Latest / The Inspired Stories Podcast / Jason Snider: How AI and Technology Are Transforming Private Equity Investment Strategies

Transcript

Jason Snider: How AI and Technology Are Transforming Private Equity Investment Strategies · The Inspired Stories Podcast

• 0:04
  Welcome to another edition of the Inspired Stories podcast,
• 0:08
  where leaders share their experiences so we can learn from
• 0:11
  their successes and be inspired by how they've overcome
• 0:14
  adversity. My name is Anthony Kotaspodi,
• 0:17
  and today's guest is Jason Snyder, partner and chief
• 0:21
  financial officer at Gage Capital.
• 0:23
  They are a private equity firm that specializes in investing in
• 0:27
  growth companies, helping them scale and achieve sustainable
• 0:31
  success. They've built a reputation for
• 0:34
  strategic partnerships and long term value creation.
• 0:37
  Now, Jason himself has LED numerous financial
• 0:41
  transformations throughout his career, including roles at
• 0:44
  Leslie Rudd Investment Company and TPG Capital, where he
• 0:48
  focused on organizational development and operational
• 0:51
  excellence. He previously served as senior
• 0:54
  manager at Ernst and Young, which shaped his focus on
• 0:58
  process efficiency. His background also spans media,
• 1:02
  entertainment, and oil and gas, giving him a broad perspective
• 1:06
  on how to navigate financial challenges.
• 1:09
  Now, today's episode will be a little bit different.
• 1:12
  We will be exploring the private equity industry as a whole and
• 1:16
  how it works. So we're going to use this as an
• 1:18
  opportunity to provide our listeners A venture capital,
• 1:22
  private equity one O one introduction where we explore
• 1:25
  the basics, discuss trends and get an understanding of where
• 1:29
  gauge Capital fits into the big picture.
• 1:33
  Now before we get into all that good stuff, today's episode is
• 1:35
  brought to you by my company, Add Back Benefits Agency, where
• 1:39
  we offer very specific and unique employee benefits that
• 1:43
  are both great for your team and fiscally optimized for your
• 1:46
  bottom line. One recent client was able to
• 1:48
  add over $900 per employee per year in extra cash flow by
• 1:53
  implementing one of our innovative programs.
• 1:56
  Results vary for each company and some organizations may not
• 1:59
  be eligible. To find out if your company
• 2:01
  qualifies, contact us today at Add Back benefits.com.
• 2:05
  All right, back to our guest today, the partner of Gauge
• 2:08
  Capital, Jason Snyder. Thanks for making the time to
• 2:10
  Share your story today. It's great to be here.
• 2:13
  Thanks for having me. So by the way, I'm not the
• 2:16
  partner, I'm a partner. So, OK, thank you for correcting
• 2:20
  my articles there. That is an important
• 2:22
  distinction. So before we get into sort of
• 2:26
  the one O 1 lesson, let's hear a little bit about your
• 2:30
  background. You started at Arthur Andersen.
• 2:33
  Can you tell me what drew you into accounting initially and
• 2:38
  then what happened when the firm went through its significant
• 2:41
  challenges? Yeah.
• 2:45
  So, so first of all, when I was in college, probably like a lot
• 2:49
  of kids, I didn't really know what I wanted to do.
• 2:53
  I was in the Business School, you know, was a very curious
• 2:57
  mind, was, you know, interested in political philosophy,
• 3:01
  interested in politics. But I was trying to find my way
• 3:05
  through the Business School and what I heard from a lot of my
• 3:09
  counselors and from some of my professors was accounting is the
• 3:14
  language of business. And so I thought, oh, OK, I'll
• 3:17
  go into accounting. So I went through the accounting
• 3:21
  track. I was good at it, got really
• 3:22
  good grades, got a chance for an internship.
• 3:27
  Doing a little bit of my internship and audit.
• 3:29
  I, I found out pretty quickly that I did not want to do audit.
• 3:33
  That was pretty clear pretty early on.
• 3:36
  I knew I didn't want to do audit.
• 3:38
  I knew I didn't want to do tax, so that led me down the
• 3:41
  consulting route. So somehow I kind of finagled my
• 3:44
  way into Arthur Andersen, into their business consulting
• 3:48
  practice and started there in 1999, which you know, as we all
• 3:53
  know is right before the whole Enron debacle with Arthur
• 3:57
  Andersen, which you alluded to. And yeah, it was an interesting
• 4:01
  time. I could tell you I we could do a
• 4:04
  whole podcast and all the interesting stories about that
• 4:06
  time. And the bottom line is, you
• 4:09
  know, luckily I was able to find another opportunity outside of
• 4:13
  Arthur Andersen. It's it's, you know, travesty.
• 4:17
  In my opinion, what happened to that firm is a great culture.
• 4:21
  We were doing a lot of good work.
• 4:23
  I could have seen myself, you know, growing up through Arthur
• 4:26
  Andersen, but it was. But I learned a lot, you know,
• 4:29
  from from that time and in my career.
• 4:32
  And, you know, I also learned a lot about just not taking
• 4:36
  certain things way too seriously because, I mean, whoever,
• 4:40
  whoever would have thought that Arthur Andersen would have gone
• 4:45
  under, right? And would have been indicted by
• 4:47
  the I. Mean.
• 4:47
  They were for, you know, younger folks who don't recognize the
• 4:50
  name. They were one of the big
• 4:51
  stalwarts, you know, they were a pillar.
• 4:54
  Absolutely. And that when I, when that
• 4:57
  happened, I was three years into my career.
• 4:59
  And so I'm thinking, gosh, what am I going to do?
• 5:02
  You know when what's my next job going to be?
• 5:05
  But everything turned out for, you know, a good reason.
• 5:08
  And here I am today so talking to you.
• 5:11
  Yeah. And so you did some IPO
• 5:14
  readiness work and got your first exposure to private equity
• 5:18
  in 2007 while you were Ernst and Young.
• 5:22
  What was it about private equity that really intrigued you and
• 5:25
  made you think, I like this, This is pretty fascinating.
• 5:28
  Yeah, it's a good question. So my dad, first of all, he was
• 5:35
  always an entrepreneur, which is how I ended up in Business
• 5:38
  School. And 'cause I was interested in
• 5:41
  business, I was interested in companies and the the products
• 5:46
  that companies make and just, you know, how they go to market
• 5:50
  and attract customers. And so I've always been
• 5:53
  interested in business from that perspective.
• 5:55
  I mean, United States, you know, it was built on a capitalist
• 5:59
  society. When I was at Arthur Andersen
• 6:03
  and even Ernst and Young, I always felt like I was on the
• 6:06
  outside looking in. You know, you're a consultant,
• 6:09
  you're helping businesses and you see a a very small piece of
• 6:14
  a business. And, but I always felt like, you
• 6:16
  know, I never had ownership and accountability for a business.
• 6:20
  And then, and I knew that when at some point I always wanted to
• 6:24
  own my own company, I was always talking about and thinking about
• 6:27
  what do I do kind of on my own? And so when I was at Ernst and
• 6:32
  Young and I had an opportunity to work with TPG and I'm sure
• 6:36
  you'll, you'll have some questions about my time at TPG,
• 6:40
  when I had a chance to work with TPG and learned about private
• 6:43
  equity. I mean, it's, it's like the
• 6:45
  world came together for me. I was like, wow, this is a
• 6:48
  really interesting business. Here is a firm that participates
• 6:54
  in the capital markets, you know, take gets capital from
• 6:58
  investors and invest it directly into companies and then gets to
• 7:02
  improve those companies and make them better and return capital
• 7:05
  to those investors. So I was just enamored by the by
• 7:08
  the business model, did a good job at Ernst and Young serving
• 7:14
  my client TPG and luckily got an offer to go to work at TPG and
• 7:19
  kind of really start my career in in private investing.
• 7:22
  So and. You were at TPG for 6 1/2 years
• 7:27
  before an opportunity came up to move to, of all places, Wichita,
• 7:32
  KS. That's right.
