesting has been the 420 00:29:49,360 --> 00:29:55,120 Speaker 1: development of the m r n A vaccines because that's 421 00:29:55,160 --> 00:29:58,800 Speaker 1: not just a single product, but that is a platform 422 00:29:59,680 --> 00:30:05,840 Speaker 1: UH that has not produced UM therapeutics or vaccines before 423 00:30:06,720 --> 00:30:11,040 Speaker 1: that can now be utilized to address a range of 424 00:30:12,280 --> 00:30:17,360 Speaker 1: both vaccine opportunities, but also on the therapeutic side, yet 425 00:30:17,400 --> 00:30:23,080 Speaker 1: one more tool against cancer and other rare diseases. So UM, 426 00:30:23,120 --> 00:30:28,280 Speaker 1: I think the example of UM what we've seen over 427 00:30:28,320 --> 00:30:32,720 Speaker 1: the course of the last year UH is um UH 428 00:30:33,440 --> 00:30:38,920 Speaker 1: not just a one off, but is actually a microcosm 429 00:30:39,160 --> 00:30:45,560 Speaker 1: of the opportunity set UH that exists in healthcare UM 430 00:30:45,600 --> 00:30:49,000 Speaker 1: as the number of tools and technologies that we develop 431 00:30:49,480 --> 00:30:54,640 Speaker 1: are allowing both a faster and more effective development of 432 00:30:54,680 --> 00:30:59,120 Speaker 1: a broad range of therapeutics and diagnostics UM that go 433 00:30:59,520 --> 00:31:04,560 Speaker 1: right to the heart of solving a number of difficult 434 00:31:04,600 --> 00:31:12,360 Speaker 1: disease states across various cancers and cardiovascular diseases as well 435 00:31:12,400 --> 00:31:15,920 Speaker 1: as a number of other areas. So we're going to see, 436 00:31:16,000 --> 00:31:20,000 Speaker 1: I think, a continued explosion, if you will, of of 437 00:31:20,200 --> 00:31:25,640 Speaker 1: therapeutics and diagnostics. And there are entire industries that have 438 00:31:25,720 --> 00:31:29,760 Speaker 1: been set up to support the companies that have the 439 00:31:29,800 --> 00:31:36,000 Speaker 1: innovative science that they will develop into those drugs and um. 440 00:31:36,120 --> 00:31:41,920 Speaker 1: The ability to provide services to the specific pharmas and 441 00:31:42,000 --> 00:31:47,320 Speaker 1: biotechs who have the innovative science is something that you know, 442 00:31:47,400 --> 00:31:50,760 Speaker 1: we and many others have been focused on. So whether 443 00:31:51,000 --> 00:31:54,120 Speaker 1: it's the outsourcing of the clinical trials through c ROS, 444 00:31:54,760 --> 00:31:59,000 Speaker 1: it's the ability to provide a broader range of products 445 00:31:59,040 --> 00:32:02,440 Speaker 1: and services. It's the ability to take some of the 446 00:32:02,440 --> 00:32:07,440 Speaker 1: commercialization activity, whether it's salesforce or the development of selling 447 00:32:07,560 --> 00:32:13,040 Speaker 1: strategies more broadly and help these companies do all of 448 00:32:13,080 --> 00:32:16,360 Speaker 1: that while allowed them allowing them to focus all their 449 00:32:16,480 --> 00:32:19,640 Speaker 1: energy on the innovative science. You know, that I think 450 00:32:19,720 --> 00:32:23,160 Speaker 1: is good for the world as well as presents a 451 00:32:23,240 --> 00:32:29,120 Speaker 1: broad range of investment opportunities. Really interesting you mentioned things 452 00:32:29,120 --> 00:32:34,160 Speaker 1: that took place last year, obviously a COVID nineteen pandemic year. 453 00:32:34,920 --> 00:32:39,400 Speaker 1: How did that change the way you think about investing? 454 00:32:39,600 --> 00:32:43,600 Speaker 1: What was different for you whether it was working from 455 00:32:43,640 --> 00:32:47,320 Speaker 1: from home or just thinking about the impact of the pandemic, 456 00:32:47,720 --> 00:32:51,680 Speaker 1: how did affect the way you think about healthcare invest 457 00:32:51,760 --> 00:32:55,840 Speaker 1: now UM. I would say that the biggest impact was 458 00:32:56,120 --> 00:32:58,680 Speaker 1: the recognition that, UM, you know, there are a set 459 00:32:58,720 --> 00:33:02,200 Speaker 1: of tools out there that allow you to operate in 460 00:33:02,200 --> 00:33:06,600 Speaker 1: a virtual world incredibly effectively. And for us, those are 461 00:33:06,880 --> 00:33:10,120 Speaker 1: tools that you know, we had not used before UM, 462 00:33:10,480 --> 00:33:14,600 Speaker 1: and we're finding that they'll be incorporated in how we 463 00:33:14,680 --> 00:33:18,280 Speaker 1: do business going forward. In terms of UM the opportunities 464 00:33:18,360 --> 00:33:22,320 Speaker 1: that in healthcare, I don't know if there was any 465 00:33:22,360 --> 00:33:27,760 Speaker 1: great UM realization UH of new opportunities coming out of 466 00:33:27,800 --> 00:33:31,920 Speaker 1: the pandemic, as much as there was a reinforcement that, 467 00:33:32,080 --> 00:33:34,440 Speaker 1: you know, we are in a world where the you know, 468 00:33:34,440 --> 00:33:38,000 Speaker 1: as I said earlier, UH, the ability to support companies 469 00:33:38,240 --> 00:33:43,520 Speaker 1: that are able to provide a broad range of UM 470 00:33:43,560 --> 00:33:50,600 Speaker 1: of UM services UH to the pharma and biotech industry. UM. 471 00:33:50,640 --> 00:33:53,400 Speaker 1: You know that that is UH continues to be an 472 00:33:53,520 --> 00:33:59,040 Speaker 1: enormous and expanding opportunity set UM and the ability to 473 00:34:00,440 --> 00:34:05,560 Speaker 1: UH support companies that are able to provide various forms 474 00:34:05,760 --> 00:34:12,080 Speaker 1: of care UM at more effective prices UH so that 475 00:34:12,160 --> 00:34:15,280 Speaker 1: we can reduce the total medical expense to the system 476 00:34:15,480 --> 00:34:20,560 Speaker 1: is um is something that is worth focusing upon. So, 477 00:34:20,800 --> 00:34:26,759 Speaker 1: you know, I think the the pandemic um uh in 478 00:34:26,880 --> 00:34:33,040 Speaker 1: terms of healthcare investing reinforced a set of opportunities more 479 00:34:33,120 --> 00:34:40,280 Speaker 1: than created uh any truly new opportunity sets. Huh. Really interesting. 480 00:34:40,760 --> 00:34:43,000 Speaker 1: I don't know if you can answer this question, but 481 00:34:43,000 --> 00:34:46,200 Speaker 1: but I have to ask, having observed this from a 482 00:34:46,280 --> 00:34:50,320 Speaker 1: distance as well as anything I've ever done in terms 483 00:34:50,360 --> 00:34:56,279 Speaker 1: of medical services, why is the US healthcare system so inefficient? 