WEBVTT - David Layton on Being an Outbound Global Driven Firm 0:00:09.400 --> 0:00:12.960 This weekend on the podcast, another extra special guest from 0:00:12.960 --> 0:00:16.840 the world of private markets. The Partners Group is probably 0:00:16.920 --> 0:00:21.000 the largest private equity firm you've never heard of, perhaps 0:00:21.040 --> 0:00:25.680 because they were originally headquartered in Zook, Switzerland. They're the 0:00:25.800 --> 0:00:31.200 largest listed buyout firm in Europe. They also have headquarters 0:00:31.280 --> 0:00:36.000 here in the US in Colorado. They are decidedly not 0:00:36.320 --> 0:00:40.360 your typical private equity firm, not your typical Wall Street firm. 0:00:40.720 --> 0:00:44.080 They have a very thoughtful approach and a very long 0:00:44.200 --> 0:00:49.519 term approach to making investments in the private markets. I 0:00:49.640 --> 0:00:53.160 found David Layton, CEO of the firm, to be very 0:00:53.240 --> 0:00:59.480 thoughtful and very much different in how he thinks about risk, reward, liquidity, 0:01:00.720 --> 0:01:06.399 various market sectors, processes, just the whole gestalt of we 0:01:06.560 --> 0:01:10.200 are a steward of capital with our clients and we 0:01:10.200 --> 0:01:14.560 are aligned with those clients. It was really a fascinating conversation. 0:01:15.600 --> 0:01:19.080 I think you'll enjoy it. With no further ado, the 0:01:19.160 --> 0:01:24.520 CEO of Partners Group, David Layton. I'm Barry Ritults. You're 0:01:24.560 --> 0:01:29.040 listening to Master's Business on Bloomberg Radio. My extra special 0:01:29.040 --> 0:01:32.120 guest this week is David Layton. He is the chief 0:01:32.160 --> 0:01:36.680 executive officer of the Partners Group, which is Europe's biggest 0:01:36.920 --> 0:01:40.440 listed private equity and buyout firm, with a market cap 0:01:40.520 --> 0:01:43.600 of about twenty five billion dollars. They run over one 0:01:43.680 --> 0:01:48.360 hundred and thirty five billion dollars in assets. David is 0:01:48.560 --> 0:01:52.840 on the Global Investment Committee. He leads the executive team. Previously, 0:01:52.960 --> 0:01:57.040 he headed the firm's private equity business. He has been 0:01:57.080 --> 0:02:02.600 with the firm his entire career. David Layton, Welcome to Bloomberg. 0:02:02.800 --> 0:02:05.240 It's a pleasure to be here. So let's talk a 0:02:05.240 --> 0:02:07.600 little bit about that. That's kind of unusual these days. 0:02:07.600 --> 0:02:10.440 You went straight to the Partners Group after you got 0:02:10.600 --> 0:02:14.240 a bachelor's in finance from Bringham Young University and the 0:02:14.320 --> 0:02:17.799 Marriott School of Management, and you've stayed there your entire career. 0:02:18.360 --> 0:02:21.200 Seems kind of rare these days. Tell us about that. Yeah, 0:02:21.320 --> 0:02:27.920 so I found Partners Group out of school. I was 0:02:27.919 --> 0:02:35.440 actually running the investment banking club at BYU, and you know, 0:02:35.520 --> 0:02:38.880 thought I was interested in that, interested in going to 0:02:38.919 --> 0:02:43.919 Wall Street. I was. I was tentatively committed to to 0:02:44.280 --> 0:02:48.560 go to Lehman Brothers. And there was a one of 0:02:48.560 --> 0:02:50.920 the Partners Group founders. It was on campus and I 0:02:50.960 --> 0:02:53.640 went to convince him why he should come and be 0:02:53.720 --> 0:02:56.440 a part of what was called the investment banking boot 0:02:56.480 --> 0:02:58.239 camp that we were doing at the time to get 0:02:58.840 --> 0:03:01.839 students ready to go to Wall Street and do their interviews, etc. 0:03:02.520 --> 0:03:04.560 And I went to pitch this asset management guy on 0:03:04.600 --> 0:03:08.200 why he should come be a part of that process, 0:03:08.200 --> 0:03:11.400 and he Jiu jitsued me, and he ended up we 0:03:11.480 --> 0:03:16.840 ended up talking, and he was just this fascinating, bigger 0:03:16.880 --> 0:03:21.920 than life personality, and we ended up hitting it off, 0:03:22.440 --> 0:03:25.839 and I got linked up with Partners Group directly out 0:03:25.840 --> 0:03:29.000 of school. Yeah huh, that's really intriguing. You joined as 0:03:29.000 --> 0:03:31.920 an analyst, That's where you began. I joined as an analyst. 