Matt: From the crossroads of America in the Hoosier State of Indiana, this is Get IN, the podcast focused on the unfolding stories and extraordinary innovations happening right now in the heartland. I’m Matt Hunckler, CEO at Powderkeg, and I will be one of your hosts for today’s conversation. I’m joined in studio by co-host Nate Spangle, head of community at Powderkeg.

And on the show today, we have Susan Ford, who is a partner at Graham Allen Partners, a private equity firm based in South Bend, Indiana.

Susan: And it’s funny, I had a seller say to me one time, Susan, do you know how many times I’m gonna sell a business in my life? How many? One.

Matt: Susan Ford is a partner at Graham Allen Partners, a private investment firm focused on developing early-stage technology businesses into sustainable growth companies. And I love this show because it is like a mini MBA. In this conversation, you’re going to get a crash course on all things like private equity, important benchmarks for any business, massive opportunities in legacy industries, and so much more.

It is one heck of a conversation and I’m so glad to share it with you today. Here’s Susan Ford.

Susan: So Graham Allen Partners, a private equity firm in South Bend, Indiana. We are the only one of our kind. And I think it is important to know that we have a few different pieces. We have things that are outside of our traditional fund.

When people talk about a pool of committed capital, that is money that other people and other institutions have invested. So we have a private equity fund. We also have funds, we have companies that are invested in which we call our permanent capital portfolio and so this gets really interesting when we talk a little bit more later on about the community component because some of our Earliest investors in our permanent capital fund are members of the community businesses in the community institutions in the community so that I hope we can come.

Yeah,

Matt: I would love to yes Okay, cuz me and I both want to start a private equity firm

Susan: Oh, guys, you hear heard it here right now. We’ll talk about that in a second. And we’re in the process of preparing to raise our second pool, our second committed fund. And so the concept is over a long time horizon, anywhere from five years, 10 years, 20 years, different firms have different metrics around this.

But our first fund, our first committed pool of capital is for 10 years. So it’s a 10-year investment life cycle. And so you think about how you are. And then you going to invest in. You then do whatever it is that you are going to do, so we can talk a little bit about our strategy, and then you go to exit.

And during that time frame, you are able to return to those limited partners who have invested in you, and that’s what it looks like. And our thought is, you give us a dollar, give us some time, believe in our strategy, and we’ll give you three dollars back. So that’s is that good enough? Keep going, one question.

Matt: So how is it different from venture capital? You just took my, yeah.

Susan: Okay. So that is a great question and I think at the end of the day, venture investors are understanding that not, what is it, 80 percent of all venture ideas fail, only 20 percent hit. And so there’s a high degree of risk. And there’s a high degree of reward, but you know that you’re going to have a lot of failures.

I think in our private equity world, we have less there’s less comfort for risk. Obviously, the experienced investors understand that not everyone is going to be a home run, right? We might hit a single on one, a double on one and a home run on one. And to collectively that will give us, you give us a dollar, we’ll give you 3 back.

But it’s a little different. The ratios are a little different than in a venture fund. And I would also say the dollars look a little different as well. I think some of the venture funds, go ahead.

Nate: When you say ratios.

Susan: Returned. No, I’m just saying in terms of what did I just say there? Ratios of… Risk reward.

Risk reward. Yeah, exactly. Yeah, thank you.

Matt: So like venture, you’re basically looking for 1 out of 10 companies to basically return. The have the potential of returning the fund exactly. Nine out of 10 of them are going to fail. Whereas in our world, of course, every VC fund will say no, but we’re doing, two out of every five are going to be home runs.

But the data is still the data. The data is still the data. And so private equity is a little bit later stage. Yes. Meaning it’s got a little bit more momentum, probably investing larger amounts of capital.

Susan: That is exactly right. And so that is a perfect setup. It is. And it’s also for us specifically and every private equity firm and then each of its funds has a particular thesis.

And so our thesis is all about Midwestern mid market businesses and our whole fund, actually the whole firm. So I’m going to delineate firm and fund. Our whole firm is how do you go from bridging that gap from tradition to innovation. And so something we’ve thought, talked about, so this venture thing as we talk about it and if I can, X axis, Y axis, I think about the X axis is here’s tradition and here’s innovation.

And how do you help bridge the gap from companies who are traditional companies, which the Midwest has thousands of them. I was listening to one of your other podcasters, Silver Tsunami, right? So all of these core businesses that have lots of value. And so I think about the X axis tradition to innovation.

And then I think about risk and reward. And so when we talk about all of these venture firms up here, Uber is a great example, right? High risk, high reward, total disruption, nothing on the traditional side. And so that was great, a great return profile for its investors and a lot of VCs and a lot of entrepreneurs, startup entrepreneurs, let me say, delineate.

And I think that’s an important delineation. Startup entrepreneurs can do really cool things up in that space with great returns. We are, and I also think down here, you think about commodities. I think about Warren Buffett and right, everybody was going to stop eating hamburgers and stop drinking Coca Cola.

Not true. People are going to, so you’re going to have a consistent return down here as well. And so when I think about the types of companies we’ve invested in, we are bridging that gap and what might have, under another traditional private equity strategy, hey, you have an insurance business, we’re going to buy 15 insurance companies, roll them together, make them a little more efficient, great.