484 00:34:56,800 --> 00:35:00,040 Speaker 1: There just doesn't seem to be any universal stand to 485 00:35:00,160 --> 00:35:03,359 Speaker 1: its for for files or test results. You would think 486 00:35:03,920 --> 00:35:08,520 Speaker 1: this would be perfect for technology to fix, and yet 487 00:35:08,600 --> 00:35:11,120 Speaker 1: here it is, and it's as much a mess as 488 00:35:11,200 --> 00:35:14,200 Speaker 1: it's ever been. Why can't we fix this? You know, 489 00:35:14,280 --> 00:35:16,160 Speaker 1: it's a really interesting point, and I would say that, 490 00:35:16,360 --> 00:35:19,560 Speaker 1: you know, first start with the question about what are 491 00:35:19,600 --> 00:35:23,200 Speaker 1: the right metrics and why can't we measure them uniformly 492 00:35:23,200 --> 00:35:26,000 Speaker 1: across the system? And one of the things that I 493 00:35:26,120 --> 00:35:30,160 Speaker 1: found has been in chair of the match RYTHM Healthcare 494 00:35:30,239 --> 00:35:33,080 Speaker 1: System for a number of years, and it's one of 495 00:35:33,160 --> 00:35:36,120 Speaker 1: the countries. In fact, the country's leading high end clinical 496 00:35:36,320 --> 00:35:41,320 Speaker 1: and largest research and teaching institution is the complexity of 497 00:35:41,640 --> 00:35:48,680 Speaker 1: disease states the nature of patient condition is so complicated 498 00:35:49,200 --> 00:35:52,040 Speaker 1: that at the very high end, which is where much 499 00:35:52,080 --> 00:35:55,960 Speaker 1: of the cost is, it's very hard to get apples 500 00:35:56,000 --> 00:35:59,880 Speaker 1: to apples comparisons. And that is exacerbated by the fact 501 00:36:00,080 --> 00:36:04,200 Speaker 1: that the most difficult cases will flow to the highest 502 00:36:04,360 --> 00:36:08,600 Speaker 1: end providers, will flow into a mass General Hospital or 503 00:36:08,680 --> 00:36:13,239 Speaker 1: Brigham Women's Hospital or Mayo Clinic or Cleveland clinic. And 504 00:36:13,440 --> 00:36:16,560 Speaker 1: so you know, you might be looking at data that says, 505 00:36:17,200 --> 00:36:20,480 Speaker 1: people with a certain heart condition, you know, here here 506 00:36:20,600 --> 00:36:25,080 Speaker 1: the outcomes, but um, it's not as comparable as you 507 00:36:25,080 --> 00:36:29,600 Speaker 1: would like to see it because the people with significant 508 00:36:29,640 --> 00:36:33,759 Speaker 1: comorbidities and more complexity are going to flow into those 509 00:36:33,840 --> 00:36:38,880 Speaker 1: highest end providers. UM and UH. Even though the the 510 00:36:39,719 --> 00:36:44,320 Speaker 1: the description may be similar, the nature of the condition 511 00:36:44,400 --> 00:36:47,080 Speaker 1: and what you do to deal with UM that condition 512 00:36:47,800 --> 00:36:53,680 Speaker 1: UM uh is UM very different. So let's start with 513 00:36:53,800 --> 00:36:57,120 Speaker 1: the fact that it's hard to get true comparisons, as 514 00:36:57,640 --> 00:37:02,439 Speaker 1: you were referring to across the entirety of the health 515 00:37:02,480 --> 00:37:06,799 Speaker 1: care system. But even with that, UM, you know, there 516 00:37:07,000 --> 00:37:09,759 Speaker 1: there are lots of ways that we can improve the 517 00:37:09,880 --> 00:37:15,479 Speaker 1: efficiency and information flow to patients and reduce the total 518 00:37:15,560 --> 00:37:18,439 Speaker 1: medical expense of the whole system. And I think there's 519 00:37:18,440 --> 00:37:20,320 Speaker 1: a lot of work being done. I know at Massonal 520 00:37:20,360 --> 00:37:23,200 Speaker 1: Brigram there's enormous work being done to look for ways 521 00:37:23,320 --> 00:37:26,200 Speaker 1: that we can make sure that a patient with a 522 00:37:26,239 --> 00:37:30,880 Speaker 1: certain acuity or complexity to their condition is treated in 523 00:37:31,360 --> 00:37:36,120 Speaker 1: the right place with the most effective but cost effective 524 00:37:36,160 --> 00:37:39,960 Speaker 1: as well care. And that requires an enormous amount of 525 00:37:40,320 --> 00:37:44,680 Speaker 1: effort and changes the culture and changes to structures that 526 00:37:44,840 --> 00:37:49,040 Speaker 1: I think will be something that we see accelerating around 527 00:37:49,080 --> 00:37:52,239 Speaker 1: the country in order to deal with this issue of 528 00:37:53,880 --> 00:38:00,520 Speaker 1: of high um medical expense. Now, I would also note that, uh, 529 00:38:01,520 --> 00:38:07,399 Speaker 1: the United States benefits right now from having extraordinary healthcare. Uh. 530 00:38:07,760 --> 00:38:10,920 Speaker 1: And you know, one of the proof points of that 531 00:38:11,440 --> 00:38:14,040 Speaker 1: would be the number of people who come from all 532 00:38:14,280 --> 00:38:17,840 Speaker 1: all over the world for the care, particularly at the 533 00:38:17,960 --> 00:38:24,560 Speaker 1: very um high end of the acuity um level. People 534 00:38:24,600 --> 00:38:29,680 Speaker 1: who are reasonably sick want to come and be treated here. Uh, 535 00:38:29,960 --> 00:38:34,439 Speaker 1: not as much people here going to other places other 536 00:38:34,560 --> 00:38:37,880 Speaker 1: than the so called medical tourism. And and that's the 537 00:38:38,000 --> 00:38:43,480 Speaker 1: strange paradox is the level of care here is so good, 538 00:38:43,760 --> 00:38:49,239 Speaker 1: and yet systemically the entire operation is it seems to 539 00:38:49,280 --> 00:38:54,400 Speaker 1: be just so chaotic it's really kind of fascinating that 540 00:38:55,080 --> 00:38:59,399 Speaker 1: the more granular you get, the more specific you get, 541 00:38:59,640 --> 00:39:02,160 Speaker 1: the better of the treatment is. But step back and 542 00:39:02,239 --> 00:39:07,200 Speaker 1: look at the entire system, it's expensive and doesn't always 543 00:39:07,239 --> 00:39:11,080 Speaker 1: have great outcomes. Well, you know, and again I think 544 00:39:11,160 --> 00:39:14,279 Speaker 1: it goes to this issue of are we measuring things 545 00:39:14,840 --> 00:39:19,000 Speaker 1: correctly and do we have the tools, as I mentioned earlier, 546 00:39:19,120 --> 00:39:26,040 Speaker 1: to actually measure things appropriately