I think I was always supposed to be an accountant, but I resisted it for a good few years.

I actually did an engineering degree.

Initially. And then after spending about a year and a half traveling the world, I succumb to the pressure.

This is Net Learning.

The podcast that keeps finance and banking professionals ahead of the curve. In each episode, we focus on career growth and practical advice, while mixing in the occasional war story. Join us as we tap into the minds of leaders and expert to some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Peterdy. My guest today is Garrett Nichols, regional director at the CFO center. Gareth brings over thirty years of accounting, finance, and C suite leadership experience. Garrett, thank you so much for joining me today.

Thank you for having me.

The CFO center is a UK based firm with offices in, I I think, seventeen countries. They provide fractional CFO services to small and middle market companies to help them, work through complex financial issues. So maybe, Garrett, we could start with what might seem like a obvious question, but what is a fractional CFO? And why might a business want their services?

So a fractional, Steve, well, I guess you break that question down into two things. Right? What’s a CFO in the first instance. Not everybody has a really good understanding of what a CFO is. I think most people would kind of understand the fractional piece And then how does that apply in a, you know, a smaller company environment?

We we’re actually at the CFO center. We have what we call a twelve box framework to try and help people under and the role of CFO. So I don’t wanna go through it in detail, but it builds on sort of the foundational aspects of finance around transactional and compliance kind of activities that a CFO will provide oversight building up to more of an operational level of finance where a CFO is gonna help them provide a management information system that’s gonna help the business drive typically profitability, but then maybe other things, revenue, etcetera, manage cash flow, have the right systems, those kind of things.

And then at the strategic level, yeah, we’re looking at things like exit planning, raising capital, risk management longer term strategic planning, things like that. So that’s the sort of holistic role of, of, as we see, of the CFO. And you can apply that to any size of business, at the smaller level, most businesses still need those skills in you know, varying degrees. And so the the sort of fractional CFO, the idea of a fractional CFO is that a small business, a mid market company can access those kind of skills.

Just in an affordable way on a, you know, on a part time basis.

That’s a really interesting perspective. We appreciate kind of the backdrop of you know, what a CFO does period because that’s a it is something that not everyone entirely understands.

And so what are some specific examples of when an organization may come to you or or your firm for a fractional as you mentioned about capital raising and stuff like that. Are there any other sort of specific instances?

I would say, you know, the one of the big times the company, you know, a small growing company will get to a point, and often, a a business leader or business owner will have a lot of capabilities in a lot of areas, including finance, but there’ll come a point in, in the life cycle of a business where you need some high level experience, some, you know, financial leadership, some foresight to understand as a business grows in scales, what are the next challenges gonna be on on that sort of scaling journey? So there’s there’s, you know, a huge benefit of a small company having that level of experience when they’re on a growth trajectory.

And typically as well, you know, the business owner, the CEO, has other, let’s say, more valuable things to spend their time on as well. So even though they may have the capability, there’s a capacity issue for them at some point as well where that becomes a really sort of value added proposition. So so there’s that growth. There’s a growth story piece. Oftentimes, I mean, the thing that we see when we go into companies, the thing that’s typically not done really well in small mid market companies is that reporting cadence It’s the, you know, having a robust view of the future, a financial road map to achieve business objectives.

Combined with a cadence of internal reporting that helps the business understand that it’s on the right track. And if it’s not on the right track, why it’s not on the right track and how it, how it should adjust to be on the right track. So having that regular cadence of good management information is is critical in small mid market companies. And that’s often where bringing in a senior sort of finance leader can add a add a ton of value to a company. Even, you know, we get brought into companies who’ve been around for a long time and suddenly feel that they need that that sort of skill set. So it’s often around. It’s often, you know, there could be lots of reasons, but it’s often down to that lack of visibility see of what’s actually going on in the business from a finance perspective.

And maybe just tell us a little bit about the CFO center and and how the company works Like, is it a franchise model? How does how does the business work?

Yeah. The CFO center started twenty two years ago now in the UK.

By, by an individual Colin Mills who who was, had sort of spent his career in big corporates and wanted some freedom from corporate life. So set set up on his own, essentially, and then decided he could make a a business out of it, twenty two years later, as you alluded to, we’re in seventeen countries around the world. We have about over over seven hundred and CFOs around the world now. We’ve been in Canada for twelve years, and we have close to a hundred CFOs in in Canada now. So It’s not a franchise model. What we do is we recruit CFOs who then work with us on an exclusive basis.

And we, in in my role as as regional director for Western Ontario, I’ll work with them and help them build a portfolio of clients. So a CFO will have between two and six clients.

We find that sort of ranges works really well depending on the nature, complexity of the client.

And so, and so we recruit CFO as we go through a whole recruitment process, we’re not, like, a sort of search firm. We’ve we very much bring CFOs on to our roster. We go through a very comprehensive recruitment process, and then we work with them and help them build that, that portfolio.

What’s harder finding clients or CFOs to service them?

It’s interesting, I see, because it can be it can be regionally very different You know, so we we we do tend to like CFOs who have some larger company experience, because if you think, you know, we work with smaller companies, but not a lot of smaller companies are trying to become larger companies. And so having that sort of foresight to to know what good looks like and what best practice looks like applied in a pragmatic way to a smaller company. Right? So we do like the larger company experience. So, you know, some of the larger companies tend to be in the larger cities. So, you know, we often find there’s a lot of CFOs in those kind of areas, but a lot of the companies that we, you know, that need our services can be, lots of different, lots of different places, a lot of small, mid market companies, for example, in in Southwest and Ontario.

Yeah. Yeah. Huge manufacturing technology hub, lots of agriculture. It’s super interesting region. We’ll circle back to the CFO business or the fractional CFO business.

It’s really interesting to me. And, hopefully, for our listeners, but first, I wanna talk about you. You started in accounting back in the early nineties. And since then, you have experience with some really big name corporates, across various different finance functions and and executive level positions.

Maybe you could just tell us a bit about your career to start.

Sure. I I I I think I was always supposed to be an accountant, but I resisted it for a good few years.

I actually did an engineering degree.

Initially. And then after spending about a year and a half traveling the world, I succumb to the pressure. And, I think it was because my dad was an accountant that I sort of resisted it for, some period of time, but eventually succumbed and, I actually trained with, BDR in in Nottingham in the UK. Was with them for four years, became a member of the Institute of Chartered accounts in England and Wales.

I worked at Price Water House for a year, But my intention was always I always wanted to work in industry. It was a, you know, it was a great qualification there, but I I really, you know, I really wanted to work in industry, and As I made that transition, I sort of had this overarching career objective with to gain, you know, really good experience that would put me in good stead for financial leadership positions in smaller organizations. I really had this idea it would be really fun and rewarding to work work in smaller businesses and, you know, CFO kind of roles, but leadership type roles.

But I felt that the best experience would be gained through doing that in working with large companies. So, yeah, I joined a large conglomerate, called GC at the time, but I joined a defense development and a defense division working with radar technology, which is as a project accountant, which was, which was interest that company more significantly over a nine year period, and and I ended up in what was then became a telecoms company in their manufacturing. So you know, I worked extensively in manufacturing, and eventually that company, a long story about that company, it fell foul of the dot com bubble essentially, and it collapsed into a services services business over time.

And after spending a a little while contemplating. I was looking at doing some entrepreneurial things, actually, but I’m a small c conservative and decided to go back to work at that point. So I worked with Cabri Shrap, so I was the controller of their flagship Bournville factory for a couple of years. And then I moved to a logistics business, but not long after I was there, I got I got a call from a recruiter about this fabulous opportunity and, place called Canada, and with a company called, research in motion, and and as I started digging it, it became a very attractive, very attractive opportunity.

So So my background had been in manufacturing and finance and and research and motion at the time. We’re looking for someone to leave their supply chain team. So it was a great fit for me, and that’s what brought me to Canada. So I was there for, for about four years.

And then I’ve also been CFO was, of, medium sized private, financial services group. And then in, I started doing it. Well, I sort of I was always trying to get back into this, you know, smaller business. I wanna work with small companies, and that’s when I decided to branch out on my own, which I did originally before meeting Ian Young is the CEO of, Canadian part of the CFO center.

He asked me if I wanted to be interested in not only being a fractional CFO, but helping build the Southwest Ontario region. So that’s I have this role of regional director where I started with clients, but I I have left clients now and I’ve been building the team out in, in this region. So that’s what I’ve been doing for the last six years.

Super interesting. And I’m I’m curious. Obviously, you know, Blackberry, research emotion was the the the parent company of the Blackberry brand and In a way that few other companies have ever done, it went from being like an unimaginable Canadian success story to something of a cautionary tale and businesses schools or some other business schools everywhere. In your view, you know, with the benefit of hindsight, like, what were some of the things you think that maybe went wrong at Blackberry?

I know it’s a loaded question.

It’s probably its own podcast, but maybe give us like kind of a I’m gonna recommend that I’m gonna recommend that folks to read the book losing the signal, which, if you have you heard of that one, Kyle?

I have.

Yeah. It’s actually, you know, it’s great if you want to really understand what what happened. You know, I think there were there were obviously a few, a few missteps the as as, the Apple iPhone came to the market in two thousand and seven, it was the reaction to that was was a fairly big misstep in the product the storm product.

I don’t know if you remember these, but I do.

I totally remember the story.

The storm. I mean, I worked on I worked on the product costing side. So I was quite intimate with products going through from very early in the life cycle. And I was actually looking.

I’ve, a bit of a collection of phones that I’ve had because I used to have all the, you know, the the beta versions. I don’t have a storm because it was it was really not it was really not very good. So it was a bit that was obviously a first big, gonna start. There were some, there were some investor relations type things along the way as well that I think hindered the progression of the company.

The, again, the response to the iPad was the, it was the playbook, which, again, you know, it was, it was a device was launched with a huge strategic intent. It was more of a reaction to, you know, the the iPad and and, you know, a black bree device without email, which was, which was an incredible thought at the time, right, which was the whole raise on detriment of the Black B brand originally.

So was the best email phone that’s ever existed, even to this day, I believe.

Right. The Black rebal, yeah, was absolutely a phenomenal device. It was absolutely absolutely great. And then and then as it became very apparent that the hardware was becoming more of a of commodity, and it was much more about the platform and the software.

There was the strategic debate had by the company about what to do with BBM, which would have become very, very successful.

That was the messenger app.

Basically, Yeah. I was basically holding up the hardware business because the hardware was reliant on, you know, this Blackberry Messenger service.

It was very, very difficult to break away. And I think ultimately, that was where, you know, the two leaders sort of had the made, major disagreement about how to take the company forward and, they, they, they sort of stuck to the, stuck more to the hardware route and the software route, and, the rest is history, I guess.

Married to those margins. So when you think back on your career, obviously, lots of learnings at Blackberry, but what are some of the most important sort of pivot points or projects or or decisions that you made?

I I think when I joined, you know, what was a large conglomerate called GC in nineteen ninety six. It wasn’t what happened wasn’t wasn’t by choice, but I think it gave me a huge depth of experience that you wouldn’t necessarily go looking for, but having it. I think that’s been great for me.

How so?

I started in a defense division. That was all fairly normal. I worked as a project accountant. I then went to work in I was a controlling in, a factory for a company making telephone switchgear, basically.

And as the company morphed, there was a change in leadership.

The old guard was replaced. The new guard decided to go all in on technology, essentially, telecoms divested itself with the old businesses and spent all its cash on leverage its balance sheet write up, spend all its cash on technology, and this is at late nineteen nineties.

In doing that, one of the ideas was to sell off non essential assets, basically. And so I got involved in a project to divest manufacturing facilities, basically, our printed circuit board assembly manufacturing facilities around the world and being involved in one of the biggest trees. I had this kind of depth of knowledge about how that all operated. So I went to work on this project for, you know, senior executive who’d been brought in specifically to to do this.

Well, as we were going through this process, this senior executive decided he didn’t like didn’t like doing it. We decided to leave, and I was basically left in this situation that the the company was really given choice, but to promote me to the this leadership role in this, in this product project. So I led the fine financial side of this project. I think it was about it was about eight hundred million pounds divestiture pro project at the time across, you know, the US factories, European factories, And so it’s, yeah, I got I got heavily involved in this very, very significant divestiture activity and also resourcing agreements, so supply agreements.

So not only were we divesting factories, we were then using those factories to fund the company that we’re divesting to, to source back the manufacturing. So that was a a massive experience of, you know, just everything from legal work through to operations, through to working with suppliers. The company, though, actually over burned itself with debt, leverage itself up. And then you’re too young to remember Carl, but in the back end of the nineties, there was a lot of over evaluation as as the internet sort of started to really expand, and it all really fell apart in the early in the early two thousands.

And so a lot of the lots of technology companies were taken down with that. And so it was actually called Marconi Communications, and it ended up anyway, having to it got sold off in in pieces, became a a pretty small services company in the at the end. But we went through rounds and rounds of balance sheet restructuring and operational restructuring to the point where, you know, I was restructured. But I think, you know, the the the kind of lesson, obviously, I learned an awful lot in some of the projects I did, but the lesson, the sort of corporate lesson was this whole idea of really, you know, undiversifying this, this huge business that had been successful for decades.

And then over over leveraging itself against the, you know, in an industry that was as yet unproven was a very, very risky strategy in that that proved as much.

Wow. And and I guess from a career perspective, you couldn’t manufacture that kind of experience anywhere else.

And and just, yeah, it happened and you were there to put your hand up and and to be the beneficiary.

Although, I guess, probably didn’t feel like the beneficiary at the time.

No. It was it was it was a case of oh, I mean, you know, it was a very dynamic environment. The whole, you know, the whole way through was a very, very dynamic environment from from you know, we were acquiring businesses. We were divesting assets. And then we were, you know, rounds of austerity measures and balance sheet restructuring and figuring out, you know, figuring out what to do and what could be sol salvaged. And, you know, so, yeah, the whole, the whole process was, You know, it’s extremely dynamic. And those are, you know, even though some of them are optically, you know, happy, they’re they’re very you learn an awful lot going through things like that.

Yeah. Can’t even imagine.

So a lot of our a lot of our listeners and members are looking either to get into finance roles or to kinda move off and transfer within within the function. So I’d love to ask your advice and perspective. I mean, you’ve you’ve so much experience. The the first question is around folks looking to kinda get into finance. What are some skills that you recommend? They practice or master in order to try to hit the ground running as quickly as possible.

I mean, you know, you can you can always talk about the technical stuff. Right? It’s great to be it’s great to have some level of analytical abilities and, you know, those those kind of things. But The thing that’s that’s kind of interesting in finance, especially if you have ambition to be, you know, to be progressive and, which most people do and to finance, they think of themselves as growing into increasingly progressive and senior roles.

One of the key things I once read somewhere that the thing that separates good, senior finance leaders from good senior finance leaders is empathy.

And the the reason I think that is is because being able to understand somebody else’s, but somebody else has a different viewpoint or a different perspective. It gives you this ability then to adapt your, you know, if you’re trying to influence somebody, trying to standing how they perceive the world and how they can think about a particular issue. I think puts you in a much better standing to be able to then influence and explain.

Because, you know, finances facts, but not everybody thinks like that. And so this, you know, being able to understand that being able to adapt the way you behave with other people and be able to explain complex, sometimes, you know, very complex issues I think is a, a really critical skill.

And it’s becoming, I think it’s becoming even more critical. A lot of the, you know, finance tasks are getting more and more, obviously, more and more automated. Mhmm. So, you know, I I that that would be that would be an area. And I don’t I don’t think or you need it before you start, but it’s certainly something that I would say is worth thinking about trying to develop over the course of, of, of, for career.

Was gonna be my next question was, you know, progressing and moving up. And that’s really good perspective. I interviewed another guest who said something that re resonated and really stuck with me and that’s that Sometimes the finance leaders, particularly of today, are having to solve problems that don’t necessarily have a net present value, or to what you’re saying, maybe the the net present value is interpreted differently by different people and to be able to understand those different stakeholder perspectives is very, very valuable as you progress up in an organization.

Yes. It’s it was interesting actually as well, you know, working with smaller organizations.

You have to be very cogniz of the fact that not every business owner has the same idea of what success looks like. Yeah. So we are always looking at the outset with a relationship with a new client to make sure we understand, well, what are what are you actually looking for yourself out of the business? What are you looking to take from the business?

And therefore, what do you want the business to do and how do you want the to work and operate. Not, you know, it’s not always about, you know, I gotta maximize revenue and maximize profit. It can be there can be, you know, there can be other there can be other objectives. So I I think having that sort of perspective as well. It’s slightly different when you’re working in a, you know, a large public company where it’s hard to move away from anything other than, you know, I gotta improve earnings per share. Right. But certainly working with smaller companies, we have to really be assign us that.

This is a good way to tie it back to the fractional CFO business. And, you know, you kinda mentioned earlier you had a path in your career and you had a a a road map, you wanted to work with smaller businesses, and you had this extensive experience set with large conglomerates, but, like, why was that? Why did you want to work smaller businesses. What was it about them that was attractive to you?

The I think the ability to have a very meaningful direct impact on the on the business. I I mean, I probably saw it as being on the business, but having experienced this on the business owner, essentially, or the business owners essentially. It’s extremely rewarding when you spend what might not be a huge amount of time with a business, but you help them very directly achieve their objectives.

It’s that direct impact in in in larger organizations.

And, you know, larger organizations are great for building that experience base of, and depth of, you know, what’s best practice, what what the good controls look like, especially, you know, from a finance perspective, but you can get lost in the, you know, a a large corporate. You can get lost in the organization. It can be very hard to see directly how you’re impacting the ultimate, you know, the ultimate shareholder, for example, and big organizations can, you know, have politics and things like that that can that can go off inside. When you’re working with a small organization, you you’re very much having a a very, you know, very direct impact on the outcome, and you can see it in, in real time.

It sounds rewarding. I wanted to ask you if you would give a sales pitch to our listeners that are that are qualified. Why they should come work for the the CFO center and you sort of just did, but if you wanna if you wanna give the thirty second elevator pitch, let’s have it.

Sure. Yeah. I mean, but I’ll tell you how I’ll tell you what most people say that, do come and work for us, and it’s it really people people work like like doing this kind of work for, freedom and flexibility and and then contribution. So I’ve just I think I’ve just told you why the piece is so great in working with small and mid market companies. And then you’ve you’ve got more flexibility to run your own life, essentially.

You know, like I said, we help CFOs build portfolios typically between two and six clients.

Some CFOs wanna work five days a week, someone to work less, and we’ll help try and help them build a portfolio that is, sort of commensurate with that, with that objective. So the and the CFO centers, so we have this incredible network of CFOs. So in which it gets I always say that I’m a much better CFO now than I was when I joined the CFO center just because I spend so much of my time collaborating with, you know, fantastic CFOs. We have a very high bar for for our CFOs. So, you know, you alluded to my thirty years of experience. That’s really not untypical.

We like we like our CFOs to have been in that senior finance leadership position for you know, five to seven years at least. So they’ve been in a, you know, CFO role in business, obviously qualified, qualified accountants.

But, you know, a lot a lot of a lot of folks at that level are looking, for a bit more flexibility and a bit more opportunity to manage their own time. So this kind of model works really, really well. But without, you know, without being isolated, you’ve got this team that you can leverage. We’ve got a bunch of partners and service providers that we work with. It’s a phenomenal sort of global resource that an individual can also can also leverage in in that particular model.

Well, and on the subject of of portfolios, I’m really curious how do you carve up the portfolio of clients? You sit between two and six, but, like, a SaaS company looking for institutional capital requires a different skill set and experience set than, like, a second generation manufacturing company that’s considering an acquisition. And so do you do it by industry? Do you do it by company size? You do it by, like, life cycle stage? How do you think about portfolio construction?

That that’s a great question.

The the I think it’s, with recruitment, to be honest. We try and recruit people who have had, you know, a reasonable of experience in the first place.

Cause that sort of alludes to the the adaptability. Right? If you can, if you can move industries where you’ve got a couple of different industries.

There’s an adaptability there that I think is generally helpful in the sort of small mid market space.

And so what we do find is a lot of our CFOs, or we’re generally able to adapt to a whole different bunch of industries. So just by example, My background is all manufacturing.

I was able to adapt quite quickly to working with software companies. I worked with a few software services companies.

But we try and yeah. I mean, there’s always a compromise. Like with any recruitment, there’s a bit of a compromise. We also like our CFOs, we can do virtual engagements, but we really like it best when we can have some kind of physical presence.

So there’s a geographical aspect with, you know, an industry aspect And then there’s the as you as you sort of alluded to more of a finance operational aspect, are they do they have a systems issue? Are we looking to you know, change systems? Do they have? Are they raising capital?

Do they have investor relations issue? What’s the what’s the issue? And can we then build, or can we bring the right experience that matches that? So it’s really, I mean, part of my of as regional directors to have that exploratory conversation with the business owner and try and understand what is the most important, what are the most important aspects and then trying to see, you know, how we can base match.

And his combination is, do we have the right people? And do they have the capacity? And and that kind of thing. But we can typically, we can typically find people.

We have, you know, like I say, we have a hundred people, and it depends on what compromises a business is prepared to make to some degree, but we we can typically find people who can add a lot of value in in small companies. Even if even if they haven’t had the exact experience. Like, we can typically, you know, given the given the depth of experience of our CFOs, they can typically adapt to different types of industries.

Great answer. Appreciate that. Okay. So, alright, another question. You talked a lot about the different sort of needs or instances where a business would come to you or your firm to seek out fractional services to what extent are these CFOs coming in and supporting the risk management function broadly as opposed to reporting and capital raising, like, is there a lens for risk management with companies at that size or or is it more about sort of facilitating growth?

I I think there’s a I think there’s a lens for risk management companies of of every size. I think it comes down more to the degree of sophistication of the risk management activity. Right? I think I’d being able to identify risk is critical. And it often falls into a planning process. So you look at a strategic planning process. And then you’re doing a a financial road map to look at, you know, how do we get from here to your ultimate goal?

That journey is gonna be, you know, it’s gonna have risks. There’s gonna be risks involved along the way. And and so you know, in a smaller organization that might be about modeling out those risks. I mean, there’s a brainstorming activity to identify fly them, they’re not always necessarily documented in a, you know, in a deep, detailed way. But there’s there’s a process through that of planning. And this is why this is why planning and strategic planning is so important because it it sort of draws out those kinds of conversations.

And that’s where that’s where a company would really, really look at that. And you you end up with, you know, scenario planning to account for a k, well, if this risk happens, what, what does that look like, or if this happens? What does what does that look like? I have been through with medium sized companies myself, actually a whole whole risk management process as well, where we’re trying to understand, you know, a full, as you as you kind of textbook risk management type process.

So I do see that a little bit. Depends on really, it depends on the complexity of the business and the organization, sometimes what its objectives are and where it’s heading as well. But it’s certainly, it’s certainly critical thinking in a small, you know, there’s there’s no there’s no size of business where it isn’t important to think critically about the risks Everybody thinks about the opportunities. Right?

But, you know, there’s it’s it’s part of the same process.

It is it is easy to over index on the opportunities, especially in a world where, you know, venture landscape has been glorified the way that it has. We we think about the sky being the limit and forget that the floor exists too. Do you have a favorite quote or, like, a final piece of career advice for our listeners?

Yeah. So the the quote that I love, it’s something like I’d rather regret doing something than regret not doing something. And it’s actually that’s actually attributed to James Hatfield who’s the founder of Metallica.

Yep. So you’re smiling there.

You knew that one. Right.

Yeah. I love that field.

But, yeah, no, I love the idea, and it’s something I sort of tried to base you have to, you have to be reasonable with it, but, it’s something I tried to base quite a bit of what I I mean, you know, immigrating to Canada, for example, was, is an example of a big big decision I had to week. But in the end, I I was like, well, I’d rather regret doing it and not, you know, spend my whole life regret not having done it. So that kind of idea, I like that.

It’s a great perspective. Is it also entirely possible that, the context under which James hadfield made that statement was quite different than career mentorship, but I get it. I get it. I was a metalhead, so I I that resonates with me. I love that.

Okay. So we’re coming up on time. I’d love to ask what can I do or what can our listeners do to to help you?

Well, really just, you know, bear in mind. I think that this concept of a fractional CFO exists and can and real value to small mid market companies.

That don’t that really need that high end senior finance resource, but just don’t need it on a full time basis. So, you know, a senior finance executive can add a ton of a ton of value to a small business in a very short, you know, day or two a month in a very short period of time. So just just keep that in mind. And if if anybody wants to reach out, got any questions, you know, I’ll I’ll be more than happy to speak to anybody if they’ve got a situation where they think, you know, use of a fraction CFO might be useful.