There’s a potential for a return, which is wonderful, but it’s not necessarily new or innovated, innovative. And where we come in, where we help cross over that nexus point is when we start to talk about, Hey, this is where we are going to get into proprietary data, which is what our thesis really is.

We can talk more about that in more detail, but you look like you have a question. Oh. I didn’t mean to put you on the spot. You look like you podcast.

It looks like I have a great question. So we are focused in a few different verticals. We think healthcare is really interesting. Thank you. Healthcare is really interesting. We think business services is really interesting and we will always be fascinated with technology because at the end of the day, we think we are uniquely positioned to take the de risk technology that is coming from Silicon Valley.

This is like such a matchup of how you think about the world and how we think about the world and it gets scaled on the East coast, but no one’s really thinking about it for these midsize. businesses. So your question was, how do we think about these traditional businesses? The two industries that I mentioned, both health care and business services, they are asset light to a degree.

So they really just have lots of data, so they don’t have lots of infrastructure. And so that’s part of our strategy, where we think it is data rich. We talk about data, rich asset light. And so that’s the part that we think is most compelling. So we are able to take those traditional businesses and do more with the data.

But your question, did I answer it? How do we think about those traditional businesses?

Nate: How do you define, how do you define traditional? But you definitely went into that there. And I think that’s super interesting because we’ve had Bethany Hartley on the show. I heart Bethany. Yes. And we’ve had Iris Hamel on the show as well.

And they, the South Bend, Elkhart region and talked a lot about, there’s a heavy presence of manufacturing there. Elkhart County is a manufacturing stronghold for not just Indiana, but for the entire country. And where you’re talking about when from healthcare and from business services, I was really expecting to be like, we look for manufacturing companies to roll up and yada.

And it’s. It’s not, doesn’t seem to be that way at all.

Susan: I am going to correct myself and say the whole second fund is all about adding manufacturing on the analytics side and we think there’s a ton of data in the manufacturing. I should tell you, I have a couple of hats that I wear. I wear my Graham Allen partners hat and I do a lot with the regional partnership.

And Yeah. Which is the organization Bethany is the president and CEO of. And I think that is exactly right. So the whole bit about we in South Bend and Elkhart, we build things. That’s mission critical to our understanding, to our DNA. Studebaker, Bendix, all, everybody from South Bend is going to come and tell you these same stories.

But I think it’s really important.

Matt: Go ahead. Are there a lot of other PE firms that are?

I think of all of these communities that we serve, places like Pittsburgh and Chattanooga and, Cleveland have a ton of innovation happening there, but they also have their economy still predominantly. Are there a lot of other P E firms that are seizing the same opportunity?

Where are we? Do you think in that life cycle of innovation?

Susan: It’s a great question, and I think there are a lot of different ways you could answer. I think, yes, there are Private Equity firms. And to your point, there’s good private equity and bad private equity. I think that there are people, you’re the good kind.

That’s what we’d like to believe. That is what we’d like to believe that there are some that are cannibalizing that, right? Here’s this opportunity. We’re going to come in and give you a great example. Rally, make a plug for rally, how cool rally was, and one of the speakers I heard talk about an IPO.

I think it was in Lexington about, it was an 8 billion IPO and there was no local money. No local money. So private equity venture firms coming in from the coast came in did the IPO took their money and left and that’s like great for the region that they had an IPO, but also really sad that the money was going out to the coast, right?

And so So when I think about your question, part of what is interesting, I believe about what we are doing is we are talking to businesses that are Midwest values. They understand they don’t want to sell their business to an evil private equity firm. That’s going to just, take the money and run, cannibalize it, not withhold the values that they already set out for many years.

They take care of that. And so for us, this big piece of what so we Graham Allen care about is also the community, right? So how do we help sustain these businesses? And so not about disruption, but more about transformation. And so when we talk about when I was explaining private equity and our permanent capital fund, so Graham Allen is an investment firm, it is those original large businesses.

In the region who know we need new technologies. We need to know what is happening next. And we don’t know how to get it on our own. And the other people aren’t coming to the coast to be excited about these smaller businesses. It’s not a match, right? So we feel very uniquely positioned to understand Midwest business, to have a deep understanding of technology, to have deep ish pockets to be able to support that.

So that feels a little different. Yeah.

Nate: Is your. That region, like specifically in your thesis, like we serve this sector of the market, this geographic region,

Susan: Secondary and tertiary markets. So a hundred percent. So thank you for giving me the chance to clarify that because it’s not, we’re not going to be in Chicago.

We’re not going to be in New York. We are going to serve. Secondary and tertiary markets and being really thoughtful about it. 65 percent of all of our platform companies in our fund are based in Indiana. And the remaining portion is in Midwest companies and secondary and tertiary markets. So that is where we want to play.

And that is where we’ve been really thoughtful about our LPs and even some of the members of our team where we can build around the relationship and build around the reputation.

Nate: You guys hit it at, right? There’s. There’s stereotypes of good P. E. and bad P. E. What are a few indicators of bad private equity firms?

Susan: Oh, man, I don’t know if I want to be on record for that. I think that at the end of the day, your reputation matters. Do you say what you’re going to do? Our managing principal, Tracy Graham is played football with Lou Holtz and it’s do the right thing. What is it? Oh, I’m going to get it wrong.

Nate: You’re not looking at the right person. I’m not a sports guy.