0:03:31.919 --> 0:03:35.040 I got an offer to Partners Group's New York office, 0:03:35.080 --> 0:03:38.360 and that's where I thought I was going. And I 0:03:38.400 --> 0:03:40.800 got a call not that long before I was supposed 0:03:40.840 --> 0:03:43.200 to start by one of the partners there who said, 0:03:43.200 --> 0:03:45.600 wait a second, Dave, you're not going to New York. 0:03:46.120 --> 0:03:49.160 He said, you're coming to Switzerland for like a year, 0:03:49.240 --> 0:03:51.440 maybe three years, until I tell you you're ready to 0:03:51.480 --> 0:03:54.240 go to New York. He said, how can you go 0:03:54.360 --> 0:03:58.400 join us in that market before you know anything about us? Right? 0:03:58.440 --> 0:04:00.480 How can you represent us in that mark before you 0:04:00.480 --> 0:04:05.160 know anything about us? Um uh. And so it was 0:04:05.440 --> 0:04:07.720 I hook up the phone and had an interesting conversation 0:04:07.800 --> 0:04:11.520 with my wife about go to Switzerland. But that was 0:04:11.560 --> 0:04:16.080 the firm's philosophy at the time. It was Switzerland was 0:04:16.120 --> 0:04:20.600 the center of gravity. UM, that's where the cultural um 0:04:20.800 --> 0:04:25.720 ethos was kind of formed and Zug. You went to 0:04:25.800 --> 0:04:30.520 Zoog Switzerland and UM and in that environment, you know, 0:04:30.760 --> 0:04:34.200 through proximity to the firm's founders, people kind of get 0:04:34.320 --> 0:04:37.520 culturally integrated. And then you went to different from the 0:04:37.560 --> 0:04:41.720 Swiss or German or French. UM. I took some some 0:04:41.839 --> 0:04:46.640 German lessons before I went there, and then I found 0:04:46.640 --> 0:04:49.080 out the Swiss German is a little different, and I 0:04:49.120 --> 0:04:53.280 didn't end up very different. It's a little different. It's 0:04:53.279 --> 0:04:56.560 a little different. So so, but everybody there speaks English. 0:04:56.680 --> 0:04:59.360 Everybody there speaks English. I was in an English speaking 0:04:59.440 --> 0:05:02.720 environment for sun up to sundown. It was very dynamic. 0:05:02.760 --> 0:05:05.040 My wife actually picked up more German than I did 0:05:05.040 --> 0:05:08.320 because she was out in the community. But in our 0:05:08.320 --> 0:05:11.839 context we had we had an English speaking environment in 0:05:11.920 --> 0:05:15.719 the office. So how does one get from analyst in Zooch, 0:05:15.960 --> 0:05:20.560 Switzerland to CEO in Colorado. Yeah, so when I started, 0:05:21.640 --> 0:05:25.000 after a couple of days, um my wife asked me, 0:05:25.040 --> 0:05:28.160 how do you like your boss? And I told her, look, 0:05:28.680 --> 0:05:30.599 I don't know how to answer that question. I have 0:05:30.720 --> 0:05:34.640 twelve people that tell me what to do. Bosses. It's 0:05:34.760 --> 0:05:36.960 that that was the I was just the youngest I was. 0:05:37.000 --> 0:05:38.880 I think it was the youngest person that they'd ever 0:05:38.960 --> 0:05:41.800 hired up until that point. And so I was just 0:05:41.880 --> 0:05:46.119 kind of sweeping up and doing whatever needed to be done. 0:05:46.480 --> 0:05:49.599 And it was so much fun working with different people 0:05:49.680 --> 0:05:52.360 in different groups, and I got a lot of good 0:05:52.440 --> 0:05:55.760 experience doing that. So I was, you know, when the 0:05:55.760 --> 0:05:59.880 firm launched its debt business, I was an analyst putting 0:05:59.880 --> 0:06:02.680 together some of the credit analysis on the first couple 0:06:02.720 --> 0:06:07.320 of loans that we had written. At the time, we 0:06:07.360 --> 0:06:11.280 had a group that was doing small growth capital investments 0:06:11.400 --> 0:06:16.200 in Germany and Switzerland at the time, fun doing secondaries 0:06:16.279 --> 0:06:19.280 and funds, and the senior people were more specialized, but 0:06:19.320 --> 0:06:21.880 as young people were just getting a very dynamic set 0:06:21.920 --> 0:06:24.960 of experiences and it was a lot of a lot 0:06:25.000 --> 0:06:29.359 of fun. And it sounds like a baptism by fire 0:06:29.480 --> 0:06:31.440 that you're just thrown right into the thick of it. 0:06:31.440 --> 0:06:35.080 It was a baptism by fire in a very entrepreneurial culture, 0:06:35.080 --> 0:06:39.240 and that very much aligned with who I was and 0:06:39.320 --> 0:06:41.919 what I was interested in. You gained a lot of 0:06:41.960 --> 0:06:45.760 experience fast, and so from there I went to New 0:06:45.839 --> 0:06:51.159 York helped to build up the firm's business in the Americas. 