Okay. That’s great. And, very much appreciate your time. Thank you so much for joining us. I I look forward to keeping touch.

Thanks very much for having me, Kyle.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an Oregon station on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning’s wherever you listen to your favorite podcast, or visit us online at corporate finance institute dot com slash podcast. See you next time.

So I always say we wear different hats, you know, if I have a phone call from a debtor, an individual, I have my debtor hat on. A creditor could call me, and I put my had on and talked to the creditor, and then I could, you know, get a phone call from the regulator, and they can have a question about the file. And then now I’m talking to the regulator. It’s I don’t know really what other professions you would see that much interaction with the various stakeholders, but that’s one of the reasons the the profession is so exciting and diverse.

This is Net Learning.

The podcast that keeps finance and baking professionals ahead of the curve. In each episode, we focus on career growth and practical advice, while mixing in the occasional war story. Join us as we tap to the minds of leaders and experts at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle, Peter My guest today is Jennifer McCracken partner at Bdo Debt Solutions. Jennifer is a licensed insolvency trustee and brings nearly twenty five years of experience in financial services and credit restructuring. Jennifer, welcome to the show, and thank you for joining us.

Thanks for having me.

This is Back that a lot of folks will have heard of Beado, pretty large professional services firm with a global footprint, but Beado debt solutions may be new to many of our listeners. So can you give us kind of the Kohl’s notes on what this division does?

Absolutely. So we have a corporate and consumer division, we’re located all across the country. We basically take on formal engagements to help individuals and businesses that are in financial difficulty, and we always offer free initial meetings. So we have a lot of touch points with Canadians and to understand from all walks of life, you know, I could be talking to a senior, to a business person, to somebody who’s just finished winding down a business, a student, etcetera.

So we’re all across the country. We help individuals and businesses that are in financial work through solutions. And our team’s interesting in the sense that we’re, as we’ll get into in the podcast for a very regulated industry. So our team consists of partners, trustees, financial advisors, like analysts at the front end, but then also the back end, so specialized teams for tax and claims adjudication and things like that.

So very interesting work, and we used to be very paper driven. Now everything’s online. So I guess we’re the lesser slots of pay paper in in the work that we do.

I’m sure. Yeah. And we’ll talk about that. I I honestly, I’m really excited about this conversation as you know, the goal of the podcast is to be resource for folks looking for mobility, either into or within financial services and and finance roles. And I’ve never really talked to anyone with your unique credentials and your experience. So perhaps a good jumping off point would be to tell us what does a licensed insolvency practitioner or a licensed insolvency trustee actually do?

Well, we’re licensed through the federal government, so we actually have a trustee’s license to take on formal engagements through the bankruptcy and insolvency act throughs for creditor driven processes like receiverships. We wear lots of hats, and so we we are an interesting profession in the sense that on any engagement I’m on, I’m actually kind of technically working for the creditors, right, particularly for bankruptcy scenarios. It’s liquidation. We collect the money.

The creditors are the beneficiaries of the work we do. They register their claims. We pay out the money that’s available. But practically speaking, a lot of our actually with the debtor company or with the individual.

So it’s this neat role where you’re you’re interacting with an individual that’s in financial difficulty doing the work to benefit fit their creditors, and then all within the landscape of having regard for the regulator. So the insolvency system, oh, different than in the we care about the integrity. We want to avoid bankruptcy abuse, abuse of creditors.

All that realm is there in the sense that we have regard that being integrated to the statute. We have to have regard for case law. So I always say we wear different hats, you know, if I have a phone call from a debtor, an individual, I have my debtor hat a creditor could call me. And I put my creditor hat on and talk to the creditor, and then I could, you know, get a phone call from the regulator, and they could have a question about the file. And then now I’m talking to the regulator. It’s I don’t know really what other professions you would see that much interaction with the various stakeholders, but that’s one of the reasons the the profession is so exciting and diverse.

You answered one of my questions, which was, you know, who’s your actual customer? And your customer is not necessarily your end user, so to speak, right, or the person you interact most But what does a successful outcome look like in your line of work?

Well, that’s a fantastic question because it kinda goes back to the piece I talked to with integrity. So a successful outcome, if you have an individual in an insolvency filing, it’s that they are the the statute, the premise is that there’s an honest and unfortunate debt or so they are entitled to the financial relief. As long as they they have proper dealings, we we recover money for the creditors. We see an outcome for them that they charge or compromise their debt. And they’re debt free to become a member of society again that they can now go off and do other things and and be released to the financial burden of their debts. Another successful outcome is recovering money for the creditors, right? So we want to recover what’s available.

Max, something we talk a lot in the industrial optimizing realization for the creditors. So that’s also an outcome that we will always have regard to what’s fair to the creditors, what what money is there, we can realize on for the creditors. And then again, having regard to the regulatory piece. So if I am on an engagement, and I think that there’s, you know, there’s something that could be further, we have mechanisms to report to the regulator and seek their involvement. So a successful outcome typically is ensuring, we’re balancing the priorities from, from all those standpoints.

Really interesting insight. I’m wondering if you can maybe just us back to the beginning of your career and walk us through how you ended up in this line of business because it’s not something that you hear a lot about in business schools.

You know, I would agree with you and we don’t have campaigns like the way CPAs and accounting firms sort of and and do online campus recruitment. But I can say in the insolvency world, we are a niche industry. And I’m licensed through the federal government as a trustee, but most of us obtain our designation through a professional association called CARP. So it’s CAIRP.

And we obtain something similar to a CPA designation, but we obtain a CIRP.

So we’re chartered insolvency restructuring professional. So it’s its own program of study. We article no different than how accountant’s article. Right?

We work at a firm, do the coursework, and sit for exams. I personally kind of fell into this. I was in the middle of finishing off my BA in psychology. So I was I always knew I would study psychology.

It was just I was obsessed with psychology at a very young age. So I was very much enjoying my degree and didn’t know what my future was holding, but I certainly was loving what I was doing at school. And I just kind of fell in a summer job and expanded to the weekends. And then as soon as I graduated, like, within a month, I had got signed on full time at the firm.

Registered for the trustee program. And so after a little while working in it, I kinda knew that. Okay. Well, I’m gonna give this a go.

I think it’s a really a trusting profession. Interesting field. And so, I guess, I kind of fell into it, but it was one that it basically well, as soon as I kind of cut my teeth a little bit on it, I realized it was going to be fulfilling, challenging, rewarding, all all the things you want in a career.

Yeah. No. I’m sure it’s very challenging, and and we’ll we’ll talk more about that as we go. But what, I guess, that sounds like maybe a bit of an atypical path. What would most folks like your peers and your counterparts? Like, how do they typically find their or is it is it maybe not that atypical?

You know, historically, Kyle, I would say most would come through an accounting, background So they they were in audit at a CPA firm, and, the the restructuring team over here, which they’re they’re normally the funnest most dynamic people at at all the all the counts, listening can snicker, but they they fight. They get us a comment to the restructuring team, and they also, you know, they realize how dynamic and interesting the work is, and they stick with once they finished their CPA, they then enroll in the trustee program. That would be typical, although I’ll say now, like most professions, we’re seeing people for different backgrounds now.

So I was licensed in two thousand and nine. So it was a few years ago where, generally, what I was getting since most people came from that background now, and I sit for board exams. Now I see students with all different backgrounds. They, you know, have science backgrounds.

No degree. Some people just actually come in and professionally learn the work hands on. And I am a huge proponent of diversity and thought diversity in the workplace, diversity in background. So I am excited at the fact that we have people from different backgrounds now kind of more in the profession than historically it was really more of an accounting based background.

You mentioned you’re in Canada, but I’m curious just because we have international listeners and folks all over. What would be sort of the equivalent of your role title or your designation million like the United States, is there an exact proxy or an approximate equivalent?

I guess the quick answer is no. And the reason I say that is that bankruptcy legislation bankruptcy law in the United States is a lawyer driven process, and it’s heavily court mandated, which actually I think is fascinating. If you wanna sort of search bankruptcy offenses in United States, you can read some fascinating case law. The legislation to me is really really interesting.

So there isn’t really a similar type role, although, I guess you could say that me as a licensed insolvency trustee, I am the equivalent of the bankruptcy lawyer in the United States. One distinction would be though that under our mandates in the bankruptcy insolvency Act, it’s really mostly trustee driven. There are times we actually are required to go into court. Some of our more formal restructuring proceedings are more heavily court driven, but it’s really more we’re really administrating the staff without having to go to court for every little aspect of the administration.

In the United States, it’s different every single juncture. There is some court involvement. So that there is that distinction, There also are distinctions around in the United States. There’s a means test.

So when an individual is declared bankrupt, there’s a test that’s employed to sort of assess which chapter they proceed through in Canada, we don’t have necessarily that similarity, but I think one one other aspect though I will say too is that our statutes also do provide for cross border. So I think very interesting cases to read about are the ones that have this cross border piece where there’s a US entity and and there’s more formal restructuring. So there are times where the statutes kind of come together in those types of engagements.

Yeah. That would be totally fascinating. Just to kind of stress for our listeners how sort of niche the field is that Jennifer is in, the c a CIARP, the organization that you’re a member of. I think has about, what, fourteen hundred members.

Mhmm.

And CPA Canada has, like, almost two hundred and twenty thousand. So that’s, like, that’s quite a small subset. I I find that really, really interesting.

It is. And so to me, the work, in a way it’s all it is similar in the sense that you know, if you’re a CPA, you have regard for your professional conduct, professional rules. You’re also in a very regulated profession. If you’re providing advice to business around their tax filings or conducting an audit, you are following gaps. So you’re really you’re alive to all the risks for your client, and you want to correct any or any missions or you want the company to be clean and in a good standing, you want the best for your client. So the work is similar, but I guess to a certain extent, I guess you could play be kind of point the finger that maybe we haven’t done a good enough job advertising the work that we do and recruitment in the industry. So maybe there’s more to come to bring awareness to expand our membership.

Maybe this podcast will help.

Hey, I’m hoping.

Alright. I something I’ll I’m also curious about, how much crossover is there between personal restructuring work and and corporate. And and I asked, I guess, what I’m trying to tease out is what, maybe, what percentage of and solvencies are actually the result of, like, a business venture going sideways and enforcement action, you know, being taken against the company.

Yeah. I I mean, for me, I would say at least thirty percent of my practice and and when I say that, I mean individuals that operated corporations. So, yes, write theirs. There could be director’s liabilities.

There could be personal guarantees. The company is in and of itself its own person. So you provide advice around the business, and then how what’s the ripple down effect to you as the director of the company, but also owner operated businesses. You’d be surprised how many insolvency filings and work grants I do for individuals that operated as sole proprietorship.

So they didn’t incorporate they didn’t have an LCD. And I’ve seen it on really large scales, like, shockingly. But you know, when we talk about, like, the top line revenue, it’s remarkable that somebody would not have incorporated the company. So, absolutely, there is a component, a business component to a lot of what we do more so than I think people realize.

So, I can say sort of in circles if I’m at a networking event or I’m out and someone says, oh, you do consumer work. There’s this, I think there might be a stereotype that I’m just helping families and students and that we don’t really touch or look at business, but you’d be I very much encourage individuals that are actually articling and working towards being a trustee that they do get corporate experience because you, even as a consumer practitioner, You need it. You need to read financial statements. You need to understand the workarounds for the business.

Like, you, you have to have that knowledge to the individual that’s an owner operator or who who ran a corporation.

What surprised you most about this line of work when you first started?

You know, the diversity of the files. So, like any course of study, everything seems so black and white. Right? You read a legislation.

You read a rule and say, okay. Well, this is exactly. And and there’s a rigidity around, like, a newly licensed trustee is somebody that generally is known to be quite rigid because they’ve just come out of their program with study and they think everything’s black and white. You get more flexibility.

Once you’re licensed, you get more space at the firm you’re working at to kind of be more involved on the front end of the mandate. Early on in my career, I was at a boutique firm, and, we did amazing file work. It’s I still look back in Marvellette just the the very interesting engagements that we took on the complexity, and that was where I learned the gray areas that you may think something is so clear, so black and white, you don’t know that there’s a case or decision lurking, you know, maybe it was ten years old, five years old. That’s relevant to the scenario that impacts your perception on what you should do as a practitioner whether it’s a realization of asset or abandonment of an asset.

So the intertwinement of the legal aspect and the accounting aspects, and then are just the, like, whether it’s common law or statute based, all of these things factor in our decision making on files. And that I, earlier on in my career, I don’t think I had as much of a realization. It wasn’t till I was at a firm that had really interesting, very complex work, that really kind of pushed the envelope in terms of my thinking around is this issue black and white. And I think that it very much governs the way I operate now, and I’m most grateful I had that.

And I had also some really bad setbacks as well in terms of like bad outcomes on files, and that we can talk about this more I’m a huge believer that the mistakes you make and the setbacks you have are really where you grow the most.

Right. Yeah. That’s that’s tremendous advice. Okay. I think we should actually maybe pause here for something I’m gonna decide because we’ve used some pretty technical terms.

And I think it’d be worth clearing up kind of questions or confusion around what some of those terms or definitions actually mean. So just a friendly reminder, you’re in Canada. So if we get too nuanced on sort of legalese and legal definitions, they won’t expand across jurisdictions. And maybe we can talk about, in some instances, if there’s, like, a US equivalent or some somewhere else in the commonwealth, just to be helpful.

But I think about sort of financial distress as a spectrum. So I think probably directionally a lot of these words are going to work anyways. And so I made a list, and I’ll read the whole list if you don’t mind. And from there, we’ll come back and kinda do one by one.

But the words I’m curious about are insolvency.

Receivership, consumer proposal, bankruptcy, which you’ve used. And then maybe within that, and you mentioned in the US, they have a different chapters, are there different types of bankruptcy?

What is bankruptcy protection and what is restructuring? That’s the list of sort of six words. If there are any others that you think are important, you can certainly add them. And then the only other piece here is I would say, are they the same for a business as they are for a person? So that’s a lot. We can go through them one by one, but that’s kind of my ask. So the first one is insolvency.

Okay. So this is the same for a business or person. So insolvency is the same for a corporation or for an individual. So you think about it this way, an individual who can’t pay their debts as they become due.

They have cash flow constraints. So a creditor is knocking on the door, they don’t have the money. The other way is through asset values. So there might be a lack of liquidity to the values or the values could have depreciated.

So if you look at a balance sheet and take asset values versus liabilities, when we see the scales tipping in the wrong direction, that’s insolvency.

So insolvency is not a legal state, but it is normally always a be cursor to some type of legal state like bankruptcy and receivership. So it is an indicator of financial difficulty, cash flow constraints, asset issues, and any corporation or individual that knows that they’re insolvent. There’s they’re in financial distress. Typically, that’s when they reach out to a trustee for advice.

Got it. So if we look at that financial distress spectrum, this is sort of at the earliest end of it. Insolvency kind of is a precursor to other things?

Absolutely.

Okay. That’s helpful. Then what is receivership?

So that’s a non bankrupt state it is a legal state. So it’s usually when a creditor, a secure creditor has initiated some type of seizure, and they’re seizing and selling an asset for the benefit of a creditor. So I have acted as receiver on file, so you can be obtained or appointed rather by court order or you can have private appointment.

And really, your mandate is to go in, seize the asset, sell it, and pay it for the benefit of the creditors. And as part of your mandate, you will also have sight line to other liabilities, other creditors, there might be a recommendation for a bankruptcy depending on what you find when you go in, but it really it’s a non initially, it’s a non bankrupt asset seizure.

But a legal state.

But a legal state. Yes.

And so when when a lender takes enforcement action, they would hire or or appoint a receiver through what you that was what you called a a private appointment. Mhmm. Okay.

That’s right. And then there’s also sections of the bankruptcy act that mandates notices receivers member appointed. So there’s typically, there will be the involvement of, a lawyer for the secure creditor. They find a trustee to act as receiver, and they’re they’ll work kind of directly with the company on the appointment, and the company typically at that stage also has its own legal counsel, so they’re it it sounds like really simple. Like, all of a sudden, one day, a bailiff shows up with with the trustee and has changed the locks. But usually, there’s a lot of the lead up time before the receivership actually happens.

When even then there may have been a quarter or many months at least of, like, tripped covenants or something for that individual business that they own or what have you read?

I mean, it doesn’t just happen over Oh, absolutely.

There’s default notes. And a lot of times, there’s a, an entertainment of forbearance agreements. Right? So the lender might want to again, counsel for the lender might want to put to the debtor company, here’s some forbearance terms to get some commitments from the business of how they’re gonna rectify So we were very alive to in the receivership world, we call it in provident realization.

So you wanna you really only wanna get that receiver in when other options have been exhausted. And, you don’t a lender doesn’t want to come across as being heavy handed to a business, but the, you know, as I say, there is that lead up ultimately, sometimes the receivership is really what needs to happen because the lender needs closure at that point. They’re not moving anywhere that they there also could be a risk that the asset values going down. All these things are considered before an appointment.

Okay. Consumer proposal. I don’t know if this is a uniquely Canadian term. I think it’s a uniquely consumer term, but, consumer proposal.

I my understanding is in the States chapter thirteen is the equivalent. So that’s that means test I was referencing. So there is some type of equivalent where there’s a to creditors. So in Canada though, the definition of consumer proposal is uniquely Canadian.

I’d I agree with you on that. And, so it is an alternative to inruptcy. It is also though you are in a legal state. You’re considered a consumer debtors.

You’re not a bankrupt, but you are called a consumer debtor, and you’ve put forward an arrangement or proposal to your creditors.

So in bankruptcy, when debts are written off, we call it discharging debt. In proposals, we call it compromise. So the creditors vote on the proposed arrangement, it goes through a approval process. So it becomes basically a court sanctioned agreement with creditors.

And one unique thing with a consumer proposal that separates it from bankruptcies that individuals are what we call the debtor in possession. So they they Yeah. Retain title to their assets. There’s no there’s a disclosure of assets but there’s no liquidation type scenario going on with their assets, which makes it a distinction from bankruptcy.

So it’s something about like a temporary state like, if negotiations almost. And would Yes.

So the creditor’s rights are stated. And we and then we’ll get to that too with the bankruptcy protection. So a lot of, you know, bankruptcy creates the state proceedings where creditors rights are the trustee steps in, stays any actions, assets are now in the custody of the trustee for the benefit of the creditors. In the restructuring and proposal scenarios, yes, there’s the creditor protection that the creditors can’t.

A debtor company can’t be fighting lawsuits while trying to make proposals it’s creditors. There is creditor protection, but the assets don’t necessarily that they’re not vesting with the trustee to be sold. The the company needs the creditor protection to get financial relief, but the intent is that the company and the individual will work itself around that they’ll find an arrangement to offer the best that they can to their creditors and compromise the debt and move on. So it’s it’s really meant to be bankruptcy.

You could think of being terminal or end proposal or restructuring is is really, it it is a work around that there isn’t necessarily an end to the business. It’s really turning over that new leaf.

So this may be a silly question. Would you be the one or someone in your shoes be the one that helps them negotiate that proposal?

Absolutely. So, again, so this is where it’s the dual hats. Right? So I might, you know, this is where a lot of times we talk about solvency having difficult conversations.

So I might meet with somebody who discloses something to me that is impactful to their proposal. It could be a transaction that they need to report on that I need to comment on and do an analysis. So At the end of the day, we do make a recommendation that we think is fair to the creditors. And if creditors want us to obtain banks, and investigate transactions.

If there’s a need to do an examination, we’ll make those referrals. So we’re talking a lot to the debtor company or to the individual, but at the end of the day, We have regard for the integrity of the statute, and we will do those negotiations with the creditors. We chair meetings of creditors, obtain their votes, And once we have the requisite majority, the proposal itself gets accepted. It’s passed.

It’s court sanctioned. We collect the proposal money and we distributed. So we are really the facilitator in that scenario. And the creditors have comfort that we’re really kind of like the eyes and ears of the court.

So we’re not I’m not a debtor’s advocate where I we’re shielding things and we’re kind of massaging the situation where we are reporting in partially on the situation. And so that really brings maintains the integrity of the workaround.

Okay. So item four on the list is than bankruptcy. What is bankruptcy?

So bankruptcy is a legal state, and the best way to say it is it’s the liquidation type scenario where the trustee steps in collects as much as we can for income as much as we can for assets and, we report on the discharge. And so corporations don’t typically obtain a discharge. There is a provision in the bankruptcy act actually, and I had it on one file at, I was saying that boutique firm I worked at where a corporation actually did satisfy its in full and bankruptcy, and, was a bit of a head scratcher not to get the corporation discharged. But generally speaking, the discharge is really relevant to individuals.

They go through the process obtain the discharge, get their fresh start. Corporations at Abriley is just the end of the wind down of the business, relies on the assets and pay it out to the appropriate parties.

So a bit of an aside where outside the definitions here. I’m just curious, and you may or may not be able to give a reasonable answer, but, like, what what percentage of total debt outstanding is typically written off in a discharge scenario. Like if I owed, you know, a hundred thousand dollars, would they let me walk for with, you know, thirty or seventy. Like, what does that look like?

You know, it varies because the the statutorily in an individual only has to pay based on income and based on asset values. And this, again, this is similar to the US. So the sim the US has state exemptions, and they also have exemptions around the income. We have something similar in Canada.

So in or if creditors have the right to participate, what someone has paid the statutory, the minimum required amounts, and that’s when I say the minimum, I mean, that’s the amount creditors are entitled to. If they’re wanting more money, they do have the right to participate, the right to weigh in at the discharge. So it varies. I have bankruptcy files where there’s a return of, yeah, like, thirty percent to the creditors.

I’ve had bankruptcy files where situations change, and you get almost a full recovery all in the debt. There’s no hard and fast rule around it. There’s a range of zero, honestly up to a hundred.

Yeah. It it was a bit of an unfair question, but that’s crazy to think that it can go from zero to all.

Yeah. Can I think about it this way, again, another distinction between the American and Canadian statutes in Canada, any assets evolve or become due? So I have had people who have inheritances during their bankruptcy, and that asset is technically up for grabs. So you could have some un unforeseen assets that come into the hands of the individual while they’re in bankruptcy, and that’s what changes the recovery. In the states though, once someone’s filed, their post filing assets are theirs. And so again, it’s just what it some of the nuances between the two statutes.

Okay. That’s super helpful. And then so is it worth covering bankruptcy protection and restructuring?

Yeah. I mean, in a way I kinda see them as the same thing. So bankruptcy the way I would view it is that it’s for a corporation or individual who’s protecting themselves from bankruptcy. So it is that work around through proposals.

I haven’t gone into too much detail, but large restructuring engagements like Air Canada, like huge corporations go through something called the CC AA, the company creditor’s arrangement act, and those types of, statutes, we would call those bankruptcy protection because the corporation obtain to the stay and they’re avoiding bankruptcy. They’re working through a compromise and work around, and it is a form of a restructuring engagement. My only other comment on the the difference between the United States and Canada is that my understanding of the US statutes is that the blanket sort of umbrella term is everything’s bankruptcy.

There’s there’s various chapters, but it’s all within the bankruptcy court. And, here in Canada, it’s a little bit different. We’d we’d really do make the distinct and that, like, a corporation restructuring under C. AA, we would never call it a bankrupt.

But in the United States, my understanding is all of that is within the, the umbrella term of bankruptcy.

And and very newest. Were there any words that I missed? Were there any other words you think people No.

You’ve pretty much covered it. I’m pretty impressed. Yeah. And you’re gonna have to get a license one day.

Yeah. Maybe. You know, it sounds very interesting. You gotta be honest. It sounds very, very interesting. So you kind of alluded to this earlier, but maybe want to highlight a couple like myths or misconceptions that are out there about working with individuals or or businesses that are in financial distress.

Oh, yeah. There’s so many. I would say and one that’s the frontier to my heart is that I’ll start the discussion by saying there’s a scale, right? So you have misfortune, to mismanagement. And somehow the financial difficulty, it could be both ends, but it’s somehow caught on that scale. And and what a lot of people think about businesses, individuals that are financial difficulties that they were irresponsible.

They ran the business rough shot. They really didn’t care about their creditors. They were irresponsible. Or fraud.

A lot of individuals come into this with a really heavy heart. They’re very ashamed. They don’t want to be meeting with a license that solves the trustee They’ve found themselves in difficult circumstances through the economy through COVID. Let’s take COVID, for example.

Right? Like, how many businesses suffered because of this? So That is a misconception that every single person that accesses the insolvency system is uneducated, irresponsible, abuse their creditors. It really isn’t case.