And because of the incredible 547 00:39:26,120 --> 00:39:33,560 Speaker 1: complexity and specific nature of um of patients conditions, it's 548 00:39:33,640 --> 00:39:37,279 Speaker 1: often hard to do that, and so um the proof 549 00:39:37,320 --> 00:39:41,120 Speaker 1: points are are more um in the outcomes that we 550 00:39:41,239 --> 00:39:46,680 Speaker 1: see for patients with extraordinarily difficult conditions. The way that 551 00:39:46,800 --> 00:39:50,600 Speaker 1: we provide care on you know, the more primary and 552 00:39:50,640 --> 00:39:54,840 Speaker 1: secondary side is something where it's a lot easier to 553 00:39:55,080 --> 00:39:59,400 Speaker 1: look on a comparable basis across systems to see what 554 00:39:59,640 --> 00:40:04,920 Speaker 1: the most uh effective and yet cost effective ways of 555 00:40:05,560 --> 00:40:09,000 Speaker 1: providing you know, primary and secondary care might be. On 556 00:40:09,080 --> 00:40:12,160 Speaker 1: the church earing coortinary side, it gets a lot harder 557 00:40:12,719 --> 00:40:15,480 Speaker 1: for the reasons that I just mentioned. Let's talk a 558 00:40:15,560 --> 00:40:20,160 Speaker 1: little bit about how rapidly these markets came back and 559 00:40:20,600 --> 00:40:24,600 Speaker 1: what that might mean for the alternative space. Were you 560 00:40:24,680 --> 00:40:28,760 Speaker 1: surprised at how quickly the market collapsed and then snapped 561 00:40:28,880 --> 00:40:33,239 Speaker 1: right back to what it was doing pre COVID. I 562 00:40:33,400 --> 00:40:36,280 Speaker 1: was less surprised by the nature of the collapse, given 563 00:40:37,040 --> 00:40:39,560 Speaker 1: the fact that we had this unprecedented shut down to 564 00:40:40,719 --> 00:40:44,320 Speaker 1: our economy, uh, and much more surprised by the speed 565 00:40:44,320 --> 00:40:46,919 Speaker 1: at which it came back. I think, you know, early 566 00:40:47,000 --> 00:40:50,280 Speaker 1: on people were dismissing the possibility of a V shaped recovery, 567 00:40:51,040 --> 00:40:54,239 Speaker 1: particularly a sharp V. And Um, those of us who 568 00:40:54,320 --> 00:40:58,120 Speaker 1: were doing that were completely wrong. Uh. I think what 569 00:40:58,239 --> 00:41:04,200 Speaker 1: we didn't anticipate was the unprecedented level of both monetary 570 00:41:04,520 --> 00:41:09,440 Speaker 1: and fiscal support uh that that we saw occur here 571 00:41:09,480 --> 00:41:12,280 Speaker 1: in the United States as well as around the world. 572 00:41:13,040 --> 00:41:17,040 Speaker 1: M um. And and did that create any unique opportunities 573 00:41:17,480 --> 00:41:22,920 Speaker 1: for investing during during COVIDD? Did anything bubble up more 574 00:41:23,000 --> 00:41:27,680 Speaker 1: quickly than it might have otherwise? I would say distressed 575 00:41:27,760 --> 00:41:31,640 Speaker 1: opportunities were here and then gone in about a nine 576 00:41:31,680 --> 00:41:34,560 Speaker 1: a second. Uh. There were a few few things that 577 00:41:35,320 --> 00:41:38,640 Speaker 1: got done in the industry that I think, um, you know, 578 00:41:40,120 --> 00:41:45,680 Speaker 1: was characteristic of distress investing, But um, you know, primarily 579 00:41:45,840 --> 00:41:48,360 Speaker 1: that that disappeared as we saw that very sharp V 580 00:41:48,480 --> 00:41:51,239 Speaker 1: shaped recovery. So much of what what we were doing 581 00:41:51,440 --> 00:41:56,200 Speaker 1: was again focusing on areas that we felt had that 582 00:41:56,360 --> 00:41:59,759 Speaker 1: strong secular growth to it. Uh And one of the 583 00:42:00,000 --> 00:42:02,680 Speaker 1: offits of strong secular growth as it tends to be 584 00:42:02,880 --> 00:42:08,160 Speaker 1: less adversely affected bicyclical downturns um whether it's caused by 585 00:42:08,280 --> 00:42:11,320 Speaker 1: a normal economic cycle or in this case by the 586 00:42:12,360 --> 00:42:18,280 Speaker 1: pandemic that again led to an unprecedented shutdown of the economy. 587 00:42:18,880 --> 00:42:24,200 Speaker 1: So some folks are describing the current era as as 588 00:42:24,320 --> 00:42:28,800 Speaker 1: late cycle or late business cycle. What sectors do you 589 00:42:28,960 --> 00:42:34,359 Speaker 1: find attractive if it's late cycle, What what businesses are 590 00:42:34,440 --> 00:42:38,840 Speaker 1: you kinds of businesses are you looking at? You know, 591 00:42:39,000 --> 00:42:42,759 Speaker 1: for us, it's again the areas that we've we've had 592 00:42:43,120 --> 00:42:47,239 Speaker 1: very long basic experience and that we think, you know, 593 00:42:47,360 --> 00:42:51,880 Speaker 1: we'll be able to to ride through a more traditional 594 00:42:52,520 --> 00:42:56,800 Speaker 1: economic cyclical downturn. And so that would be things in 595 00:42:56,880 --> 00:43:00,880 Speaker 1: the financial services. In tech space, we talked about healthcare, 596 00:43:01,000 --> 00:43:04,759 Speaker 1: where we see again a broad set of opportunities that 597 00:43:04,920 --> 00:43:08,040 Speaker 1: tend to be less much less cyclically sensitive. And then 598 00:43:08,160 --> 00:43:12,800 Speaker 1: the the areas of technology and automation that will continue 599 00:43:12,840 --> 00:43:17,400 Speaker 1: to be deployed almost regardless of the economic cycle. And 600 00:43:17,600 --> 00:43:20,000 Speaker 1: it's not to say that these areas won't see some 601 00:43:20,239 --> 00:43:25,040 Speaker 1: adverse effector economic cycle. I think they they generally will, 602 00:43:25,239 --> 00:43:29,319 Speaker 1: but it will be a much softer downturn than you'll 603 00:43:29,360 --> 00:43:35,480 Speaker 1: see in industrial industries, process industries and um, you know 604 00:43:35,600 --> 00:43:40,359 Speaker 1: other sectors that have tended to m to see much 605 00:43:40,440 --> 00:43:44,280 Speaker 1: sharper ups and downs as we go through the traditional 606 00:43:44,320 --> 00:43:49,560 Speaker 1: economic cycles. So you mentioned the financial sector. I have 607 00:43:49,800 --> 00:43:52,920 Speaker 1: to ask you a little bit about defy and and 608 00:43:53,320 --> 00:43:59,200 Speaker 1: the potential challenge to centralize finance and currencies and and 609 00:43:59,360 --> 00:44:04,759 Speaker 1: let's break that into things like financial apps and services 