0:06:51.640 --> 0:06:56.440 We were really transitioning from back then outsourcing a lot 0:06:56.440 --> 0:06:59.040 of the investment content that we had done with other 0:06:59.120 --> 0:07:01.520 managers to bring a lot of that in house. And 0:07:01.560 --> 0:07:03.320 I helped to drive a lot of that in the 0:07:03.360 --> 0:07:08.720 America's early on. And then in twenty sixteen, we are 0:07:08.760 --> 0:07:11.400 thinking a little bit more strategically about our business in 0:07:11.440 --> 0:07:14.960 the Americas, and I championed this project to open up 0:07:14.960 --> 0:07:19.280 a headquarters for the firm in Colorado and away from 0:07:19.360 --> 0:07:23.320 the street, away from Wall intentionally away from Wall Street. 0:07:23.640 --> 0:07:26.119 And that's that's a part of the partners groups secret 0:07:26.160 --> 0:07:29.080 of success. I do think a lot of people ask 0:07:29.160 --> 0:07:31.480 us how we've been so successful in terms of innovating 0:07:31.520 --> 0:07:35.640 our business and evolving our business over time, and I 0:07:35.680 --> 0:07:39.040 think being in zoog early on helped with that. I 0:07:39.040 --> 0:07:40.520 was talking to one of our founders, he said, look, 0:07:40.520 --> 0:07:42.960 a lot of people think we're in Zoog for tax reasons. 0:07:43.400 --> 0:07:45.480 He said, we're here because this is where my mother lived. 0:07:45.600 --> 0:07:48.320 This is where I wanted to spend my time and 0:07:48.320 --> 0:07:51.080 live my life. And isn't that how private equity locates 0:07:51.120 --> 0:07:55.960 its headquar It's like where's mom? Great stop? And there 0:07:56.040 --> 0:07:59.120 are there that much tax advantages to be in Switzerland 0:07:59.120 --> 0:08:02.960 if you're operating throughout Europe. UM, I mean it's not 0:08:03.480 --> 0:08:07.280 Monaco or Lichtons. No, it's not like that. But it 0:08:07.400 --> 0:08:10.080 actually had nothing to do I don't think with the origins. 0:08:10.080 --> 0:08:12.960 It was all about this is where he wanted to 0:08:13.000 --> 0:08:16.960 live his life, and his founders agreed. And what that 0:08:17.000 --> 0:08:20.200 meant is that everybody that joined Partners Group at that 0:08:20.280 --> 0:08:22.960 time wasn't just a butt in a seat in a 0:08:23.040 --> 0:08:26.720 capital market changing jobs. They were moving their family somewhere 0:08:26.880 --> 0:08:30.720 and being and becoming a part of something, and that 0:08:31.240 --> 0:08:35.959 has created this very tight culture within our organization. We said, 0:08:36.040 --> 0:08:37.800 let's do the same thing in the Americas. Let's find 0:08:37.800 --> 0:08:41.600 a place where our people genuinely want to live their 0:08:41.640 --> 0:08:45.800 life and raise their babies and make that the center 0:08:45.920 --> 0:08:48.360 of our system. We decided to do that in Colorado. 0:08:48.960 --> 0:08:53.079 So that's interesting because UM Colorado obviously in the Rockies. 0:08:53.760 --> 0:08:56.520 Zoog is very much you know, how far are you 0:08:56.600 --> 0:09:00.800 from from the big ski resorts? That's a la side town. 0:09:00.960 --> 0:09:04.880 Some of the photos I saw quite charming. What was 0:09:04.960 --> 0:09:10.000 life like in Zoog? And any coincidence that Colorado is 0:09:10.000 --> 0:09:12.400 about as close as you're going to get to Switzerland 0:09:12.440 --> 0:09:15.680 in the US. No, you're you're in close proximity to 0:09:15.720 --> 0:09:20.240 the mountains there. It is an idyllic setting there in 0:09:20.320 --> 0:09:25.000 the postcard. In the postcard setting there in Zoog very charming. 