Susan: Do your best, do the right thing, and treat other people the way you want to be treated. And I think that is so core to how we operate. I think the other piece is you don’t want people to say one thing and do something differently, right? And so I think that is a term that gets passed around is the jombo, just another middle market buyout.

And when I think about… I hadn’t heard that term before.

Nate: Wait, that was the one! Acronym and it’s like jumbo or something.

Susan: Jumbo, makes me hungry, jambalaya. And I’ve just been like, just another middle market pile. And that’s not a bad thing. Let me be clear, it’s not a bad thing if the people, let’s presume people are operating with integrity.

Yes, absolutely. But where I feel like we are a little different and a story that I think about, one of the platform companies in our current fund, the it was second generation, so two sons who have the business from their fathers in the insurance space. And they were getting courted all the time with other offers like hey, we’re gonna build this giant insurance firm We want you to come in and be part of it.

And so super interesting super compelling they could take a lot of chips off the table and That would be fine. It would be totally fine, but that’s not necessarily securing the next generation That’s not that is more about either a little bit of same or some Disruption, bad example, disruption, but it’s not transformation, and so what they get excited about when you think about the structure of what we’ve put together, it’s also, hey, you have an opportunity to participate in the transformed business as well, which longer term we think is going to be more compelling than anything that you might just get if you took a standard.

Matt: When you look at the pieces and parts of those businesses, I would imagine a lot of that applies to just about any business. And the principles are all the same, whether you’re, just a jumbo or, yeah, or you’re, just acquiring a mom and pop shop and saying, oh, we’re going to implement a new POS system and all of the digital marketing tools that.

This mom and pop is crushing it despite not having those things much smaller scale, not a private equity play, but something that is accessible to people who are maybe, middle class or upper middle class to be able to go and rinse and repeat or for those of us that have business businesses or work at businesses, whether it’s a small business or a startup, I feel like understanding some of these principles of how these bigger firms, PE firms think about, here’s how we take something that’s good. Yep. And maybe it’s even great, but make it even greater, three exit over the course of 10 years. What are some of those like key levers that you. Personally, look at it.

Susan: For us, it’s one it’s the data and traditional investors have chronically underestimated the value of data in these core businesses.

It’s not even a line item on the balance sheet. So when you think about that, that there is value to that. And but what I think people get wrong, or where I think we have the opportunity to help make it right, is that we understand what it takes to harness the data. So when you think about the data infrastructure piece, and sure, every company can go out and hire some tech people, and they can get the tech stack right, and we can get all the servers, and we can do all these things.

But I think about, at the end of the day, let’s say I’m going to pick on a bank, but the bank’s core business is being a bank. The bank’s core business isn’t being The I. T. Guys are not the stars of the bank, right? And so it’s a little bit converting that to say, Hey, we what we like to do is bring the I. T. stars to the table to help them think about the things that they might not otherwise. And what we are really working on behind the scenes is to be able to get the data piece right at scale. And So like the connective tissue to actually make the data valuable is not just I have 10 servers. I spent 50, 000 on each server.

It is actually how do you get the data that is reliable, that is clean, that is accurate and getting it with a level of consistency. I think that’s a piece that is chronically underestimated. And what I find with a lot of the businesses that are trying to do something, I think I’m off from your question, but I’m going to keep going on this thread.

I think so. It really they’re, they. They get in over their heads, and I think probably imagining you guys are experiencing tech people want to be around other tech people, and if their leadership and vision is coming from a, let’s again pick on a bank CEO who may not be able to understand nor should this person have been expected to understand, right?

And so that’s the opportunity where we are investing in the data scientists, where we are investing in the data engineers. And we have a lot of Like in house at Graham Allen Partners? Graham Allen Partners. So the strategy to scale and understand and harness the data, that’s what we are investing in.

Nate: Yeah, because as I sat here and you were talking, I was like, okay. Great. Not a huge Excel spreadsheet guy, but everyone talks about the value of data and it’s good to have it all, but it really comes down to what you do with it, right? So what are you guys doing and how are you see the data that you’re collecting from your?

Do you own portfolio companies from the portfolio companies? There are a couple, is there a story of how you guys have done something and acted on this data to make a transformational change at a business?

Susan: It’s a great question. At the end of the day, this is where it gets venture capitally because it’s all about the unit economics.

And a lot of these traditional businesses have not deeply understood unit economics in the way that a venture one of their portfolio companies to operate.

Matt: And so for those not indoctrinated, you might just defining unit economics. Like I know that’s probably table stakes for most of our listeners.

But I think hearing it through the lens of a PE firm of which unit economics are really important.

Susan: Sure. I’ll do my best. I’ll do my best. But at the end of the day, it is understanding how the business is run at a very deep level. And so it’s. It’s if you’re going to do this better than I am.

I want to hear your definition.

Matt: When I think of unit economics, I think of the, I’m, I am at a software company. So I think of like software, economics, like cat customer acquisition costs, a lifetime value of a customer LTV, your cocktail TV ratio is really important. All of those kinds of things are like the key performance indicators in SAS “software as a service”.

Susan: It’s the same. Yeah. It’s the same. I again, love Dan Hanrahan podcast. And I love how he told the story, all of those, all of that terminology, yes everything for mulch. It was so good. I thought that was so good. And so it is exactly that piece of it, but it is these, that director listeners to that podcast as well.