610 00:44:05,480 --> 00:44:09,640 Speaker 1: versus let's call it blockchain versus crypto. How do you 611 00:44:09,719 --> 00:44:14,560 Speaker 1: look at that universe. Well, so, we have traditionally been 612 00:44:14,640 --> 00:44:21,799 Speaker 1: focused on supporting companies that provide technologies to the more 613 00:44:21,920 --> 00:44:25,520 Speaker 1: asset based part of the financial services world. So we 614 00:44:26,239 --> 00:44:30,239 Speaker 1: were the sponsor of companies like Black Knight Financial, which 615 00:44:30,360 --> 00:44:33,400 Speaker 1: is the largest provider of technology services to the mortgage 616 00:44:33,440 --> 00:44:37,759 Speaker 1: world mentioned f i S. We are very interested in 617 00:44:38,560 --> 00:44:42,600 Speaker 1: companies that can help the various parts of the insurance 618 00:44:42,960 --> 00:44:47,200 Speaker 1: value chain do their jobs better. Wealth management, again, is 619 00:44:47,280 --> 00:44:51,880 Speaker 1: a is a really interesting sector that we've participated in 620 00:44:52,640 --> 00:44:56,040 Speaker 1: and where we think that there are ways of improving 621 00:44:56,520 --> 00:45:00,799 Speaker 1: the ability to serve clients through the utilization of technology. 622 00:45:01,320 --> 00:45:04,520 Speaker 1: So in the financial services world, we've generally been focused 623 00:45:04,560 --> 00:45:08,000 Speaker 1: on how to help the kinds of companies that directly 624 00:45:08,080 --> 00:45:13,160 Speaker 1: serve consumers and businesses in their key business processes. Blockchain 625 00:45:13,320 --> 00:45:17,239 Speaker 1: is an interesting technology in that regard that I think 626 00:45:17,280 --> 00:45:21,239 Speaker 1: we're still in very early innings. I would separate blockchain 627 00:45:21,400 --> 00:45:24,880 Speaker 1: from cryptocurrencies like bitcoin, even though they're often put in 628 00:45:24,920 --> 00:45:29,320 Speaker 1: the same category. We have not really focused upon the 629 00:45:29,680 --> 00:45:32,520 Speaker 1: cryptocurrency side. It's not it's not in an area that 630 00:45:32,840 --> 00:45:37,200 Speaker 1: that we have any traditional strength. And you know, obviously 631 00:45:37,360 --> 00:45:42,000 Speaker 1: we've been fascinated to watch the the explosion and the 632 00:45:42,120 --> 00:45:45,560 Speaker 1: valuation of these cryptocurrencies, but I don't really have a 633 00:45:45,680 --> 00:45:49,680 Speaker 1: strong view on it. Kind of kind of interesting, and 634 00:45:49,800 --> 00:45:53,240 Speaker 1: we've been we've been talking about growth rate and valuations. 635 00:45:54,080 --> 00:45:58,400 Speaker 1: When you look at spaces like blockchain, how do you 636 00:45:58,800 --> 00:46:03,400 Speaker 1: come up with a value suation method for a particular company. 637 00:46:04,520 --> 00:46:08,279 Speaker 1: Are you just guessing at future discounted cash flow? Are 638 00:46:08,320 --> 00:46:11,719 Speaker 1: you trying to ballpark where the market might go? When 639 00:46:12,440 --> 00:46:16,399 Speaker 1: a technology is so young, it seems like it's practically 640 00:46:16,480 --> 00:46:22,440 Speaker 1: impossible to come up with a reasonable valuation. Yeah, I 641 00:46:22,600 --> 00:46:26,560 Speaker 1: think you're you're pointing to something that that probably is 642 00:46:26,719 --> 00:46:30,480 Speaker 1: characteristic of the differences between the venture capital side of 643 00:46:30,680 --> 00:46:33,959 Speaker 1: private equity and the buy outside and growth equity side 644 00:46:34,040 --> 00:46:37,560 Speaker 1: of private equity. So I think on the venture side, 645 00:46:37,600 --> 00:46:42,360 Speaker 1: when you're investing in very young technologies, new technologies, you 646 00:46:42,440 --> 00:46:45,600 Speaker 1: know you are making a very broad based bet without 647 00:46:45,760 --> 00:46:48,840 Speaker 1: the ability to have any level of precision about what 648 00:46:49,000 --> 00:46:53,839 Speaker 1: those numbers will look like in any given one to three, 649 00:46:54,239 --> 00:46:57,440 Speaker 1: let alone five to ten year period. What we're trying 650 00:46:57,480 --> 00:47:00,480 Speaker 1: to do on our side is invest in companies where 651 00:47:00,520 --> 00:47:04,000 Speaker 1: we think we have enough data to have a reasonably 652 00:47:04,320 --> 00:47:09,800 Speaker 1: high probability of achieving a at least a three to 653 00:47:09,960 --> 00:47:13,680 Speaker 1: five year set of projections. Obviously a lot harder to 654 00:47:13,760 --> 00:47:16,680 Speaker 1: go past that, and so we spend an enormous amount 655 00:47:16,719 --> 00:47:20,359 Speaker 1: of time trying to model out, particularly the first three 656 00:47:20,480 --> 00:47:24,680 Speaker 1: years of growth of of a given company, looking at 657 00:47:24,880 --> 00:47:28,840 Speaker 1: the broad range of market conditions that allow for that growth, 658 00:47:29,360 --> 00:47:33,399 Speaker 1: and where that specific company maybe in the competitive set 659 00:47:33,640 --> 00:47:37,640 Speaker 1: of companies trying to serve that market. And so you know, 660 00:47:37,760 --> 00:47:40,800 Speaker 1: we're making less of a of a venture bet and 661 00:47:40,960 --> 00:47:44,600 Speaker 1: more of a bet on something where there's already at 662 00:47:44,680 --> 00:47:48,239 Speaker 1: least sufficient data to be able to do the kind 663 00:47:48,320 --> 00:47:51,759 Speaker 1: of detailed analytics that we like to do to have 664 00:47:52,080 --> 00:47:54,680 Speaker 1: a reasonably high degree of comfort about at least what 665 00:47:54,760 --> 00:47:57,720 Speaker 1: the next three years are going to look like. Quite interesting, 666 00:47:57,840 --> 00:48:00,480 Speaker 1: and and I know there's that distinction, and it's really 667 00:48:01,239 --> 00:48:04,279 Speaker 1: challenging to, uh, to manage it. Do you look at 668 00:48:04,320 --> 00:48:07,480 Speaker 1: the word disruption and think, oh, not exact cliche again, 669 00:48:07,960 --> 00:48:11,680 Speaker 1: or is that a legitimate resonant description for for some 670 00:48:11,800 --> 00:48:15,080 Speaker 1: of the new technologies that are coming along. Oh, I 671 00:48:15,160 --> 00:48:19,280 Speaker 1: think it's you know, a crucial word in the investing universe, 672 00:48:19,480 --> 