0:09:26.760 --> 0:09:28.600 But you're on your own a little bit. As it 0:09:28.640 --> 0:09:36.240 relates to your ability to plug into the broader financial community. Right, 0:09:36.280 --> 0:09:39.280 so every client that we have, every asset that we own, 0:09:40.000 --> 0:09:42.200 is a result of somebody getting on an airplane and 0:09:42.280 --> 0:09:45.880 building a relationship. It's created a culture being there where 0:09:45.880 --> 0:09:48.360 we don't expect anything to come to us. We are 0:09:48.400 --> 0:09:52.520 an outbound driven firm, right, We're from that identifies opportunity 0:09:52.520 --> 0:09:55.920 and we hustle and get in front of it. And so, yes, 0:09:56.000 --> 0:10:01.160 beautiful setting there in the in the Alps. Yes, that 0:10:01.280 --> 0:10:07.120 did inform our choice with regards to location. Being in 0:10:07.160 --> 0:10:11.120 the mountains was important to us. We wanted to have 0:10:11.200 --> 0:10:14.120 that continuity of culture, if that makes sense. And and 0:10:14.240 --> 0:10:20.440 how does the business split between Switzerland and US. Are 0:10:20.440 --> 0:10:23.880 they the same types of business just different geographies? Is 0:10:24.000 --> 0:10:27.680 what is the division from from Colorado to Zook. Yeah, 0:10:27.720 --> 0:10:31.360 we are a global firm. Our teams, many of our 0:10:31.400 --> 0:10:36.960 teams are organized on a global basis. We have most 0:10:37.040 --> 0:10:42.440 of our clients from Europe, that's our biggest market, and 0:10:42.520 --> 0:10:46.280 most of our investment activity is in the Americas. Um 0:10:46.400 --> 0:10:49.160 it's been about fifty five percent of our investments that 0:10:49.160 --> 0:10:51.440 we've made are in the and that is an evolution 0:10:51.559 --> 0:10:53.559 that it hasn't always been the case. You know, a 0:10:53.600 --> 0:10:57.360 lot of people think of US as disproportionately European or Swiss, 0:10:57.760 --> 0:11:00.640 and they're surprised to learn that over the last decade 0:11:00.679 --> 0:11:03.280 we have invested most of our firm's capital into the 0:11:03.360 --> 0:11:05.800 US market. This is a big market, important market. And 0:11:05.840 --> 0:11:07.960 when you look at the economy for the past decade, 0:11:08.040 --> 0:11:11.520 or at least as judged by the public markets, Europe 0:11:11.559 --> 0:11:13.840 seems to have been a little sleepy the past decade, 0:11:13.880 --> 0:11:16.719 the US was where all the action was. Yeah, is 0:11:16.760 --> 0:11:20.000 that true in private markets as well as public markets? Well, 0:11:20.040 --> 0:11:25.480 we have a global relative value approach to investing, which 0:11:25.520 --> 0:11:28.559 means that our firm will hold up an investment opportunity 0:11:28.600 --> 0:11:34.000 from the US alongside opportunities from Europe, alongside opportunities from Asia, 0:11:34.120 --> 0:11:37.800 and we will fight about where we see the best 0:11:38.360 --> 0:11:42.520 relative value. And as indicated by the mix that I 0:11:42.600 --> 0:11:47.000 just described, we have found better relative value in the 0:11:47.120 --> 0:11:50.520 US markets. Not just about activity, but it's about relative value. 0:11:50.960 --> 0:11:55.600 Now we have still been active in Europe. We're actually 0:11:55.679 --> 0:11:58.920 bringing all of our investors to Vienna in just a 0:11:58.960 --> 0:12:02.160 couple of months, our biggest investors, for an investor conference, 0:12:03.000 --> 0:12:05.920 and I want to bring them to the most European 0:12:06.080 --> 0:12:09.280 of cities to send a reminder that even though there's 0:12:09.280 --> 0:12:11.160 a lot of people that are down on Europe at 0:12:11.160 --> 0:12:16.760 the moment, that's when a long term investor, and that's 0:12:16.760 --> 0:12:19.280 where private markets I think, can take a long term 0:12:19.320 --> 0:12:23.520 perspective and continue to find opportunities when others aren't looking. 0:12:23.720 --> 0:12:27.640 So I'm intrigued by the concept of relative value, looking 0:12:27.679 --> 0:12:32.000 at it globally by geography, how much is it the 0:12:32.080 --> 0:12:35.240 value of the company or investing in how much is 0:12:35.360 --> 0:12:42.280 the perspective market size, as well as how robust local 0:12:42.280 --> 0:12:48.600 economy is and by local I mean Asia, Europe or US. Yeah, 0:12:48.800 --> 0:12:53.480 I would say that this has evolved over the last decades. 