There might be an element of that. Yes. Like, in any profession, there might be someone who’s defrauded their creditors. I’m not saying it doesn’t happen, but by and large, the people we meet, they are there because they’ve tried every other avenue, and their last resort now is some type of restructuring engagement.

What do you most like about this line of work and and maybe just to balance it out? What do you sort of least enjoy?

Well, I most like is adjudication, so I spend I literally spend most of my day talking on the phone, so whether it’s internal discussions, external discussions, and there’s a a huge, education piece, to what we do. So whether I’m entering a student, whether I’m I’m talking to a debtor who’s wanting advice about, you know, what their options are. You know, like, you’re always educating individuals.

There’s a huge financial literacy piece that I’m really passionate about that. And, we can talk more about my social media channels, but it’s really important to me. While I’m here on this earth, I want to impart the knowledge and wisdom that I have within this field and the education of clients of, of debtors, of creditors, of any Canadian or American. I really love that opportunity.

The part that gets to be a little grading and maybe this just speaks to how long I’ve been in the industry, it’s the myth bust type question. So I’ll give you a few zingers. So the common questions of what bankruptcy is not free. My friend followed bankruptcy.

He only had to pay x amount of money or Oh, I thought my bankruptcy would be this many months. I read this online, or what’s wrong with my credit report? Why is there this error on my credit? So those common kind of mythbuster type questions when you get those regularly on a weekly daily basis.

That’s why financial literacy is such a passion because I I know I can see the gap ups, and we answer the same questions over and over. So there’s something to be said that there’s an opportunity to educate individuals.

Well, I mean, your average consumer can’t even drop, like, a family budget, let alone, understand, you know, once in a lifetime, hopefully never a bankruptcy process or insolvency process. So that is interesting that you call that out because I’m sure there’s a huge gap in the market in terms of like what people know and think they know.

Yeah. And a lot of the advice sort of, oh, I was in a bar and this guy wrote it on an Appcan, and that kind of stuff where not and actually I will say that when I started out insolvency, there wasn’t really the internet we advertised, like, on Skytrains and in the yellow pages. And I think we were, like, using ask Jeez, you know, when we wanted to to Google something. So definitely a totally different era now.

And so, historically, what I met with people was very the information was very new, very fresh. They’d really? Oh, Wow. You know, there it was really hard to find information unless you went to the superintendent of bankruptcy’s office and got a pamphlet.

There really wasn’t a lot of information about bankruptcy to the public. It’s different now. Right? There’s blogs.

You can follow people on TikTok, you can go to firm websites.

And so there is a lot of information out there, but I do have to see if cautious about what you’re reading. So that at the end of the day, you do have to still go to that licensed solvency trustee to get the real thing.

Makes sense. Can ask another question that may or may not be totally fair because I’m sure it varies, but, like, you mentioned you’re on the phone a lot. What is kind of a typical day or maybe a week look like? And and is there any sort of seasonality in your business? Like, do you get a lot? Do you get a big influx after tax season? What does that look like?

No. You would think that right. A lot of people think after tax season, we get an Flux. And, and the one reason I’ll tell you why is that a lot of people have tax problems aren’t adhering to tax deadlines. So that’s fine.

That’s fair.

But, the other one too was holidays, right, after Hudduka Christmas. Oh, there was a big spend come January when those credit card statements come in. Absolutely not. So, though, there isn’t seasonality, I would say though that we are if you look at insolvency trends, like, through the superintendent of bankruptcy, they published numbers on filings, we can see filings have been going up in the last twelve months.

So a lot of it actually, if you were to predict trends, it would be tied more to the economy to inflation to bank of Canada interest rates. If you want to prognosticate on numbers, you would look more to the economy and make predictions based on as opposed to something as, like, simple like credit card statements or tax season. But, yeah, typical day, it, you know, I’m keeping in mind I’m a partner, so we’ve got the partner piece. I have the local partnership here in Vancouver that I have a lot of interaction with the partners around here, but there’s mentoring, lots of phone calls, a ton of emails, signing off on documents, reports, king.

We still do I do an element of court, so I’ve been speaking court for over twenty years. And so it’s preparing for court application speaking in court. It kind of runs every day is different, I will say, and the day flies by. So if anybody wants sort of a fast paced career This is one.

And where I am in Vancouver now, I I have a lot of people who always say to me because I’m in an internal office of people walk by all the time. They always say to me, You’re so busy. You’re always, you know, you’re always on the phone. You’re always on a call, or they’ll stop me.

Go, what is it that you do here? Cause you feel it’s a sense of, you know, I when you do this work, you stand out to the person sort of plugging away on tax returns at t one season or, someone sort of plugging away on an audit file or there it’s a different pace to what we do for sure.

Can you share maybe an example of, like, a key project or accomplishment that really accelerated your career?

I would say public speech And so I’m a huge fan of people putting themselves out there even if they’re unsure themselves.

I know I think public speaking is right up there with heights in terms of fears. So it’s not for everybody, but it is a skill that you will need at some point in your career. So if you plan to be a leader, you plan to lead a project. You are gonna be standing in front of people, guiding them, responding to things on the fly.

And so I can tell you, just to give you a little bit of a story. The first time I spoke in my We’re tight knit community as you’ve commented on. So I got asked during my Matt leave, and I’d just been licensed to do a presentation at a a local conference, and I was used to seeing some of the more senior gray hairs presenting really looked up to them. And so I knew that I was going to go in not having, like, I was already having a break on my bat leave.

I was going show up and present to this very sort of senior seasoned group of people, and I had to do something like hot topics and to build out the content myself. And so I didn’t have a comfort level initially, but I just said to myself, I had like an inner voice that said do it, and you need to do this, and this is how you’re gonna build own personal brand. And I didn’t stop after that. I I speak at those industry events.

I speak at academic conferences, So what happens with that is you build confidence.

You build out your network. People get a sense of your brand, who you are. It’s an opportunity to showcase personality. A lot of what we do, I’m interacting, you know, if I want files, I want a lawyer to send me a file or I have a a banker that I wanna work with.

You know, you need to be able to sell yourself and interact with people that have those discussions. I think public speaking and presentations are a really great way to learn that skill and do it in a way that you’re really challenging yourself. Right? It’s it’s a very intimidating thing.

You could really pat yourself on the back. If you’ve done something like that. And the last bit I’ll say is that where that when I look back on those experiences and how I really had to push myself, I didn’t have a lot of mentorship in that regard. I had to really just do it sort of jump in where the benefits are now is that I never anticipated that I would do radio interviews, TV interviews, and now these are things happen on a very regular basis in my business and it’s ones that my firm finds for me to do and there’s some that media outlets reach out to me and ask me And if I hadn’t really pushed public speaking, if I hadn’t pushed doing those presentations, I wouldn’t be able to do that as well.

So you never know where those skills are gonna translate later on in your career. So I I’m a huge believer in putting yourself out there and, doing presentations and speaking.

Love that.

So you’ve given us so much insight, and I think it’d be important just to sort of reinforce some of the the key takeaways. So what if you could say or kinda two or three of the most important skills that someone should have, if they wanna get into and be successful in this line of work.

Well, definitely communication. So oral communication oratory skills is key because you are communicating with the courts, you’re communicating with the regulator, you’re chairing meetings or creditors, reading reports, doing a now assist. I speak in court regularly.

Again, going back to those hats, we are interacting. I’m interacting in a work day with, depending on the file, the engagements I have on my desk lawyers that referred the work with the creditors, with the debtor, with counsel. I could have the superintendent’s office phone and have a query. So that being able to communicate effectively professionally is really, really important.

I would also say having professional judgment. So kind of going back to what I said earlier that we might think there’s one way of doing things or one way of administering things, but you have to be able to e exercise professional judgment. It starts in the beginning of client acceptance. Am I a right fit for this file?

Do we have the expertise? That goes all the way through, administering the engagement. One thing to keep in mind is that for insolvency mandates, we can’t do in a legal world. They call it tools down.

Once we are on an engagement, we are the try of record until we’re substituted by court order. So professional judgment when you bring work in and professional judgment on what’s going what it will take to administer the file and have the ideal result for the stakeholders is really, really key. And I would also just say sort of strategic thinking, so strategic thinking around outcomes. You wanna be able you wanna understand case law, be up to date.

You want you have to stay connected in your industry, marketing, and business development is huge. You have to keep up professional development. So you really do you you can’t sit back on the five to back and relied on my insolvency knowledge when I got my license nearly fifteen years ago, I’m going to be left in the dust. Right?

Innovation is key moving with the time I’m staying current. All of these things make for a strong practitioner.

It sounds like a very, very dynamic environment. So Jennifer, where can people go to connect with you or learn more about what you do? I know you have some social channels.

I do. So, I am really passionate about personal finance budgeting, cooking on a budget, a lot of it’s kind of family focused, and it’s really bare bones basic around budgeting, cash savings, etcetera. So my two channels are what’s on Instagram, and on TikTok. It’s Fast Finance with Jennifer.

I also love posting on LinkedIn, writing of more blog style format. So I report on consumer matters, consumer finance, economic updates, like, all that kind of stuff it’s a little bit of a different feel, a little bit more formal on LinkedIn, but nonetheless I I do wanna have followers there as well. So I’m I really believe in brand, in, like, your personal brand, promoting, for me, it’s promoting financial literacy and financial awareness.

That’s great advice. And we’ll actually leave those links in the show notes for any of our listeners that wanna be able to go there and check it out. And I encourage you to do that. So we’re coming up on time. I just wanna ask sort of one final question, and that’s if if you weren’t a licensed since obviously trustee, what would you be doing?

That’s hard because I, I mean, I’ve stayed in this profession for a long time, but I really am more of the type that I would have bounced around, just because of the way my mind works, I like a challenge. But I will say that I have a huge pass passion for forensic psychology. So when I graduated, I was working in a forensic lab, and forensic psychology is psychology in the criminal justice system. So it can be through prisons and institutions. It could be through victim services. It could be through psychological profiling, policing, etcetera. So I probably would have explored some type of masters or and psychology in that realm.

Very interesting. I hear all kinds of the cool answers to that. I’d be fishing or I’d be in the military or That would be a forensic psychologist is, definitely unique. So, Jennifer, this has been terrific. I I honestly can’t thank you enough. This has, been very, very insightful so on behalf of our listeners.

Thank you, and let’s keep in touch.

Thank you.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning wherever you listen to your favorite podcast or visit us online at corporate finance dot com slash podcast. See you next time.

How did this seventeen year old child I moved to the US at age seventeen for college from Nigeria. And it’s like, how did this child who moved left her family to come to go to college, end up, the CFO and, the hundred plus the year old architecture firm. I think that’s fascinating.

This is Net Learning.

The podcast that keeps finance and banking professionals ahead of the curve. In each episode, we focus on career growth and of advice, while mixing in the occasional war story. Join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and responses.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Piederty. My guest today is Boenele Williams Ollie, CFO and co owner at Mancini Duffy. A full service design and architecture firm based in New York City. Bo Landley, thank you so much for joining me today.

Thank you for having me. Glad to be here.

And we’re and we’re thrilled to have you. Belendly brings over sixteen years, actually, a finance, experience, and a and a wealth of experience with nonprofits as well. Beyond that, she also authored the best selling book, Build Baldwin. And I’m looking forward to talking about, all of that today. But first, perhaps you can tell us a little bit about Mancini Duffy, please.

Yeah. Of course. So Mancini is a hundred plus year old architecture firm based in New York City. You can imagine I wasn’t there.

When it initially form, but, you know, myself and my partners, there for the partners are currently leaders, at Mancini now. Mancini has a rich history, that we are grateful for in architecture, but let’s go back maybe like ten, fifteen years ago really focused on corporate interiors, in the financial sector. And so when Christopher Jodano, who is our current president, and, one of my partners, became on as one of the things that we started thinking about in terms of how do we build upon the legacy of the the firm and then take this firm into the twenty first century was beginning to diversify our market sectors, you know, the types of clients that we work with.

And so I like to say that we are a tech technology first designed from that services, clients in all different sectors, be it, aviation, retail, corporate interiors, restaurants, hospitality, self storage. Right? We have, like, the really, really prestigious projects that we do in times square to, projects that we do in Jersey. Right?

Like, we do a range, of of projects that has really helped us cement our ourselves in this rich legacy that the firm has. And so, been amazing, so far. Right? We do architecture and tour design planning.

And our clients, I think, really appreciate how we’re really thinking about how do we deliver our projects in in, using technology in a way that’s unique to us. So one of the things in the last five years, again, that I think is is special to our firm is, you know, we have a patent approved That’s it’s approved. And I say that because I’m really proud of us, a patent approved, software called a tool belt, which we’ve developed in our design lab, and it really our way of designing using, technology that helps us do work that architects would typically do in three weeks in three hours. Wow. And so, it’s been an amazing experience for me to one, not only be the CFO, at Mancini, but also to see this, essentially rapidly innovative architecture company really embracing, change and doing it awesomely, if that’s a word.

I’ve read or rather listened to a good portion of your book. Build boldly, and it it’s very, very insightful. Did you wanna maybe a quick background on, you’ve got a copy of it there. What inspired you to, to write a book and, and maybe tell our listeners what it’s all about?

Yeah. So let me first start off by saying that writing a book was never one of my goals. And I’m I’m a very goals oriented type person. Right? Not just from, at the start of a new year, but at any point in time during a year, you know, I think about a goal and I pride myself on being one who executes.

In fact, you know, when the the thoughts about writing Bill Boodi came about, that was probably in two thousand anyone, I would say it was January first. I had no idea that I was gonna be writing a book fast forward maybe two to three weeks after. My kids and I were sitting down and they had, they had this idea for a children’s book. I had approached to someone who is was an editor and you know, I’m saying like, oh, you know, I’m the CFO of this company, but I really wanna write a children’s book. And she’s like, no. Wait. Hold on.

Tell me more about your career journey, right? How is it that this person who, you know, doesn’t have this, background in accounting from an educational standpoint has been able to navigate your way. That’s me. Right? I’ve been able to navigate my way and you know, as I was sharing a lot of the things that I did as well as pivotal moments of growth, like real exponential growth in my career.

You know, she said to me, I don’t mean to put any pressure on you, but I really think you should write a book. And so I spent some time, you know, pondering like, okay, a mid career. A lot of times when people are writing books, especially around, you know, career path journey, sometimes it’s, you know, you’re reflecting maybe you’re about twenty, twenty five plus years in. But I thought there was something special about opening up the curtain.

While in the midst of figuring out your career path. Right? Yes. Everything that I’ve done so far has gotten me to where I am, and I felt like my peers, one, could learn from my journey. Two, people who were coming into the workforce could learn from this, like, very unique way in which I’ve been able to make it to CFO really quickly as, you know, I became CFO at thirty two And also, like, as firm leaders or as organizational leaders are thinking about, how do you nurture your staff? How do you retain really good really good teammates. How do you also manage, you know, client relationships?

How do you really think about doing things differently? How are you leading?

As as, as as someone who then, you know, you moved from this technical expert to a leadership position. How are you really leading in your company and how are you setting your company apart?

That’s why this book Bill boldly, you know, essentially was birth. And I was like, you know what? I am going to do this. This is one thing that actually pretty much scares me. You know, writing something that’s, you know, you write it. It’s final and it’s it moves on, it has a life of its own.

But it was such a necessary book when I wrote it and the response from peers, the response from, you know, a woman, woman of color, but other women, other mothers who just really resonated and connected with my story, it it it it showed me that the this book had no other choice than to come to life. And so, you know, I titled it Bill Boney one because felt like, the moments where I really, saw growth in my career paths where moments where I was really bold. And there’s a whole, acronym in the book called the Bold Framework, which I kind of like summarize at the end of each chapter. And it’s this idea of you know, when the reader picks it up, can they sit in the driver’s seat rather than just allow their carriers happen to them? Can you chart your own unique career path?

And if you’re a leader, really challenging you to think about how you can lead boldly through through courage, And you’ve touched on so many so many topics that I’d love to unpack today.

Sure.

And so I appreciate that background of that context. And you you you just mentioned it quickly, like, so many CFOs spend time early in their careers at like a big four accounting firm. You did not, and that’s super inspiring. And and I wanna hear more about that. Maybe you can Spend some time here and and tell us a bit about your background and your early career journey. How did you get to where you are today?

Yes. I I sure can. It’s, It’s an incredible story, you know, one that I I I think I reflect on from time to time and I sit there, like, how did this seventeen year old child? I moved I moved to the US at age seventeen for college and, from Nigeria.

Right? And it’s like, how did this child who moved left her family, you know, to come, to go to college, end up as a CFO and, co owner of again, like a hundred plus year old architecture firm. I think that that’s fascinating on paper. Anyone will be like, but how did that happen?

Yeah.

And so for me, you know, studied mathematics in college, that wasn’t even what I came here to do, but it was a passion and something I was really good at. I did I I did a applied mathematics, masters. Bachelor is also a mathematics but the the idea behind the degree was that I would be able to apply it to any industry to get work at. Right?

I always see like those beginning stages when I was applying as an international student for work. I interviewed very terribly. Right? I wasn’t, as sure of myself, I couldn’t really speak about my degree and like, okay.

How how are you gonna translate these skills that you have? To the workforce. I didn’t really know how I was gonna go about that. However, you know, I I always say that the pivotal moment for me was when I found, you know, this job posting for junior project accountant at an architecture firm.

No clue what that meant.

But I was like three weeks to graduation.

And so I was like, you know what? I think I took a long term of technical drawing in high school. So I said, ah, this might be interesting. Let me apply, for this position.

I ended up applying. I’m getting called in, but there was something I did. I had to make a decision within myself.

How are you gonna show up in this interview? Are you going to be, you know, timid, not sure of yourself or present yourself as who you think the interviewer wants to see, or are you really going to, like, reflect on your own strong skills that talk about your math degree. Talk about this complex thesis I was working on. And listen, you take it, you know, take me as I show up which was a candidate who was ready, willing, eager to learn anything about this role, pour myself into it. I knew it was entry level. But I I made a decision that I wasn’t going to show up scared.

And that essentially opened the door for me.

The person sitting across across me also studied drafting school. Maybe that was the trigger for him inviting me for an interview, but we connected of that. Right? And I always say, like, at that entry level position, we now, you know, now being a leader.

I know what we’re looking for. You don’t know everything. You need that opportunity. So what I think they were looking for was, does this person have the character?

What are the, what are the, what are the traits they’re showing? And can they be a good addition to the team while giving them an opportunity to learn and grow? And so I say, you know, to lead us as we’re thinking about filling lower level roles or giving somebody a shot, like, that for me was what caused the door to open for me to begin this sixteen plus year career journey within the architecture space. Right?

So again, like I said, knew nothing but went in. I was so excited. Got the job, went in. Learn.

That was two thousand seven. So you can imagine two thousand eight financial crisis living through that. And I say make another bold move. I went to the CFO.

I said, listen, we’ve unfortunately lost people in the team. I’m willing to learn. Please invest in me, which he did a lot of the foundations that I have, knowledge about the industry, how to think about projects, how to think about project accounting, came from being given that opportunity then. And so then, you know, of course, as you’re learning, like, I need to shift shift firm so that I can learn how to how arca how accounting is done in architecture from a different perspective, I moved, to another company.

And then after that, you know, I was on my merry way. I had my two kids, and I could have very well stayed a senior project accountant, but character.

I got a phone call, for a controller position at Mancini Duffy, And it was because Christian Jordana, who’s our president, worked with me at that very first job. Not one on one, but, you know, just that interaction, him coming to accounting to drop off his expense report, and I see a high, hello. I, you know, I ask about him, his projects, just that interaction made him remember me ten years after. Isn’t that amazing?

And all the all the thoughts that I could have had on, like, this is a double promotion, how am I going to do this? A lot of controllers have twenty to twenty five years experience, their CPAs, you know, there was just so many things. Like, if I went on LinkedIn then and looked, I was like, oh, I’m, I’m definitely not qualified. However, opportunity was given to me.

And so I stepped in two thousand seventeen. I was controller by two thousand eighteen you know, the leadership was like, well, no. We really need to fix your title. We’ve really been operating as a chief financial officer.

So I got promotion.

To CFO. And in the following year, I became owner, and I like to say the following year, I got thrown into the gauntlet, which was a global pandemic. So you can imagine first time CFO then having to, to deal with, crisis and leading a firm through there. But while we’re here, we are here.

So so one of the things that that really jumped out there that I thought was so interesting was use a double promotion, like, two steps up. We can always think of reasons not to do something, not to take a risk. Right? And it and it’s it’s refreshing to say, no.

No. I I can do this. Like, I’m just gonna jump headlong in and and to figure it out. I think that in and of itself is is just a really inspiring attitude.

And know, a lot of our listeners and a lot of our members at CFI are are sort of in the career progression business. And so I I wanna ask For folks that maybe don’t come from a finance background, but that are interested in in getting into the role, What are some things they can be doing or ways that they can be positioning themselves to to kind of get an opportunity in the field? That’s part one and part two is like what are some of the roles they should be looking for as like more of an entry level career changer type opportunity?

Yeah. So I I think the first thing that you kind of have to do is just really be honest with yourself and have an audit on what are your relevant skill sets that can apply to this finance role that you are considering. Right? So again, I I just talked briefly about, like, how I was thinking about that first interview and positioning my self, right?

I had to be like, okay, from an educational standpoint, what does a math degree give me? Right? It gave me the analytical skills. The ability to think about problem solving really differently to not only approach problem solving one way But, like, how else can I think about a problem?

Right. How else can I find a solution? How else can I arrive to where we’re trying to go? Right?

So really one, there’s a self analysis piece of it, right, that we all as, you know, individuals thinking about either maybe change or, like, you want to to maybe you’re in college, you’re trying to now get in. You have to think about what are the skill sets that you have that one, you can apply to this, job role that you’re trying to seek. And two, as you’re you’re thinking about the skills, how can you even strengthen them. Right?

So strengthening them comes from either maybe taking some courses. I mean, this is the age of the the internet. So there are lots and lots of resources, online, even from colleges. Right?

They, they, a lot of them have, like, either free courses that you can take that can begin to help you just get some foundational knowledge. Right? You so, so for me, the way I think about that is, are you open to learning?

Right? You have to be one who is a continuous learner. Even me in this role, I have to make sure I’m continuously learning plugging in so that I don’t, I don’t get still or too comfortable. Right?

And then it just helps broaden your your your knowledge and your skill set. The other way that you can think about finding opportunities is is one by networking. Right? So for me, I would say, you know, when I think back again to to coming in.

I didn’t I wasn’t really plugged into any professional networks. But now as a CFO, you know, I’m plugged in. We have something called, you know, well, one, CFO is a network, right, but there’s also something called the CFO leadership council that I’m plugged into. And there’s nothing like learning from your peers.

Right?

Right? So there are people who are constantly sharing their different experiences.

You are able to plug into maybe there’s a particular area of finance, if you’re interested in nonprofit or corporates, or you’re looking for other women who are navigating their career path, plugging into Networks helps tremendously. And it could even be peer group that I do not underestimate the power of of learning from your peers. Now, in terms of roles, again, find either internships or entry level positions that you can apply to. So for me, within our industry, right, it’s the it’s project accounting or cost accounting. Right? So that’s where I why my first role was a junior project accountant, which really is, like, you’re doing everything ad hoc in the group. Or you start off, you start off, you know, I I have on my team, I have a lady who started off, as our accounts payable specialist.

But because she saw, you know, the project accountants. She supported them. She saw how they worked. How they supported our project managers.

She approached me in and said that she would like opportunity to grow into that role. And so I guess this part now would be on the leader side. Right? Are you creating room especially for us in accounting and finance where a lot of times, unless you’re in a really big organization, there really isn’t trajectory to maybe horizontal, sorry, vertically grow, you know, up in their careers. But are you creating rooms where there’s cross cross functional learning, right, where they either have an opportunity to get exposure to a different side of the business. Right? So one, you as the the person who’s seeking new opportunities.

Make sure you’re speaking up, but then two, as leaders, are we identifying traits within people that we think and maybe possibly help them in their career paths and and give them opportunities to learn something else. So those those types of roles or that type of thinking and mindset, right? So I’ll just say it again.

Skills, continuous learning, plugging into a network, keeping yourself informed, right, with with new rules, times, where you’re getting your financial news from. Right? Like thinking about all those things will help you as somebody who is, again, maybe not You didn’t go to school for accounting, but you do have interest in it, internships, nonprofit volunteering.