• 7:33
  Yeah, Yeah. What happened there?
• 7:36
  Yeah. So TPG was was awesome, 6-6
• 7:40
  years there. I knew that if I wanted to
• 7:45
  further my career, you know, be a CFO, be a COO, etcetera, it
• 7:50
  wasn't going to happen at TPG. Most likely big firm, a lot of
• 7:54
  competition for that, for that role.
• 7:57
  And so I got an, I got a call one day from a headhunter and
• 8:03
  they, you know, in most of the time I'm, you know, unless it's
• 8:06
  really something compelling, I just say thank you.
• 8:09
  You know, I'm, I'm happy with where I'm at.
• 8:12
  But we're learning a lot of TPG, very formal.
• 8:14
  Here's an awesome role. I, I was seeing the whole firm,
• 8:17
  you know, travelling all over the world is great.
• 8:20
  But this spec that came across from the Headhunter, it was for
• 8:26
  a family office in Wichita, KS. They owned winery assets, beer,
• 8:32
  wine, spirit, distributorships, a bunch of real estate, you
• 8:36
  know, roughly a billion of assets under management.
• 8:40
  It would give me, it would utilize a lot of my skills from
• 8:43
  TPG, but it would also give me business responsibility, like
• 8:46
  business operational operations responsibility.
• 8:50
  And yeah, it was, it was, it was one of those where it's like, Oh
• 8:55
  yeah, it's in Wichita, KS. Who cares?
• 8:56
  This is a great business, great opportunity.
• 9:00
  Talk to my wife about it. And, and we were off.
• 9:04
  We were, you know, we were all in Wichita.
• 9:07
  OK. So you were there for several
• 9:08
  years and then I think right around the time of the pandemic,
• 9:12
  maybe a little bit before you met the founders at Gage
• 9:16
  Capital. What happened there?
• 9:18
  Yep. So I'll try to make this short
• 9:23
  because it is a bit of a long story.
• 9:25
  One of one of my buddies from TPG that I worked with the TPG
• 9:29
  was the the tax partner on the gauge account.
• 9:35
  And he called me up one day and he said, hey, you know, are you
• 9:38
  ever looking to get back to Texas?
• 9:40
  I was like, heck yeah, I'm looking to get back to Texas
• 9:42
  someday. He's like, well, I may have the
• 9:45
  perfect opportunity if you're interested.
• 9:46
  And I was like, I don't know, I'm really happy, blah, blah,
• 9:49
  blah. And he's like, well, just why
• 9:53
  don't you just talk to him? And so I met, you know, one of
• 9:55
  the founders over the phone late 2019, Really hit it off.
• 10:00
  Just such a great guy. And then he introduced me to his
• 10:04
  partner, came into the office, talked to both of them.
• 10:08
  And it was a different flavor of private equity than what I was
• 10:14
  used to. I mean, just great, 2 great
• 10:18
  founders, humble individuals, mega smart.
• 10:23
  And it was an opportunity to really, I think, help scale the
• 10:27
  firm. I think they're on the second
• 10:29
  fund at that time. And again, it's one of those
• 10:34
  when opportunities come your way that that are obvious, you,
• 10:38
  it's, you don't say no to them. It's kind of funny I did one of
• 10:43
  the founders would give me crap because I did say no to him a
• 10:46
  couple of times just because it's hard to it's it's hard to
• 10:49
  leave where you are, But you know, at the end of the day, it
• 10:53
  was, you know, right for me and my family.
• 10:56
  So and it great firm, different breed of firm from my I think
• 11:00
  most private equity firm so you. Know different breed in that I
• 11:04
  mean, you mentioned obviously the founders are very bright, I
• 11:07
  think which you're going to find at most firms.
• 11:09
  But the the one thing you said that's that stuck out to me was
• 11:12
  very humble is, is that sort of the element of, you know, part
• 11:15
  of what makes it different there?
• 11:17
  Absolutely. I, I, I think you, you know, I
• 11:21
  don't want to generalize. I, I think that I, I have a
• 11:26
  personal belief that you can be really successful and, you know,
• 11:32
  really intense on the one hand and really humble and, you know,
• 11:37
  for lack of a better term, nice on the other hand.
• 11:39
  And those, those can mix because not all conversations, business
• 11:44
  conversations and negotiations have to be a conflict.
• 11:47
  You know, they can be working together.
• 11:50
  And I think that our firm and specifically, you know, because
• 11:53
  the firm is really kind of a reflection of the founders.
• 11:57
  I think our firm does that very well.
• 11:59
  And it starts, it starts with the two founders, but it does
• 12:03
  permeate throughout the culture. And, and, and when I joined,
• 12:06
  there were 20 people, roughly 20 people here.
• 12:10
  Now we have 70. And I think, I think we've done
• 12:13
  a really good job over the past five years of just grow kind of
• 12:18
  keeping that culture intact while, you know, while growing
• 12:22
  as, as rapidly as we have. So that's what I mean by a
• 12:26
  different breed, because the those are the things that as
• 12:29
  I've gotten older in life, you know, mean more to me as the
• 12:34
  people you work with, the culture that you work in,
• 12:37
  because the type of work you do can be a lot of the same from
• 12:41
  firm to firm or from place to place.
• 12:44
  And so it really does come down to to some of those intangibles.
• 12:48
  And I like what you said about how, you know, negotiations
• 12:50
  don't have to be a conflict. There have to be friction there.
• 12:54
  It's hey, how can we find middle ground that works for everybody
• 12:57
  here? Much, much better place to
• 12:59
  operate from. OK, So we got some good
• 13:02
  background. Now let's kind of move into the,
• 13:04
  you know, venture capital, private equity one O 1 lesson
• 13:08
  here. So whether we're talking about
• 13:10
  Angel investing, venture capital, private equity, other
• 13:14
  terms, I'm, I'm not remembering here what's the overall purpose
• 13:19
  of this? Yeah.
• 13:20
  So I, I, I think about venture capital and private equity is
• 13:24
  it's another set of markets. So you have your public markets
• 13:28
  that get capital to public companies that.
• 13:31
  Like the stock market? Yeah.
• 13:32
  On an exchange. As that New York Stock.
• 13:35
  Exchange exactly. So this I think about venture
• 13:38
  capital and private equity is just another set of markets to
• 13:42
  get capital from private investors to private companies.
• 13:47
  And those private companies are you know they span from your
• 13:54
  start up, your person in the garage that has an idea and
• 13:59
  needs some capital to make that idea happen.
• 14:01
  That's kind of more the venture capital side of things to
• 14:05
  private equity, which is, hey, I've got a business, it's got
• 14:08
  revenue, it's got profit. I, I've built this business and
• 14:14
  now I'm looking to get some liquidity for myself and for my
• 14:18
  family because I've worked the past 20 years trying to grow
• 14:22
  this business. And so now there's a, there's a
• 14:26
  set of markets, you know, firms, etcetera, that will raise
• 14:30
  capital from investors and invest in these businesses, take
• 14:35
  either minority or majority state positions in these
• 14:40
  business businesses with the intent of growing those
• 14:43
  businesses, getting your return and returning that back to to
• 14:48
  investors. And we can get into, you know,
• 14:50
  all the new, there's a lot of nuance there, but just trying to
• 14:53
  simplify, simplify it in my mind, BC and PE is really just a
• 14:58
  set of markets to get capital from those who have it to those
• 15:02
  who need it to grow or build their business.
• 15:05
  So a possible chronology could be Angel investing, which is
• 15:10
  sort of more like a friends and family kind of a thing, just
• 15:12
  trying to get this thing off the ground.
• 15:14
  Then venture capital, you got maybe a little bit something
• 15:17
  here, a little bit momentum. And then private equity is for
• 15:19
  companies have been around a bit longer, they're a bit more
• 15:22
  established. And so those would kind of be
• 15:24
  the different stages of this to think about.