0:12:54.760 --> 0:12:57.160 So it used to be within private markets that you 0:12:57.160 --> 0:13:00.400 would find a good business, apply quite a bit of 0:13:00.559 --> 0:13:03.080 leverage to it, at least in the private equity business, 0:13:03.520 --> 0:13:06.199 and be able to make a pretty good return by 0:13:06.240 --> 0:13:09.520 buying good, solid businesses as they are. That has changed. 0:13:09.720 --> 0:13:13.960 Leverage levels have come down materially. You're investing majority equity 0:13:14.160 --> 0:13:17.559 in most of the transactions that are occurring today. And 0:13:17.600 --> 0:13:21.240 it's all about the future. It's all about what are 0:13:21.240 --> 0:13:23.679 this company's prospects, How are you going to steer this 0:13:23.760 --> 0:13:26.959 company to be able to maintain its market position, What 0:13:27.000 --> 0:13:29.960 can we do with this business over the coming years. 0:13:31.000 --> 0:13:33.760 So it's much more about potential and how you can 0:13:33.880 --> 0:13:38.080 drive market leading strategies than it is necessarily about just 0:13:38.160 --> 0:13:41.080 buying good business and leveraging it up. So we're going 0:13:41.160 --> 0:13:43.240 to talk a little more about partners Group in a bit, 0:13:43.280 --> 0:13:46.400 but I want to stay with the investments. You guys 0:13:46.400 --> 0:13:49.600 seem to be very long term. You're not just buying something, 0:13:50.000 --> 0:13:52.120 putting a fresh code of paint and then flipping it. 0:13:52.679 --> 0:13:55.640 You buy companies to run them and manage them for 0:13:55.720 --> 0:13:59.520 the long haul. Tell us a little bit about the 0:13:59.600 --> 0:14:03.640 giant portfolio of companies you guys are managing. Yeah, so 0:14:03.679 --> 0:14:08.360 we manage a portfolio of several dozen companies. When you 0:14:08.440 --> 0:14:13.400 add together all of our portfolio companies, it's effectively one 0:14:13.480 --> 0:14:16.760 hundred billion dollar enterprise when you add all of our 0:14:16.800 --> 0:14:21.800 companies together across multiple sectors, and it's global in terms 0:14:21.800 --> 0:14:27.080 of its breadth and scope, and quite a few employees also. Yeah, 0:14:27.160 --> 0:14:30.200 So if you look at our business, we have about 0:14:30.200 --> 0:14:33.560 eighteen hundred people at the management company, and then across 0:14:33.600 --> 0:14:37.920 our portfolio over two hundred thousand employees of our various 0:14:38.120 --> 0:14:45.359 portfolio companies. So we are a large owner of assets, 0:14:45.600 --> 0:14:49.040 and I think we take that stewardship very very seriously. 0:14:50.040 --> 0:14:53.120 That's one of the reasons why we really haven't identified 0:14:53.320 --> 0:14:57.600 ourself as a financial firm or as a money management firm. 0:14:58.000 --> 0:15:01.440 That's not the proper lens through which to view Partners Group. 0:15:01.760 --> 0:15:05.040 I think we are very much an owner of assets. 0:15:05.160 --> 0:15:09.680 We're a builder of businesses, and we're a steward of 0:15:09.720 --> 0:15:13.800 these companies, and we take that very seriously. So I 0:15:13.800 --> 0:15:16.400 wouldn't be surprised in the future if you didn't look 0:15:16.400 --> 0:15:19.640 at us and we looked more like an industrial conglomerate. 0:15:19.720 --> 0:15:23.360 That's where like a private equity firm. That's really interesting. 0:15:23.800 --> 0:15:26.480 You sit on the board of directors on a number 0:15:26.480 --> 0:15:29.400 of portfolio companies. Tell us a little bit about what 0:15:29.520 --> 0:15:34.400 that experience is like. You own them, but yet they 0:15:34.440 --> 0:15:37.680 manage themselves and you guys are involved in that. How 0:15:37.680 --> 0:15:39.760 does that operate? It sounds like there's a lot of 0:15:39.800 --> 0:15:47.240 independence amongst all these different holdings. If you think about 0:15:47.480 --> 0:15:52.040 the role that we play as owners, it is a 0:15:52.120 --> 0:15:56.760 real responsibility that we have to develop these companies