Cause he explained it really well.

Matt: So something that companies could do immediately to make their business more valuable is if they don’t already have their unit economics dialed in, just get a. Benchmark or get a baseline

Susan: just get a baseline. And I think where I was a little deer in headlights as you were thinking about this, I was going two steps ahead because for us, when you, a lot of the traditional businesses have been.

Thinking about their own business for all of these years and where the private equity lens comes in, it says, okay, the unit economics, the potential for the unit economics looks very different because we don’t need five leadership teams, right? You only need one leadership team. And so like the, I think the traditional business owners, what you’re looking at.

So when you bring two businesses together you don’t need two heads marketing. And so then when you think about the KPIs that are really important, you’re going, they’re going to change a little bit because you’re going to make some changes.

Matt: It’s a merely PE is making huge impact on overhead and just overall capital expenditure.

Yes. So that’s helping margins immediately. Yes, exactly. And that’s before you’re even tapping into the data.

Susan: That’s before you’re even tapping into the data. So I think to your point, it’s a bit state table stakes just to get it and understand it, but then what are we using the data for? So then it’s being able, so those are the baselines, right?

But then you get into, I’ll talk about one of our businesses, which is an orthopedic billing, fascinating to go through that. And back office billing. Not necessarily sexy, but oh my goodness, it is people’s lives and you have to take it very seriously. And the way some of the big insurance companies work, you have an amount of time that you have to file a claim on something.

If you are not able to sort through all of the data to figure out which claim you need to process first, then the amount of dollars that could be lost is significant. But the way the system works right now within different EMRs, it’s okay, this one is a hundred dollar bill. This is a 2, 000 one. This is a 30, 000 one.

But it’s presented to each of the individual workers in that order. And it’s gosh, we need to use our data to look ahead to make sure that we are going to be able to process the claims that are going to retire or expire so that we can collect fully on behalf of our client. Does that make sense?

Yeah. So that’s. It’s using, like harnessing the data and using the data to help the company expand its margin and ultimately grow revenue. But where we think it gets even more interesting is then once you have all of this data, there are other buyers when we think about what we want to do, who will find that data.

And this totally plays into your tech world and as you guys think about using it. But one of our foundational beliefs, again, back to what I said earlier. A lot of the traditional investors have just underestimated this in the businesses that we, these traditional businesses. It’s just underestimating.

Matt: It’s not the way things have been done. It’s not.

Nate: I’d like to do a quick segue into, you’re talking about bringing two businesses together. You only need one head of marketing. Yep. And I think that is a common. Maybe misconception or maybe just like stereotype of PE is like PE comes in and cleans house and it’s all about hitting the number and if the profitability is it’s the numbers, the number is the number.

What are you guys doing to prioritize culture in these companies that you’re making an investment in?

Susan: Thank you for asking that question. I would say when we think about the values of Graham Allen Partners, when we think about the community, but also when we think about our engagement with these private with this portfolio companies, people in culture is number one. At the end of the day, nothing is going to happen without trust, right? Nothing is going to happen without trust. So we are very thoughtful. We use office vibe to track the culture scores of all of our portfolio companies. So we can see what is office vibe.

It is a culture measurement tool and it looks engagement over 10 different areas. And it’s a, it rather than an annual engagement survey. And then by the time you go back to do something with it, it’s changed. It’s just a weekly pulse. It’s a pulse. It’s a pulse. It’s great. And it’s all about the data. It’s all about the data.

You get into a net promoter score. And so that, so we’re always talking about that. And before we, and so this is interesting when you think about So when we talk about private equity returns and what people are expecting, it takes time to do to make any sort of massive change or transformation, right?

And so for the first year or two, when we are working with a portfolio company, it is about building trust. It is about the basics. It is about the blocking and tackling. And so always we’re working behind the scenes on the data platform and what we think can happen. But that our goal is not to disrupt that core business.

And I think that’s really important when we talk about what we’re trying to do. It is I cannot say this enough. It’s not disruption. It’s transformation.

Matt: And so that makes a lot of sense because you can’t come into a business. And change things all of a sudden because that’s going to be traumatic.

It’s going to affect the culture and then the culture change is going to have that trickle down effect on the business. So it’s really interesting to hear that you’re in the background for the first couple of years after a strategic investment.

Nate: Why do they call it strategic investment and not acquisition?

Susan: It’s a great question. It’s nuanced and the people like we’re not trying to pull anything back on anybody but pull what is it pull the wool over anybody’s eyes, but it’s true It’s a strategic partnership at the end of the day we and the way we set sure people use the word acquisition Yeah but I think it is you hit the nail on the head because it is a partnership and the way we structure our transactions is we want to win together, right and our incentives are We’re going to do well when you do well, and you’re going to do well, you being the seller, right?

Matt: And so that, that’s and founders or executives are still maintaining upside. Yes. So it’s not like it’s a complete, Oh, okay. We’re acquired. Yep. We’re done.

Susan: No, it’s not that at all. And I think the other thing that is really important is to talk about they, they need to know where we’re going, right?

Like they have chosen to sell based on our shared belief in the future and our shared belief in the vision. And if there’s not a match there. Then there’s not going to be a transaction like that’s the important piece of it.

Matt: What is your biggest piece of advice to? Founders or executives who are considering an exit via private equity versus keep growing on your own versus get that next wave of funding from VC or other routes versus getting acquired by a strategic, you know acquirer

Susan: It’s a great question.