• 15:27
  Yep, that that's that's how I think about it.
• 15:29
  And you know, each of those, each of those stages, if you
• 15:32
  will have interim stages. So like you mentioned Angel
• 15:35
  investing, well, you know, you have some venture capital firms
• 15:38
  that will only invest at the very beginning of a company, you
• 15:42
  know, pre revenue or just, you know, barely any revenue at all,
• 15:45
  you know, kind of a call it a Series A not to get too
• 15:48
  technical. You have other venture capital
• 15:50
  firms that consider themselves more growth equity or growth
• 15:55
  investors and they're investing in kind of series C or a series
• 15:59
  D. And then you've got private
• 16:01
  equity, which I think about. I mean, VC in my mind is kind of
• 16:04
  a version of private equity, but kind of core private equity
• 16:07
  being, hey, you know, here's a group of founders or other firms
• 16:12
  that are now looking to get liquidity.
• 16:14
  They've scaled this company to a certain size, a certain amount
• 16:18
  of profit and they're looking to get some liquidity and we think
• 16:21
  we can take it even higher with some of our expertise and
• 16:26
  knowledge and in background. And and so I really do think
• 16:30
  about it kind of in those stages and.
• 16:33
  When you talk about getting liquidity, you just mean like
• 16:36
  being able to take some cash and put it in your pocket.
• 16:38
  Hey, I put a lot into building this business.
• 16:41
  I want to take some cash from this.
• 16:43
  That cash would come from the investors who come and, you
• 16:45
  know, take some equity, though. That's right.
• 16:47
  I mean, again, I, I know this is simplification, but for your
• 16:52
  audience, you know, for those who are not well versed, I think
• 16:55
  about your mom paw business, you know, whatever it is, a couple
• 16:59
  that created a business together, they've grown it,
• 17:03
  they've held it for 20-30 years. It's been a great source of
• 17:06
  income for them. It's really helped to build
• 17:09
  their own personal wealth, the wealth of their family.
• 17:12
  But you know, they've got a lot of their own equity in that
• 17:16
  business, just like you'd have equity in a house.
• 17:19
  And at some point that mom paw they want to retire, right?
• 17:23
  They're in their 60s, seventies, they're ready to spend more time
• 17:27
  with their grandchildren, whatever, and they're ready to
• 17:29
  retire and they need liquidity to do that.
• 17:33
  Private equity is a great source for that kind of capital.
• 17:39
  And this kind of is a good lead into my next question, which is
• 17:41
  what kinds of companies, whether it's VC or PE are, are they
• 17:46
  looking to invest in their particular industries, sizes,
• 17:50
  profitability levels? We, we could probably be here
• 17:54
  all day listing every single type.
• 17:56
  I mean, it, it really, it really spans everything.
• 17:59
  You know, you, you talk about hospitals owned by private
• 18:02
  equity. Doctors offices are owned by
• 18:04
  private equity. Your vet, your local
• 18:06
  veterinarian may be owned by private equity.
• 18:09
  Your, you know, the food that you have in your fridge.
• 18:13
  You know your protein powders that you put in to your drinks
• 18:17
  may be owned by private equity. Any kind of business.
• 18:20
  Yeah, your apartment complex could be owned by private
• 18:23
  equity. The office that you're in right
• 18:25
  now could be owned by private equity.
• 18:27
  I mean, it really spans, I mean even the toll road that you're
• 18:31
  you're driving on could be owned by private equity.
• 18:33
  It really, I, I've not looked at the, the number recently, but I
• 18:37
  think private equity owns, you know, or controls roughly 7 to
• 18:42
  10% of the of GDP, you know, So it's, it's pretty ubiquitous.
• 18:49
  And what are some of the, let's kind of take the dark turn for
• 18:55
  just a second. What are some of the
• 18:56
  misconceptions that people have about this space?
• 19:00
  You know, sometimes you just kind of see a villain narrative
• 19:03
  being portrayed in the media. What what's that about?
• 19:06
  Where does that come from? Yeah, well, it may have.
• 19:09
  It may have originated with with Pretty Woman, with Richard Gere.
• 19:15
  If you ever saw that movie with I, I don't know the age of your
• 19:19
  listeners, but I love. It it'll go over the heads of
• 19:22
  some folks for sure, but that's all right.
• 19:23
  Yeah, well, so people should go watch it.
• 19:25
  It's a good, it's a good movie. I'm sure they'll do a remake at
• 19:27
  some point. But I mean, if you think back to
• 19:32
  that character, it's kind of the image I have in my head that I,
• 19:36
  I think a lot of people have about private equity, which is
• 19:39
  this cold hearted doesn't care about anybody around him.
• 19:42
  All he cares about money, you know, goes and invests in
• 19:45
  companies and his intention is to just go break the company up
• 19:48
  and sell off the pieces and take everything for himself and then
• 19:51
  move on and do that to the next company.
• 19:53
  I, I think that there's a general stigma in a lot of it's
• 19:57
  fueled by articles. You know, there's the Toys-R-Us
• 20:01
  debacle. Several years ago, but it just
• 20:05
  like anything in life, it's probably, you know, there's a
• 20:07
  lot of noise fueled by a few cases that that drown out, you
• 20:14
  know, the the good. And and so I do think that PE to
• 20:19
  some degree has been vilified in media and you know in movies
• 20:24
  etcetera to some degree. But at the end of the day, like
• 20:28
  it own private equity investors. And by the way, those investors
• 20:33
  are firefighters, you know or pensions that have firefighters
• 20:37
  as their recipients and teachers, doctors, policemen,
• 20:43
  etcetera as as their recipients who are ultimately the
• 20:47
  investors. These private equity firms are
• 20:50
  investing in companies that we use their products every day and
• 20:55
  and serve a really important, like I said, very important kind
• 21:00
  of part of the economy of the world and capital markets of the
• 21:05
  world so. So the vast majority of private
• 21:08
  equity is not learn not not yearning to do the Richard Gere
• 21:13
  thing where they, you know, break it down into parts, sell
• 21:17
  it off and, you know, there's nothing sort of left of what
• 21:20
  they started with. They're they're trying to add
• 21:22
  value. What is that process of adding
• 21:25
  value look like? How does a private equity firm
• 21:28
  or venture capital money add value to a company?
• 21:32
  Yeah, that, that, that's a great question.
• 21:34
  It's, it's multifaceted. I, I'd say the, the 1st place
• 21:39
  obviously is, you know, capital. Capital is helpful for companies
• 21:45
  in terms of growth. You know, you got to have
• 21:47
  capital to grow. And if you don't have that
• 21:49
  capital, it's hard to grow. So that's the first place I'd
• 21:51
  start. But but once a private equity
• 21:54
  firm is involved, there's a lot of places that it can add value
• 21:58
  typically, especially whenever you talk about different, the
• 22:02
  different kind of market steps in the market.
• 22:07
  So I'm talking about lower middle market or middle market,
• 22:09
  which is smaller companies versus really large companies.
• 22:13
  These smaller companies perhaps may not have a lot of
• 22:16
  infrastructure. So private equity firms end a
• 22:19
  lot of lend a lot of know how you know, how do you how do you
• 22:22
  scale up? How do you build a management
• 22:24
  team? How do you select the right kind
• 22:26
  of talent to take this from AX revenue company to AY revenue
• 22:31
  company? We can do that because we have a
• 22:35
  lot of reps doing it with other companies.
• 22:38
  We can do that because we have networks of of what we call what
• 22:45
  the industry may call operating partners or really what these
• 22:48
  are just experts in specific fields like marketing or finance
• 22:54
  or data and analytics, you know, whatever it may be.
• 22:59
  But bring bringing that kind of knowledge to bear with firms
• 23:03
  that have never or companies that have never had that kind of
• 23:06
  expertise is really where a lot of value gets added.