over time. 0:15:57.120 --> 0:16:00.400 The role of the board years ago maybe isn't that 0:16:00.560 --> 0:16:04.920 critical or wasn't that important Today, it is absolutely paramount 0:16:05.240 --> 0:16:09.080 to your success as an investor. And so we are 0:16:09.360 --> 0:16:12.800 very very focused on making our boards the center of 0:16:13.000 --> 0:16:18.800 vision and strategy and accountability. Our board members work more 0:16:18.920 --> 0:16:23.360 intensively with our companies, have a greater time commitment than 0:16:23.440 --> 0:16:26.160 most board members are used to. This is not come 0:16:26.200 --> 0:16:28.760 together once a quarter, eat chicken dinner, and rubber stamp 0:16:28.760 --> 0:16:30.760 a couple of things. But this is really roll up 0:16:30.800 --> 0:16:34.880 your sleeves and have a commitment to helping to chart 0:16:35.760 --> 0:16:39.440 the appropriate path moving forward. And I have always taken 0:16:39.520 --> 0:16:44.040 that stewardship very very seriously and h and that that's 0:16:44.040 --> 0:16:47.880 the culture that we're creating is to take those board 0:16:47.920 --> 0:16:51.680 assignments very seriously. Yes, there is a lot of of 0:16:51.960 --> 0:16:55.680 steering of individual strategy that goes on in the portfolio companies. 0:16:55.680 --> 0:16:59.560 At the same time, Partners Group is developing a business 0:16:59.680 --> 0:17:03.200 system STEM that we are looking to apply across our 0:17:03.240 --> 0:17:08.040 portfolio companies. We're looking to create a culture that is 0:17:08.119 --> 0:17:11.200 similar with regards to how we set strategy, with regards 0:17:11.200 --> 0:17:13.719 to how we create accountability on that strategy, with regards 0:17:13.720 --> 0:17:16.160 to how our boards get involved in driving that strategy. 0:17:17.240 --> 0:17:20.359 And that's something that we think is essential to differentiation 0:17:20.800 --> 0:17:25.720 in the future. Really interesting Gear headquartered in Colorado. How 0:17:25.760 --> 0:17:28.560 often do you get back to Switzerland. I'm in Switzerland 0:17:28.600 --> 0:17:32.080 about a week a month. Oh really that much? Wow, 0:17:32.760 --> 0:17:35.160 that's a lot of travel from Colorado. That's a lot 0:17:35.200 --> 0:17:39.400 of travel. Yep, that comes with the territory. Quite interesting. 0:17:39.960 --> 0:17:43.360 So let's talk a little bit about the firm. It 0:17:43.400 --> 0:17:46.680 has a market cap over twenty five billion dollars. That's 0:17:46.800 --> 0:17:51.679 bigger than Credit Swiss, which means you're a pretty substantial entity. 0:17:52.760 --> 0:17:56.240 Tell us a little bit about the corporate culture, which 0:17:56.320 --> 0:18:01.880 is decidedly different than the typical Wall straight bank. Yeah, first, 0:18:01.960 --> 0:18:06.040 let me put into context some of our views with 0:18:06.119 --> 0:18:09.480 regards to how our industry is evolving, and that'll help 0:18:09.840 --> 0:18:14.199 to inform some of the decisions that we've made with 0:18:14.240 --> 0:18:17.760 regards to how to set our company culture. The private 0:18:17.840 --> 0:18:23.399 markets is not a young industry, necessarily been around for 0:18:23.640 --> 0:18:28.360 for forty years. But the skills, the talents, the attributes 0:18:28.520 --> 0:18:31.400 that allowed people to be successful in this industry historically 0:18:31.400 --> 0:18:34.879 are not necessarily the attributes that are going to be 0:18:35.400 --> 0:18:38.560 successful in propelling firms in the future. If you think 0:18:38.600 --> 0:18:42.600 about the way private markets functioned twenty years ago, twenty 0:18:42.640 --> 0:18:48.040 five years ago, people would with a transactional skill set 0:18:48.560 --> 0:18:53.600 provide access into an inefficient asset class, right. They would 0:18:53.640 --> 0:18:56.920 do that by buying and selling things, and they were 0:18:56.960 --> 0:19:00.639 able to make a good living doing that, and that 0:19:00.720 --> 0:19:05.640 this transactional skill set is something that was praised. You'll 0:19:05.680 --> 0:19:09.479 hear teams call themselves deal teams. You'll call individuals call 0:19:09.560 --> 0:19:13.400 themselves deal professionals, and this deal side of the business 0:19:13.520 --> 0:19:16.200 is really what was emphasized. Now I want you bring 0:19:16.240 --> 0:19:18.960 that up. I have to ask a question. I kind 0:19:18.960 --> 0:19:22.520 of read a shocking thing. You guys banned the word 0:19:22.680 --> 0:19:26.680 deal from the company. Explain that if fits into context. 