I don’t think there’s one silver bullet answer. I think it depends.

Matt: What are some of the things that those founders or executives should think about?

Susan: So I just had this conversation with a potential seller the other day and he was self aware about what he didn’t know. He didn’t know. And I think that’s probably one of the most important things that you can do when you’re in a selling position and making sure that you have people who are giving you the right questions to ask.

I think that is probably the most important thing. Getting a group of advisors around you to help you know what questions to ask. I think conflict what 95 percent of all conflict is a communication issue, right? And so how much can you resolve up front? How much can you understand? And I think also having some sort of framework for how you’re going to answer how you’re going to solve problems when they come.

Cause you can’t know all the questions you need to ask, but you can have a thought for how we’re going to do, how we’re going to solve those questions.

Nate: You guys talked about Uniteconomics being super important from the seller perspective. Are there other tips for potential sellers to get their ship in order before going out to look for an acquirer or.

A strategic investment or however you want to call it like things that they can be doing to prep for a sale.

Susan: Yes and it’s funny. I had a seller say to me one time. He’s susan Do you know how many times i’m going to sell a business in my life? How many, one right? And so I So all of the things you just mentioned I think part of it though, and it depends It’s a hard question to answer is what I would say, because part of it depends on what the future is going to look like as well.

And I think that’s why it matters just to have trusted partners. I will say, I think for us, it is just mission critical that the incentives are aligned. And that would be my advice to sellers, that you want a partner where your incentives are aligned. I think.

Nate: That’s I think that another thing we see if there’s a ton of like social media influencers that are like start this PE fund of boring Businesses and yada and they talk about EBITDA It’s all just like the number I look for a business that’s printing cash and put a bunch of those together When you guys are looking to make investments. What are those other things you look for obviously the numbers let’s say the numbers I’ll check out it’s great But what are you looking for in founders in teams that really set your investments apart or set the sellers apart from potential to make it happen.

Susan: So that’s great question. A term we have talked about is this concept of a Midwest Maverick. And so I am going to probably repeat myself a couple of times here, but it’s people who understand that you have to honor the tradition and you have to honor the legacy.

We live in the Midwest. This is where we live. This is about transformation, not disruption. And so one of the sellers that we worked with is a medical doctor, right? And so he is a phenomenal doctor. He is staying up on everything that is happening in his world, in his practice, in cutting edge technology and how he can best service patients.

That means he’s not spending his time. thinking about new technology and how to harness his data and what does that look like? And so he is like these Mavericks, the things that we are looking for people who want to honor both honor the past and move toward the future and probably not probably.

I think there is absolutely humility around knowing what you know and knowing what you don’t know. I think that is really important. And I think the other piece of it in all of it is It’s the community, right? If I don’t, it’s let us not be the IPO that goes to the coast, right? Let us find a way to keep that locally, so

Matt: I really like the pairing of those two words, because when you think Maverick, and there’s a great book called Maverick that you probably read, You think pioneer, can’t be told what to do, they’re doing their own thing, and you don’t think things like humility, you think things like confidence, willing to break through walls, they’re going to bang their head, they’re going to go across the Oregon Trail.

Should we fly by the tower? Yeah, we may lose some families along the way, but we’ll get there, Maverick can have some of that connotation. And also, of course, has all of the positive sides of opportunity, growth tapping into tapping into things that weren’t tapped into before, but when you pair that with Midwest, which has all the values of humility and hardworking knowing what you don’t know, but also still like wanting to learn, and not just being like, Oh, I don’t know that you pair that with Maverick and it’s this really cool pairing.

So I. I like that

Susan: thesis. That’s awesome. And this is credit to Tracy Graham, and this is how he thinks about the world. And so he has a super interesting Midwest story. And I, my background prior to joining Graham Allen partners was retained executive search. So I have interviewed over a thousand executives over the course of my career.

And so have perspective on the good, the bad, and the ugly. And I always

Matt: get into the good, the bad,

Susan: and so what I always. about Tracy Graham where I was compelled to join him on what he was, what he’s been thinking about for 15, 20 plus years is he is exceptional with vision. And I, if you were here, I would say this, he doesn’t get 1 percent on everything, but he gets top 1 percent on vision.

And his whole story, which then ultimately becomes the trajectory of what we are up to is all about seeing around this corner. And so his famous story is he wanted to put the phone book online back in the early nineties, mid, early, mid nineties. And he was actually too far ahead because he realized not enough people had internet.

So after he ran out of money, putting the phone book online, then he’s Hey, I need to go find a way to get more people with internet. And so he built an internet services provider business. And so that’s what he did, but it’s. Always been around. What’s the next thing that’s coming? And so the first business talked about analytics, which is the company that we in our permanent capital portfolio in South Bend that was initially invested in by regional players who knew we needed to have a data center in South Bend, Indiana.

Okay. That was cool. They’re huge now. They’re huge. But when we were doing that data centers were already a big thing on the coast, but they weren’t a thing in the Midwest yet. So we did a data center and then what happens after that? Then you need managed services because people are trying to figure that out.

So that becomes part of the analytics story. And then you need to have analytics and that becomes part of the story. And then you need to be able to do more processing with the data. And so that is a really important part of our thesis process. And bringing what’s next to these Midwest businesses. And that’s to be able to have the gift of focus to say, that’s what this piece is going to be doing.