00:48:21,760 Speaker 1: because what we're trying to do is look for companies 673 00:48:21,840 --> 00:48:25,320 Speaker 1: that are on the right side of disruption and always 674 00:48:25,400 --> 00:48:29,560 Speaker 1: be aware of the business models that could be disrupted 675 00:48:29,719 --> 00:48:33,400 Speaker 1: by new technologies or new entrants that bring in a 676 00:48:33,560 --> 00:48:37,600 Speaker 1: very different model to a given industry or sector. And 677 00:48:37,760 --> 00:48:39,719 Speaker 1: so we spent a lot of time trying to make 678 00:48:39,800 --> 00:48:41,919 Speaker 1: sure that, you know, we are on the right side 679 00:48:42,000 --> 00:48:45,000 Speaker 1: of that, as I just said, as opposed to being 680 00:48:45,040 --> 00:48:47,719 Speaker 1: put in a position our entire business model can be 681 00:48:47,840 --> 00:48:52,680 Speaker 1: undermined by new entrance who disrupt the traditional way that 682 00:48:52,760 --> 00:48:56,600 Speaker 1: business is done in that industry. So so, speaking about 683 00:48:56,680 --> 00:49:00,560 Speaker 1: traditional ways of doing business, in my research, I noted 684 00:49:00,680 --> 00:49:04,040 Speaker 1: that when you guys did the Duncan Brands deal in 685 00:49:04,160 --> 00:49:06,480 Speaker 1: two thousand and five. They were one of the larger 686 00:49:06,600 --> 00:49:10,600 Speaker 1: franchisers of Duncan Donuts restaurants. You didn't just do that 687 00:49:10,719 --> 00:49:13,680 Speaker 1: by yourself. You you had Bank Capital and the Carlisle 688 00:49:13,760 --> 00:49:18,560 Speaker 1: Group as co investors. Is that sort of transaction common 689 00:49:18,600 --> 00:49:23,239 Speaker 1: it It sounds more like a traditional VC investment with 690 00:49:23,440 --> 00:49:27,600 Speaker 1: co investors than private equity. So there was a period 691 00:49:27,640 --> 00:49:30,440 Speaker 1: of time where the size of the transactions or the 692 00:49:30,520 --> 00:49:33,839 Speaker 1: nature of the transactions in private equity, in the buy 693 00:49:33,880 --> 00:49:37,600 Speaker 1: outside of private equity, were required more than one firm, 694 00:49:37,719 --> 00:49:41,280 Speaker 1: and it was a point in time when the availability 695 00:49:41,360 --> 00:49:45,360 Speaker 1: of capital was really from other gps. Today we're in 696 00:49:45,400 --> 00:49:49,000 Speaker 1: the world where we have just some phenomenal limited partners 697 00:49:49,600 --> 00:49:53,960 Speaker 1: who are anxious to be co investors in transactions. So 698 00:49:54,080 --> 00:49:57,120 Speaker 1: in today's world, we rarely have another general partner in 699 00:49:57,160 --> 00:50:00,759 Speaker 1: the deal. But back in the too thousands, and in 700 00:50:00,880 --> 00:50:04,239 Speaker 1: fact even in the late nineties, it was more traditional, 701 00:50:05,239 --> 00:50:08,240 Speaker 1: given the size of transactions and the size of our funds, 702 00:50:08,719 --> 00:50:11,360 Speaker 1: to partner with another general partner or more than one 703 00:50:11,440 --> 00:50:16,759 Speaker 1: general partner um UH to acquire a company. So you know, 704 00:50:16,880 --> 00:50:19,520 Speaker 1: Main Capital UM was a partner of ours in a 705 00:50:19,600 --> 00:50:24,520 Speaker 1: number of different transactions. Uh and um, Duncan Brands was 706 00:50:24,560 --> 00:50:26,560 Speaker 1: one of them. And we partner with Carlisle and a 707 00:50:26,600 --> 00:50:30,000 Speaker 1: couple of things as well. And UM you know that, Um, 708 00:50:30,520 --> 00:50:35,640 Speaker 1: that has really evolved more uh in today's world to 709 00:50:35,840 --> 00:50:40,440 Speaker 1: a single GP buying a company with the support of 710 00:50:40,960 --> 00:50:44,960 Speaker 1: their limited partners who co invest in that deal. Uh. 711 00:50:45,120 --> 00:50:50,040 Speaker 1: Now we're also seeing some rather large transactions happen again. Uh. 712 00:50:50,280 --> 00:50:53,359 Speaker 1: And in those transactions, you might you're starting to see, 713 00:50:53,960 --> 00:50:56,839 Speaker 1: you know, the so called club deal come back, um, 714 00:50:57,640 --> 00:51:02,560 Speaker 1: because the the ability to under those transactions may require 715 00:51:02,680 --> 00:51:07,080 Speaker 1: more than one general partner. Um. Uh. So you know 716 00:51:07,239 --> 00:51:12,600 Speaker 1: the world you know is you had mentioned earlier about conciclicality, 717 00:51:12,680 --> 00:51:17,239 Speaker 1: the nature evaluations going up and down. Uh. You know, UH, 718 00:51:17,880 --> 00:51:21,040 Speaker 1: if you're in this business long enough, you you will 719 00:51:21,120 --> 00:51:25,239 Speaker 1: often see trends that you thought might have disappeared come back. 720 00:51:25,360 --> 00:51:28,120 Speaker 1: And I think we may be seen to come back 721 00:51:28,239 --> 00:51:31,560 Speaker 1: of the so called club deal uh, where you club 722 00:51:31,640 --> 00:51:36,920 Speaker 1: together uh two or more general partners to acquire a company. 723 00:51:37,920 --> 00:51:42,799 Speaker 1: That's really that's really interesting. It's um, it's kind of fascinating. 724 00:51:42,840 --> 00:51:45,200 Speaker 1: I had no idea that the structure. I knew there 725 00:51:45,239 --> 00:51:48,600 Speaker 1: were calls on LPs who put money into a fund. 726 00:51:48,680 --> 00:51:51,520 Speaker 1: But I never realized that when a big enough deal 727 00:51:51,600 --> 00:51:56,360 Speaker 1: comes along, they might be UM less limited than what 728 00:51:56,480 --> 00:52:00,200 Speaker 1: we traditionally think of as limited partners. Is this the 729 00:52:00,400 --> 00:52:02,719 Speaker 1: future of private equity? Is this going to be a 730 00:52:03,520 --> 00:52:07,319 Speaker 1: big aspect? And the reason I asked that is Vanguard 731 00:52:07,560 --> 00:52:13,640 Speaker 1: and some other large public investor non accredited investor shops 732 00:52:14,200 --> 00:52:18,920 Speaker 1: have been looking to access more private equity. This seems 733 00:52:18,960 --> 00:52:23,560 Speaker 1: like a very different model. Well, I think it's something 734 00:52:23,640 --> 00:52:28,600 Speaker 1: that's been developing over UM, you know, the last decade. Uh. 735 00:52:28,760 --> 00:52:31,680 Speaker 1: It's something that we've been very focused on. Is the 736 00:52:32,200 --> 00:52:35,120 Speaker 1: strategic partnership that you can have with your limited partners. 