Right? Volonter for it is an organization, volunteer to to to help, you know, in an accounting group for a nonprofit. Of course, maybe working under somebody will give you the exposure you need, but you can’t, you know, just sit down and say, well, let me just apply for this position and you don’t really know how to one to show up to the role. It’s it might not necessarily work out as planned, but you have to be able to speak up, go after what you want, and there are always people out there willing to help.

Yeah. It’s such a valid point. It it’s got me wondering about so how do you recommend for folks balancing the delivery of, like, your day to day duties also sort of thinking about that long term career progression piece. Right? If people wanna try something that’s a little bit more cross function and they wanna be positioned themselves. Maybe they’re taking on some projects. But, like, how do you make sure you’re still thriving and executing in your day to day?

Yeah. So, For me, the way I think about this and where I like, you know, I advise people to think about this too is that life is very seasonal.

And what I mean by that is there’s a season for learning. There’s a season for for expansion There’s a season for growth. There’s a season where you have to, like, stay still. Right?

So really understand what season are you in your life, in your career path. Again, a lot of this is is self reflection. What is your current to see. Right?

So, yes, you want to get this exposure, but maybe is this, is this a year end close? And then now all of a sudden, you’re like, It’s the end of the year. I haven’t accomplished this one new, course that I wanted to take. It might not necessarily be the right time.

To do that. So really understand what your current capacity is. And if you’re then able to craft out that time, to then start getting exposure. So, right, I give that example of, like, maybe possibly volunteering in a non profits, helping them out with their finances.

Maybe it’s during tax time. Right? Think about what your day to day is. And are you able to give one hour, two hours, four hours? A lot of times when we take, take stock of how we’re spending our time, you’ll find that you if you if you want to, you can make time out for some of some of these activities that will help you on your journey. Right? Like, if you’re really serious about, wanting to add on or or continuously learn or give back so that you then get exposure to to the finance function.

Take your time, stock.

Yeah. Understand what season you’re in. Understand what your capacity is. And even if it’s not a Not not right now because your day to day really just requires you to be there fully present.

You know, you don’t have any time on the weekend. You can’t do anything. That’s fine. But maybe in three months, you can find two hours a week where you’re where you’re slotting this in.

Right? So I think the key is remembering that it’s not a sprint. It’s a mar it’s where we’re literally running a marathon. And so give yourself great if you’re not able to, you know, not everybody has the same capacity.

Right? So give yourself grace, but don’t get lax.

Find that time and then begin to, to plug it in because you want, again, of course, you want to get to the end of the year, you set your goals, you want to get to the end of the year and feel like you’ve accomplished it You just have to find that time to to put it in.

It’s interesting what you say about time. I had another guest, like in time, to money in some ways. And, well, you can always go and get more money, but you can’t get more time. It’s the one resource that you have a finite amount of And so thinking about it as you would your, like, investment portfolio and what’s gonna generate return on your time and are you using it in the most sort of wise fashion. It was such an interesting concept. And, yeah, I’m glad you brought that up.

So maybe we can talk just about the CFO role broadly. You mentioned earlier how you got promoted out of the controllership to sort of right size your title based on your responsibilities. Like, What are your responsibilities? How do you characterize what a CFO does and maybe how the reporting lines break down typically?

Yeah.

So I think for me, you know, when I when I think about, you know, my idea of what the CFO role was, as an employee. And now, actually, you don’t seeeping in that seat. And then I think in in twenty three and twenty twenty two and twenty twenty three, it really has evolved from from when I reported to CFO to now being being one. And so so so when I think about, like, you know, what is it I do?

What is the value that I bring? How do I help the firm walk towards his vision. The very first thing that I have to be doing is really thinking about How are how are we leading the firm strategically? Right?

How are we tying from a financial perspective? Right? How are we how am I? As well as the partners shaping our financial future.

And, you know, how how are we walking on our path to growth? Right? What are our business goals and how do we make sure from a financial perspective that all the decisions that we’re making strategically aligned with the business goals.

The second, actually, maybe there’s no second. Let me not let me not label it with numbers, but say the the other important thing is the f in the CFO. Right? It’s the financial oversight and management.

Right? So are you paying attention to to all your financial levers? What makes your business business, move? Are you doing the budgeting?

Right? Are you doing the day to day? Are you leading your your finance team? To make sure that everybody is doing their part, when it comes to, you know, our day to day, weekly, monthly monthly rhythms, are we doing what we need to do?

Right? And so it’s very important as a CFO that you have the financial oversight and you’re managing this process properly. Right? Are you comply are you paying attention to compliance?

Right? Are you my my president says that I call him santa clause.

That’s because, you know, he’s a visionary. Right? He’s he’s there. He set our big goals, but myself, alongside our CEO, we’re really there to, like, balance and manage, those big goals and dreams we have.

Right? So so that’s a key role. Right? We are integrators, right, taking the the visionary ideas and then bringing it down to reality a little bit.

How are you managing risk? Right? And then I think for me, as one of the important thing is do you understand your business? Right?

Are you just sitting producing reports Or do you really understand, like, for me now in architecture, right? Do you have a general sense of project cycle, project lifeline. How are you integrating with the project managers and studio leaders that are running these really large complex projects that we’re working on. How is accounting and finance really being something I called the nth sense of design, which is through our numbers, we’re able to see and be proactive about catching potential challenges by just asking the right questions from what we’re seeing on the number side of things.

Right? So that’s from an operational part. Right? Like, how do you truly, truly understand how the business works so that as you’re doing your analysis and your team in the in the finance team, we’re able to then, raise the flags or be like, this project this studio is doing really, really well.

What is working?

And how can we, you know, maybe replicate or or roll the things that are working, out. Or we’re having issues here.

What levers do we need to pull, you know, to make sure that we can course correct and minimize the the the problems that are coming coming on on on here from the project side. The other thing that I wanna say is that you have to be a leader.

Right? You have to be making sure that you’re pouring into your team, you’re leading your team. You’re also leading the organization. Right? Because now you’re at an exec level. Right? So the firm as a whole has to fill you or fill the impact from a leadership perspective.

How are you educating? Right? Do do the folks in the in on the floor, right, in the business? Do they understand what one hour of their time means? It doesn’t mean that they all of a sudden have to start, like, being concerned about how this is trickling down to the income statement, what, like, is then educational part where they know the how how they fit in the piece because I think when you have that, then you build buy in, then you build trust and all of that then trickles down to the fight to to your financials.

So those are some areas that I think are very important when I’m thinking about what is the role of a CFO?

Not just from our technical expertise standpoint, but from a from a a leadership perspective. I think maybe the last thing I would say is also from an innovative perspective. Right? Are you thinking about new ways in which you’re presenting the numbers?

Are you making a digest are you just, you know, we are the ones who have all the accounting terms. But, like, when you’re speaking to, Again, I I keep coming back to my industry. Right? But when you’re speaking to architects designers who did not go to school for these for these things, How are you relaying and storytelling the the the the the crow right, the storytelling what is really important to them.

Right? For for my CEO, he wants to know, is our business okay?

Yeah. Are we going to be able to my plain English? Yeah.

No jargon. Just just explain it.

Just explain it. Right? And I think there’s There’s the beauty in being able to take something that’s really complex and make it simple digestible where the person or or, you know, your board or whoever it is that’s receiving this information from you really feels like they understand and they can walk away and go and make the changes that they need to make in the business to make sure that again, you’re aligned going on track with the business schools that you’ve set for for your firm.

You talked a lot about leadership, in that answer, and I I wanna pull on that leadership thread a bit. You put out a social media post recently that featured some really interesting lessons about what parenting has taught you about leadership in the workplace. And I I’m a parent as well, and it really resonated with me some of the topic areas were, like, empathy fostering a supportive work environment and and sacrifice stood out. Would you would you care to chat about that a bit and your how parenting’s influenced your leader so.

Yeah.

So, you know, I my my daughter just turned ten, and I was sitting there thinking, oh, wow. Like, When I reflected back on ten years of of her life, right, and time, I also that then made me think about like, work. And I was like, I’ve I’ve experienced and grown so much in ten years in my career journey. I was like, there has to be like, take a moment to to reflect on how parenthood has influenced, this career journey and in some ways helped me grow again very quickly and exponentially in my journey.

You know, when I when I the the first thing that’s that just just came to me was empathy. Right? Like, a little child needs you. Right?

They need you. You need to be warm. You’re you’re there. They just they they are they are there.

I’m looking for and looking for care from you. And so for me, I think very early on, one of the things that set my was a mark in my own leadership style skill was this, this ability to really care about people.

Ask the simple question. How are you?

You know, it might be simple, but it’s loaded. It’s so simple, but it’s it’s actually loaded. And, like, actually connect with, not just again, the people in finance, but, like, somebody who’s starting up my organization for the their first week. How was your first week? Tell me, you know, like, how did it go? Tell me something about yourself.

I’m telling you sometimes when I did that, forget about leadership now just as an employee navigating my way. People tended to just connect connect with me. It allowed them open up. It allowed them feel like, listen. We’re working here. Like, if you think about the work, we could spend so much time together.

You know, the time we spend at home is really minimal compared to the amount of time we’re spending with the people we work with. Right? So can you just just pull yourself out of, you know, from from our world, the business of our lives, and actually just take a few minutes to connect with your your team. And like I said, that that for me was a was a real game changer connecting to leadership when I was an employee. Like, I would you know, I would be supporting, big, big clients, big, big, you know, partners that were working on, that let me say, like, working projects in China. And but Joseph Farka, I said, oh, how was your daughter’s horse race riding?

And that’s that allowed them, open up. And so again, just empathizing with your sim situation empathizing and trying to understand what season they are in their lives. Right? I think helps them just be more engaged working in your team because they know that they are working for somebody who really cares about them, who’s real with them. It just lets people do better work.

So then the second thing I said about sacrifice, we are constantly in, you know, there’s a trade off all the time.

Everything. Every yes is a no to something else. Right?

I’m telling you right now. Right? As we’re recording this, my kids are home. It’s a snow day, but I’ve told them I can’t be with you at this very moment.

You know, like, mommy needs this time right now to to do this to this, recording.

Fortunately, because I’ve sort of, like, you know, been talking my kids. They they kind of have an idea of what I do. They were like, oh, mommy takes care of the money at work. They understand the importance of my role.

And, you know, when I when I ask for this time, they are they honor it. Right? So that’s from the the the family child side, but also from the work side. Right?

Like, There are times when I have to be home today because there’s there’s a snow day at school. That’s a trade off. I can’t be in the office. Right?

So your constantly juggling this, what is what what are you working on right now? What are you giving up? But my approach to it is just take it one day at a time. Right?

We know what, maybe, maybe, again, your goal setter, you’ve set your goals for the quarter, break it down into something small and then take it one day at a time. Make sure that you are making progress from your from the work and professional perspective.

Make sure you’re making progress on those things. And then also from the, you know, your family side, you’re making progress, but you cannot have it all at the same at the same time. Right? You can have it, but not all at the same time.

And I think the last point I have brought up was about, you know, support And I think anyone in a leadership role writes for you to really be successful There has to be support in in all forms. It could come from family if you are able to plug in. I think for me culturally, being from Nigeria, like, having almost like a village is something that I grew up with. Right?

And so I think about, like, you know, friends or maybe other parents in in my kid’s school where we kind of all just band together and help, during all the seasons. Like, that’s that support that I treasure that allows me show up in my leadership role. And then also, as an organization, how are you how are your policies? How are your practices?

How are you’re actually walking the talk that that we say when it comes to, yes, we want parents to return and, you know, and then they’ll be able to come back How are we really thinking through what that care and support looks like in our organizations?

You know, so those are some of the things that I’m always constantly thinking about that have affected how I lead right now. And so it’s it’s been an interesting journey.

I started, you know, leadership. I was pregnant. I went back to school with with my son. You know, it was just it was crazy.

But I’ve somehow navigated it now, and I thought that it was important to to share these reflections that I had and see what other folks were thinking. And I think that post actually did really well. A lot of people connected with it. So maybe I need to now start sharing some more around parenting and, you know, being being in a leadership position.

Yeah. Well, there’s so many lessons to be learned. And in some ways, it’s kind of the ultimate metaphor for learning on the fly, and and being flexible in some of the characteristics that that parents have no choice but to exhibit are are things that you probably look for or want an employee in some ways too. And and actually, I’d like to talk a little bit about that.

There was an experience that you cited in the book. And I and I think it was when you were joining your current firm Mancini Duffy. You were talking about how silly it is that, leaders hire top talent, but then they failed to put the support infrastructure in place that’s needed to, like, help those people be successful and actually kinda make the impact that you envision for them.

Can you talk about that a little bit?

Yeah. So, like, did I use the word silly?

No. I’m I’m paraphrasing. No. Yeah. It it is. You can talk and think about it.

You you know what? If we if you think about it, it is one hundred percent true.

We want top talent that is you want you’re looking for AA plus talent to come work in organizations or maybe, you know, you you identify a plus people in your organizations.

And sometimes you give them opportunities to step into roles or positions that may be, you know, they are just primed for.

And one of the things that I think, you know, we sometimes don’t do well as leaders is really think about How do we make sure that they are set up for success so that when they start this role. They don’t fail terribly. I’m not saying that they don’t fail at all. Right? Because when you step into a role, you wanna fail quickly and then, you know, keep it moving, learn the things you you need to learn, and then, you know, continue your trajectory.

But that that example was around, you know, when when in the interview foot for the controller role. I said, listen, I could do project accounting in my sleep. I can I can support project managers?

This is firm wide.

Right? I don’t have again the educational background. How are we gonna make sure that I can do things? You know, if I have if I have questions, I have that resource.

So what what ended up happening was that, they hired a financial consultant that I worked with, you know, that had sort of helped with some ownership transition, things for, the my my partner’s Dan. And I had this help.

And that, you know, I I say because I was already an a plus player, that investment in me early on Before year one was was done, I I outgrew that support.

Right? And so if we now want to zoom out zoom out for a second, right? Think about folks who are prime for a position. What can you give? It might not maybe you cannot afford to hire a financial consultant, but are you as a leader crafting out the time to spend and invest and lock it in your calendar and pour into them. Or if you don’t have the time, can you find, some funding within within your firm where they can either take a course or, you know, something where they don’t just feel like they’re thrown into the water without any support whatsoever.

So of course, you’re looking in in your organization, looking at resources, looking at pairing them, looking at helping them plug into organizations.

Right? Like, that’s that’s a resource. Right? Because a lot of organizations you know, you pay the the annual fee. They give so many free webinars.

Yeah. Foundational webinars.

If you’re scaling to, I don’t know, a million billion dollar work. Like, they have all of these webinars that you, again, as person, you have to plug into, but of course, you need that support. I think when firms do that, the employee or the the teammate, you know, they are they are ready to rise because they already displayed that character. If displayed that character that if you pour it into them, they’re gonna rise.

They’re gonna rise quickly. They’ll feel fast. Rise quickly build their credibility.

But there has to be some some investment from from the organization.

And I and I have to imagine at least anecdotally that that probably helps with retention too. Right? Hundred percent. Feel supported all the time.

A hundred percent. Again, you know, so it’s it’s it’s support can look different depending on your organization. Right? You might not be able to afford it financially, but maybe, like, how else?

Right? Like, start thinking creatively And you will see that that the ripple effects of it just helps is a is a win? Is a is it such a huge plus morale boost for that for that employee or, you know, and who who personal persons that you’re you’re pouring this into, they’re they’re locked in. I’ve not seen it for myself.

And then this is not just an example about me, although my other, you know, peers in other industries.

When they have that support, they’re growing very fast. And and you you you see there’s a differentiator with in how they they either stay committed to the organization in a when we’re living in a time where you don’t really have lifers.

You don’t have lifers as much.

Yeah. It’s a different it’s a different era. And and and it’s funny what you said. I because I actually wrote down a quote from your book that I thought it really resonated with me. And I think it speaks to what you’re talking about now, and it was We all have time to lift others up with us. Once you start exercising the muscle of thinking about other people, it will expand. And I just think that’s such a great that’s such a great message and such a great takeaway.

We’re coming up on time. I wanna be respectful of your time, but I I’d love you could tell us maybe just a little bit about some of the non profits that you’re involved with, if you wanted to to tell us a bit about that.

Of course.

And thank you for for, you know, creating a space for me to talk about the things that I’m also very, very passionate about. So as I mentioned earlier in our conversation, I’m from Nigeria.

And one of the things that was very important for me to do even before becoming a leader was giving back to the the country that I came from, and I’m very passionate about education, especially, like, improving the quality of education for children who live in low income communities back in Nigeria.

Fascinates that they feel that there are people out there who care about them, who can pour into them from an educational standpoint.

And so my nonprofit is called She builds lives focused, again, around everything that I just said.

We have a school that we support in Lagos. It is in a floating or on a floating community. Like, the entire community is on water. So the school is on water.

Wow.

And it’s an elementary school, and we’ve worked with them now maybe well over seven years. If if not more. And so the idea is, you know, one, how how do you support the children, not just from an educational standpoint, but even even thinking about, like, food feeding. Right? So children who are in lower income communities coming to school in the morning, It’s not just like, oh, yes. I’m coming to to school. It’s like, I’m hungry.

You know, I haven’t eaten. Like, how are you going to expand their minds if you haven’t, like, taken care of some of some of their basic needs. And so, like, that’s something that we’re always thinking about.

I love it. Bullendly listen. Thank you so much for your time and and for your wisdom today. We we really appreciate it. And, thank you on behalf of our listeners.

Thank you so much. I enjoyed this.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow net learnings wherever listen to your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next time.

You’re coming into risk management, you need to know how to use an Excel spreadsheet. Like, I have people on my team that came from the business and joint risk young professionals.

And the first thing I do is put them through, you know, PowerBI, Excel Tableau one zero one.

This is Net Learning’s.

The podcast that keeps finance and baking for professionals ahead of the curve. In each episode, we focus on career growth and practical advice, while mixing in the occasional war story. Join us as we into the minds of leaders and experts at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Piederty. Today’s guest is Aaron Corr, VP and Chief Risk Officer at MCAN Financial Group, which is one of Canada’s largest independent mortgage finance companies.

Aaron brings nearly fifteen years of experience in a variety of really interesting roles ranging from business analysts to options trader to now enterprise risk management. Erin. Welcome to the podcast. Thank you so much for joining me.

Thanks for having me, Kyle. It’s good to be here.

And we’re gonna talk risk management, obviously, a lot. And, there are a few different directions that we can go. But I I think an important sort of jumping off point would be just having you define What is risk management in your own words?

Sure. So I’m sure there’s a formal definition for this and various different zeros of organizations would give you a different response based on, you know, the risks apparent to their own business model.

But The notes I jotted down, what I think real risk management is to provide thoughtful and purposeful challenge and oversight from a risk perspective, of an investment to transaction, a process, a new product, a market, whatever is really in question, which will essentially enable a higher success rate of execution, essentially supporting strategy at the end of the day.

And to give you an example of this, you know, we are internal risk managers every day. So let’s say you’re a private investor, Kyle, you know, you have a two thousand bucks to invest in in something. You know, you wanna put your money in something other than savings account. And, you know, you choose your first vehicle as something pretty safe, maybe like a market toggled ETF for your investment.

So getting to this actual decision required several levels of internal risk tolerance checks you know, you’ve rationalized your decision to take on more risk to invest in something other than a savings account. And your first big investment is, you know, pretty safe. A market type of ETF. So this is really internal risk management.

Now we also call this risk appetite as well. And it’s understanding, you know, how much risk you’re willing to take and what you’re not to take. And this is usually toggled to yields as well, how much money you’re gonna make from a risk based decision. Right? So now let’s say you’ve made a little bit money. And now you wanna start taking on more risk. You wanna buy maybe individual stocks or even looking at the feasibility of option trading.

So getting to this decision actually hopefully required a lot more risk decision thinking. You know, perhaps you did more research, Maybe you checked with professionals, maybe you read a book or two, maybe you even bounced ideas off your, you know, your network.

And what this means is you’ve moved up the risk curve essentially. Your tolerance is changing. Your risk appetite is changing. You’re willing to take on more risk, but why are you willing to take on more risk out? Because you wanna make more money. Right? And so this again is a clear example of risk management and risk tolerance and risk appetite.

And, you know, this ideology can be applied to risk management professionals as well. So every day, we make investment decisions in finance. Right? We have to think about if we want to invest in large projects, if we wanna put money or capital buying individual borrowers, whatever.

Right? So as a part of a risk manager’s decision, is to first ask questions, you know, so banker, capital markets guy, or even, let’s say, you know, retail lending, Part risk management’s job is to just ask questions. Is is is about the deal? To fl to hard to flush out the, you know, the risks of the deal.

And then we also do a second check to say, you know, does this deal or this investment or transaction or product? Does this fit our brand? Is this within our risk tolerance? Is this within our risk appetite?

We wouldn’t wanna be investing in something that we don’t know anything about. If we don’t know anything about that, We’d probably get well researched before making that investment transaction.

So this is a pretty, like, layman example of, you know, a typical risk management risk manager’s job, but there’s much more to it. Right? So we don’t only provide oversight and challenge of our deals. We also provide, a bit of oversight overall operations as well.

So let’s say Kyle, we said, okay, we gave you the green light, go put your money in that, you know, six story condo whatever. You know, Kyle, I think also you should track data, and we’ll give you certain advice on which data you should track. And we use this data to essentially form other decisions in the future. You know, we test our performance, we test the risk parameters, we test to see if this was a good transaction, if we wanna keep doing it in the future.

So risk management also provides a lot of, you know, support to enhancing the processes to make better investment decisions in the future.

So at the end of the day, we support strategy. Historically and what I mean historically, I mean, up until the last ten years, risk measures were really reviewed as cops. Right? Like, you can do this business or you can’t do this business.

And, you know, people kinda shunned away from risk management for that purpose because, you know, no one wanted to deal with them. And what’s really happened in the last ten fifty year fifteen years is that risk management has transitioned it’s it’s not all black and white anymore. It’s very much gray. And what we do with the best risk managements are is to help support and enable business and really flush out the risk in whatever you’re talking about.

Yeah. No. That was a really good, really comprehensive explanation, and it’s true. The reputation of the risk folks being the the wet blankets in the organization, law long lived, but is changing.

It seems to be changing a lot. And part of the conversation today is gonna be around why you might wanna consider a career in risk management. And we’re gonna get to that. So you talked you talked a lot about making capital allocation decisions in in real estate decisions there, and that’s I believe what MCAN does.

So I wanna talk about MCAN, your company, and maybe more broadly, like, you know, mortgage investment companies. Because if I were to say, you know, BMO or Wells Fargo or something like that. Most folks listening would instinctively know exactly what those firms do. Right?

There’s some moving parts, but they’re banks at the end of the day. And that I’ve found is not always quite so cut and dry with with mortgage companies or with asset management firms in the real estate space. Like those, I think, also sometimes get conflated.

And the business is just a little bit opaque. Right? Like, some are eligible for deposit insurance. Some not, some hold exposure on their balance sheet, some securitize it and so on. So that’s a lot, but I’m hoping you can maybe just tell us a bit about M Ken and what the company does and how it does it.

Sure. So MCAN’s an investor in three main product lines, essentially. And it’s all a little bit more higher risk than the bank. So we’re we’re up the risk curve. We have more risk tolerance as I mentioned before.

So the three main product lines is really construction, commercial investing, so we’re putting our capital behind larger projects, usually focused on residential lending, but you could put money behind commercial, industrial, whatever, but our main focus is, residential lending. We also invest in higher risk mortgages too. So this is mortgages to people like you and I that are just looking to, you know, get a mortgage and a home to live in. We also invest in marketable and non marketable securities.

And essentially a non marketable security, it’s just a pool of fun to invest in large projects.

So the main difference though between a large bank like Las Fargo or BMO is that, you know, we have higher risk tolerance, and that’s because our cost of capital is essentially higher. And so what do I mean by this? So let me break this down into simplest terms, the banks, they pull their funding sources from checking account savings accounts, primarily. These are pretty sticky deposits.

They’re super low yielding. They don’t pay any money for this. And they, you know, and they also get, funding through other means as well. Right?

And then they deploy this capital into assets, you know, the assets that we all know, credit cards, mortgages, lines of credit, non retail. Whatever, and they make that yield. Right? They make us spread off that.

So at M Kim, we do exactly the same thing. Right? But we just moved up the risk curve a bit because our cost of capital is actually inherently a little higher. So we don’t offer checking accounts and savings accounts.

If we did, we’d be a bank. Instead, we issue, you know, term deposits, GICs, and we have other funding channels as well. And these have a higher coupon that we have to pay for. And because it has a higher coupon, we have to earn our own NIM or yield on it.