And then that plus Graham Allen, then we are able to bring a full suite of resources. And that sounds really cheesy. I don’t mean that in a salesy way, but I mean that in we’ve done that hard work to make it so that when we want to work with a new type of business, we can scale very quickly.

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Matt: I’m not going to let you get away with just mentioning that you’re an executive search and you help thousands of executives get hired without digging a little bit deeper. Tell me a little bit about that. What are some of the things that you learned while interviewing thousands of executives for companies?

And some of the things I’d be particularly curious about are what are those things that are just deal breakers? What are some of the bad and then what are those things? And it’s just this is magic and if you not every candidate’s going to have it and maybe not even every place. percent executive candidate is going to have it?

But when they when you have that, it’s the top 1%.

Susan: It’s a great question. It is a great question. And I live. I live my life. I don’t really see black and white and a lot of things, so I’m a it depends person because and again, listening to your other great podcasts and hearing how you talked about what different executives do and what they don’t do well.

I think the most important thing like the most important thing for me is do you know yourself? Do you know yourself and do you know what your particular gifts are? Do you know what you do that annoys people like that? Gift of knowledge and self awareness to me is probably the most important thing.

Matt: What are some of the best tools?

Susan: Oh, did you set me up to talk about the enneagram? I do love the enneagram But if you don’t know or love and my one plug for why I love the enneagram because there are thousands of different tools and tests and different things that you can do under I’ve taken them all So we could talk about that later, but the Enneagram is more powerful about your why it is why you do the things you do So you may be great at 42 different things you I think people I like big parties, I can go to them, I have fun. I can talk to lots of people, but what I actually care about more is having a really good one on one conversation with someone. So it’s a misperception. And so like, when you understand the wise about people and what they do, I think that is so powerful and so compelling. So just self knowledge, I think is mission critical.

And then of course. It’s what does the particular job need? I’ll tell you one of my favorite parts of executive recruiting actually was working. It wasn’t, Hey, Susan, go find this person. It was the time. I love connecting with the people. Don’t get me wrong, but it was more. What is the business problem that this business is trying to solve?

And so talking to having interviews with five other executives and turns out they haven’t actually all agreed what the problem is that they’re trying to solve or what that person needs to bring. And so that that is step zero almost to understand that.

Matt: Any great tools or books in particular that you would recommend?

Susan: No, I that’s a great question. I don’t have one that comes to mind immediately.

Matt: Yeah. How would you facilitate that with a team of executives? So

Susan: I love the five dysfunctions of a team, Patrick Lencioni, is that how you say it? And so I have no idea. And so that, but I always find the five dysfunctions of a team to be really compelling.

And I think also just like the simplicity of alignment, I think is so mission critical. I’ve always thought, I’m going to go back to one of the things you asked me a minute ago, when like talking to advice you would give to someone considering selling a business, I think that you should take every.

And so I had to take and ask them about their colleagues. I heard a story talking in the network to some other private equity folks who said that they didn’t know their partners very well. And so there was conflict amongst the partners because they weren’t having conversations with each other, having the deep, hard conversations.

And it’s so interesting because I think in the venture world, there’s a ton of conversation about this, right? Pick your co founder. Make sure you know this. And so we have to agree all these things up front. And interestingly, I don’t think some of the private equity firms do that as well or do that as much.

And we I think as a team do a pretty good job with that,

Nate: Like down to favorite quotes. Yes, holds quote.

Susan: Yes. That’s in the water down there up there.

Matt: But if you’re an executive and you’re scoping out team to potentially join a great thing to make sure you do is talk to every other leader at that company and not just talk to them to get to know them.

Talk to them to get to know how they relate to their other leaders.

Susan: One thousand percent and one of my favorite questions to ask is what are misperceptions that people have about you? I think that, to me, that was always my final question. What are misperceptions people have? And there’s not one right answer, but it’s just that to me is the self knowledge.

Do you know how you’re

Matt: perceived? You mentioned one of your misperceptions as being the person at the party, and that might be… Perceived as your why but really what you care most about is that are these one on one conversations totally What are some of the other misperceptions that people might have about

Susan: you?

Oh about me personally I think because I am such an optimist that I am afraid to make tough calls or have hard discussions And I think that’s a misperception because if we’ve worked closely together, that’s not true. Yeah.

Matt: Oh, that’s

Nate: What’s the way that you can open up? To others like let’s say they don’t ask you what your misperceptions are but like to say hey You might think that I’m an optimist and can’t have these hard discussions like is there a good strategy for that to open up?

To your other exec members of your team.

Susan: It’s a great question. I think at the end of the day, people fund, I think all business is about people and it is about communication and I think people fundamentally want to be understood on some level. I think that’s it. And so it’s I presume good intention with everybody I’m operating with.

So what you said may not have come out right or it might have hurt my feelings or whatever. I’m going to give you the benefit of the doubt to say. I’m sure you did not mean this, but this is what happened. Let’s talk about it. And so I’m just always scratching.

Nate: Matt does that very well. He does that. So what I’m hearing is X, Y, Z thing.

And I’m like, wait, you took what I just said. Is that no, that’s not what I meant.

Susan: There was an article that just came out which said like some of the best communicators. That’s an important line.