737 00:52:36,040 --> 00:52:38,920 Speaker 1: I think a lot of firms in the industry h 738 00:52:39,360 --> 00:52:42,239 Speaker 1: have been thinking about it in a similar way. UM 739 00:52:42,680 --> 00:52:46,879 Speaker 1: and UH. It allows you, particularly in a world where 740 00:52:46,920 --> 00:52:50,080 Speaker 1: it's not clear what the pace of investing UH could 741 00:52:50,160 --> 00:52:53,399 Speaker 1: be if one's trying to sustain, you know, the kind 742 00:52:53,440 --> 00:52:57,960 Speaker 1: of high returns that our investors expect and that that 743 00:52:58,120 --> 00:53:01,040 Speaker 1: we want to be able to provide them. UM. Uh, 744 00:53:01,239 --> 00:53:04,759 Speaker 1: it allows you to size your fund in ways. UM. 745 00:53:05,000 --> 00:53:07,680 Speaker 1: They give you a reasonably high level of assurance that 746 00:53:07,800 --> 00:53:11,600 Speaker 1: you can maintain the disciplines UM that you want in 747 00:53:11,760 --> 00:53:14,840 Speaker 1: order to achieve those returns and allow you to scale 748 00:53:14,960 --> 00:53:17,600 Speaker 1: up on transactions that are on the larger side of 749 00:53:17,640 --> 00:53:23,760 Speaker 1: what your target universe uh is So um the strategic 750 00:53:23,880 --> 00:53:26,800 Speaker 1: partnership UH there I think is important to the GP 751 00:53:27,440 --> 00:53:31,239 Speaker 1: and for the LPs. It's a way of participating more 752 00:53:31,320 --> 00:53:36,799 Speaker 1: broadly in private equity where you're not um uh necessarily 753 00:53:36,920 --> 00:53:41,600 Speaker 1: paying the same kind of fees uh and U profit 754 00:53:41,680 --> 00:53:45,280 Speaker 1: participation to the GP that you would on the investments 755 00:53:45,360 --> 00:53:49,680 Speaker 1: that you make directly into their funds. All Right, I 756 00:53:49,800 --> 00:53:52,200 Speaker 1: know I only have you for another twenty or so minutes, 757 00:53:52,239 --> 00:53:55,680 Speaker 1: So before I get to my favorite question, I'm gonna 758 00:53:55,719 --> 00:54:01,160 Speaker 1: throw you a curveball. And that's for For decades, you 759 00:54:01,320 --> 00:54:06,319 Speaker 1: sat on the board of the Dolins Controlled Cable Systems UM. 760 00:54:06,760 --> 00:54:09,440 Speaker 1: And this year, first time in a long time, the 761 00:54:09,520 --> 00:54:13,560 Speaker 1: Knicks are having a decent year. So what's it gonna 762 00:54:13,640 --> 00:54:16,640 Speaker 1: take to get the Dolins to finally sell the team? 763 00:54:16,680 --> 00:54:20,120 Speaker 1: What do we have to do? So I was on 764 00:54:20,200 --> 00:54:21,880 Speaker 1: the board of MSG. I'm not sure it was for 765 00:54:22,160 --> 00:54:27,960 Speaker 1: quite that long. Uh and um uh. The you know, 766 00:54:28,080 --> 00:54:33,840 Speaker 1: the team certainly had UM as you point out significant 767 00:54:33,960 --> 00:54:38,600 Speaker 1: ups and downs and you know even more, I guess 768 00:54:38,800 --> 00:54:45,640 Speaker 1: um significantly uh you know, a long uh period of 769 00:54:46,920 --> 00:54:51,000 Speaker 1: not getting anywhere near the success that pants had wanted. 770 00:54:51,640 --> 00:54:58,040 Speaker 1: And I'm no longer on the MS tad or or two. Um. 771 00:54:58,600 --> 00:55:02,200 Speaker 1: But you know the team, you know that I really 772 00:55:02,280 --> 00:55:05,719 Speaker 1: think they're on the right track now, you know, I think, 773 00:55:05,960 --> 00:55:08,560 Speaker 1: um Leon Rose has done a very nice job of 774 00:55:09,200 --> 00:55:14,680 Speaker 1: putting together a team UM that has a lot of 775 00:55:14,800 --> 00:55:19,040 Speaker 1: upside to it, uh with a coach that you know 776 00:55:19,120 --> 00:55:22,120 Speaker 1: has finally returned the team to its roots of being 777 00:55:22,160 --> 00:55:27,759 Speaker 1: a very tough, defensive minded um uh squad um uh. 778 00:55:28,000 --> 00:55:33,200 Speaker 1: And so I'm I'm optimistic about the future. But as 779 00:55:33,320 --> 00:55:38,200 Speaker 1: a longtime Nicks fan myself way before I joined the 780 00:55:38,640 --> 00:55:42,440 Speaker 1: MSG board, UM, I'm just very happy to see uh 781 00:55:42,760 --> 00:55:45,160 Speaker 1: see the success they've had this year. Let's jump to 782 00:55:45,280 --> 00:55:47,960 Speaker 1: our favorite questions we ask all our guests, starting with 783 00:55:48,800 --> 00:55:52,440 Speaker 1: what are you speaking of? Of MSG and various channels? 784 00:55:52,960 --> 00:55:55,280 Speaker 1: What are you streaming these days? Give us your favorite 785 00:55:55,440 --> 00:55:59,960 Speaker 1: Netflix or Amazon Prime, whatever's keeping you occupied and entertained 786 00:56:00,160 --> 00:56:04,759 Speaker 1: during lockdown? Well, my wife and I have kind of 787 00:56:04,840 --> 00:56:09,080 Speaker 1: gone through, um, almost everything one can watch on either 788 00:56:09,120 --> 00:56:11,560 Speaker 1: of those channels. I mean, i'd say our favorites were 789 00:56:11,600 --> 00:56:14,960 Speaker 1: things like Queen's Gambit, which I think lots of people 790 00:56:15,520 --> 00:56:21,320 Speaker 1: UH have really enjoyed. Um. Uh you know, there's a 791 00:56:21,360 --> 00:56:27,360 Speaker 1: wide range of of um, other things that that go 792 00:56:27,800 --> 00:56:33,240 Speaker 1: that go across a number of different genres, from Bridger 793 00:56:33,320 --> 00:56:38,200 Speaker 1: Tin type thing too, um um the great on Hulu. 794 00:56:38,680 --> 00:56:42,160 Speaker 1: UM you know, so um you know we're always looking. 795 00:56:42,400 --> 00:56:45,640 Speaker 1: We probably spend ten minutes trying to figure out what 796 00:56:45,800 --> 00:56:50,520 Speaker 1: to watch almost every night. So um, you know, lots 797 00:56:50,560 --> 00:56:53,959 Speaker 1: of different fun things. Uh. And UH tell us about 798 00:56:54,040 --> 00:56:58,240 Speaker 1: some of your early mentors who helped to shape your career. 