So we go up the risk curve, and we traditionally loan to higher yielding assets to earn that NIM essentially.

NIM being net interest margin.

Sorry for Yes.

Net interest margin. Yeah. Okay. So in very simple terms, you know, we are higher up the risk curve than the banks.

But to be honest, I wouldn’t say we, like, are inherently more risky What do we invest in or who do we invest in? So, you know, non bankable borrowers, which essentially could be borrowers with you know, a weird credit history, or even borrowers where their income is not so clear cut. So you and I both work for companies. Our paychecks probably come twice a month.

Right? The banks like that kind of information. But if you’re a business, especially a small business, your income might be quite varied or, you know, you can’t track it as strongly as ours. And so, you know, banks kind of avoid that kind of business as well.

So we would do that kind of business.

On the non retail side, you know, again, non bankable clients, so banks are more interested in, you know, pretty high net worth developers and builders. In terms of real estate, we’re talking about the pretty big developers, Tridell, whatever.

For us, you know, we’ll do business with borrowers that have built less projects, but have had experience building projects. Right? We’re not going with people, but have never built anything ever. Or maybe their net worth is not as high.

So there’s inherently more risk in these deals, but if you actually look at the history of our performance, we’ve actually lost less money than the bank. And the reason for this is because we have clear risk management policies, processes, we’ve identified our own risk appetite and tolerance and we stick to it. We do the business, which we know, which enables us to grow, earn that yield, and, you know, not lose money at the same time. So just because you’re up the risk curve doesn’t necessarily mean you’re actually taking on more risk or potentially losing more money.

Similar businesses to MCAN, I would say, is equitable bank, which is actually, quite grown, quite exponentially the last few years. Home Trust, which just got bought out. They’re both, which we call traditionally b lenders. So people with, you know, these are higher risk mortgages.

In the US, there’s so many different comparables, but the market is actually completely different there. The terms and structure of their mortgages very different than Canada. In Canada, our terms are traditionally five years where you knew the mortgage. In the US, they go out to thirty years or so. And so it’s it’s a much different environment as well. And just because in our banking system, we kinda have an oligopoly going on with sixty Sibs.

Yeah.

In the US, it’s much different. Right? They have tens of thousands of different banks and different structures and different regulations as well. So it’s tough to pick out in a direct competitor.

Yeah. No. No. That’s fair. I was gonna ask about other companies that people could sort of compare, understand against.

So that that is really helpful. Okay. We’re gonna get to why people should consider a career in risk management eventually.

But before we do, you know, you’ve talked a lot about sort of some credit risk and financial risk. I think it would be useful to understand the space more broadly, though. And I wanna ask a multi part question. The first is what are the specific types of risks that risk managers manage? Cause if you work at a corporate, it would be different than if you work in financial services. And two, what are the types of roles that specifically exist out there in risk management?

Sure. So risk management, I would say, Without a doubt has more technical roles, the non technical roles. Generally speaking, the folks that work in risk management have some sort of financial education.

And a lot I would say anyone who’s a manager or above high probability that they have, you know, three letters behind their name, whether it’s like a CFA, an MBA CPA, and it’s because the roles that they’re conducting are traditionally more technical in nature. That said, there’s a lot of non tech role roles that are becoming more and more apparent in the industry. And it’s just a factor of technology, which I’ll talk about in a minute.

But to give you an example of, the types of roles, so we are broadly categorized in terms of risk types, so credit risk. This is and we can separate the out into, you know, two real functions. We have retail credit risk, which is, you know, loaning to us, right, credit cards, mortgages, lines credit.

People.

People. Yeah. And, you know, risk management, these are commodities too. Right? The there’s less of a human element to it.

It’s more based on risk parameters, and they’ve been stressed from a technical perspective to understand, you know, probabilities of default with a lot of certainty. Right? Like, we have credit scores, and that goes into these decisions. And so a lot of a risk management’s job in this type of field, you know, is policies, oversight, monitoring, reviewing changes, you know, challenging going into certain markets and so on and so forth.

The other side of credit risk is non retail. So this is kind of like a bit bigger than small business, commercial lending and corporate lending. So these deals can vary in degree of complexity. Right?

I would say, you know, commercial loans, pretty complex. You might have, you know, ten million to a few hundred million. You know, we’re talking about people building manufacturing lines in Ontario or different provinces, and they’re, you know, showing their financial statements to a banker, and they’re recommending a decision. Interis Management provides our oversight and challenge of this decision.

And this goes up to corporate banking as well, so, you know, lending let’s say Samsung or, you know, Brookfield, much larger businesses, and the same rigor in process goes through this too. So they’re the real risk managers. They’re on analyzing the risks, but they’re also sending this to risk management. We provide over oversight and challenge of these roles as well.

Now this is the most traditional form of risk management. And when people think of risk management, I think they think of these types of roles, But there’s also, you know, liquidity market and interest rate risk. And this is really treasury in liquidity risk management.

And these are super technical roles, so every organization should have a treasury or some sort of liquidity function. There’s a risk management element to that too. So we’re looking at funding risk to making sure that, you know, businesses have adequate lever to fund their business. You know, market risk is to ensure that the exposures you have on your balance sheet, understanding the potential risk of loss there.

So, you know, Kyle interest rates are inversely related with valuations. So interest rates go up. Valuations go down. We should understand risk management professionals, the potential loss of this change and the potential impact on the assets in our balance sheet. And those are really, you know, higher technical working with, working with finance, working with the treasurer, and those types of roles, generally speaking CFA type of for those types of roles just because you’re you’re using, more complicated instruments like derivatives and other hedging instruments to, you know, protect your P and L. Essentially, profit and loss in your in your interstatements.

A more common type of role is really reporting monitoring data analysis.

So every organization has some sort of level of enterprise, risk management.

Traditionally, this role is, you know, conceptualizing the risks in your business, your role profile, and escalating or communicating this to your management in the business. This is a doubt through a function of key performance indicators or key risk indicators, but risk management also plays a big role in data management as well, you know, crunching a lot of data. There’s a lot of stress testing involved here as well, scenario analysis.

Another big body of, work that’s actually happened in the last five to ten years with risk management professionals is model development, actually, or model validation. And, you know, this model development can sit in the business, it can sit in finance, it can sit in risk management.

A lot of the time it sits in risk management, These roles, a lot of education. Right? You need to be have high financial literacy. You need to understand the business. You need to usually know statistics, coding, and also be able to communicate what you’re producing as well and allowing the business to understand the models so that we can provide, oversight and challenge to ensure they’re working as well.

Those are the most common technical type of roles.

The more less or sorry, the less technical kind of role is operational risk.

And this is, usually falling under the enterprise risk pillar as well. Traditionally, and operational risk was more so looking at your processes. So, you know, every organization has hundreds and thousands of processes. The larger the institution, the more complicated the process.

So we, my organization, you know, we’re not so big. So we’ve identified, you know, critical processes, less critical processes. And we wanna understand the risks to these processes. We wanna understand the controls within these processes. And we wanna understand that, you know, if there’s disruption to this process, what do we do to ensure that this process is back online so we can continue business?

So you think of, you know, business continuity plans, scenario testing and so on and so forth. And this field of risk management is actually getting quite of a lot of attention recently, and a lot investments gone into this part of risk management, and it’s because of technology.

And the emergence of technology has become game changer in all institutions and industries. Right? So instead of, you know, my company developing technology, we go to third parties for that now, and so are the bigger banks too. So more and more companies are getting third parties and bringing that to provide a service or solve a problem for us. And once you start going to third part is you’re actually opening yourself up to more cyber security risk as well.

So I wanna go ahead and help you with that.

Where does cybersecurity risk fit in such a buzzword?

So operational risk is a catch all for, cybersecurity, third party, could be fraud could be built into that too, anti money laundering.

Is climate in there?

Climate risk goes in there. And so because our processes with the emergence of technologies becoming more complicated, these risk types as well have become more and more important, especially for the regulator as well. They’re expecting risk management companies to put more investment in understanding the risks with these as well.

Okay. That’s that’s really helpful context. Thank you. A lot of folks listening will be in financial services, probably in some capacity. I’d love for you to unpack some of the lessons that were learned maybe from, like, the SVB Silicon Valley Bank collapse or or credit suisse or something. Like, it’d be it’d be cool to kind of, draw a parallel something that’s happened recently in the market. Are you able to tie these back to some of those specific technical areas that you just talked about?

Sure. So this is great because SVP was, like, a case for all businesses to learn from, essentially, from a risk management perspective.

So OSVP was, you know, one of the largest financial institution failures since to eight. Their business model was mostly lending to venture capital, and tech firms, essentially.

And this actually inherently has a lot of risk to it as well, because, you know, who are their depositors They’re not sticky.

So they’re non retail deposits. So their their their their liability side of their balance sheet essentially has lump sums of money from companies. Whereas, let’s say you look at a big bank, where do their deposits come from? Well, they come from Kyle and Aaron, right, our money and their checking accounts.

They also come from commercial partnerships as well. So anyways, let me get into what happened with SVPB, but essentially they were invested in quite a lot of ten year treasuries. Right? Ten year treasuries as their assets.

And while interest rates started going up, valuations go down. So they started taking big losses on these, treasury holdings. And when they finally pulled the trigger and sold, they lost something like one point eight million dollars in losses. Okay?

So they held all this information internally. But soon as this information became public, the worst thing possible happened to their institution A run on the bank happen. And what does a run on the bank mean? A run on the bank means is when customers who are dealing with this, people like us who have retail deposits, in their business, they freak out and they wanna pull these deposits out of their business.

So like what I was saying before is that so these venture and fintechs started pulling money out of their accounts quickly. And it’s easy to drain the coffers quickly if there’s fewer deposits in there and they’re lumpy.

Where is hundreds of millions at a time?

Hundreds of millions at a time. Whereas, let’s say if there’s a run on the bank on Wells Fargo, you need literally tens of millions of borrowers to pull money out of that account. Right?

Or depositors, you mean.

Or depositors. Sorry.

Yeah. Yeah.

So that was the biggest issue there was that, you know, first, they lost a whole whack of money and then there was a run on the bank. So the solution to this problem is to get capitalized at the end of the day. And what does that mean to go to the market, sell your equity, you know, share shares shares of your company and start bringing more money to, you know, keep the lights on.

But, you know, I think the the new cycle just got too vicious and they couldn’t recover from that. And so, you know, what was these case studies and learning opportunities from this? So we dive deep into what happened, we can break it down into a few things. There was really poor risk governance there.

So what do I mean by that? They didn’t have a CRO for eight months, and their board of directors had only one board with risk management experience. Okay? So without a CRO or proper risk oversight from a board perspective, there’s no firepower to escalate communicate any issues across organization to get ahead of them and start curving any of the risk.

So that was huge fundamental issues from a governance perspective.

But if we look at from a more technical perspective, they failed risk management one zero one on liquidity interest rate and market risk. And so as I was mentioning before, you know, types of careers in risk management, you have liquidity market interest rate. So what do they do from a funding risk perspective? They were funding their business through non sticky deposits, which is not good.

You should diversify your deposits. Right? So they failed on funding risk. From a liquidity, our actual skip that one, from, you’re supposed to also match your assets and liabilities as well.

That’s the key. Yeah.

We hear about that. Asset liability match it. Right?

Yes. You wanted to, match the duration of your assets. Essentially, your cash flows come up for renewal at the same time, so there’s no big cash flow concerns at any given time in the future.

We think about what happened. They had one day deposits on their liability side and ten year treasuries on their asset side. That is a huge bifurcation of duration. Right? So that is like failure of risk management one zero one on that point as well.

Also, market risk. Right? They should know the total exposure of those ten year treasuries.

And, you know, as, as financial professional, everything we do is toggled to interest rates. Right? So they shoulda had some sort of strategy or monitoring system or something To tell them when interest rates start going up, the valuation of your treasuries is gonna go down. And now which means are you gonna start selling these.

You know, you don’t need to sell them all at once, but you should start layering sales, or you should start putting hedges on this as well to mitigate that risk. But it you know, and the okay. So the case study of SVB is that they actually said in their policies and procedures and they’re just financial disclosures that they do all these things. But when in reality, we saw what happened to them.

It seems like they didn’t do them, or maybe they didn’t do them in-depth enough to actually give them signals to take action and mitigate these risks.

Yeah. It’s such an interesting story and so counterintuitive because you know, the government ten year bonds are effectively what, like, price interest rates and prices are are based off of. Right? The the counterparty risk is virtually zero. And I’m sure on the surface, everyone just assumes, well, there there’s no counterparty risk on on, treasuries. But but because of that inverse relationship, to asset prices and and interest rates, they just got punished. It’s it’s really quite an interesting quite an interesting story.

One point eight billion is an astonishing amount of money to lose on a single type of asset.

Yeah. Yeah. It’s wild.

Great perspective and and and an case study and why risk management is so important. Let’s get into the sales pitch part, help our listeners and our members understand The top five reasons why someone should consider a career in risk management. You’ve made it sound certainly very interesting. Let’s let’s hear what your reasons are. What’s number number one?

Okay. So first of all, I didn’t think I would ever become a risk management professional, but I really enjoy this career, and I’ll give you the top, you know, five reasons First of all, generally speaking, they’re higher paying jobs. So because I mentioned earlier, a lot of these roles are pretty technical. They require a lot of financial literacy and education.

They’re one of the higher paying positions within the organization.

Like, obviously, you have bankers and, capital market guys that are based on are paid on commission based. But aside from those types of roles, if you look at the organization as a whole, risk management professionals are often paid pretty darn high.

That’s interesting. I don’t think I know.

Yeah. Number two, job stability. Right?

So Okay.

Explain.

So part of my friends, when she hits the fan, often you need wrist management professionals.

And so we’re in an interesting credit cycle right now, right with right now, and all banks are kind of pulling back in terms of their their staffing and their human capital.

I can guarantee you a lot of the recent announcements Not a lot of them are risk management focused because a lot in in this environment, risk management is actually utilized even more to understand the risks, communicate the risks, and escalate the risks to either senior management and the board. And so there’s a there’s there’s more, I would say, job security, in a risk management profession as well.

On balance interesting because you would think of them on the surface as a cost center. And usually, it’s cost centers, not revenue centers that that get wiped out, when times are tough, but you’re saying they’re a little bit insulated from that.

Yes. That’s true. Okay. Number three. Okay.

Number three. Yeah. What’s number three?

Transferable skills. And so what do I mean by this is that the same principles you learn in applying risk management are you can often apply to all other financial institutions.

So, you know, banks, trust companies, insurance companies, fintechs, whatever, but also they’re transferable to other industries as well.

Like large corporates. Right?

Large corporates. I’ve been throughout my career, not just in this role. I’ve been contacted for energy, utilities, telecom, nuclear power facilities, grocery, consumer goods, all sorts of disciplines.

And so it’s the same principles that you could apply to all industries. So you’ve actually, your your your your career opportunities is is is quite larger than most people think.

Yeah. Okay. Transfer. So we got, okay, high paying stability transferable skills. What’s number four?

Number four, impact on decision making. So what does this mean? Is that a lot of the times in risk management you have, critical role within the organization.

You are talking about big deals. You’re discussing big deals. That, and approving these big big deals a big impact on the organization.

That’s from the credit risk perspective, but also the big if they want to engage in new products, new markets, whatever, new processes, usually risk management’s involved, and our opinions are heard and it impacts the business decision. Essentially, we’re supporting strategy at the end of the day, and we’re making sure these strategies are executed successfully. So we actually have a higher seat at the table.

A lot of the folks you’ll talk to in risk management are usually, you know, higher levels in the organizations. You actually have a lot of light shine on you as you rest of your career.

That’s very interesting. How often do you reference Antsoft’s matrix in in risk management?

Oh, we do those we use those kind of grids all the time. Tools like this are really utilized to understand our risks and our opportunities as well. So both the business and risk managers use them.

That’s great.

Number five, exposure to various business functions. So similar to number four is In risk management, you’re working with the business, essentially, and traditionally was working with the business for retail and non retail credit. But as I mentioned, our jobs have expanded quite a bit, cybersecurity, climate change, operational risk, third party risk, new products, processes, finance, compliance, essentially in a risk management department, All our hands are in every cookie jar. And so you have a lot of exposure to a lot of different, lines of business. And so if you enjoy the work with that line of business, often opportunities to actually switch roles and join the business as well. And so a lot of career opportunity in that sense.

Okay. That’s quite a list.

Yeah. Now that was the top five, but I’ll give you one other one.

A bonus a bonus here.

A bonus one, an on court one, And that is work life balance is pretty good. Yeah. Like okay. It all depends on the individual and the type of job you have. If, you know, you have to approve deals and it’s coming down the wire, you obviously have to, you know, work those hours.

You’re on the hook. Yeah.

You’re on the hook. Right? Because you have a job to do. But at the end of the day, most risk management roles are, you know, nine to five. So you get that combined with the, you know, job stability, high pay, and nine to five, you know, you can go back to your your family at a reasonable time, and enjoy that ecosystem as well. All in all, I think these are, you know, pretty good, recents to join risk management.

Yeah. That’s a heck of a list, and certainly appreciate you bringing that perspective. Okay. Maybe you tell us a bit about your career and and how you got into risk management? You mentioned that you didn’t envision going in this direction, but you did it.

Yeah. So, you know, long story. Right? So I thought I was gonna go into a medical career originally.

I have, you know, a father and a grandfather who, doctors and surgeons. So I thought, you know, medicine was for me. I had the opportunity before going into my undergrad, staying with my uncle who was an SVP, SVP, and, Goldman Sachs. And he was a broker there.

So he was, looking at equities and recommending them to, you know, clients. And so I got to meet his clients. I got to, you know, talk to my uncle about, you know, different equities. I still remember poker stars standing out long, long time ago.

This is before the emergence of online casinos and any of that kind of stuff. Right?

Yeah. Yeah.

So he’s asking me, you know, do your friends talk about this kind of stuff? Is it is is this is this an an important thing amongst your friends. And so, you know, having these discussions with my uncle got me pretty excited, especially meeting his clients and that kind of atmosphere.

And so I originally did my undergrad in in medicine, but I I switched to, more danced discipline.

I through a long story, I actually left my undergrad early to join Scotia and I was very, very young at Scotia. I trade. So I trade is essentially investing direct through equities, options, fixed income, for clients and customers. I’m not making those decisions.

It’s them. I just helped them execute this. So young in my career became accredited to invest in equities, options, and fixed income. That was the last hiring block before the two two thousand seven, two thousand eight crisis.

And so that was an absolute bloodbath during that time. I had customers and, clients calling me crying of about, you know, losses they’ve made in the market often trying to trade their way out of it, which is, you know, bad from a risk management perspective, I would say. I saw that, you know, this was quite a while ago. So this was, like, sixteen, seventeen years ago.

And capital markets was very inefficient then. So we knew it was gonna start getting digitized and automated.

And so I actually jumped to IT for a while where I was working on Scotia online, Scotia Mobile is in Scotia Itrades mobile application. And this was, you know, a very long time ago So this was like an emergence of new technology. So the banks and other institutions were just dumping money into this, trying to, you know, race to provide good products for people to use online. So I brought my, you know, brokerage experience and supported these IT projects as well.

Through my MBA and then I flipped over to when I got on my MBA. I I jumped into risk management.

I was lucky I worked under a vice president, and I enterprise risk, which was essentially, you know, putting out fires in various different disciplines of risk management. So I was exposed to, you know, credit, liquidity, capital monitoring, reporting, using, you know, statistical analysis, you name it. So I was exposed to, you know, various different risk management disciplines.

Eventually, I got Tedhunted to join MCAN as the director And when I joined MCAN, the the function was in a in C stage, I would say. So I had the opportunity to build the whole function, and eventually I got promoted to the chief risk officer in here I am today.

My advice to other, you know, risk management professions is that, you know, there’s so many different risk management professions out there. You don’t need to typically stick to one line. If you have a subject, expertise and credit risk, those are often transferable to enterprise risk or operational risk well as long as you know the principles behind it.

Right. So if I were to ask you a true or false question, Data skills, data science skills are a serious asset and risk management true or false.

Very true. Extremely true. I would say if you’re coming into risk management, you need to know how to use an Excel spreadsheet that I have people on my team that came from the business and joint risk management, young professionals, and the first thing I do is put them through you know, Power BI, Excel, Tableau, one zero one. I try to get them to get quick on their feet with data analytics.

And, you know, understand that business assistance come from quantitative analysis.

So Yep. Not only, you know, driving these analytics, but how you communicate it as well. These are fundamentals in risk management.

Yeah. If you weren’t in risk management, what would you be doing?

You know, a tough question, probably something not related to finance.

Maybe medicine?

Maybe medicine. You know, I’m also a DIY at home. I love building my own furniture. I love, working with my hands.

You know, I go to Home Depot. I look at the workers there, and I think, like, I would love the opportunity to help people realize their home improvement dreams as well, or even the factor of, like, renovating homes, you know, seeing that creativity of what a space you can live in and help execute that I think that would be a great role. Like, right now, it’s probably not good because the credit cycle’s a little bad, but the whole ideology of, like, renovation and producing beautiful spaces to live in is awesome.

You mentioned the credit cycle that may play in here. It may not. But what are two or three things that are sort of most top of mind for you right now in terms of the year ahead, and and just to time stamp, we’re recording this in January twenty twenty four.

Yeah. So, I mean, everyone has different opinions, but the central bank essentially three times interest rates. Right? They three times what it was a year ago.

And so it’s extremely difficult for people like us who wanna get a new mortgage it’s extremely difficult to, you know, just maintain this kind of balance sheet for a lot of people. So there’s a lot of uncertainty in the market. There’s a lot of uncertainty in the market. There’s a lot of agency from a macro perspective too, you know, what’s happening with unemployment rates, GDP, you name it.

And so as a finance professional, you know, we drop or budget every year on and we, you know, theorize where where where interest rates will be. We don’t know. And you know what? I don’t know if the central bank and knows too.

Like, everyone has their hypothesis of, when interest rates will start dropping, but that might change. History often, doesn’t repeat itself. And so what we have to do as, risk managers is understand that risk, right, start baking in scenario analysis of interest rates dropping, you know, incrementally starting in spring to, you know, summer, or what if they drop faster? And what’s the impact on your business?

What’s the impact personally? Right? And so we need to start thinking about this and thinking about how this impacts our future business as well. You know, we’re in the business of real estate.

Right now, the market pretty dry, I would say. But as soon as you drop interest rates, what happens to the business? Maybe housing, pace starts picking back up. You know, there’s a lot of immigration in Canada and not enough supply of homes.

That’s another critical factor as well.

So, essentially, as a risk management profession, Like, I’m trying to think of how do we navigate through this credit cycle, and what are the things we should be thinking about before rates are dropping because we don’t know Kyle if they’re coming off, like, incrementally or way quicker. History also can repeat itself. Or at all. Right?

Yeah. Well, there’s a scenario of stagflation too. And so, you know, my organization, we stress test stagflation. What’s gonna what’s the impact on our capital?

What’s the impact on our liquidity? And what are we gonna do? Which kind of levers can we pull to mitigate that kind of scenario as well?

You’re in, long before the coronavirus pandemic, and I I feel compelled to ask, like, how if at all the nature of work has kinda changed from pre to post pandemic. Like, has it forced you and and people in your type of role to think about tail risk type events differently?

I think what we’re seeing from coronavirus, I mean, pre pre COVID. So okay. Let’s go back a bit. You had the financial crisis.

Right? And that was a pretty shock. That was a pretty big financial crisis. You know, like, if you look at relative From a relative perspective, all the crises out there, that was a pretty big financial crisis.

It was like two to three quarters of negative GDP growth, and it took a while to actually get out of that. But what happened after two thousand two two thousand seven, two thousand eight, massive boom in economy? Like, big. Like, after that, it was great.

It was, like, You know, after rain, there was sunshine, essentially. Yep. Yep. And business was groovy.

A lot of business to be made. And then what happened after that is two thousand ten to about two thousand fifteen, you had lowering of interest rates slowly in Canada. To spur growth. So you saw housing prices start to skyrocket as well.

And that was because, you know, the central bank was essentially juicing the market. There was also a lot of quantitative easing well, pumping liquidity in the market to generate business. You know, with more money in the economy, the more business is gonna be generated.

But these were all more or less typical credit cycles, I would argue. You know, we had the the bust from o seven zero eight. We had the boom thereafter, and then kind of like flattening during the two thousand tens. Right? And then we had COVID happen in twenty twenty.

And that was such a shock to the system. Okay. Major shock to the system. From an operational active.