Matt: So what I’m hearing.

Five years of relationship therapy with my wife has done wonders for my leadership.

Yes, that’s

Susan: Very good. What I heard you say. Did I get it right? Some of the

Matt: best, some of the best marriage advice is repeating back. Yes. What and even if it’s as it’s like clearly you got what they said, even just repeating it back to someone like it makes sure that they know you’re listening and if you can use their own language to and then sometimes it’ll be like, Oh, that came off maybe the wrong way.

So what I heard you say was. This XYZ thing and the person’s Ooh, yeah, but I think what I’m really feeling is,

Susan: It’s also super effective in hostage negotiation. So marriage and hostages,

Nate: The book about negotiation that was written by the old FBI. Yes. Yeah. I read that.

Matt: And we’ll link it up in the show notes.

Nate: Oh my gosh. What is it’s like the most.

Matt: You’ll remember it once we’re done. You guys don’t know what I’m talking about. I know what you’re talking about. He’s got a masterclass on the masterclass

Nate: platform on the show notes, but it’s a good one. Okay. And they talk about that.

Matt: I want to make sure I ask the question because you don’t shy away from having the tough conversation. You’ve interviewed thousands of executives, which means you’ve told probably thousands of executives that they didn’t get the job. You’re now COO at a private equity firm where you’re probably having tough conversations all the time.

What are your top tips for having those tough conversations?

Susan: I think it has to happen quickly. So people, you need to do it in the moment. Don’t beat around the bush. Don’t beat around the bush. I think you have to do it kindly. I think you have to presume good intention.

Nate: Kindly, that’s like very easy. Do it kindly.

Is there a really kind way to reject somebody?

Susan: Two different things tough conversation versus telling someone they didn’t get a job in it. But in both, right? I think you have to, it’s your marital advice, right? Acknowledge what the other person said and then say this doesn’t fit or this doesn’t work.

And here is why. So I think for the here when a candidate doesn’t get a job, I think that’s really important. But I think in a tough conversation, I think it has to be done swiftly. I think it has to be done privately. And I think you really have to show a Generous spirit of wanting to understand the other person.

They’re, what is it? Seek first to understand and then to be understood. I think that principle is really valuable.

Matt: Those are great tips. And I think one of the things that stands out to me when I think about what is kind when you’re quote unquote, rejecting someone. Is something Meg on our team says all the time, which I think is from Brené Brown, which is “Clear is Kind”.

Susan: I was just gonna quote some Brené Brown, so I’m glad you have someone who’s doing that for you.

Matt: Yes, of course. I love all of her books and Meg and I share that love. I don’t think it’s in Nate’s wheelhouse yet.

Susan: But soon right after this, did you do the values exercise?

Matt: I think so.

Susan: I, it’s I like that one as well, where it, because I did it with a smaller group of team members, there were four or five of us, and it was one of the most powerful conversations we had in the past year.

So it’s like looking at all, here are a hundred different values, but what are the two, at the end of the day, through which your lens.

Matt: We did a version of that, but I think that would be worth revisiting. Do you remember which book

Susan: that’s from? Dare to lead. I’m really scared to leave. Yep.

Matt: Great. Which is all right.

Get ready. Friday. Are you excited?

Nate: I’m so pumped. Oh, it’ll be fun. I like fun. I like to stretch.

Matt: Nate really likes the soft things like vulnerability.

Nate: My absolute favorite.

Susan: We could talk the Enneagram after that. I have a

Nate: hunch. So much will happen. We’re going to put you in

Matt: your, a little bit outside your comfort zone.

Which you do doing.

Nate: You don’t grow if you don’t go outside your comfort zone. Though I might not gravitate towards these things, I hope listeners out there, there might be things we don’t gravitate towards. But I do enjoy expanding to new things and trying it. And as I, if I like, I’ll try anything once, twice if I like it.

So there we go. That’s my model that I live by. So I’ll do some Brene Brown, dare to lead all fun stuff.

Matt: You heard it here first listeners,

Nate: But I do always like to revert back to my safe and happy and fun place. And that is the lightning round of the podcast. Oh my goodness. What a transition.

This guy’s a master. We have the lightning, which is my favorite round of the podcast and where we talk through quick hitting. Three questions no wrong answers as Matt always says, but first thing that comes to your mind. Okay. And we might dive into a little of them if we need some clarification, but first thing that comes to your mind.

Okay. Outside of the amazing entrepreneurial ecosystem, what is Indiana known for?

Susan: We build things. We build things. Favorite thing that’s been, that’s being built in Indiana? You guys both cock your head the same way at the same time.

Nate: Is that We’ve done this

Matt: before. Yes. We’re like twinning too with our shirts and our hats.

Susan: It looks great. I can’t be from South Bend and Elkhart and not say

Nate: RVs. RVs. I love it. Oh,

Matt: It’s a mecca, but why is that? For the people that don’t know

Susan: Elkhart, Indiana is the RV capital of the world, which is very exciting. More RVs manufactured there than anywhere else in the United States. I had a friend who just got back from Australia and she said You would not believe the number of r Elkhart made RVs or in Australia right now, which is pretty cool to think about.

That is cool.

Nate: That is wild. To think that they roll off of the line or whatever in Elkhart and end up in Australia. It’s

Matt: amazing. Before it was cool too.