799 00:57:01,280 --> 00:57:04,440 Speaker 1: So um you know, I would say one really important 800 00:57:04,480 --> 00:57:08,040 Speaker 1: mentor very early on was Walter Cabot, who, as I 801 00:57:08,280 --> 00:57:12,600 Speaker 1: mentioned earlier as the CEO of Harvard Manament Company, actually 802 00:57:12,800 --> 00:57:18,280 Speaker 1: started Harvard Manasamon company for Harvard. UM and just a 803 00:57:18,360 --> 00:57:26,240 Speaker 1: remarkable individual who um I think had both great success 804 00:57:26,760 --> 00:57:29,880 Speaker 1: um in traditional money management and yet also had the 805 00:57:29,960 --> 00:57:36,520 Speaker 1: foresight to push Harvard into areas that at the time, UM, 806 00:57:37,040 --> 00:57:41,040 Speaker 1: you know, we're not consistent uh at first thought with 807 00:57:41,680 --> 00:57:44,680 Speaker 1: what they used to call the reasonable man rule, which 808 00:57:45,360 --> 00:57:49,440 Speaker 1: was a general rule about how um the nature of 809 00:57:49,520 --> 00:57:53,560 Speaker 1: the risk one could take with endowment UH and foundation 810 00:57:53,680 --> 00:58:00,320 Speaker 1: assets UM. And Walter was incredibly supportive of the uh 811 00:58:00,920 --> 00:58:05,040 Speaker 1: the efforts that he had me undertake to to move 812 00:58:05,120 --> 00:58:09,960 Speaker 1: Harvard into these UM alternative assets spaces well before almost 813 00:58:10,000 --> 00:58:15,960 Speaker 1: any other UH endowment or foundation. UM and UM he 814 00:58:16,360 --> 00:58:22,160 Speaker 1: uh uh you know was just uh an extraordinarily smart 815 00:58:22,320 --> 00:58:27,200 Speaker 1: and supportive boss to have and really launched me into 816 00:58:28,280 --> 00:58:32,960 Speaker 1: the career that that I have now. UM and you know, 817 00:58:33,000 --> 00:58:35,320 Speaker 1: there were people along the way who taught me lots 818 00:58:35,360 --> 00:58:40,040 Speaker 1: of different things. I remember Floyd Qualmie at Cliner Perkins, 819 00:58:40,120 --> 00:58:43,840 Speaker 1: who UM we co invested with when I was at Harvard. 820 00:58:43,920 --> 00:58:46,600 Speaker 1: He was one of the general partners at Clina Perkins, 821 00:58:46,720 --> 00:58:49,240 Speaker 1: and we served on a number of boards together of 822 00:58:49,880 --> 00:58:54,800 Speaker 1: early kliner companies and UM you know uh Floyd was 823 00:58:54,920 --> 00:59:02,240 Speaker 1: a founder of National Semiconductor and UH a individual who 824 00:59:02,280 --> 00:59:08,000 Speaker 1: had great UH operating and technology experience and really learned 825 00:59:08,000 --> 00:59:13,120 Speaker 1: a lot about how UM uh young dynamic growth companies 826 00:59:13,160 --> 00:59:17,880 Speaker 1: work from UM somebody like Floyd. UM you know Tom 827 00:59:17,960 --> 00:59:22,200 Speaker 1: Lee UH when we worked together. UM you know, Tom 828 00:59:22,320 --> 00:59:27,040 Speaker 1: had had this great ability to really like UH any 829 00:59:27,120 --> 00:59:31,160 Speaker 1: deal UH and UM what he was you know looking 830 00:59:31,240 --> 00:59:35,960 Speaker 1: at was an uh an ability to um uh look 831 00:59:36,040 --> 00:59:41,160 Speaker 1: for the opportunities that on things and UH learned uh 832 00:59:41,600 --> 00:59:45,000 Speaker 1: UH learned a lot of that from uh from Tom 833 00:59:45,120 --> 00:59:49,360 Speaker 1: and UH you know, as I go through um the 834 00:59:49,480 --> 00:59:54,960 Speaker 1: various uh relationships I've had over many many years, UM, 835 00:59:55,320 --> 00:59:58,240 Speaker 1: you know, there have been an extraordinary number of of 836 00:59:58,360 --> 01:00:03,280 Speaker 1: people who U, even though they were more uh on 837 01:00:03,400 --> 01:00:08,880 Speaker 1: the pier side than the boss or older mentor side, UH, 838 01:00:09,160 --> 01:00:12,080 Speaker 1: that I've been able to learn from. And UH. One 839 01:00:12,120 --> 01:00:16,320 Speaker 1: of the great experiences um uh that I had UM 840 01:00:16,880 --> 01:00:20,920 Speaker 1: is working with John MacArthur, who was the longtime dean 841 01:00:21,000 --> 01:00:23,480 Speaker 1: of the Harvard Business School and who first got me 842 01:00:23,600 --> 01:00:28,080 Speaker 1: involved in um the what's now the Master General Brigram 843 01:00:28,440 --> 01:00:34,120 Speaker 1: Health System uh in uh when he was the chair 844 01:00:34,240 --> 01:00:37,720 Speaker 1: of the BRIGOM and then became the founding co chair 845 01:00:37,960 --> 01:00:41,200 Speaker 1: of what was then called Partners Healthcare, which is now 846 01:00:41,280 --> 01:00:45,000 Speaker 1: morphed into the Masioneral Brigram System. And you know, John 847 01:00:45,160 --> 01:00:49,040 Speaker 1: was an iconic figure at Harvard Business School. Uh. He 848 01:00:49,160 --> 01:00:53,240 Speaker 1: and I shared rugby in commons, so I had gotten 849 01:00:53,280 --> 01:00:55,760 Speaker 1: to know him a little bit through that. UH and 850 01:00:55,920 --> 01:01:00,480 Speaker 1: then UM you know watched his ability uh to look 851 01:01:00,560 --> 01:01:06,200 Speaker 1: at m a situation UH in ways that were innovative 852 01:01:06,320 --> 01:01:10,280 Speaker 1: and different than what almost anybody else was thinking, uh, 853 01:01:10,520 --> 01:01:12,280 Speaker 1: and how he was able to turn a lot of 854 01:01:12,360 --> 01:01:18,160 Speaker 1: that into new realities. And UM that's been uh something 855 01:01:18,280 --> 01:01:23,919 Speaker 1: that I've long valued, both the personal relationship with John 856 01:01:23,960 --> 01:01:27,120 Speaker 1: who uh passed away over the last couple of years, 857 01:01:27,360 --> 01:01:33,360 Speaker 1: um uh, and um the learnings I got from uh 858 01:01:34,240 --> 01:01:36,800 Speaker 1: his ability to take a step back, think out of 859 01:01:36,840 --> 01:01:40,480 Speaker 1: the box, and then uh turn some out of the 860 01:01:40,520 --> 01:01:44,240 Speaker 1: box thinking into realities. So let's talk a little bit 861 01:01:44,280 --> 01:01:46,840 Speaker 1: about books. What are some of your favorites and what 862 01:01:46,960 --> 01:01:52,880 Speaker 1: are you reading right now? Um so um you know, 863 01:01:53,080 --> 01:01:56,520 Speaker 1: right right now, I have a few I'm reading kind 864 01:01:56,560 --> 01:01:59,680 Speaker 1: of a range of things. UM. You know, I think 865 01:01:59,720 --> 01:02:02,840 Speaker 1: that and Colins book Built to Last is pretty interesting 866 01:02:03,440 --> 01:02:06,560 Speaker 1: right now as a kind of a a survey a 867 01:02:06,640 --> 01:02:09,960 Speaker 1: wide range of um, different companies