We all learned to work from home. So our technology capabilities just improved vastly. Right? We realized we don’t need to go to law office to work necessarily.

So that was like, you know, business continuity plan in action in real life, which was a great learning experience as well. But what happened was then, you know, there was a lot of negativity in the first couple quarters of COVID. And then we the government all governments across the world stepped in and just pumped the economy full liquidity.

And then, you know, these guys were bright. Right? Everyone was getting not everyone, but with so much money in the economy. We had Serb in Canada.

People were buying iPads. Technology was flying off the shelf. Economy was great, but after that, there’s always a bus cycle. Right?

And one of my point that I’m getting to right now is that The bus cycle from COVID was very short, and the boom side and the boom cycle that happened after that was very short, And this this, doom and gloom right now is we don’t know what kind of cycle this is. Is this gonna be a short cycle? Is this gonna be a long cycle? So the stagflation, which you, you know, brought up, is this gonna be longer?

And so as risk management professionals, we also think what’s gonna happen after? Right? Are the cycles gonna be much more shorter? Or are they gonna go to more longer credit cycles where we can manage that risk you know, manage that assets and liability duration on our on our balance sheets, or are they gonna be tighter?

Do we need to be on our feet all the time as management professionals because the credit cycles are gonna be boom and bust all the time.

My philosophy or my theory is that I think the credit cycles are gonna be shorter. I think there’s a lot more money in the system now, and the economy is much more global than it was before. The supply chains are much wider. And money comes from many different sources now. And so because of this, I think there’s a lot more risk to boom and bust cycles within our economy and we’re gonna have to get used to managing notes at the end of the day. And I think that was the biggest risk from or the biggest outcome of COVID on enterprise risk management, really.

I’d love to ask a little bit about AI. I mean, obviously, super hot topic today. And I’m I’m sure that as a risk management professional, the proliferation of large language models, particular has gotten your guard up a bit, but with risks come, you know, interesting opportunities. So, you know, a two part question, are you willing to sort of share some you know, general thoughts on AI. And then how if at all do you see AI changing the nature of, work that folks do in risk management? Maybe for the better even.

Sure. So, yeah, AI is definitely a hot topic. Every boardroom should have some sort of AI expert discussing the opportunities, the risks, the challenges.

So right now, you know, AI is still rather basic. Even though there’s been, like, this new blockbuster technology that’s come out, with chat GPT, but how it’s applicable today with the new technology out there now is, you know, Believe it or not, we have a lot of manual processes.

Right? Tons and tons of manual processes. There’s a lot of writing in risk management as well. So what can AI be used today? Well, every company or to every department right now should be thinking about use cases of how to apply AI in their own business. And they can be from anything from, like, non sexy to sexy, essentially.

So from a non sexy perspective of AI is from a risk perspective, you know, we have to escalate know, unusual transactions to the business, to risk management, sometimes to regulators.

Sometimes these things can be, you know, a lot of different pages. You can use AI to streamline this to get the to get it down summarized and uploaded to the regulator easily. Right? You know, what about communications?

Employees are communicated to all the time on cultural, on changes in benefits, and changes in pay, and changes in events, communications can be streamlined through AI. Right? Hey, hey, chat GPT. Help me create a communication on, you know, habitat for humanity event coming up with these key aspects of the event, to include. You know? It’s For so for day to day, business as usual process oriented tasks, it can make life a lot easier. So I would highly recommend, you know, all institutions to take a deeper look at what you do today and how you can apply, you know, just this kind of AI.

Then you get into the more sexier type of work too. And so this is more, you know, modeling I’m talking about. Right? So right now, you have models for investment bank decisions.

You have models for, yeah, all sorts stuff. So let’s say even adjudicating credit. Right? Yep.

So, you know, Kyle, you might be a pretty investment grade guy. You’re applying for a mortgage, could we get AI to auto adjudicate? Maybe an investment decision, you know, you put in your information investment decision happens within seconds. And before there was machine learning with this kind of stuff and more or less kind of figured it out.

But now with AI, you can get to much more behavioral characteristics as well to understand if Kyle is actually a good, person to loan to. And then it can get more complicated. Right? You can get to investment banking, put in a lot more different risk parameters to think about that the model can think about.

Now the challenging part with that is that then you have AI building the model, the models can get much more complicated at the end of the day. So then where does risk management come in? Well, then you’ll need risk management professionals to validate that model to make sure it makes sense just from an intuitive perspective that whatever this AI is generating, it actually makes sense, and that we can, like, statistically challenge the decisions.

Yeah. Model validation. There it is. It’s back.

Model validation. It’s back exactly.

Nice.

So this has been a really great chat, and you’ve shed some light on the career props prospects and opportunities and sort of some reasons why. I wanna be respectful of your time. Where can our listeners go to learn more about you or about MCAM?

So, MCAN, we’re we have, you know, presence on, obviously, all the major platforms, LinkedIn, Instagram, what you name it, For myself, personally, I don’t like to keep it, big social media presence, but obviously LinkedIn, you can always hit me up, reach out to me. I’ve done a lot of mentorship before just providing advice on, you know, potential career opportunities as well. So, yep, hit me up on the LinkedIn, Erincore.

Nice. Okay. Well, again, Aaron, thank you so much for your time. Really, really appreciate it.

Thanks, Kyle. This was fun. I hope this was valuable to your listeners as well, and thank you for this opportunity to share my perspectives on risk management.

Absolutely.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning wherever you listen to your contact or visit us online at corporate finance institute dot com slash podcast. See you next time.

It don’t care where you want to call it in what means more is sitting in a room and talking to people and being able to articulate tell a story. And be interested, not interesting, be curious, ask questions, and listen more than you talk.

This is Net Learning.

The podcast that keeps finance a baking professional ahead of the curve. In each episode, we focus on career growth and practical advice, while mixing in the occasional war story. Join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Peterty. My guest today is Charlie Gifford, senior partner at New Heritage Capital, a middle market private equity firm based in Boston. Charlie brings twenty five years of industry experience, and I’m told a roster of world class dad jokes. Is that true, Charlie?

Dad jokes and all other different types of jokes too. I can go deep in many different verticals of jokes. A man of many talents, There we go. Thank you, for joining us and welcome to the show. Quickly before we start, a big congratulations, though, to you and your firm for closing a nearly four hundred and fifty million dollar fund that was oversubscribed. I can’t imagine that having been very easy in today’s fundraising environment.

Hey, when well, first of all, thank you for mentioning that, Kyle, and saying those kind words. It it was interestingly and surprisingly easier than, I guess, we anticipated. I just given the choppy waters, but it’s somebody once said or an LP one said, last year, you all are a little bit like a unicorn because you and your partners have been working together for more than twenty years. Your returns are top quartile, and you have a structure, and we can talk about it.

But we go to market with a unique structure called private IPOs who are offering a different strategy or employing a different strategy than most of the other middle market sponsors out there. And as a result of those three things, fundraise was quick. We were twenty five percent over our stated goal without getting on an airplane. And so Incredible.

Given a difficult fundraising market, we’re certainly happy with the results. But now comes the hard part. We’ve earned the confidence of our investors, and now we have to fund great businesses to invest in. Wonderful.

And we’ll we’ll we’ll talk about all of that. I hope. But I’d love to clear something up first that sort of long bothered me about financial services. And I tend to do it myself too.

I would say like middle market or small and middle market, but depending on where you are and who you’re talking to, The definition varies a bit. How do you, and the heritage crew define the middle market?

It’s funny. You’re right that the definition has evolved, and we’ve evolved with it where we used to think of ourselves as middle market investors. We’re now Gandably, I think, by normal parlance lower middle market investors. Okay. And the way we think about how you define its not revenue. It’s not EBITDA businesses you invest in or you sell at the end, hopefully.

It’s about equity check size. So we’d like to write an equity check between twenty and fifty million.

Which leads to by and large double that amount at forty to a hundred billion dollar enterprise value, where that used to be probably considered by most to be middle market focus. We see more and more of these large multi billion dollar funds raising what they call middle market funds. And those funds start out at seven hundred plus million dollars. So that’s definitely not a fund to one to us. But because they are coming in and redefined in that middle market, we’re awfully happy with the lower middle market because that’s where we see the greatest amount of arbitrage in terms of opportunities to invest in growing smaller businesses.

So why might a firm choose to deal with, you know, small and middle market type businesses instead of going with those large ones or even, you know, publicly traded companies. What what is the sort of magic recipe?

Well, I can’t answer for everybody because if I did, I’d get in trouble, but I can tell you we like what we do because we’ve identified where our strengths and our strategy lends itself and we’ve had the most success with, which are the smaller businesses that have yet to access the institutional equity, capital markets here to four. And they’re at a little bit of an inflection point. And we feel a lot of businesses around that ten million dollar EBITDA number they kind of hit an experience. Right?

Now, obviously, there are businesses that can grow through that, but it’s at around that time where people are looking for help in the form of outside capital, not only a capital partner, but a thought partner to help them think about growth. And so that’s we we feel like those opportunities to really come in and help these businesses think about change and have them become real institutionalized cohesive businesses that leverage data and bring on best of breed talent across the organization.

That’s where we see and we can, you know, have the most success in growing equity value, those types of businesses. Well, I I noticed that the portfolio is pretty diverse. It includes everything, I think, from I saw food manufacturing, health care. There might have even been an aircraft repair business in there. So if you’re not positioning based on the expertise in that specific industry. You’ve touched on this a little bit. Can we unpack sort of the theme across the portfolio?

Maybe talk about industries you love or or don’t love, you know, those types of questions. Yep. We used to have on our pitch deck probably twenty different icons of def twenty different types, different industries.

And somebody, I think rightfully pointed out as becoming a generalist was I wouldn’t say it’s out of, you know, out of vogue, but it it definitely is when more and more people are trying to become specialists, certainly on the sell side, maybe less so on the buy side is that we can synthesize all twenty of those icons and make them into three big buckets, namely business services, health care, and manufacturing.

And you can fit a lot of different types of businesses within that type of framework.

Yeah. What we don’t do, we don’t invest in turnarounds or startups. We don’t invest in anything with, you know, a, risk, yeah, restructuring anything with a high r and d component. We like high return, businesses, high return on asset businesses. So low CapEx, you know, try to minimize cyclicality, minimize concentration.

But instead of it it’s a little bit atypical the way that I’m gonna answer the question, is because we’re not really focused on the vertical focus of a certain industry, but what we do focus on instead is on more of a horizontal And what I mean by that is we all know that no two businesses are the same. But the issues facing these middle market businesses, there’s often cotton there’s a lot of similar traits that our people are dealing with. Whether it’s asset concentration from the founder, or growth capital for all the managers or some shareholders may want to fully take sell their shares in the business. And so what we try to do is we’ve devised a form and a strategy to invest in these businesses called the private IPO. And the idea behind it, it’s the benefits of going public while staying private, namely material liquidity. You get growth capital, and you have the ability to maintain control.

After the transaction.

So instead of being vertically focused on any one industry, we are horizontally focused in trying to solve a problem for shareholders, specifically founder owners who say I’m too young to retire, I have a lot of gas left left in the tank, and I don’t wanna let go of the wheel. And it’s that let go of the wheel piece, Most people that do what we do can’t get comfortable letting somebody else have their hands on the wheel. And the world of private equity is based upon the quid pro quo of capitalism.

I give you money. I get control of your business.

And then you’re my employee on a go forward basis. And so I always say the, the term private equity partnership, which everybody talks about, It’s not much of a partnership, Kyle, when the CEO can be fired by the private equity firm the day after closing if the private equity firm so chooses. Now does that happen? No. It doesn’t. But the fact is is that we know that it can happen. And when the the owner, these maniacal individuals who are so driven by growth, they feel uncomfortable giving up control, and that’s where we like to lean in.

Love that answer. So what are you looking for then when you are, you know, interviewing and chatting with these founders. You talked a bit about the businesses and sort of the characteristics, but like, what makes a founder that you wanna partner with?

I think it’s somebody that is really obviously comp competent and great at what they do. We often find some of the things looking back over the twenty plus years that we’ve been investing where we’ve had a lot of success or by backing individuals that started business, say, five to ten years ago, But those individuals work for the six hundred pound gorilla, the large strategic buyer, a start strategic, player in a certain industry. But they saw that player really take their eye off the ball, not focus on customer service, not being focused on innovation.

And so they spin out and they start their own business to compete with the large six hundred pound gorilla, and they’re able earn share because they’re so maniacal on whether it’s customer service or product development. And so that’s what we look for those types of people with that entrepreneurial spirit that are excited and are creative. But they’re also, you know, they’re also tired. Oftentimes they’re having a little bit of a mini midlife crisis.

Right? Because they have a business that’s worth way more than they ever thought that after their family members, it’s the most important thing to them in their lives. But again, they’re they’re really focused on and they believe in their heart of hearts to the next three to five years are gonna be the best three to five years in the history of their business, but they could also really stand by taking some money off the table to diversify their net worth. Cash out shareholders that want out, but really think about how do I grow this business?

And is this partner gonna help me get to where I want to be? In a more truncate a period of time while risk sharing because they’ve taken money off the table. And so we look for those people. I often say, that are long term greedy.

Right? Everybody’s greedy today. Everybody the most important objective in any transaction is value, and we know that. But for those people that say, I really I’m okay with taking less today for a multiple of that whatever I take less of today in the future.

And what we always look for are those flagging moments in any type of transaction.

When an owner says, you know what? I I’m so excited about talking about my business. I’d actually like to roll more into the deal. That is a great signal.

And, obviously, the converse is true. If throughout a process, somebody says, I wanna take more money off the table. Well, that to us is a little bit of a red flag. So information asymmetry is obviously a way bigger problem in private market deals, then it would be for your, you know, public market by side counterparts.

How do you think about mitigating risk. I mean, I I presume part of it is that the owner stays on board with a controlling interest, but, like, how do you know? How do you know what you’re getting yourself into?

Well, couple of a couple of thoughts on that. I mean, the the concept of due diligence is obviously incredibly important. And and people, our investors have shown the confidence in us because they believe that we have a lens and a framework and the judgment to make the taught the right decisions and sometimes tough decisions to grow equity value with each of our investments.

So I I think that, you know, the more deals that you do, the more voices you have around the table in reviewing opportunities and a diverse experience set and a deep experience set You know, that’s the best thing. Right? Instincts judgment of people that who who’s people in your partners who you trust. I I think that’s the most important thing.

We obviously Like everybody will outsource many facets of the due diligence, part, process. But to us, the business judgment really resides around the table. And I you know, you also just said something that really made me think. And I think private equity is a is a little it’s an interesting animal, and a lot of people focus on the fact that in the you talked about the public markets and in the public markets, investors are protected by insider self dealing by the SEC.

Right? So the whole insider trading or the asymmetry of an asymmetry of information is watch very, very carefully.

And much like, you know, you wouldn’t want to invest a large portion of your net worth into a publicly traded company when the CEO CFO and board members are selling.

But interestingly, here I’m gonna transition to the pod to the private markets, private equity is based upon buying when the insiders are selling.

Right? And so what we think back our strategy, we think the most intuitive way to invest our investors’ capital is when the insiders aren’t signed, they’re selling some but they’re notably rolling into the deal because they also know something. And it’s when we buy in, we often talk a lot about leverage buy ins, not leverage buyouts.

It is not our model to come in and take over business and force a hundred day a day plan down the throats of management is all about buying into their strategy, listening, and collaborating on a roadmap that we come to an agreement on. Now people often say, well, gosh, you’re giving up control to these people. How do you even get comfortable? And at the end of the day, it gets back to the start of my answer, which is judgment.

And and being able to understand and listening to what people have here to say and getting excited about how they wanna grow their business. You know, that’s the best part about our job. I love that notion of a leveraged buy in. It sounds like a much better way to align incentives than than the inverse.

You mentioned something interesting about trusting your partners at the table and experience and being able to really in your gut. And I I was wondering over the course of twenty five years, this is two part question. One is, how many deals do you think you’ve looked at And the second part of the question is, was there some sort of magic number when it started to click and you’re able to kinda size up a deal a lot more quickly?

First answer, I I’m gonna directionally say seven hundred to a thousand deals a year.

But we don’t keep track. If we don’t sign in NDA, you know, we really start we we have like a top of the We get lots of stuff that get, you know, falls off to transom pretty quickly because either it’s not of size or not an industry or a geography that we’re focused on. And most importantly, it might be a full sale. It also might be a sponsored divestiture.

We don’t buy from other private equity firms. But the, you know, the the real number in terms of NDA sign and stuff we try to that will sign up is somewhere around the call four hundred, five hundred or so a year. I’d say that’s directionally. It obviously market booths and cycles, but that’s Yeah.

So but I always think that, you know, we wanna look at as many as we possibly can because the more deals you look at, the more picky you can be.

And so that’s what we we try to the focus on the front end is as many at bats that we can have in private companies led by founders that are that’s not looking to sell, but are really, really fired up and wanna partner with this firm to help them grow.

Your second part of the question was, The the second part was was there kind of a number or a a a ten year point in your career where you you felt like you were able to size up a deal Oh, yeah. More quickly. Yeah. Yeah. Yeah. And as it as it relates to your second question, speed is not a strength.

We believe that and that goes through anything that we do here. We don’t do fast well, you know, including running or swimming or anything like that. But, you know, we we are very we are nothing if not diligent, and everything that we do is all around process.

And so if somebody calls up and says, hey, I got a great deal. You gotta pay this. And, you gotta close by this. And it’s all yours.

And that’s it. I I don’t care what the business is to us. It’s all about the connection and buying into the vision of the founder, that is something that cannot be done quickly, and it can’t be done via Zoom. It’s all about multiple relationship building meetings over meals to understand to make sure that we’re simpatico as it relates to one another and us buying into what they wanna do and then buying into how we structure our deals.

But speed is not a strength What do you think is the biggest misconception out there about private equity that we are that we pillage businesses, that we lever them up, that we lay people off, that we are only focused on bottom line profit. I mean, it’s it’s a lot of what you hear. You heard it when Mitt Romney was running for president, and you hear any time that there’s whether it’s Glenn Youngkin at the university, Virginia, state of Virginia, Bruce Ronner used to be a governor of Illinois. When you you people get painted with a broad brush of saying that private equity is, you know, the bloodthirsty vampires squared eye sucking the life out of these businesses.

And, I mean, it’s and I’ve listened to radio shows on NPR on weekend shows where two hosts were talking and just spewing these to say that they’re half truths would be giving them the benefit of the doubt. But look, that’s not to say there are some bad actors. They’re bad actors in every single industry, but to paint it in a broad brush and make broad generalizations that all a private equity is bad, I think is irresponsible.

I know it’ll vary by fun, but on balance sort of for like a growth fund like yours, what proportion of the total committed capital will tend to go into like new to platform deals versus follow ons. Do you have do you have, like, a measurement that you abide by? Not that we abide by. It’s gonna be more case by case, but I will tell you that the percentage of dollars spent on add ons has increased as compared to ten years ago.

You know, that you can grow equity value in a number of different ways. You can obviously grow the earnings of the business. You can pay down debt. You can look for multiple arbitrage, IE, sell it for a greater multiple than you buy it for.

Or you can grow through M and A, add ons tuck ins and the like.

That has become as growing organic earnings in a bit more difficult economic environment gets harder, the whole add on playbook works pretty well. And there’s been a lot of firms that have had a lot of success in buying smaller businesses for lower prices and trying to arbitrage them on the back end. And blend them into an overall blended exit value number. So we used to not focus on that as much But interestingly over the last ten years, that has played a larger role. And if I had to guess, Kyle, it’s something like probably seventy percent for forms, thirty percent for add ons independent of obviously fees and expenses, etcetera.

She talked about an interesting evolution. How do you see the industry continuing to change over the next five to ten? I’m bad at predicting the future. I don’t know.

I often think about where the innovation’s gonna come from. You know, and and well, you always think about the exogenous factors that may affect our day job and make it more and more efficient. And when you’ll think about, like, where I when I started it working with my partners in nineteen ninety eight. It was a different world, but Canada, I don’t think it was that different.

I mean, you’ve read you consumed information differently.

You know, instead of getting the confidential information memorandum sent to you by email, It you got into a FedEx box. Right? All data rooms were analog. They weren’t digital. And so there though there are those types of things where technologies helped the overall efficiency and maybe the decision making can be ex has been accelerated.

But it’s still about at least in our market.

Connections with individuals with humans, but buying in into what they want to do. And to us, That’s hard. I don’t see that changing because that is the most important thing is earning the confidence of your of your partners to try to help them grow their businesses. And, yeah, you can use lots of different tools and information to help accelerate growth But as it relates to investing in finding big deals structuring and investing them, technology will help.

But I think by and large, it will remain relatively the same. Alright. Let’s just talk a little bit about your career. What was it about private equity that attracted you in the first place?

Well, I spent some, time in banking, and at a startup, and then went to business school. And I remember early on, I asked my father If you could do it all over again, what would you do? And he said without without delay, he said, well, definitely private equity. And I asked him why, and he said, well, it’s pure entrepreneurialism mixed capitalism. It’s all about It it draws on lots of different facets of business, whether that’s finance or operate, organizational behavior or fundraising or sales or management of staff.

Culture film building firm building.

And, you know, you get to really see lots of different types of businesses And you get to choose the ones that really resonate with you. And so I was like, oh, I thought that was pretty cool. My dad was a, you know, has been was and continues to be a a a big influence on me. And so I was like, alright. Well, I think I’ll try to give that a go. And so in between years of business school, I went to Kellogg at Chicago.

I spent a year at our predecessor spent a summer at our predecessor fund and as a summer intern and offered employment on my last day of my summer and start with the firm the following August.

That’s interesting. And you sort of outlined why you think someone should get into PE and why why you did. Who is there is that different than when you meet folks that are aspiring analysts, why they wanna get into PE, I feel like a lot of folks are interested in earning potential, but what what do you hear typically in the market?

Well, I it’s the world. It’s a different world. That’s a real hot take. Today, that it was twenty five plus years ago.

I I do think people are enamored with the earnings potential, but, you know, on the spirit of folkander, people were enamored with the earnings potential back in the late nineties as well. It was just, it was a less developed market, so it wasn’t as big of a mar they weren’t as many players. And there were many players, firms, players, people. And so as a result, as the market has matured, become more efficient, and there are more service providers serving them more of an equity market.

The visibility has gone up and more and more people. It’s on people’s got a radar screen, I think, more and more. So I think that’s the that’s probably the biggest difference.

I feel like that’s similar, but maybe even amplified with venture over sort of the last ten or fifteen years. Certainly, the last five has been really pronounced. Seems like everyone everyone either wants to get into or thinks they’re a venture investor.

Yeah. Funny. I I don’t, like, people often say, what are the good venture firms with a good player, the good hedge funds. And, you know, we are so or I am so head down in terms of our kind of you know, our runway and what we do and how we do it, who our competition is, where the people that we work with on the financing side, I really don’t know much at all about the venture side or that the headphone side.

To me, it’s it’s a completely different language. The idea about venture capital and investing in ideas and you know, somebody a really compelling person with a kind of a new product or service without any type of track record with that product or service. That that’s just a different skill set and a different way people think about the world. Certainly is different than what we do.

In your experience over the years, do a lot of people leave private equity? And if they do, where do they go?

I don’t know the I don’t know the the the accurate answer. My guess would be of after retirement it would be people that might wanna go and operate the a business on their own.

And, you know, I often said if I was really Right. I would have started my own business and grow it to twenty million in EBITDA and sell it for a ridiculous amount of money. But instead, you know, you do you migrate to, you know, what your skill set allows provides you to it to, you know, to achieve something.

And it looked, you know, with finding good people to partner with and by partners and finding good investors and good investors companies to invest in you know, that really spoke to me more so than operating my own business.

We talked about gravitating towards the skill set. Wanted to ask about that. What are some of the skills or characteristics that either you look for when you’re hiring or that sort of tend to set the best PE people apart from those that that aren’t as good.

Yeah. And I I can’t answer for other firms. And We’re a little bit differently. We’re not afraid. We’re not bound by conventional norms. You know, we just went through an exhaustive process on a high a a VP of business development and, you know, on purpose, I I didn’t want to focus on the private equity investment banking market because I feel like Well, obviously, there’s strain there’s a reason why most people do that.

We thought that having somebody that was not bound by those conventional norms but instead comes in, you know, finding a really bright strategic thinker, who will bring kind of a different, you know, framework with which they think about problem solving. Would be beneficial. We hired this guy who’s twenty five years old, interviewed a ridiculous number via LinkedIn, which is a Bennette was a really eye opening experience, and I’m happy to share the experience with that. But, we brought him a board and he’s been a he’s been a great ad, and he’s got a lot of creative and different ideas that he brings to the table and have having done this now for more than twenty years.