• 23:09
  So a lot of the operational experience that you have, the
• 23:13
  network partners that you can sort of bring in, it's not just
• 23:16
  the cash, it's how to do things at the next level that maybe the
• 23:20
  company doesn't have sort of the the infrastructure in place or
• 23:24
  the experience to kind of do themselves.
• 23:26
  Yeah, I, I liken it to, you know, a, a good marriage, right?
• 23:30
  And I'm sure we'll come back to it and you'll hear a theme for
• 23:34
  me, it's all about partnership. And I think, you know,
• 23:37
  especially for my firm Gage it, it's really about it's about
• 23:42
  partnership. And that is, you know, like in a
• 23:45
  good marriage, you've got a good, you've got skills and you
• 23:48
  got a personality, etcetera. And you want to marry someone
• 23:52
  who just makes you better because they have a different
• 23:54
  outlook on life or a different perspective on things and you
• 23:58
  collaborate. I look at it the same way as is
• 24:02
  that, you know, private equity is just a partner that comes to
• 24:06
  the table and works with you and the intent is to make you better
• 24:09
  by giving you new skills, new perspectives on on how to grow
• 24:14
  your business. So I'm sure that there's tons of
• 24:18
  ways to do this, lots of nuances, but what's the typical
• 24:23
  structure of a fund look like? Yeah.
• 24:27
  So I'll try not to get into the weeds.
• 24:30
  I'll start at the highest level. So first of all, at a private
• 24:33
  equity firm, you have a general partner.
• 24:35
  You'll hear the term GPA lot or sponsor or manager.
• 24:40
  There's the general partner. The general partner is the firm.
• 24:43
  So Gage is general partner and we, we make the decisions.
• 24:49
  We decide what, you know, we want to invest in.
• 24:52
  We, well, we raise capital, we decide what we want to invest
• 24:56
  in. We, we decide, you know, when's
• 25:00
  the right time to exit, what kind of services needs to be
• 25:03
  brought to bear to improve this business.
• 25:07
  But as a general partner, we have kind of unlimited risk,
• 25:10
  right? You know, if there's lawsuits,
• 25:11
  whatever, you know, God forbid, you know, you have kind of
• 25:15
  unlimited risk or unlimited at risk, then you've got the
• 25:21
  limited partner or LP. You know, you'll hear that,
• 25:24
  people hear that term a lot. You have the limited partner,
• 25:27
  which is saying here's my capital, I want to put it into a
• 25:30
  fund and then I expect some level of return over time.
• 25:36
  But I'm giving you this capital now.
• 25:39
  It's drawn down over a period of time, but I'm giving you this
• 25:42
  capital so you can make good decisions with it, buy
• 25:45
  businesses, fix them up and then sell them and then I'll get a
• 25:48
  return from that. So that's where it starts with
• 25:51
  the general partner and the limited partner.
• 25:54
  At that point it can get quite complicated.
• 25:58
  But generally speaking, the limited partner is going to pay
• 26:01
  a management fee to the general partner.
• 26:03
  That's typically 2%. That can vary.
• 26:08
  And then if the GP, the general partner does their job well and
• 26:12
  actually has good returns, then they're going to get a cut of
• 26:16
  the profits of the fund. And that that's called carried
• 26:20
  interest, which I'm sure a lot of people have heard about in
• 26:23
  the media. And that typically is 20%.
• 26:28
  So you make $100.00 of profit, the GP would take 20 and then
• 26:34
  the limited partner would take 80.
• 26:37
  So that's the very basics. We could, we could do a whole
• 26:41
  podcast on structuring funds and all that.
• 26:44
  It's a real fun conversation, but that's the basics.
• 26:47
  And so when you're raising money for a fund and somebody says,
• 26:53
  hey, I, I want to put money in that, I like what you're doing.
• 26:56
  Are they giving you the money all at once, or is it a
• 26:59
  commitment to give you money as you need it?
• 27:01
  Yeah, it's that's a great question.
• 27:04
  It probably wasn't clear. Typically these are what we call
• 27:07
  draw down structures, which means they make a commitment,
• 27:10
  the LP will commit, so they may commit.
• 27:13
  I'm making this up $1,000,000 and they say I'm going to commit
• 27:17
  this to you for 10 years, right? And typically we can get into it
• 27:23
  because things are changing, but typically a fun life, maybe 10
• 27:27
  years. And the investment period is the
• 27:30
  first five years and then the quote UN quote, harvest period,
• 27:33
  the selling period is the last five years of that 10 years.
• 27:37
  And so the LP will say, I'm, I'll commit 1,000,000 bucks.
• 27:40
  And then what you'll do is as you make investments as the GP,
• 27:44
  you will call that capital from the LP and then invest that
• 27:49
  capital into the businesses that that you're investing in.
• 27:53
  And how often do you have trouble actually getting the
• 27:55
  cash? Well, I, I'm, I'm, I can't speak
• 28:00
  for every private equity firm. I can speak for Gage and it's
• 28:02
  not often if ever. So because these are firm, these
• 28:07
  are firm commitments. You know, the LP is signing
• 28:11
  what's called a subscription agreement when when they sign on
• 28:15
  and they make a commitment, they're signing a legal document
• 28:18
  that says here's the terms of the partnership.
• 28:21
  And we are making a commitment of of $1,000,000 and we have an
• 28:26
  obligation to fund that whenever, whenever you call it.
• 28:31
  So can anyone become an investor?
• 28:34
  Yeah, it's a, it's a big question and it's a, it's a very
• 28:39
  question. I'd say generally yes.
• 28:42
  But you know, for example, and I can only speak for the firm that
• 28:47
  that I work at work for Gage here, we we only allow what's
• 28:53
  called qualified purchasers into our funds, which means you have
• 28:58
  to have a certain level of net worth.
• 29:00
  Now there are a lot of firms that are starting to, for lack
• 29:05
  of a better term, kind of democratize, you know, their
• 29:09
  investment base and they're they're going more for the high
• 29:15
  net worth individual that does not, that does not meet that
• 29:18
  qualified purchaser level. And so these could be
• 29:22
  individuals that are clients of a private bank and you know,
• 29:26
  they, they are interested in private equity and that bank may
• 29:32
  pull together a bunch of those kind of investors and invest in
• 29:35
  private equity. So there's a lot more
• 29:38
  individuals that are coming to the table to invest in private
• 29:41
  equity. It's becoming a lot more common
• 29:44
  than even five years ago, which was very much so the large,
• 29:48
  large institutions are very ultra wealthy individuals in
• 29:53
  this country or in the world so. Once you invest in a company,
• 29:57
  what is the dynamic like between you and them?
• 30:02
  Us and. And the portfolio company?
• 30:05
  Oh, and the portfolio company, yeah, yeah, it's a, it's a good
• 30:09
  question. I, I think the ultimate answer
• 30:12
  is it depends. It depends on if the portfolio
• 30:15
  company needs a lot of assistance.
• 30:18
  If it needs a lot of assistance, then I think the dynamic is very
• 30:21
  frequent touch points. It could be more time on the
• 30:24
  ground, it could be a lot more operational calls with the CEO
• 30:28
  just making sure that things are staying on track.
• 30:32
  If it also could depend on, you know, there are cases where the
• 30:38
  management team is in flux, right?
• 30:40
  You know, new management team members are coming in, some are
• 30:44
  exiting. You know, it all depends.
• 30:47
  There could be on the other end of the spectrum those, those
• 30:50
  perfect situations where you have a portfolio company, you
• 30:54
  invest in it, the management teams in place from day one,
• 30:59
  everybody knows what they need to do.
• 31:01
  And then it becomes just a quarterly cadence with the
• 31:03
  board, with the, with the board and so or somewhere in between
• 31:08
  those those 2 ends. It's a spectrum like everything
• 31:11
  else in my. Right.
• 31:12
  And then what is the involvement, if any, from the
• 31:15
  limited partner? Are you just kind of giving them
• 31:17
  updates or do they ever get involved in sort of looking
• 31:20
  under the hood? What's going on?