0:19:26.720 --> 0:19:30.960 It's because the things that made people successful, that deal 0:19:31.520 --> 0:19:34.440 doing mindset is not the things that are going to 0:19:34.520 --> 0:19:37.040 make us successful in the future. We meaning the over 0:19:37.119 --> 0:19:41.280 emphasis on transactional drop a ticket, get the next trade 0:19:41.320 --> 0:19:45.160 in flip it as opposed to building something exactly. Our 0:19:45.280 --> 0:19:50.200 business is no longer about doing deals and providing access. 0:19:50.680 --> 0:19:55.000 It's about building businesses, and so we don't want to 0:19:56.200 --> 0:19:58.879 we don't want to put too much emphasis on the 0:19:58.920 --> 0:20:02.320 transactional side of things. We think that's been overdone historically. 0:20:02.680 --> 0:20:06.720 We really want to emphasize the rolling up your sleeves UH, 0:20:08.320 --> 0:20:12.920 strategy setting, building businesses side of things. And because of that, 0:20:13.119 --> 0:20:17.480 we've we've asked our people to change their terminology. We've 0:20:17.920 --> 0:20:20.439 done things like change our job titles. We don't have 0:20:20.680 --> 0:20:23.400 senior vice presidents, you know, twenty five year old senior 0:20:23.480 --> 0:20:28.440 vice presidents running around anymore. That's the terry level position president. 0:20:28.680 --> 0:20:32.600 We've we've we've changed that. That's again a reference to 0:20:32.680 --> 0:20:35.320 kind of Wall Street culture, and that made sense maybe 0:20:35.359 --> 0:20:37.639 years ago when you had to sound important on the phone, 0:20:38.240 --> 0:20:40.600 but in today's environment, we don't think it's you know, 0:20:41.080 --> 0:20:42.959 it makes a lot of sense. And so the culture 0:20:43.000 --> 0:20:46.720 that we're creating is a more industrial culture focused on 0:20:46.840 --> 0:20:50.240 rolling up your sleeves and building businesses. And that's reflective 0:20:50.280 --> 0:20:53.480 of we think the environment moving forward. So so now 0:20:53.520 --> 0:20:57.119 I understand why your headquarters in Colorado has a sign 0:20:57.160 --> 0:21:01.879 on the wall that says this is not Wall Street. Yeah, 0:21:01.880 --> 0:21:05.359 so not only are you locating the firm two thousand 0:21:05.440 --> 0:21:08.359 miles away from from Wall Street, you are making a 0:21:08.480 --> 0:21:13.320 very conscious effort to behave very differently. And by the way, 0:21:13.320 --> 0:21:16.720 when you walk through the door, it's immediately apparent to 0:21:16.760 --> 0:21:21.040 you because when you walk through that that office in Colorado, 0:21:21.400 --> 0:21:26.160 it is brick, steel stone. We have built a more 0:21:26.520 --> 0:21:31.159 industrial business building feel that is in direct contrast to 0:21:32.160 --> 0:21:35.800 what you you see in most places within our industry. 0:21:35.880 --> 0:21:39.440 So where are you in Colorado? So we're just outside 0:21:39.480 --> 0:21:43.240 of Boulder in a town called Broomfield. Really interesting. So 0:21:43.320 --> 0:21:48.520 you are knowing near val Or some of the sheshier 0:21:48.600 --> 0:21:51.440 parts of Colorado. Is that is that a fair state? Yeah? 0:21:51.440 --> 0:21:54.720 We're down the mountain um, which is a good three 0:21:54.760 --> 0:21:59.280 hours depending on the depending on the weather, in the traffic, 0:21:59.680 --> 0:22:02.959 it can be a bit um. But let me tell 0:22:02.960 --> 0:22:07.639 you something. When we first decided to move to Colorado, Um. 0:22:08.320 --> 0:22:11.960 Uh it was you know, in a way, UM, a 0:22:12.080 --> 0:22:15.520 part of this whole move um away from Wall Street. 