doing things differently and 868 01:02:10,400 --> 01:02:13,920 Speaker 1: and um trying to understand um you know, how you 869 01:02:14,320 --> 01:02:20,160 Speaker 1: make breakthroughs and and um places that have um uh 870 01:02:21,720 --> 01:02:27,760 Speaker 1: a long legacy of success. UM. I've had fun reading 871 01:02:27,800 --> 01:02:32,000 Speaker 1: the Dynasty. The Crafts have done such a remarkable job 872 01:02:32,120 --> 01:02:38,920 Speaker 1: at building h a a franchise UM that I think 873 01:02:38,960 --> 01:02:43,280 Speaker 1: sets the standard for sports teams UH and other organizations, 874 01:02:43,720 --> 01:02:47,960 Speaker 1: other types of organizations. UM uh you know there are 875 01:02:48,000 --> 01:02:53,280 Speaker 1: some interesting areas. UM. I've liked AI Superpowers um as 876 01:02:53,360 --> 01:02:58,640 Speaker 1: a way of really understanding China uh and what they're 877 01:02:58,640 --> 01:03:03,960 Speaker 1: doing and how they approach UM. That uh incredibly important 878 01:03:04,320 --> 01:03:10,080 Speaker 1: uh area. UM. I recently reread The Best and the Brightest, 879 01:03:10,120 --> 01:03:13,920 Speaker 1: which was probably about my fifth time, because I think 880 01:03:14,000 --> 01:03:17,480 Speaker 1: that they're you know, there's continued lessons to be had 881 01:03:18,760 --> 01:03:23,640 Speaker 1: about how we approached the world um and the importance 882 01:03:24,200 --> 01:03:29,560 Speaker 1: uh of of avoiding Hubert UM. So you know, there's 883 01:03:29,600 --> 01:03:32,120 Speaker 1: a there's a range of things I think are really interesting, 884 01:03:33,520 --> 01:03:37,000 Speaker 1: uh quite quite fascinating. What sort of advice would you 885 01:03:37,080 --> 01:03:40,400 Speaker 1: give to a recent college grad who was interested in 886 01:03:40,520 --> 01:03:47,720 Speaker 1: a career in private equity? You know, UM, it's a 887 01:03:47,800 --> 01:03:50,040 Speaker 1: great business. It's a great business, it's a great area. 888 01:03:50,480 --> 01:03:53,720 Speaker 1: Um Uh try to get involved in it if you 889 01:03:54,000 --> 01:03:59,640 Speaker 1: really fundamentally love building businesses. UH. They're probably easier jobs 890 01:04:00,320 --> 01:04:04,560 Speaker 1: to have, um if one's looking at it just from 891 01:04:04,600 --> 01:04:09,120 Speaker 1: the financial aspects. UM. I really do think our industry 892 01:04:10,840 --> 01:04:18,000 Speaker 1: is about helping make companies better uh and um uh 893 01:04:19,360 --> 01:04:26,000 Speaker 1: being involved with management teams UH that uh can be 894 01:04:26,160 --> 01:04:29,720 Speaker 1: true partners UM. So if that's what excites you, if 895 01:04:29,800 --> 01:04:33,640 Speaker 1: you're really interested in helping build enterprise. This is a 896 01:04:33,760 --> 01:04:39,400 Speaker 1: great a great industry to do that from. And our 897 01:04:39,480 --> 01:04:42,560 Speaker 1: final question, what do you know about the world of 898 01:04:42,840 --> 01:04:48,080 Speaker 1: private equity and investing today? You wish you knew almost 899 01:04:48,160 --> 01:04:53,320 Speaker 1: forty years ago when you were first getting started. UM. 900 01:04:54,760 --> 01:04:59,040 Speaker 1: So it's a really it's a it's a fascinating thing 901 01:04:59,040 --> 01:05:02,000 Speaker 1: because I'm not sure there's there there there is one thing, 902 01:05:02,160 --> 01:05:09,240 Speaker 1: but you know, I think understanding that, UM, there are 903 01:05:09,400 --> 01:05:14,000 Speaker 1: points there are there are various points where you think, UM, 904 01:05:14,720 --> 01:05:20,880 Speaker 1: you know the downside uh is reasonably limited, where it's not. 905 01:05:21,400 --> 01:05:25,800 Speaker 1: Things can always be dramatically worse than you might ever anticipate. 906 01:05:26,280 --> 01:05:30,440 Speaker 1: But conversely, UH, there there are opportunity sets out there 907 01:05:30,560 --> 01:05:34,800 Speaker 1: that one needs to uh to imagine clearly with some 908 01:05:34,960 --> 01:05:39,240 Speaker 1: analytical basis, but one needs to imagine as upsides that. UM. 909 01:05:39,560 --> 01:05:43,120 Speaker 1: You know you are not part of conventional thought UM, 910 01:05:43,400 --> 01:05:47,080 Speaker 1: and so understanding that the range of outcomes can be 911 01:05:47,200 --> 01:05:51,200 Speaker 1: much more extreme than you think, UH is something that 912 01:05:51,440 --> 01:05:57,320 Speaker 1: that you learned over time. UM. And being unbound by 913 01:05:58,000 --> 01:06:02,120 Speaker 1: often conventional thought is one of them or critical UH 914 01:06:03,080 --> 01:06:09,320 Speaker 1: skills to acquire you're in our industry. Huh really quite 915 01:06:09,480 --> 01:06:13,840 Speaker 1: quite fascinating. We have been speaking with Scott Sperling. He 916 01:06:14,040 --> 01:06:17,600 Speaker 1: is the co chief executive officer of Thomas H. Lee. 917 01:06:18,040 --> 01:06:20,760 Speaker 1: If you enjoy this conversation, well, be sure and check 918 01:06:20,800 --> 01:06:24,760 Speaker 1: out any of our previous four hundred such conversations. You 919 01:06:24,840 --> 01:06:27,800 Speaker 1: can find those at iTunes, Spotify, wherever you feed your 920 01:06:27,840 --> 01:06:32,440 Speaker 1: podcast fix. We love your comments, feedback and suggestions right 921 01:06:32,560 --> 01:06:36,560 Speaker 1: to us at m IB podcast at Bloomberg dot net. 922 01:06:37,280 --> 01:06:40,919 Speaker 1: Sign up for my daily reads at rid Halts dot com. 923 01:06:41,440 --> 01:06:45,240 Speaker 1: Check out my weekly column on Bloomberg dot com slash Opinion. 924 01:06:45,800 --> 01:06:48,920 Speaker 1: Follow me on Twitter at rit Halts. I would be 925 01:06:49,040 --> 01:06:51,680 Speaker 1: remiss if I did not thank our crack staff that 926 01:06:51,840 --> 01:06:56,360 Speaker 1: helps put these conversations together each week. Michael Boyle is 927 01:06:56,440 --> 01:07:01,320 Speaker 1: my producer. Attica val Brun is our produ manager. Tim 928 01:07:01,400 --> 01:07:05,240 Speaker 1: Harrow is my audio engineer. Michael Batnick is my head 929 01:07:05,240 --> 01:07:09,560 Speaker 1: of research. I'm Barry Retolts. You've been listening to Masters 930 01:07:09,600 --> 01:07:11,880 Speaker 1: in Business on Bloomberg Radio.