• 31:23
  That is a really, really good and a really interesting
• 31:25
  question because there's some LP's, some limited partners that
• 31:29
  have specific expertise that you may call occasionally and and
• 31:33
  say, hey, this is an issue we're dealing with with this portfolio
• 31:36
  company, etcetera, etcetera. You may pick their brain.
• 31:38
  I'd I'd say that occasionally happens.
• 31:41
  It doesn't happen a ton. Generally speaking, we will do
• 31:47
  what's called an annual general meeting or an LP conference or a
• 31:50
  limited partner conference and that's, that typically happens
• 31:54
  once a year. And it is, it is, you know, it's
• 31:58
  a production, you typically, it's typically 4 to 6, maybe
• 32:02
  even 8 hours and you sit down with your LP's in a big room and
• 32:06
  you go through every single company, you go through the
• 32:10
  performance of the funds, you tell them how, how much capital
• 32:13
  they've put in and how much have they gotten back, how's the fund
• 32:16
  performing? What's the outlook look like for
• 32:18
  each of the portfolio companies? So it is a deep dive into kind
• 32:23
  of what's going on with their investment and then they get
• 32:26
  quarterly reporting as well, you know, financial statements, an
• 32:30
  update on what's going on in the portfolio companies, perhaps
• 32:33
  like even a note from the founders about just general
• 32:37
  market commentary, that kind of thing.
• 32:40
  How long do private equity firms typically hold on to their
• 32:46
  equity in a company? Is there a traditional sort of
• 32:48
  turn around cycle? Yeah, I, I'd say on average it's
• 32:52
  probably 4 or 5-6 years. I, I think I've looked at this
• 32:57
  data before. I, I, it changes, right.
• 33:01
  So I think the actual average across all private equity across
• 33:04
  the world is around 5, five and a half years, honestly.
• 33:08
  But you're going to have situations where you have a
• 33:10
  three-year hold probably on the shorter end, two or three years
• 33:14
  on the logger end, you could hold a company for, you know,
• 33:17
  years and years and years. There are some funds and and we
• 33:21
  can get into it. There are some funds, private
• 33:23
  equity funds that don't have a 10 year life, but may have a 30
• 33:26
  year life or maybe even Evergreen.
• 33:30
  And their intention is to hold onto a business as long as they
• 33:33
  can, as long as it's cash flowing.
• 33:35
  And would there be an example of that kind of a firm that folks
• 33:39
  might be familiar with? So the one that I mean comes to
• 33:44
  mind that I'm always like kind of following, I don't, I don't
• 33:47
  know them, but permanent equity out of Missouri, I think their
• 33:52
  fun lives are around 29 or 30 years if I'm not mistaken.
• 33:56
  And I don't know if they've ever sold a portfolio company.
• 34:00
  Their their mindset is much more kind of the Warren Buffett
• 34:04
  mindset, which is make an investment and hold it as long
• 34:07
  as you as long as you can in doing Evergreen structures.
• 34:12
  Again, not to get too technical or complicated, doing an
• 34:15
  Evergreen structure, which is essentially no fun.
• 34:18
  Life does get a little complicated because you got to
• 34:21
  figure out how to get LP's in and LP's out and, and all that.
• 34:26
  So. When it comes to actually
• 34:30
  raising the funds, marketing it, for lack of a better word, how
• 34:35
  do you go about doing that and are there any restrictions on
• 34:38
  what you're allowed to do or say?
• 34:41
  Yeah, Yeah. Another great question.
• 34:45
  So how we go about it? We there's a, there's a couple
• 34:51
  ways. I'll, I'll go down kind of two
• 34:53
  paths. Some firms will use what's
• 34:56
  called placement agents and these are, these are firms that
• 35:01
  have very good connection points to limited partners and they
• 35:05
  know what the market is and they know what limited partners are
• 35:08
  looking for. And they will go market to, to a
• 35:11
  group of limited partners to get them into the fund for
• 35:15
  fundraising purposes. Some, some firms have an
• 35:19
  investor relations or maybe not even investor relations.
• 35:24
  They, they do it themselves, but they've got their own network of
• 35:27
  LP's, whether they're LP's in one of their funds or LP's that
• 35:32
  have just expressed interest. So whenever, you know,
• 35:36
  fundraising commences, if you will, they'll reach out to that
• 35:39
  group and, and hopefully they're actually keeping in touch with
• 35:42
  those with that group even before they get into the
• 35:45
  marketing period. But they'll reach out to those,
• 35:48
  those potential LP's and LP's and just say, hey, we're raising
• 35:52
  a fund. Here's the terms of the fund.
• 35:54
  Are you interested? How much do you want to commit?
• 35:56
  And then, you know, they'll, they'll go about getting the
• 36:00
  commitments, the subscription agreements all signed up,
• 36:03
  etcetera. So that's generally how it
• 36:06
  happens. Now you asked about rules and
• 36:10
  yeah, there's a lot of rules. The the the Securities and
• 36:13
  Exchange Commission likes to put rules and and you know,
• 36:16
  rightfully so, you know we. Even though this isn't a
• 36:19
  publicly traded the entity that we're talking about, they still
• 36:22
  have jurisdiction over this, OK? Yeah, Yeah, that's right.
• 36:25
  So the, the SEC does have jurisdiction over private
• 36:28
  equity. I think about it as you know
• 36:31
  there there's a lot of regulations around public,
• 36:34
  publicly traded businesses. There's a timeline by which they
• 36:38
  can report information. There's the management of
• 36:41
  material non public information and how that gets, you know,
• 36:46
  disclosed out to the masses. There's analysts calls there.
• 36:50
  There's a lot of process around that.
• 36:52
  On the private equity side, there's a lot less process.
• 36:55
  And so you can think about the regulation on private funds is
• 37:01
  being to making sure that the investors in private funds have
• 37:07
  the information that they need to make a good educated
• 37:10
  decision. And so there's a lot of rules
• 37:13
  around how information's disclosed, how you calculate
• 37:18
  track record. And, you know, so that you want
• 37:21
  to make sure you always have support for your track record
• 37:24
  because ultimately that's, that's what investors are buying
• 37:28
  is a good track record, But it's really about making sure that
• 37:32
  what you're telling an, an investor or an LP is actually
• 37:36
  what you're doing. So I just as an example, it may
• 37:40
  be a lame example, but I think it's fairly, you know, I think
• 37:43
  it resonate with a lot of your, your listeners.
• 37:46
  If I tell our LP's, hey, we've discovered the secret of using
• 37:53
  artificial intelligence and it helps us make better investment
• 37:57
  decisions and we think we have an edge in the market.
• 38:00
  And then it come to find out, well, hey, we're, we're just
• 38:04
  using ChatGPT and asking what investments we should, we should
• 38:07
  be investing in. That's a real problem, right,
• 38:11
  'cause that's like a lie if you will, or misinformation, not to
• 38:15
  your LP base that it's those kind of things that the SEC
• 38:19
  wants to prevent from happening. Let's talk about maybe some
• 38:24
  trends that you're seeing. What what do you see kind of
• 38:27
  shaping the world of private capital today?
• 38:31
  Yeah, good question. So I there's a couple things,
• 38:36
  maybe three things that I would lay out.
• 38:38
  One is we touched on it and that is just there, there's a, the
• 38:42
  aperture is opening for more participation in private equity.
• 38:49
  So you're seeing funds that are raising capital for, you know,
• 38:54
  quote UN quote retail investors, not your ultra high net worth
• 38:57
  individuals or institutions, but the aperture is opening for
• 39:00
  other investors to come into private equity.
• 39:03
  So that's changing the game a bit.
• 39:05
  It's just a different source of capital, which we can talk
• 39:07
  about. So that's number one.
• 39:09
  I, I think #2 is private equity is, has been known to be an
• 39:17
  illiquid asset. So whenever you sign up, you're
• 39:19
  committing for 10 to 13 to 15 years.