0:22:16.119 --> 0:22:19.920 UM create an environment that's somewhat similar to the Zoog 0:22:20.640 --> 0:22:22.920 you know culture that we came from. You know, we 0:22:23.119 --> 0:22:25.480 talked a little bit about being in Zoog. One of 0:22:25.520 --> 0:22:28.320 our founders grabbed me one time and said, hey, UM, 0:22:28.480 --> 0:22:30.280 why don't you figure out where you want to live 0:22:30.320 --> 0:22:34.080 your life and see if people want to move there also, 0:22:34.280 --> 0:22:37.280 right and follow you? And and uh, you have any 0:22:37.880 --> 0:22:41.560 nexus with with Colorado? Or was this just hey, big country, 0:22:41.640 --> 0:22:47.120 let's go here. Um. It's just a fantastic environment. Uh. 0:22:47.160 --> 0:22:50.000 And the and the people that are there, um are 0:22:51.080 --> 0:22:53.240 so happy. It's the one of the highest quality of 0:22:53.280 --> 0:22:58.560 life uh anywhere, um that you'll find. And I think 0:22:58.600 --> 0:23:01.800 that makes a difference. Right when we first opened up, 0:23:01.840 --> 0:23:03.359 people are kind of scratching their heads what are these 0:23:03.400 --> 0:23:06.679 guys doing? Today we get more resumes into our Colorado 0:23:06.720 --> 0:23:10.680 office than our next six offices combined. It really has 0:23:10.720 --> 0:23:13.639 set us apart and is something that's quite unique. And 0:23:13.680 --> 0:23:17.280 it's also directly in line with what we've been talking 0:23:17.320 --> 0:23:21.439 about it. It's different from Wall Street. It creates an 0:23:21.480 --> 0:23:26.840 environment for us where we can be independent thinkers and that. 0:23:27.359 --> 0:23:30.800 So let's drill down into that a little bit. I 0:23:30.840 --> 0:23:34.760 was reading about the firm and its investment process, and 0:23:34.920 --> 0:23:37.719 it seems like you guys can spend as long as 0:23:37.800 --> 0:23:41.840 five years studying a company before you make an acquisition, 0:23:42.720 --> 0:23:47.560 Whereas in most of finance it's competitive and sometimes you 0:23:47.640 --> 0:23:49.639 need to make a decision now or someone else is 0:23:49.680 --> 0:23:53.719 gonna outbid you. How do you go about kicking the 0:23:53.760 --> 0:23:56.800 tires of a company for three or four or five years. 0:23:56.840 --> 0:24:01.120 That seems to be inormately lengthy compared to the way 0:24:02.280 --> 0:24:06.680 traditional finance operations. Yeah, when I came up in the industry, 0:24:06.720 --> 0:24:09.280 when a company would come up for sale, we would 0:24:09.280 --> 0:24:14.399 have four or five months to research that business and 0:24:14.600 --> 0:24:18.120 to do due diligence and to meet the management team 0:24:18.119 --> 0:24:21.040 and to build our models. And that's enough time to 0:24:21.240 --> 0:24:23.040 get to know a space, and to get to know 0:24:23.080 --> 0:24:26.600 a sector, and to get to know a company and 0:24:26.680 --> 0:24:28.919 decide if you want to make an investment or not. 0:24:29.160 --> 0:24:34.000 With the competition that's increased within our space, it's more 0:24:34.080 --> 0:24:36.679 like four or five six weeks that you need to 0:24:36.720 --> 0:24:40.000 make that decision, okay, And you just can't do the 0:24:40.040 --> 0:24:41.960 type of work that you need to do to write 0:24:42.000 --> 0:24:45.359 a large check in four or five six weeks to 0:24:45.359 --> 0:24:48.560 buy an entire company. And so we have really put 0:24:48.600 --> 0:24:54.160 emphasis to our team on doing work well before a 0:24:54.160 --> 0:24:56.560 company sale process to make sure that when that company 0:24:56.640 --> 0:25:00.800 comes up for sale that we are expert on that space, 0:25:01.200 --> 0:25:06.240 we're expert on that subsector, and we're doing confirmatory work. 0:25:06.400 --> 0:25:11.040 We're not starting from scratch. That's something that's really emphasized 0:25:11.080 --> 0:25:15.120 within our culture. And you know, if you think about 0:25:15.160 --> 0:25:21.320 the current environment, right rates have changed, leverage levels have changed, 0:25:22.119 --> 0:25:24.679 and that means there's a couple hundred basis points of 0:25:24.760 --> 0:25:28.719 returns that's come out of our industry if you're just 0:25:28.800 --> 0:25:31.320 doing things the same way. So you need to be 0:25:31.359 --> 0:25:34.480