Susan: Before it was cool too. Side note, while we’re, this is, I’m taking us off our lightning round just for a quick second, but as we talk about things happening in Australia, I heard, I think it was Toph Day who told me that people don’t know that Notre Dame is in Indiana.

I know

Nate: no chance. Yeah. Yeah. No, I’m serious. I’m from like, I’m from in the area. I’m from just south of South Bend. Originally. Yeah. I’d be up by Notre Dame and they’re like, Oh, you’re from the East coast. No.

Susan: So we have to find a way to change that because when you think about Notre Dame and it’s convening power and the people who are coming through and what that looks like, it’s unbelievable.

So we need I did not go to Notre Dame. Same with Purdue Rose Holman, like all of these extraordinary institutions, but people don’t know. Yeah.

Matt: Let’s do it. We need a campaign. Yeah. Let’s get the marketing director or, VP of marketing from Notre Dame and Purdue and IU. And let’s just like workshop Hey, how do we get this out there?

Susan: Make sure people know them.

Nate: You didn’t say Ohio state cause there was a big, there was, Matt wasn’t, Matt’s not a sports guy, but there was a lot of Notre Dame. Beef recently, like two or three weeks ago after the Ohio state game, which was the craziest football game I’d ever seen one

Susan: heartbreaking.

I talked to a colleague on the Monday after the game. And I was like, how’d you feel about that? Like I mourned on Sunday. We’re not talking about it today. All right, and we’re moving on

Nate: The entire South Bend, Elkhart, Northern Indiana now even further hates Ohio State, and particularly Ryan Day, the coach of Ohio State, who called Lew Holtz out after the game.

Crazy. He’s because Lew Holtz, there was like some banter back and forth, and he’s Lew Holtz, what do you think about us? And everyone’s this poor old

Susan: man,

Nate: why are you coming at him?

Matt: This is crazy. This is definitely the longest lightning round. Oh yeah, absolutely. In the history of Get IN.

Nate: Yes. Back to it. What is a hidden gem in Indiana?

Susan: I can’t get over your synchronized movement, a hidden gem in Indiana. I’m going to go with Notre Dame again, right? On some level, we’re trying to take this out to the world.

Matt: What’s one hidden gem at Notre Dame?

Susan: Obviously people go to the grotto.

I think that is an important piece of it, which is the place where people go to pray. And it is very spiritual. And whether you are religious or not, it is just a sacred quiet place that I think means a lot to a lot of people. So I have adopted Notre Dame. I I went to Vanderbilt and Vanderbilt and Notre Dame have only played each other once in the entire time that we have lived in South Bend.

And we’re raising Notre Dame fans. my family moved to South Bend. So I’m all in this is good. So there was zero who am I going to cheer for? We went to the game. I wore my blue and gold or blue and green at that point.

Matt: I probably went to just as many Notre Dame games as I did Purdue games growing up.

And I grew up in West Lafayette.

Susan: Yes. Okay. So you know how this goes, but this was the important dinner table conversation that I said to my children which was. All you need to know is Vanderbilt is always one ahead academically. So as long as we know that dad went to Notre Dame we’re good.

Matt: That’s great. I love that. Grottoes is a great recommendation. I think there’s a, is there a scene in Rudy where he goes to?

Susan: There is a scene in Rudy.

Nate: Yes. I love that. All right. Next final question of the lightning round. Who is someone we need to keep on our radar? Someone who is doing big things.

Susan: There are so many people in our region right now who are doing big things. I would give a shout out to the folks at Ivanti, Maria Gibbs and Dustin Mix. They have a venture fund and they are caring about big problems in small cities and there’s a huge market there. So I think what they are doing is absolutely awesome.

I think what Iris Hamill is doing, I think what Bethany Hartley is doing. I’m going to make a plug for my husband, Scott Ford at Industry Labs and what Notre Dame is doing to connect the university and all of the manufacturing in town, I think is really interesting. I think the idea center is doing cool stuff.

I think I’m not going to not mention my partner Tracy Graham and how he is thinking about what we can do and change in our region. I could go on and on, but I love it.

Nate: That was a great answer. That’s like the Mount Rushmore of Northern Indiana right now. We got to put that was an awesome episode.

Great to get a little PE 101. Great to learn more about what’s going on in Northern Indiana and always, recap how the Irish are doing.

Matt: I particularly liked how to have tough conversations and be vulnerable as well.

Susan: My favorite. I can totally tell that. That’s awesome.

Matt: Thank you for coming

on the show.

This was amazing.

Susan: Thank you very much for having me. I love what you guys are doing and I feel very mission aligned as we continue to think about like how we keep talking about the Midwest. Thank you.

Matt: Thank you. This was great. This has been Get IN, a Powderkeg production in partnership with Elevate Ventures.

And we want to hear from you. If you have suggestions for a guest or segment, reach out to Matt or Nate on LinkedIn or on email to discover top tier tech companies outside of Silicon Valley in hubs like Indiana. Check out our newsletter at powderkeg. com. Slash newsletter. And to apply for membership to the powder, cake executive community, check out powderkeg.com/premium. We’ll catch you next time. And next week, as we continue to help the world get in, since you just listened to this podcast, you might be thinking about starting one for your company. Lucky for you, our partners over at Casted have you covered. Casted is the first and only podcast and video marketing platform made specifically for B2B brands.

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