• 39:22
  And like the case we talked about 30 years, the secondary's
• 39:26
  market is really coming on board.
• 39:30
  The, the, there are funds that are raising capital to buy LP's
• 39:35
  out of, of private equity funds and venture capital funds.
• 39:41
  And so there's a very robust set of capital markets for already
• 39:46
  existing LP interest. And so that's generating another
• 39:50
  layer of liquidity, if you will, in the market.
• 39:54
  So there's so there's more liquidity there for investors.
• 39:59
  So that's number two. And then I'd say #3.
• 40:02
  Which you can't get around anymore.
• 40:04
  And that's just technology. Technology.
• 40:08
  I think we're on the cusp of seeing some major shifts happen,
• 40:12
  happening for investors in how you process information using
• 40:19
  data analytics, which already existed, but also putting on top
• 40:22
  of that artificial intelligence. Can you say more about that?
• 40:26
  What is, I mean, you know, you sort of made the joke about
• 40:29
  using ChatGPT when you sort of, you know, had boasted about
• 40:33
  having a much more sophisticated thing.
• 40:34
  But I could see, you know, feeding some spreadsheets or
• 40:37
  some data in the ChatGPT and saying, hey, what do you think
• 40:40
  of this deal? But I don't think that's what
• 40:42
  you're talking about. Well, so that actually, you
• 40:46
  know, that's a good example. I I think that I wish I could
• 40:51
  sit here and I could tell you this is how AI is going to
• 40:53
  change the game. All I can tell you is like, you
• 40:56
  know, when the Internet came online, like we all sat there
• 41:00
  and we're like, wow, this is really cool.
• 41:02
  I can buy a book and it gets delivered in two days on my
• 41:07
  doorstep. That's really cool.
• 41:09
  But we couldn't sit there at the time and say, this is going to
• 41:12
  change the world, right? It was just kind of a cool
• 41:14
  thing. I think the same thing's
• 41:16
  happening with AI. What you just described is, you
• 41:20
  know what a lot of firms and including gauge we're doing a
• 41:24
  little bit of and that is we're using some of these these what
• 41:29
  perplexity and ChatGPT and we are putting information in to
• 41:33
  try to just get another perspective around a market
• 41:37
  around perhaps, you know, just another perspective on a deal
• 41:43
  that we may be looking at. It's just, again, it's just
• 41:46
  another Ave. into the world that we can kind of draw from to help
• 41:53
  inform our own decision process. But I think it's going to be
• 41:57
  even more fundamental than that. I, I think over time you'll
• 42:01
  have, so whenever you do a deal, you have what, what's called a
• 42:05
  SIM or a confidential information memorandum come in
• 42:09
  that you review on a particular investment opportunity.
• 42:13
  Artificial intelligence can already take that summarize it.
• 42:18
  You can build and filters for, you know, what is a deal that we
• 42:22
  want to look at, It'll run those filters against it and say, this
• 42:26
  is, this is a yes, this is a no or this is a maybe.
• 42:30
  And then right there you can, you're already being more
• 42:33
  productive, productive on the number of memos that you can
• 42:37
  review in a given year or a given day or a given month.
• 42:41
  You can just process a lot more data.
• 42:42
  Look. At a lot more deals get to an
• 42:45
  answer more. Quickly.
• 42:46
  And and that's kind of. You know, that's kind of table
• 42:49
  stakes, kind of the obvious. The the question is, is what's
• 42:53
  not so obvious? Like what, what is still yet to
• 42:55
  be discovered using these technologies 'cause I it, it is
• 43:01
  going to change the game. It's already changed the game.
• 43:03
  I mean, ChatGPT came online what, a couple years ago, almost
• 43:06
  three years ago and now you've got all kinds of LLMS out there.
• 43:12
  We've started experimenting with them here a couple of months
• 43:15
  ago. We're actively engaging with a,
• 43:20
  a variety of of vendors to help us get better and think more
• 43:25
  holistically about how to consolidate our data and and
• 43:30
  better use technology to help us process that data faster,
• 43:35
  better, you know, more efficiently.
• 43:37
  So, and, and it's not a, it's not a person reduction game.
• 43:42
  It it's a how do you repurpose people to make them even more
• 43:45
  value add Do the. Stuff that the large language
• 43:49
  models can't do. That's right, Jason.
• 43:52
  You talked about opening the aperture, basically, you know,
• 43:56
  giving access to more people who now have the opportunity to
• 44:00
  invest. Yeah.
• 44:01
  Is this good? Is this bad?
• 44:03
  Is there a risk to this? What do you think?
• 44:07
  Yeah, it's anytime you ask me a good, bad question, you're not
• 44:11
  going to get a good, bad answer because I I don't, I don't
• 44:14
  operate very well on binary, but but I'll give you, I'll give you
• 44:19
  the Jason Snyder perspective. I I don't know if it's good or
• 44:23
  bad. I think it's great for investors
• 44:27
  that have never had access to private equity.
• 44:29
  I think private equity is a great asset to own.
• 44:32
  And I think that there's there's more individuals that have not
• 44:37
  had access that should have access.
• 44:39
  So that's number one I'd say. So I think it's great.
• 44:42
  I think as a private equity firm, I think it can be really
• 44:47
  good because it gives you another source of capital.
• 44:50
  But on the flip side of that, you've got a lot more investors.
• 44:55
  And some of those investors, you know, you're talking about, if
• 45:00
  they're investing in your firm, you don't know how much of their
• 45:03
  overall net worth is at stake, right?
• 45:05
  And so I, I think the stakes go up even more because if, if
• 45:11
  you've got a family that has a net worth of $1,000,000 and they
• 45:15
  put a 10th, a 10th of that into private equity and all of a
• 45:19
  sudden, you know, they're underwater, somebody loses their
• 45:22
  job and they need that money back.
• 45:24
  They can't get it back. It's illiquid, most likely,
• 45:27
  depending on the structure, I think.
• 45:30
  I think we just got to be mindful of those things and make
• 45:32
  sure that those retail investors are fully educated as to what
• 45:37
  they're getting into. And then on the other side, not
• 45:41
  to get into all the detail, but you know, there's a lot of work
• 45:44
  involved. You know, private equity, it's,
• 45:48
  you know, it's you, you've got a lot of it, it the back office
• 45:53
  processing and all that gets very complicated.
• 45:56
  The more investors and the more unique investors you add, it
• 45:59
  just makes it a little bit more complicated and especially if
• 46:01
  they don't have a lot of. Experience being investors,
• 46:06
  there can be a lot more hand holding, a lot more question
• 46:08
  than answering. That's a great point, yes.
• 46:10
  Absolutely. So we've, we've not gone that
• 46:12
  direction yet. So I don't have a lot of direct
• 46:14
  experience with it, but you never know, right.
• 46:18
  There's a lot of firms that are starting to kind of to, you
• 46:21
  know, to, to use the word open the aperture are starting to
• 46:24
  open the aperture for those kind of investors from where you sit,
• 46:28
  Jason are. There particular industries or
• 46:31
  business models that are more appealing to you than they were
• 46:34
  say five years ago. Yeah.
• 46:39
  I mean, I, I think technology, it's hard to say more appealing,
• 46:43
  but I think it's more interesting and you've got to be
• 46:46
  more discerning. Technology comes to mind.
• 46:49
  The other area that comes to mind is residential services,
• 46:53
  right? Residential services are very
• 46:55
  interesting. You know, I think generally
• 46:58
  speaking, overtime families are growing their wealth.
• 47:04
  They want to spend more time, you know, amongst the family,
• 47:07
  which means they're outsourcing more and more of their lives,
• 47:11
  whether that's lawn mowing, whether that's repair of the the
• 47:16
  home, what you know, whatever it may be.
• 47:20
  So I think that's a really interesting, you know, side of,
• 47:25
  of what's going on and the direction we're going.