Nothing sacred, and we always wanna try creative new ways to to earn the confidence of the private business owner.

That’s an example of somebody that’s really helpful. So I don’t looking for somebody with humility, I think Kyle, if the one thing across the firm, if you talk to all the partners, The most important thing is humility.

I don’t care where you went to college.

You know, I I I it it it re if you graduated, You did well. That means more. And what means more is sitting in a room and talking to people and being able to articulate tell a story. And be interested, not interesting, be curious, ask questions, and listen more than you talk.

You said you’d be willing to weigh in a little bit on that LinkedIn process. I mean, I think lots of our listeners and members are fascinated by the recruitment process. Would you be willing to shed a bit of light? Yeah.

It and this was learnings from a friend who went through a similar process, but we were gonna hire a placement agent to help us find this VP.

And so you should post it on LinkedIn. I was like, oh my gosh.

I I don’t think I have a time to why don’t I get like a two hundred resumes in the first twenty four hours?

I was wrong, but not by much. Because I did post it in a day and a half. I think I got a hundred and eighty resumes.

And I quickly turned it off, but LinkedIn has some tools that allows you to call the you know, really have like kind of three criteria. And if you don’t answer, yes, all three. But anyway, so I got a I quickly turned off the post and then sifted through the hundred and eighty. I think I had thirty, fifteen minute zoom intro calls where there wasn’t a lot of it was really quick to the point.

And, you know, our being able to project and be articulate and connect with people is an important component to that to this job. And so again, I was just trying to winnow the numbers down as much as good. I then brought in, I think, ten people to meet with for a half hour meeting and brought back five to meet my partners and we ended up hiring the one that was on first on all of our cards. But you think about the I did that in about, I don’t know, like, two months.

You know, versus a kind of retained search.

Obviously, a lot more money, money up front, the discovery process, It’s just an interesting data point. And it was one that I’m glad that we did. I’m glad we did did it the way we did. I guess the other risk with a search firm is they may bring you someone who fits the criteria of that more characteristic looking candidate that you were talking about trying to deviate from. Do you have a favorite quote or life lesson that you’d like to share with our listeners?

Funny, I have lots of quotes.

The one thing that jumps out at me or or the one quote that really has always stuck with me and I and I don’t have it, but it was an idea. And I will yeah. And I’ll paraphrase People may forget what you did. People may forget what you said, but they won’t forget how you made them feel.

And the idea about looking at people on the eye and engaging and squaring shoulders not looking at your phone, not, you know, being engaged, being present, I think is a is something that hell, I I have a lot more weaknesses than strengths, but that’s something that I really is one that I really try to to focus on. I think it’s pretty Pretty powerful.

I’m hearing a theme of let listening more than than talking and and being engaged instead of being engaging. I think those are all super interesting takeaways, especially when you’re dealing, well, whether it’s fun raising with LPs or whether it’s dealing with a prospective founder. I mean, there’s so much value in that. Right? Yeah. I I’m there are a couple of quotes to that very point that resonate with me. And, it is better to have men It is better to have people wonder why you don’t speak than have them wonder why you did.

I like that one too. How can just I’m thinking about our audience. We have, you know, lots of bankers and accountants and lots of folks kind of in the deal making community, maybe some lawyers, like, How can they best position themselves to be able to do business with a with a firm like yours? Oh, yeah.

That’s a hard one because he the service provider world to private equity can be a a very good one. Right? It’s a growing asset class and it done well. You can the rewards can be pretty material, but it’s hard.

Right? Because the switching costs aren’t zero.

And so what to try to induce trial, there’s a real need for patients and staying in touch and getting that at bat. We are all in the long lead time game.

You know, decisions to make, you know, changes aren’t made in a capricious manner most of the time. And so I I just think it’s a matter of being persistent curious and wanting to engage with people. That would be. I I I don’t think there’s a silver bullet on that, but it’s about hustle and about, you know, follow through more than anything else.

Do you have any general networking tips for our listeners?

That’s a good guy. I I’m stat I’m so bad. I you know, I I’m a believer that, you know, I liked the network. I didn’t know what it what it really means to network. I I I just like to be I I’m not aggressive, but I just like to connect with people. You know, I I like I like to talk to people. I’d like to have human interaction.

I do I’m getting to a point Kyle that I’m so aged that I sometimes take notes and what we I talk about with people in our CRM just so that I know that, like, hey, you know, we last time we talked talked about this, we talked about that, or Hey, did your kid get into that college that you thought you were going to? I don’t know. That might strike people as cheesy. It’s not trying to be cheesy.

It’s not trying to, like, cheat or anything. Because often times they said, hey, I I don’t remember this, but I’d looks like I wrote down. Your kid was applying to go to University of Virginia. How did that did that pan out or not?

So it’s not it’s not ever sales y because I think that the worst thing you can do is to come across as sales y. I think being gen being genuine is the most important thing. And being self aware and not try to portray that you have all the answers is really important. And I I think that, I don’t know, as I the more you do a job, you get to, you know, you get stuck in your ways, but you end up migrating to people that you know and have somewhat of a history with, and with, for me, that’s people that are are genuine, and they’re not gonna try to press you with words.

They’re gonna try to earn your confidence over an extended period of time.

Yeah. And I I really like that. And I actually I don’t think of it as being cheesy or or cheating, I think of it as attention to detail. Really?

I mean, when I worked in banking all the number of years ago, I would keep extensive notes Because, otherwise, it’s a bit of a numbers game. You meet tons and tons of people, and they’re in a variety of different industries, and it can be hard to keep track. So to me, part of maintaining a good relationship and putting the best foot forward is remembering what you talked about. And this is nearly impossible to do without without taking no So I think that’s that actually, I feel validated that you said that.

Love it. In some level. Love it.

You have a podcast. Why don’t you give us a shameless plug?

Yeah. I I I am the a multimedia sensation.

I am not, but It’s I I I sometimes lack words because I I’m still amazed that it is taken on the life that it has, but it started over a lunch about, like, six or seven years ago.

Where I told this guy, it was an investment banker from Philadelphia that I always had a a nice little rep party with. And he’s very bright and he’s said that. I guess I can’t take that back. I hope he doesn’t hear it. But we always enjoyed talking to one another exchanging. Just having a conversation that was greater than any, hey, what deal are you working on, or where are you seeing pockets of of activity?

And I told him once I said, you know, I’m gonna start a podcast, and he was really excited about it. In each of the following two years, he said, how’s that podcast coming knowing full well that I hadn’t gotten it off the ground? And I think at the third year, he said, let’s do it together. I’m like, are you out of your mind?

That’s a terrible idea. I would never do such a thing. But then I realized he’s has a very creative marketing mind and he brings a lot of a good skill set and a good thought partner. And I and so we decided to do it, and we started it almost three years ago.

And it has been wildly successful.

Much like I tell my children, be careful with put on the internet because it’s there forever. That holds true with podcasts and, but to a very positive, in a very positive way because You know, I was at the dinner with a guy last night and he was referencing a podcast that I did, you know, a year and a half ago that he listened to a month ago. He said that was really interesting that that person said this. And I was almost like, god, I don’t even remember what he was we’ve talked about. Now it’s a nice way You know, it’s not a it’s not a new heritage capital advertisement, but obviously, you know, we we wanna do what we can in an authentic and genuine way to try to do what we can to make sure that New Heritage Capital stays top of mind to invest in banks when they’re selling private companies. And so that’s what we try to do.

Would you care to share the name? Oh, sure. Again, you can tell I’m not much of a salesman when it comes to my Indian guy. No.

He’s not. I am. I think. It’s called middle market musings, and you can find it in Spotify Apple and anywhere else you listen to your podcasts.

Nice. We’re coming up on time, and, real, really appreciate your time and your insight. I I’d love to ask just you know, one last question, and that’s knowing what you know now. If you could go back in time and give, you know, twenty one year old Charlie, one or two pieces of professional advice, what would those be?

Well, twenty one year old Charlie, was in the South Pacific backpacking through Asia for a year after college, So I needed a lot of advice back then. Thankfully, I made it home, I made it home safe and sound, and here I am a number of years later. You know, one of the things that sticks with me is what, my father said to me, and that is whatever you end up doing, find it look for an a job that matches well with your passions and your capabilities.

And whatever it is that you do try to be the best at what you do. Right? Whether it’s delivering a service, whether it’s creating a product, try to really listen to your customer.

Ask for constant feedback, and make sure you service your customers in a way that’s differentiates you from your competition.

And that holds true with how we structure our deals. We’re not trying to be all things to all people just looking for those, again, maniacal CEOs of founder owned business, founder owners, that looking for something other than the eighty twenty leveraged buyout that everyone does. And interestingly too, Kyle, when we look to invest in businesses, we look for a very similar business. We’re not, you know, a laser focus on providing the service and being the best at what they do or a product, obviously.

So I think that concept can hold true. And so I think if you can identify an employment opportunity that one you’re interested in that matches well with your skill set and then do your best to kind of really think creatively and iteratively about making sure what you’re doing is better than what other people are doing out there. Know, you’re way ahead of the game. Now I that’s not easy to do.

I have two kids that have graduated from college, one in college, And they’re always like, what am I gonna do with my, you know, what’s the job? You know, what job should they do? And, you know, it’s a process. It’s a process.

It’s a process of exclusion.

You know, the earlier you start, the more things you can get say no to and closer to what you’re really good at. So start early, try on lots of different things.

And hopefully, you can find that thing that you’re really passionate about. I didn’t start this job till I was twenty eight years old. So I was trying to figure out what I wanted to do for a long period of time. But, again, the more iterative you can be and trying on different things, I’d better odds you’re gonna find something you like.

Love it. Charlie, thanks again for your time. Really appreciate having you on the pod, and hopefully we can keep in touch. I very much look forward to, doing that, Kyle. Thanks for having me.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning wherever you into your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next

Join Kyle for a chat with Karl Moore, Associate Professor at McGill University. Karl is an award winning teacher, author, researcher, and thought leader in the leadership and management space.

In this episode they discuss:

• Why Karl chose tech over financial services, and what led him to academia.

• Introversion vs. extroversion preferences, working styles, and workplace impacts.

• Tips around managing both up and down.

• Boomers vs. Generation Why? (aka Z’s and younger millennials)

• Thinking differently about strategy and innovation at a big firm.

• Why we could all afford to talk less and listen more, at least once in a while!

• And much more…

This episode is a must listen for anyone that wants to be a more effective leader, colleague, or partner.

Join Kyle for his chat with Duncan McKeen, EVP Financial Modeling at CFI. Duncan brings 10 years of experience in equity research and another 10 in corporate training.

In this episode they discuss:

• Why are models so important anyhow?
• Whether AI will make humans obsolete in financial modeling.

• How to be a more effective modeler.

• What career progression looks like in the research game.

• A detailed unpacking of equity research, including Duncan’s 5 “must know” pointers.

• Craft beer – buy, sell, or hold?

• And so much more!

With more model talk than fashion week in Milan, this episode is a must listen for anyone that wants the inside scoop on a career in equity research.

Can be moments of time where you can put something on a hold recommendation or neutral as it’s sometimes called. You know, but one of the things that I I remember distinctly working very, very closely with the trading desk. Remember the head trader at one point showing me that he only had a buy ticket and a sell ticket. He didn’t have a hold ticket.

This net learnings.

The podcast that keeps finance and banking professionals ahead of the curve. In each episode, we focus on career growth and practical while mixing in the occasional war story. Join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and boxes.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Piederty. It’s my great pleasure to welcome an internal guest, Duncan McCain. EVP of financial modeling here at CFI.

Dougin has a decade of experience in equity research and financial analysis, and another decade plus, incorporate training and financial education of all kinds of different stripes. So I think it’s safe to say this guy knows models and I can’t wait to dig in. Duncan, welcome to the show. Thank you so much for joining me.

Thanks so much, Kyle. Really great to be here. Thank you.

Lots of our listeners are CFI members, but but many aren’t. And so they may not know you all that well. Can you tell us a bit about yourself and what you do here at CFI. Absolutely.

Yeah. I run the FMVA program here at CFI. And as you mentioned in in your, piece of moment ago. I’ve spent a lot of my career in equity research about ten years and about ten years since then in financial training with a large, large focus on on financial modeling.

I’m gonna ask a really basic question, but I’ve always found that you have a an elegant way of of blaming it. So on behalf of our listeners, what is a model and why is it important? No. It’s a it’s actually a great question.

It’s essentially a decision making tool. I mean, you you can think about the different decisions that you need to make in life. Some of them are easy, and some of them are, like, really, really hard. Like, so For instance, you know, you think about, you know, should we go to the beach this weekend?

You know, absolutely. You know, that’s an easy decision to make. Yeah. Yeah. So you agree.

Okay. But then people think about, well, should we spend, you know, like, three hundred and fifteen million dollars to acquire x y z corporation? And you think to yourself, That’s not an easy decision to make. You know, like, I need some help with that.

So people generally would organize all their thoughts into a financial model, which is like you know, think of it as like a replica of the business and everything the business does. And they they use that model as, you know, one of the primary tools, if not the primary tool. To to help them make that decision. Got it.

So the feature of our interview is going to be around the five must knows for a successful career in equity research. We’re gonna get there. Before we get into that part of the chat, though, there are some areas that I kinda wanna unpack your expertise.

And the first is around AI. Right? So you’re you’re working as part of an internal AI research team at CFI.

So I feel like you’ll have a ton of interesting insight. Like, what is this AI in finance project that you’re spearheading?

It’s a great question. It’s actually evolved over the months since we started it. It it started off as a reaction to everything that was happening with chat GPT. It was just so topical a few months ago that we really wanted to dive in and see what it was doing.

We realized pretty quickly that it was obviously very, very capable when you were giving it questions in text and asking for responses in text. But we quickly realized that it actually wasn’t as useful when you asked it to use a tool, like Microsoft Excel, for example, So we expanded the the scope, of the AI and finance group to start looking at things outside of chat GPT other forms of AI and also AI tools which are already embedded in products like Microsoft excel. So, really, what we’re doing we’re looking at all kinds of advancements in technology, and then we’re specifically weeding them out until we can find specific technologies that are actually, like, useful in people’s workflows.

Right? We wanna show people actually, okay, here’s this thing. And here’s how you can use it to get some of the things done that are on your plate.

So, obviously, a lot of folks in various white collar jobs have different levels of fear about what, oh, generative AI is gonna do to their careers.

Question I have is will we ever see the human element modeling completely removed from the equation?

It’s a great question. And and very topical because it’s it’s something that’s been on everybody’s minds and so many people are afraid of. Short answer is, no, I don’t think you’ll you’ll ever see humans completely get removed from the process. Really wanna think back to, like, you know, modeling as or models as being decision making tools.

I can’t imagine an environment where, you know, a company would make a decision, you know, like a a decision worth hundreds of millions of dollars without a human that’s at least gone in and and checked what was there in that decision making tool. So it’s hard to imagine a world where you’d have an artificial intelligence machine, build the model, check the model, and then you’d blindly just do kind of exactly what it was telling you. But definitely, I think you’re gonna see humans, their role within financial modeling, definitely gonna change and evolve. You’re gonna see I I believe AI taking up a lot of the really sort of repetitive and redundant part of of modeling.

A lot of the build is gonna be taken over. And then as as a human, as a person, you’d want to then be kind of lifting yourself up to to do more of the analysis and the auditing of the model. So I could definitely see a world where where AI is is doing, you know, very large percentage of the build, and then it’s your job to know enough about the building to be able to audit it and then help to interpret what’s coming out of the model.

Yeah. You always hear these horror stories of many billions of dollars in losses due to, like, a tiny modeling error or, like, an inconsistency in a formula. And you can’t imagine come turning it over completely to to machine without some kind of oversight. I would think that seems irresponsible.

Yeah. Definitely. I think humans are gonna continue to be involved definitely with with the audit process. And you you can have AI is actually showing some some great capabilities in terms of model auditing. Like, it’ll help you identify inconsistencies, but you’d wanna overlay, you know, a human audit as well in that process I would think.

You spent many years in a variety of training roles. You’ve done everything from, like, adjunct professorships to classroom training, to now, of course, e learning with CFI and you’ve worked with, you know, among other roles, a ton of investment bankers and equity research associates, I assume, In your estimation, how many people do you think you’ve actually trained in financial modeling over the years? Oh my gosh. It okay. So first of all, it’s a great question. To to one which I do not have a perfect answer. I I would say after spending almost a decade doing in person training, I I would say during that time, I could have trained, perhaps, five thousand or more people, mostly in the in the banking sector at Financial and institutions.

Since joining CFI, I think just in the it’s been a little over two years I’ve been at CFI. It’s probably been tens of thousands of people at CFI just because we have the ability to reach so many more people than than we do in person in classroom training. Definitely.

That’s wild. No. It’s it’s crazy when you think about it, really. It’s it’s really fun.

Actually, I I had a crazy interesting conversation with my father the other day who who was literally a professor for around about thirty years. And and we estimated that in in the last two and a half years, I’ve trained more people in that time frame than he has over his entire career. And I’m not, you know, I’m not trying to boast. It’s just that the technology that’s available now really enables you to just to reach so many more people than than you could in traditional sort of bricks and mortar or classroom environment.

Sort of apropos that we’re talking about how AI technology could reinvent certain roles, but education’s changed significantly. And that’s such a cool that’s such a cool conclusion to have arrived at Now when it comes to modeling, they always talk about speed being very, very important. Other than taking CFI courses, free plug there, which we have many. Do you have any other sort of, like, easy quick to implement tips for people to be a either a faster or a more effective model or broadly?

It’s a great question. Well, and I’m glad you added in effective as well because it’s not only just speed. It’s also, you know, how effective you’re being. I’d say on the speed.

If we’re just talking about the speed topic, it’s it’s definitely, like, stop using the mouse, you know, like now. Like, just don’t use it anymore. You wanna really think about you and the computer are a team. Your brain is fast and the computer’s brain Usually, it’s called the processor is also very, very fast.

The slowest part of that whole system is where you’re interacting with the machine. And if you’re using the mouse, then you’re using a really, really inefficient method of interacting with the machine. So the first thing is stop using the mouse use the keyboard. That way, your your thoughts or ideas or commands will go from your brain to the computer’s processor much, much faster.

That’s the main thing, but I would also say, don’t stop at just learning Excel shortcuts. I mean, just Continue on to all the other applications, run the whole operating system, and that’s what I do. I generally, like, I don’t touch the mouse. For anything.

Like, I I just use the keyboard for, for all applications and the entire operating system, and it’s just it’s all about just I mentioned before, just getting your ideas into that machine faster so that you can get you can get things done. So that’s, I guess, answering your question About the speed?

In terms of efficacy, I would say that maybe we’re a lot of modelers Not to say they go wrong, but maybe where they don’t emphasize enough is they don’t emphasize and spend enough time on the dashboards.

You know, they think that models are just about the numbers, but really models are communication tools, and you gotta think about your audience. You know, your audience is You know, the key decision makers are very senior within the organization. Oftentimes, you’re talking about the board of directors. They don’t necessarily wanna look through, like, an ocean of numbers.

You know, what they what they wanna see is graphs, you know, exhibits dashboards. And so you don’t want to just tack on a dashboard as being an afterthought. You wanna spend a lot of time thinking about what the audience wants and needs see. And one of the the primary things that that we teach at CFI is that you actually wanna start when you’re designing model, you start with the dashboard. Design the dashboard, figure out what the audience wants, get that right, and then you back solve all the way through the model.

To to figure out what are all the pieces you need to make that dashboard work. And it effectively effectively like starting with the outputs and going backwards, designing backwards all the way through the model to get to the inputs, really. Yeah.

Counter intuitive.

Totally counterintuitive.

Yep.

In what ways have you seen learning and or call it corporate training evolve over the years.

So many changes in the last few years, insane amount of changes. So really like, you know, obviously when COVID hit, it forced the entire world, into the situation where we all had to figure out kind of like remote work and remote training, like, instantaneously.

And so We went from this environment where, you know, a lot of the world was doing in person synchronous training to this world where Nobody was doing in person training, and it was all remote. Yeah. It’s, like, hundred percent remote, but then it was a split between synchronous and asynchronous.

And I think when the pendulum swung that far to the other extreme, what it made all of us realize was the some of the things that were missing in that environment. And, you know, some of the key things that were really there are some great things, but some things that were missing is, like, community, you know, like engagement and peers and energy and all of that stuff which naturally just happens in person. How do you bring that into that sort of asynchronous remote world.

And that’s, you know, that’s what we’re figuring out now as the pendulum starting to swing back more towards a balanced or hybrid training environment.

How about a game? Sure.

What kind of game did you have in mind? Well, the theme of the episode is around equity research. So I thought it’d be appropriate to do a game of buy sell or hold. Oh my gosh.

Okay. Okay. So here’s, like, here’s an example. I’ll just I’ll give you a term. Yep.

And you say buy sell or hold, and give us a little bit of an nation. We’re not gonna we’re not gonna give you a total a total cop out. So an example would be like Country Music.

Oh, gosh. Okay. So I I used to be a cell, and then I went to Nashville, like, couple weeks ago, and and now I’m a buy. I just saw some unbelievable, like, unbelievable country, guitarists play. And and now I, like, have a brand new appreciation for country music.

K. Yeah. So I love it. Well, you you know the game. You’ve you’ve that’s that’s it.

It’s that simple. And I’m glad you had a good trip. So so here I have a list. Mhmm.

You ready? Yep.

Biceller Hold, the Atkins diet.

Oh, gosh. I I’d be a cell.

So and to be honest, I don’t remember the exact specifics of that particular diet. But what I do know is that all these diets keep coming and going, you know, and we think we have, like, the silver bullet solution And then then there’s a new silver bullet solution, like, a couple years down the road. So I’m, like, I’m, like, a cell on one specific diet, and I I’d be, like, a buy on, like, just all things in moderation, I guess. Okay?

That’s yeah. Sounds like, s said with much wisdom. Sounds like, many years of, of experience. And on the okay.

So on the topic of of kind of fads and things that come and go, buy seller hold cryptocurrency.

As a global medium of exchange and, like, an eventual legitimate replacement of fiat currency.

Okay. Okay. Not not we’re not talking about it as an investment. Talking about No. And and I wanna be clear for her listeners.

We we we do not provide investment advice. We do lots of things. This is not investment advice. This is do you buy sell or hold cryptocurrency as a a global medium exchange.

As a medium of exchange, I would say bye.

Yeah? Yes. As an investment, I would say, no, thank you.

Fair enough. Yeah. What is it? What is it about crypto? High level?

What is it about it that I would say buy to? Yeah. I just think it’s a really just efficient way of of just transferring amounts of money. Like, just, you know, like, instead of physically having to do a a physical transfer. It just makes a lot of sense to do it completely electronically.

Alright. Bicellar hold. Craft beer.

Oh, a big buyer. Yeah. So love love beer and grew up on beer that was awful. You know?

Like, And and the leafs came here in early twenties, like beer was terrible. It all tasted the same mass produced just the worst. And now, gosh, we’re so fortunate. We have so many local craft breweries everywhere, and, yes, big buyer for sure.

K? Buy seller hold.

Work from home as a, like, as, like, a mainstream concept.

Okay. Sorry. I had already said buy. Like, instantly Yeah. Definitely working remotely. I love it.

I know it’s not for everybody. I’m definitely an introvert. And for me, you know, it doesn’t bother me too much to have, like, limited more limited interaction with people. Love, interacting with people when when I’m doing it, but I definitely do not need to be in an office full time for sure.

Okay. Mhmm. Last question.

By seller hold x, formerly known as Twitter. Oh, gosh. Okay. Not the stock. Why it’s not publicly traded anymore.

Just just x as a So these are not stock recommendations. Right? Correct. Just buy or sell, you know, would I use it type thing?

Mhmm. Yeah. I would say sell. I’m not really a social media person. In fact, I’m really not a social media person.

Like, one of the running jokes with my wife is that on Facebook, she, like, checked me off as, like, her husband. I think it was, like, ten years ago, and I still haven’t accepted because I’m putting on it. It was Okay. Basically.

So it’s like Fair enough. Yeah. I think it gave up and stopped it stopped prompting me to to confirm that fact. Because I hadn’t. That’s great.

Yep. Alright. Well, that was fun. Thank you, thank you for playing. And, I think that sets the stage nicely to talk a little bit about about equity research, which is kind of the main event here.