• 47:29
  Residential services. I, I still come back to I, I
• 47:32
  like, I don't know if it's the right term, but kind of these
• 47:37
  boring businesses. I, I'm talking about me, I'm not
• 47:40
  talking about Gage, although we do invest in some of these, but
• 47:44
  I like these boring businesses, the businesses that just won't
• 47:46
  go away. They're services business, you
• 47:49
  know, you always need office cleaning.
• 47:52
  You know that you'll always need doctors and veterinarians and
• 47:58
  you'll you'll always need to put, you know, proteins into
• 48:01
  your body. I mean, these are, these are
• 48:03
  businesses that aren't like super you.
• 48:08
  You don't find them in the media every They're not sexy, but
• 48:11
  everybody needs them. Everybody uses them.
• 48:13
  That's right. I I think there's.
• 48:14
  A lot to be said about those businesses because they're not
• 48:17
  going away. In fact, they're probably
• 48:19
  growing even more because the society gets wealthier and
• 48:24
  wealthier and we need more, more and more of those kind of
• 48:27
  businesses. So how would you describe?
• 48:30
  Gauges, gauge capitals place in in this entire landscape.
• 48:37
  Yeah. So I.
• 48:38
  I'd say we're generally US focused.
• 48:42
  So not to say that we don't invest in some foreign
• 48:46
  countries. We, we, we have and we will
• 48:49
  continue to do so. But generally speaking, we look
• 48:52
  at US businesses. Generally speaking, we are in
• 48:57
  what we call the lower middle market, which is we we're
• 49:00
  looking at smaller businesses. Now some of your audience may
• 49:04
  say, wow, that's not small, but you know, we're talking about a
• 49:07
  hundred, 150, two $100 million, you know, enterprise value
• 49:11
  businesses. So they they may have 5 million
• 49:15
  of EBITDA to 15 or 20 million of EBITDA.
• 49:20
  Those are the kind of businesses that we're generally looking at.
• 49:25
  We do look at businesses kind of across the economy.
• 49:30
  So you talk about healthcare businesses, you talk about
• 49:35
  government or industrial or transportation businesses, we
• 49:39
  talked about business services. We'll look at business services
• 49:42
  businesses or technology businesses.
• 49:45
  We look at food businesses and consumer products.
• 49:47
  So I mean we cover a pretty broad swath of of the economy.
• 49:54
  So that's that's really kind of our focus.
• 49:56
  What are you looking? For in a founder, yeah.
• 50:03
  That that's a excellent question and ultimately comes back to
• 50:08
  what I said earlier. I'd say partnership.
• 50:11
  You know, we want, we want a founder who we believe is also
• 50:16
  going to be a good partner. Now, what is a good partner?
• 50:21
  You know, again, I, I think about it as a marriage, right?
• 50:23
  You've got a marriage of two individuals or Gage and another
• 50:27
  individual or group of individuals that just have to
• 50:30
  work together. They have to be transparent with
• 50:33
  one another. They have to be open, they have
• 50:36
  to have integrity. They got to be aligned on what
• 50:39
  the the goals of the enterprise are.
• 50:42
  Typically these founders at at the end of the day are going to
• 50:47
  be minority holders and not majority holders anymore.
• 50:50
  So they've got to understand that as well.
• 50:54
  And and and and and face that, that fact, but also it's a mind
• 51:00
  shift to take place. Hey, I've been the boss for so
• 51:03
  many years and I'm still going to be here in some cases, but
• 51:06
  100% Yep. And so I think that's important
• 51:10
  and and being able to be, I use the word again, humble enough to
• 51:15
  realize that, but also, but also be productive and saying, Hey,
• 51:20
  you may want to think about this, right?
• 51:23
  And I can't, I can't not just under score more and more of the
• 51:27
  transparency point. You know, transparency and just
• 51:31
  good partnership is, is critical.
• 51:34
  It's probably a good lead in for the.
• 51:35
  Next question I had in mind is, you know, is somebody is maybe
• 51:38
  thinking about taking on investment capital, what should
• 51:42
  they be thinking about? I mean, you sort of touched on a
• 51:44
  big one there, like, hey, you were the boss man or woman
• 51:47
  forever for a long. Time.
• 51:50
  You know, if there's assuming that they're sticking around,
• 51:53
  you're still going to be there and be in the leadership role.
• 51:55
  But, you know, push comes to shove, you've got a minority
• 51:58
  stake here. And so aside from that, what
• 52:01
  else should they be thinking about?
• 52:03
  Yeah, I, I. Think a lot of founders probably
• 52:07
  just need to think about what do they want to get out out of
• 52:10
  this? Like what do they expect life to
• 52:12
  be like after the event happens? And and have a good idea, Like
• 52:17
  are they coming to the table to say I'm just looking to get some
• 52:22
  capital from my family? Or are they coming to the table
• 52:25
  to say, I want to get some capital in my family, but I
• 52:27
  still want to be involved and I still want to be CEOII think
• 52:31
  having a good sense as to what they're looking for at the end
• 52:36
  of the day is critical. I come back to transparent, you
• 52:41
  know, there have been situations across all private equity firms
• 52:46
  where the founder comes to the table and they're like, I hope
• 52:50
  they don't under uncover this one piece because if they do,
• 52:53
  then maybe the deal is dead or it's a really bad outcome, et
• 52:56
  cetera, et cetera. You know, transparency is so key
• 52:59
  because guess what? In diligence, those things are
• 53:01
  going to be found out and you don't, you want them found out
• 53:05
  then you don't want them found out after the fact.
• 53:07
  So I think integrity and transparency coming to the table
• 53:11
  with that mindset is super, super critical.
• 53:15
  Yeah, it I mean it. It says something very different
• 53:18
  about the whole relationship if it's you're upfront about, hey,
• 53:22
  here's a blemish over here, you guys are going to see, I just
• 53:25
  want to be upfront about here's what happened and here's what
• 53:27
  we're doing to fix it versus wait a minute, why didn't we
• 53:30
  just found this thing? Why didn't this ever come up?
• 53:33
  It's, it's a totally different dynamic that that takes place
• 53:36
  there. Yeah.
• 53:37
  It's it's kind of like. You know, again, I bring it all
• 53:39
  back to a marriage. It's like getting married and
• 53:42
  then you you're on your honeymoon and your spouse says,
• 53:45
  oh, wait, by the way, you know, I've got a $200,000 credit card
• 53:49
  bill. Do you think we could take care
• 53:51
  of that tomorrow? You know, so that's not from
• 53:54
  personal experience, by the way. I'm just saying that was very
• 53:57
  specific. I'm.
• 53:58
  I'm glad to hear that, Jason. That goes back to heartbreak Kid
• 54:01
  one. Of my favorite Movies.
• 54:02
  OK, so. Jason, what separates founders
• 54:05
  who thrive after taking capital versus those who find themselves
• 54:10
  in a spot where they're struggling?
• 54:13
  Yeah. Again, I think it's is it sort
• 54:15
  of that ability to take sort of a back?
• 54:16
  Seat in in a in a manner speaking.
• 54:19
  Yeah, sorry to speak over you, but yeah, I would say #1 is if
• 54:25
  they still think that, OK, I own 20% of the business, but I get
• 54:29
  to make all the decisions. Now, obviously if the decision
• 54:32
  is, hey, they're, they're the CEO 100% they should be making
• 54:36
  the decisions, but they should always be in alignment with your
• 54:39
  partner. Again, it's a partnership, but I
• 54:42
  think that's that's important. It's just being aligned with,
• 54:46
  you know, what's your role now? Is it still CEO or is it no
• 54:50
  longer CEO? And you're a board member and so
• 54:54
  you have input, but you don't have decision making authority.
• 54:57
  I think just coming to terms with whatever that role is is
• 55:01
  really important. And then also, you know, before
• 55:05
  anything gets signed, just being transparent because at the end
• 55:08
  of the day, you're going to be in the same boat with this
• 55:12
  partner. And that boat can be really fun
• 55:14
  to ride in if everybody kind of puts all their cards on the
• 55:18
  table. Or it could be a miserable
• 55:20
  experience if if things come to light afterwards, that's when
• 55:25
  trust gets thrown out the door. And so I, I can't under score
• 55:29
  those those two points enough. Maybe let's.
• 55:32
  Look at it from sort of a different end.
• 55:34
  If somebody's thinking about breaking into PEVC, what would
• 55:39
  you say to them? Words of advice there, meaning
• 55:41
  like as a career. Etcetera, Exactly, Yeah.
• 55:45
  I I think. It depends on where you are in
• 55:48
  your career because I, I think you can approach it from
• 55:51
  different directions. If you're in college, you know,
• 55:54
  if you're in high school, college, etcetera, I think
• 55:56
  there's a real opportunity. More and more private equity
• 55:59
  firms are going straight to undergrad programs to bring in
• 56:02
  analyst. So, you know, talk to your
• 56:04
  career counselor, look for private equity firms that are
• 56:08
  that are doing that. And that's a great entry point.
• 56:12
  If you're an MBA student and you've got some, you know,
• 56:16
  experience working in a company, working in a management
• 56:18
  consulting firm, working in investment bank, and now you're
• 56:21
  getting your MBA, that's a great time to, you know, be seeking
• 56:25
  out private equity and, and, and look for job opportunities again
• 56:28
  through the Career Center path. If you're in a company already,
• 56:35
  so you're fairly senior, you're again, I'm making it making up
• 56:40
  titles, but like if you're ACTO or you're ACFO of a business
• 56:44
  etcetera. There is an opportunity to work
• 56:49
  with private equity firms to to be operating talent that can be
• 56:55
  deployed into these portfolio companies, people with a lot of
• 56:59
  experience that have worked with a lot of companies.
• 57:01
  And so a lot of that is like talking to recruiters, seeing
• 57:04
  what's out there because I think private equity firms generally
• 57:08
  are looking for just really good operating talent to upscale and
• 57:12
  improve their businesses. So I think that those are three
• 57:17
  great paths in the private equity, Jason.
• 57:21
  Any lessons that you've learned the hard way in your career that
• 57:25
  maybe others could hear from and avoid themselves?
• 57:29
  Yeah, I. I, I think a lot of it, I, I
• 57:34
  said this at the beginning, don't you want to always want to
• 57:39
  take your career seriously? You want to always want to do a
• 57:42
  good job? So I don't want to discount
• 57:44
  that, but you know, there's a lot that's out of your control
• 57:49
  in business and in life. And it's super important to, to
• 57:54
  focus on the things that you can control.
• 57:57
  And I, I would also say just always be, always be prepared.
• 58:03
  So that's what I it's probably comes across too preachy, but
• 58:09
  you know, that's kind of what I, I've learned is you always want
• 58:12
  to be studied up. You always want to be prepared
• 58:15
  for what may happen so that she can be ready for it.
• 58:19
  And that that goes back to some of my Arthur Anderson days and a
• 58:25
  lot of lessons learned from there.
• 58:27
  And, and also a lot of the The thing is, is like just be be
• 58:31
  looking out for good opportunity.
• 58:34
  I would not be where I am if I were not very focused on just
• 58:41
  the good opportunities. Opportunities come our way all
• 58:44
  the time. I'm sure there's a lot of people
• 58:46
  out there that, you know, they're always scouring, you
• 58:50
  know, the job boards or they're getting calls from recruiters,
• 58:53
  etcetera. Just be very discerning about
• 58:58
  what you want and look for what's in the realm of what you
• 59:02
  want because, you know, I think life is too short to to just
• 59:09
  jump from one place to another. You want to be very discerning
• 59:12
  and focused on what's next for you and your family.
• 59:16
  Jason, what's one thing you. Wish more people knew about your
• 59:19
  industry. Again, I feel like I'm repeating
• 59:23
  myself. I, I think a lot of it is just
• 59:26
  how ubiquitous it is. It touches so many aspects of
• 59:29
  our lives. The investors in private equity
• 59:32
  are are not just these mega wealthy individuals out there
• 59:37
  with yachts and all that stuff, but we're talking about teachers
• 59:41
  and firefighters that have a lot a large part of their own net
• 59:45
  worth tied up in in these private companies and businesses
• 59:50
  by way of their pensions by. By by way of their.
• 59:53
  Pensions, I think that's really important that I don't think
• 59:55
  everybody understands. And then I the last thing I'd
• 59:58
  say is I think private equity, venture capital, people forget
• 1:00:02
  that this is an important. Segment of our capital markets,
• 1:00:06
  you know, this is how founders of our businesses, kind of the
• 1:00:10
  backbone of the American economy get liquidity for, you know, for
• 1:00:15
  themselves, for their families, but also get capital for the
• 1:00:18
  growth of their business over time.
• 1:00:20
  These are their babies that they're bringing into the world
• 1:00:24
  and growing up and private equity and venture capital
• 1:00:27
  serves a really important kind of entry point into that.
• 1:00:32
  So, Jason, I just got one more question.
• 1:00:35
  For you. But before I ask it, I want to
• 1:00:36
  do 2 things here. I'm going to invite everyone
• 1:00:38
  listening today to hit the follow button on their favorite
• 1:00:40
  podcast app. We've had a really great
• 1:00:42
  interview today with Jason Snyder from Gage Capital.
• 1:00:45
  And I want you to continue to get more wonderful content like
• 1:00:48
  this, Jason. I also want to let people know
• 1:00:51
  the best way either to get in touch with you, get in touch
• 1:00:54
  with Gage, follow your story or that of the companies.
• 1:00:57
  What would that be? Yeah, probably the two best.
• 1:01:00
  Ways if you get our web page, you know, gauge, gauge
• 1:01:05
  capital.com, you can click on info you you can reach out to me
• 1:01:10
  there. Not for Mark, if if you just
• 1:01:13
  want to talk about, you know, the industry etcetera, that's
• 1:01:17
  obviously not for marketing purposes.
• 1:01:19
  We don't market through our website.
• 1:01:22
  That's one way. The the other way is I'm on
• 1:01:24
  LinkedIn. I, I don't do a whole lot of
• 1:01:26
  social media, but I am on LinkedIn, so you can find me on
• 1:01:29
  LinkedIn. I'm, I'm always happy to have a
• 1:01:31
  conversation with people. That's really generous of you.
• 1:01:35
  So last question for you. You and I, we stay in touch a
• 1:01:38
  year from now. We're sitting down having dinner
• 1:01:39
  together and you're celebrating something one year from now.
• 1:01:43
  What is that thing? Wow, so.
• 1:01:48
  Number #1 will be my 12th wedding anniversary to my wife,
• 1:01:52
  so that that'll be important. Good answer, yeah, although I'm
• 1:01:58
  not going to your anniversary dinner.
• 1:01:59
  With you to be, just to be fair, yeah, but I'll tell you about
• 1:02:02
  how. Great.
• 1:02:02
  Everything is, how about that? The, the other thing I, I think
• 1:02:08
  the other thing is we've set out some very specific goals for
• 1:02:11
  Gage this year. I won't go into to what those
• 1:02:14
  are, but a year from now I'd like to sit down and say, hey,
• 1:02:18
  we, this is what we decided at the beginning of the year and
• 1:02:22
  this is how we've met or exceeded those goals for Gage
• 1:02:26
  over the course of 2025. And here's what they are for
• 1:02:30
  2026. Jason Snyder from Gage.
• 1:02:33
  Capital, I want to be the first to thank you for sharing both
• 1:02:36
  your time and your story with us today.
• 1:02:38
  I really appreciate a lot of great knowledge here today.
• 1:02:40
  Yeah, thank you. Yeah, great.
• 1:02:42
  To be here. Good to talk to you folks.
• 1:02:44
  That's a wrap on another. Episode of the Inspired Stories
• 1:02:46
  podcast. Thanks for learning with us
• 1:02:48
  today.