For those of our listeners that don’t really know the role all that well, or, you know, new to their finance career. Can you explain what an equity researcher does?

Mhmm. Actually, actually, the the main job is exactly the, like, the game we just played. It’s like, you have to decide buy seller hold, but you need to do that for a public company. At the end of the day, that that’s like the short answer of of what you’re doing.

And you but you need to you know, you can’t just say buy seller hold. You need to have You need to have it supported by research that you’ve done and evidence to support that be you. But that’s that’s effectively the job. Yep.

And what does career progression look like in that vertical?

So, yeah, interesting question. So you’d you’d enter into that vertical as a research associate And then and when you come into that role, you’d be reporting up to a research analyst.

And then, you know, being promoted from a research associate would mean that you get promoted up to be a research analyst.

Beyond analyst, if you’re gonna stay in research, the only place left to go would really be to the head of research. And there’s only one job there. So it’s it’s a triangle that gets really thin at the top pretty quick. Having said that, equity research in general can be, like, a great stepping stone into other careers for sure because you learn so many quantitative skills that you can then take over into other jobs, like, say, over onto the, buy side, for example, or across over to a corporate development role as another example.

And and also, you know, jobs and investment banking, you’re also learning those very similar quantitative skills that you can transport over into other roles as well.

So you brought up two interesting points. It seems like relative to many other capital markets roles, it’s it’s flipped. Right? So usually an analyst is more of an entry level role when you move into associate, it’s it’s the opposite, right, with with equity research?

It’s such a great point. And that’s, you know, for the listeners that, you know, have not spent a lot of time analyzing the different roles, it’s it’s so true. And in equity research, you come in as a research associate, and then you could graduate up to research analyst an investment banking, you would enter in as an analyst and then would be promoted up to an associate position. I don’t know why it’s reversed Right?

Those two verticals, but it is in this important distinction.

So the other piece was you mentioned you can move over to the buy side. So equity research is typically a sell side function.

So it’s two part question.

How do they work sort of where do they fit within the sell side institution? And then the second part of that question is do buy side players also have equity researchers? Mhmm. Okay.

Yeah. It’s a great question. The first part of the question I think was, like, how equity research fits into the sell side. I always think of the sell side Capital Markets groups as being made up of four basic parts.

You would have say investment banking, equity research, sales, and trading. And when you’re working in equity research, you’re really producing products for the sales team and for the traders. So, you know, you you’re coming up with your buy seller hold recommendations.

You know, with your supporting evidence and your publishing notes on that, and that’s giving the sales team a lot of talking points that they can start to have discussions with when they’re talking to portfolio managers. And then, obviously, if portfolio managers wanna act on those particular ideas or opinions, then they can execute trades as well. So that’s kind of how it fits together, and you can be really actively engaged with with sales and trading when you work in research, for sure. Okay.

So the second part of the question was is there an equivalent on the buy side, or is everyone kind of an equity researcher when you work under a portfolio manager? Great question. And thank you for reminding me about the second part of the question because I would have forgotten about it. It it’s definitely true.

You can have like, effectively, equity research positions on the buy side as well that are very, very similar. In fact, there’s been a trend towards more and more internal research being done on the buy side. A lot of that’s because, you know, they don’t necessarily wanna rely on the sell side where, you know, as we know that they can have their own biases, they’d like to have their own in house research on the buy side, be maintaining their own models, and then building building their own models means that they have a really, really deep understanding of the companies that they’re considering investing in.

We you’ve made a really compelling case to consider a career in this space. So let’s get to our main event. As I understand that you’ve curated a list of, the five most important things that you absolutely must know to be successful in equity research. And, of course, these are implicit in that are like, non intuitive things.

Obviously, you need to be good at modeling and and so on. Like, what are the five sort of unin non intuitive things that that you must know in to be a successful equity researcher. Yeah. Definitely.

So not in any particular order, but let’s let’s start with one of the things. And and one of the things can be you have to be looking forward all the time. Okay. So you you you will definitely encounter a lot of research notes that will talk about what happened, you know, backward looking, you know, company reported, and here’s here’s what they reported.

And but really, your audience is is looking forward into the future. So you can talk about backward looking events, but you really wanna focus on Well, what are those backward looking things mean for the future? Is my view of the future the same or have these recent events now changed my view of the future in some way. I mean, one of the the people that I used to work with you know, had this joke, and he basically said whenever he’d encounter equity research that was almost completely backward looking, you know, he just say, oh, this is really helpful.

You know, when when we invent time travel, this will become a really useful piece of research, but until we have time travel, it’s not useful for me to know what happened in the past unless we’re using that information to help change our view of the future. So A natural tendency of a research, analyst could be to be looking backwards, but you really need to get past that and and really focus on the what’s gonna happen part, which is really gonna help the portfolio managers out on the buy side much much more. Yeah.

Okay. That’s that’s really interesting.

See, so focus forward.

Yeah. How’s the book is for? What’s what what’s the next one?

So the next one is and this may be it may be obvious, but you have to have an opinion. You know, and that that can be difficult when you’re starting out in equity research because the tricky thing is not only do you have to have an opinion, you have to put it in print, you know, and it’s gonna be out there in print forever.

And if you’re wrong, everybody will know that you’re wrong. But you must have an opinion. That’s effectively what the buy side is paying you for. You know?

It’s not helpful if you’re wishy washy and say, well, maybe this could happen, or maybe this could happen, or I’m not sure. Maybe this other thing could happen. That’s not helpful for anyone. You need to formulate an opinion and express your opinion.

And the one way that you can, I guess, be at ease with the idea of expressing your opinion and putting it out there is just know that not everyone’s gonna agree with you? Fact, a lot of people won’t agree with you, but what they will appreciate is they will appreciate you you trying to have an opinion and also being forthright with your opinion and telling them exactly what it is. They really, really appreciate that.

That’s interesting because as as an investor, it’s like a retail investor.

If I don’t know how I feel about Tesla, I just ignore it. I don’t have to have an opinion. I don’t have to go long or short or whatever. I just ignore it.

But if you’re covering Tesla, you need to have an opinion on it, whether you like it or not. Yeah. You certainly do. I mean, there can be moments of time where you can put something on a hold recommendation or neutral as it’s sometimes called.

You know, but one of the the things that I I remember distinctly working very, very closely with the trading desk and I remember the head trader at one point showing me that he only had a buy ticket and a sell ticket. He didn’t have a hold ticket. You know, so they just they can give you a hard time. Like, it’s okay to have a hold for a little while, but eventually, you need an opinion which is going to you know, they can’t they just can’t do anything.

A trader can’t do anything bold. There’s no action there. So, yeah, definitely you wanna have an opinion. You you wanna be instructing people to either move one way or the other.

Like I said, it’s okay to have a hold for a little while. You can’t leave a hold on there for for a number of years. It just doesn’t work.

Yep. Got it.

Okay. So focusing forward you always need to have an opinion. Mhmm. What’s number three?

Oh, okay. So for maybe it follows along a little with the having a an opinion bit, it’s that you you have to have thick skin. Oh my gosh. You have to have a thick skin because the thing is is that And you can ask people, you know, how how often are research analysts to write?

You know, the best ones in the world are only right sixty percent of the time. Is this that little? It’s that little. Yeah.

At least it’s over fifty. I mean, if it wasn’t over fifty, you wouldn’t you wouldn’t hire them. Right? But so but even, like, It’s hard to even maintain that average of being right sixty percent of the time over long period.

So it means that forty percent of the time your clients are are frustrated or angry with you, or you weren’t right. So you really just have to have thick skin. You know, you just have to be able to persevere through it and think about okay. Well, maybe I’m wrong forty percent of the time, but I am adding value for them.

Right? I’m I’m right more than the market is, and so that’s that’s all that you’re trying to do. And you have to just let if you’re getting negative comments from time to time, it just has be, like, water off a duck’s back, you know, just keep driving forward, and don’t worry about it, you know, and try to learn from it along the way. That that’s interesting to me as an outsider because and and maybe even a little counterintuitive because you you think of equity research as a role where someone who’s very introverted, very analytical Mhmm.

Doesn’t want to put themselves out there. Like, doesn’t want to be on an investment banking desk or in a sales or trading role.

But yet they’re expected to put their stamp of approval on every single piece of research, and their name actually ends up out in public quite a lot. So that that’s kind of an interesting, element here. It’s a really interesting element. Yeah. And and and you’ll encounter some which are sometimes okay with the idea of putting their thoughts and opinions out there on paper, but they they won’t wanna interact in person as much, and those would be the research analysts who really don’t go out marketing in person as often maybe they aren’t on the phone. As much, and they prefer just to publish on paper or on PDF format.

But either they they need to find a way that they are comfortable and and get those opinions out there for sure. Yeah.

Okay. Six skin number three. What else do you have on your list?

Well, it’s it’s an interesting one. I mean, you just When you and it’s hard to maybe boil it down into one one punch line, but it it revolves around the idea of You know, when you’re in equity research, you are entitled to independent thought. Okay? So you can say whatever you want. You can say You can put cell recommendations on on everything. You can put hold recommendations on everything, but at the end of the day, the one thing that you need to remember is you’re working for a group that sells equities.

K? At the end of the day, that’s what a capital markets group does. There’s no On the sell side. Yeah.

They’re on the sell side. They’re selling equities. They’re either doing IPOs or they’re doing equity follow on offerings. So that’s fine if you wanna take your portfolio of ten companies and put them all on sale recommendations and be negative on the whole sector, that’s fine.

But if you wanna keep your job, you better than find another sector that you’re actually bullish on. Right? Because there’s no way that you’re gonna be able to make money as as a group, as a working group, capital market, if you’re negative on everything. Right? So you can be independent.

But be prepared for there may be a day when your sector rolls over, and and you’re like, you’re you wanna put the entire portfolio on hold or on sell, but then you’re gonna have to find something else to do with your credit. Find a different sector. For me, I worked within the mining sector, so it wasn’t finding a different sector, it would just be like, oh, okay. Well, maybe this particular commodity is out of favor now for a couple years. So let’s transition over into covering a different commodity where we’re actually really, really bullish on it, and we really like the prospects for some of the companies there.

So this concept of independence sounds like it may be somewhat controversial, but I’m I’m sure it’s also maybe one of the worst kept secrets on Wall Street to some extent too. Right? Yeah. You’re definitely entitled to independent thought, but you also need to re to remember of course that you you have a job to do, and you’re part of a business. And so, you know, if if you were to encounter a situation where All of a sudden, you became negative on your entire sector, put everything on a cell recommendation, and then didn’t pick up coverage of anything else. You’d be out of a job.

You know, because your your group would not be able to sell the products that it’s designed to sell effectively.

To boil that one down into a one liner, but it’s just an interesting thing to think about. I don’t need to. One liners are good. They’re catchy for social media, but but, no, it’s a it’s point well taken. And and what’s number five?

Number five, I would say the idea of even on the cell side, would be talking less and listening more. This this would be another mhmm. It’s pretty in count counterintuitive thing, really, because you think about the sell side. You know, instinctively, people would think, okay.

Well, you you’re supposed to have an opinion, and then you wanna be communicating those opinions out. Well, that’s true. That’s what you’re doing the most most of the time, but you can just learn so much by listening and asking a lot of questions so that because when you think about it, when you’re talking to people on the buy side, They are the market, and they can move the market in in big volume because they’re man I’m talking about, like, like, portfolio managers at funds and asset management firms. Okay.

Yes. Yes. Yes. Yes. They have the ability to move large portions of the market, you know.

And so I would always really, really like to if they’re open to it, you know, asking them questions and and start to think about how they’re feeling, you know, about the particular sector or the investments because you can learn so much and then if you go out, if you spend a week or two marketing and you do a lot of listening, you’re gonna come back from that trip. And you’re gonna have a really, really good read on what the buy side is feeling about these particular investments, and it gives you some insight into how it may move in the future. Because effectively, you you know collectively how they’re all thinking and how they’re feeling about the investment So that that’s a really, really important one.

And also, when you’re interacting with the buy side, they’re not used to a sell side analyst asking them questions. Kinda throws them off guard, and but a lot of them are really open to it because a lot of the time they don’t get a chance to communicate their own views in those meetings. So I used to do that a ton. It took me a while to figure it out, but then then once I started doing it, I I realized how sort of advantageous and interesting it was, and I used to do tons of that in equity research.

It’s so interesting because I guess if a critical mass of institutional investors are bearish on a sector, they can start to become a self fulfilling prophecy. Definitely, they’re trimming positions and and, have your supply demand a little bit out of whack. So that that’s really interesting. Definitely counterintuitive.

It yeah. Definitely counterintuitive, and it can start to if you’re going through, say, if you’ve been going through a bull market for some time, but you’re constantly asking them questions. And all of a sudden, they start saying, yeah, I don’t know. Valuations are getting a little stretched.

Multiples are a little bit high. Well, then that’s giving you insight that, yeah, we may be getting closer to a top if they’re starting to feel that way. So then you can start looking for evidence of a top that may be coming. And then and then that’ll obviously help to inspire, you know, your own opinions and in your research as you write it.

Ask a question. Yeah. You always think about so the news release comes out at six AM, right, on a com a company that you’re covering.

Is there what’s more valuable? Is it being first to market with your report, or is it being maybe not necessarily the the first mover, but the most detailed equity research report thereafter, maybe you could be third or fourth or or fifth. Do you does that question make sense? It does it does make sense.

And it’s like it’s it’s a trade off. If if you’re first out first note out there, okay, you don’t necess it your comment does not need to be as good because Okay. But it’s a bit of a trade off. Like, Just getting out there first has value because you can literally just provide a summary to the buy side about what happened about too much of an opinion, and they can get value from that because you’ve been able to react so quickly and that time is valuable to them.

If you wait and you’re slow, and, you know, by the time your comment gets out, there’s already ten comments out there, then your comment better be good.

Right. Yeah. Better, like, really good. Oh, better be really good because they’ve already had ten comment hit their desk, they all know now what happened. So you’re gonna need to tell them something incremental that no one else picked up on.

Or you’re going to need to maybe you tell them the same factual things, but you have an interesting twist on or a slightly different opinion or interpretation or a different outlook into the future, but you need something to differentiate yourself if you’re that late. I used to take kind of a balance between those two approaches.

I always wanted to be as fast as possible, but I never wanted to be for instance, like, I would never be first if it meant that I hadn’t really analyzed things and I hadn’t formed opinion. I needed to get to an opinion and have a view before I put out a comment. And it usually meant that I wasn’t the first one out, but I that I wouldn’t be the last one out either. I was somewhere in the middle.

Yeah. First for first sake, maybe maybe not worth it considering. For me, for me, it wasn’t, but for some people, that’s the approach that they like to take. And it and it can work very well for some people.

If they can always be first out, and then they don’t necessarily, as I mentioned, don’t need to have as much an opinion. They can just be adding value by, having a quick summary out there for people.

What was it about equity research that attracted you in the first place. So early on, it was I wanted I wanted more challenge in the work that I was doing, and I was also So I was working in in the mining industry as an engineer selling to other engineers in the mining industry, and it was it was interesting. But the equipment I was selling was, like, year over year, the only difference would be, okay, ten percent more horsepower on this ular, you know, drill that they’re using at this mine is like, okay. That’s not that interesting. So it was it was so challenging to to transition into equity research because the the problems that you’re working on are so complex. And and interesting and multifaceted. I was just fascinated with learning the quantitative side near the beginning.

But as things progressed through with equity research, I I found more and more and more challenges Later in my career, as I progressed later in my career in equity research, I started to really, really appreciate a lot of the quantitative aspects of the role, in particular, the psychology of the markets. I just started to just love learning about the psychology of markets and, you know, how they might be, efficient, but they can be incredibly irrational at times and, you know, unlock huge opportunities sometimes. So, yeah, that’s how it that’s how it started for me, and that’s a little bit about how how it progressed as well.

So if I had to summarize our our five main takeaways, focus forward would be one. Definitely. Yep.

You always need to have an opinion.

Thick skin.

The fourth was around independence. Maybe we’ll call it you have independence, but perhaps only on paper. There are there’s more to it behind the scenes. Say that. Sure. Yep.

And the one I I found really was talk less and and listen more. Yeah. Definitely. That one’s that one’s a fair summary.

Yeah. That’s a great summary. Yep. Perfect. Okay.

Well, This has been incredibly insightful. I have to say that you’ve answered a lot of questions that I had and some that I didn’t even know that I had. So, you know, I wanna thank you for your time. I I usually try to sort of ask everyone one question, which is if you weren’t doing what you’re doing now with CFI, what would you be doing?

Oh, gosh. It’s a great question. I love what I do. So so it’s a tough question.

I think if I was doing something else, it would it would still involve teaching, I believe, in in some capacity because I absolutely just love it. Teaching for me is, first of all, something that I feel like I’m good at, but also it’s such a nice opportunity to to give back to people that’s kinda like, what were all the things that I wish I knew twenty years ago when I started off in in finance and and how can I, you know, communicate those to other people so that I can help them early on, the things that I would really wish that I’d known way back in the beginning? So I think it would involve teaching in some capacity, Kyle.

I don’t know exactly what that would be, but definitely it would be within the teaching sphere for sure. Well, Duncan, I think you’ve you’ve delivered on that and more, and and, hopefully, many thousands of people can can download a bit of this wisdom from you. And and thank you so much for for sharing it. It was really valuable, and we appreciate your time.

Thanks so much, Kyle. Thanks for inviting me on. Appreciate it.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance, and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning wherever you listen to your favorite podcast, or visit us online at corporate finance institute dot com’s podcast.

See you next time.

Join Kyle for a chat with Jean-Philippe Ménard, Senior Vice President at BDC, which is the Business Development Bank of Canada. Among other things, they discuss:

– What a development bank is.

– How BDC is uniquely positioned to support entrepreneurs.

– Why bankers might consider working at a development bank vs. a traditional FI.

– How JP went from cleaning floors at BDC 25+ years ago to his current SVP role.

– The 4 qualities JP looks for when recruiting talent.

– His game-changing networking mantra.

– And so much more!

This is a very informative interview that sheds a ton of light on an organization where finance pros of all stripes can excel and make a genuine impact on the economy!

What’s your top networking or business development tip? There’s only one. If you wanna get referrals, give referrals.

For me, successful people in networking are the one that are taking more care of their network than their own needs.

This is Net Learning.

The podcast that keeps finance a professionals ahead of the curve. In each episode, we focus on career growth and practical advice while mixing in the occasional war story. Join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Petity. And our guest today is Jean Philip Menard senior vice president at BDC.

For our international listeners, BDC is the business development bank of Canada, often billed as the bank for entrepreneurs.

Welcome, thank you for joining me on the podcast today.

Hey, thank you very much, Kyle, for having me. It’s a great pleasure to be here. And I wanna take a moment just to congratulate what you guys are doing. A unit team are doing awesome for helping sharpen the skills of banking professionals.

So thank you for doing that. Well, I really appreciate that feedback. Thank you so much. Before we dig into, BDC, maybe we start with sort of a more general question How do you characterize what a development bank is or or what they do exactly?

Yeah. It’s an interesting question because a lot of time when we ask people would they know If they know BDC, they’re gonna tell us, yeah, I know BDC. It gets a little fuzzy when we ask them what what do they know about BDC. So the role of a development bank is is a complimentary role in an economy. It’s also a counter cyclical role to come fill the gap if there are some areas where the commercial banks are not covering, but also in in times like slow down a recession where it it is time for public policy institution like BDC to step in and to fill the gaps. So we’re there to provide capital for medium and long term needs look at it more on the bottom of the balance sheet, making sure that businesses can thrive in in tougher times, but also making sure we help them develop their full, their potential.

So there’s nothing like diversification of source of financing the same way. We, advise our client to diversify their social source of suppliers or eventually their their science.

So our focus is really small and medium sized businesses in this country. To financing to capital and to advice.

I love it. And so you sort of you sort of outlined the mandate or or the purpose, but did you did you wanna dive in a little bit more detail sort of about, like, maybe a bit of background on BDC.

That’d be cool to hear. Yeah. I mean, Not a lot of people know the story of BDC and where it came from, but but it came. Yeah.

So it came right after World War two. So many countries like Canada were trying to rebuild their economy. And on September thirtieth nineteen forty four, the Canadian parliament announced the creation of IDB at the time, the industrial development bank. So that was our first name a long time ago.

And the the objective was very, very simple. It was to help economies to redevelop following the fall following the war effort. So helping small businesses to convert their facilities to peacetime operations.

So in the early years, our main activity was around machine shops, saw mills, dex style factories, auto part manufacturers, making sure their transition into and to the next steps. And then in the nineteen seventies, We started to realize that sometimes more money was not always the solution. So this is where we introduce some advice for for smaller businesses. So We were obviously the first national organization and the first bank to this date that are offering advising, advising, services for for businesses.

And at the time, he was counseling. He was training. He was strategic planning to help businesses evolve and, in a fast paced environment, which were the the seventies at the time. So Oh, yeah.

It seems that the year story tends to to replicate. So over time, we kind of became this one stop shop for for businesses because we are the only bank dedicated to Canadian entrepreneurs.

Today, we are fortunate enough to serve hundred and thousand Canadian businesses directly or indirectly.

Last year was twenty five twenty five hundred advisory services mandates that were provided to to Canadian. It’s it made us proud to think that one out of ten Canadian businesses are dealing with us. That means they are responsible for about one point two million jobs. It’s eight percent of private sector jobs.

It’s fourteen percent Canadian GDP. Yeah. It’s it’s a very it made us proud to see the impact we have on the Canadian economy. Those are big numbers.

And you talked about counseling and and some of the other services provided. We we’ll come back to that. But before we do, I’m curious because we have all over the world, are there other examples of, like, development banks in other countries or in other jurisdictions that that people may have heard of or may not have heard of?

Yeah. Yeah. Actually, BDC is one of the leading development bank in the world. I mean, your listeners may may have heard about the World Bank, which kind of a more of a world public policy organization.

But there’s other equivalent as as BDC and France. There’s BPI friends there’s British business bank. There’s Finvera, small industries, development bank of India, And b b b a few years ago, launched what we called the Montreal Group, which is a gathering of twelve business development bank. Across the world. And we gather a few times a year to hear their reality, exchange on best practices, And, yeah, we we are proud to be leading that initiative because it it helps in Canada, but it also helps in the rest of the world.

So maybe let’s circle back now to those different divisions or I don’t know if we wanna call them product or maybe service offerings. Offhand, I recall there’s like, traditional financing, like commercial lending that you do. There’s an advisory arm you mentioned, like consulting work. And then, BDC Capital, I think has some niche groups in there.

Can you unpack these different divisions a bit and how they fit into your overall ecosystem? Yeah. So we play in three different areas. The first one is financing, and it’s mainly through term loans, and I’m gonna dig into that a little later.

But The second piece is is capital. So BDC Capital, which will in income, which will encapsulate growth and transition financing, specialized products like venture capital and and event eventually, it brought us to be the biggest investor in VC in Canada.

And and finally, our advisory services, like I said before, we get to a point sometimes that more money is not a solution anymore. And so we come to the table with a variety of mandate to to help them. So if we look in financing, it’s the core business of the organization is financing. So we’re talking about term loans to help entrepreneurs buy land, build buildings, improve their facility, buy equipment, business transition, eventually working capital for growth, This is our biggest areas of of activity.

We also do wholesale financing where we’re gonna be coming to help some smaller financial institute to reach other Canadian businesses. And then we do our own corporate finance group. So so we do our corporate finance with businesses roughly north of fifty million dollars in sales with commitment above twenty, thirty, forty, fifty, maybe up to a hundred mil. So that’s kind of the area of our corporate finance group.

We also do it through syndicated loans. So when we get in the medium and large businesses, DDC will be part of a lot of syndicate loans in in the country. We are not leaders in any of those syndicates because we don’t feel it’s our role, but we we feel it’s our role to be part of ecosystem.

On the BDC Capital side, we do it in different way. We do it in the traditional sub debt, we call it. So call it mezzanine financing, call it secure financing. We also do it to venture cap. We do it to growth equity where we’re gonna be come in taking some minority, shareholding, p position.

We also do some intellectual back property financing. And so all that follows under under BDC Capital. The best way to summarize it is when there’s some kind of securities to be to be offered or taken into a collateral financing, we’ll look into it when there’s no more of this those like tangible securities. We’re gonna move into BDC Capital.

And eventually, we’re gonna come in any of those line of business working with our advisory group. See if we can help with with advice. In three main categories, we we provide advice. First one being sales and marketing, so traditional sales online sales.

Second one’s around productivity.

So how do we improve productivity of manufacturers, old sellers, system selection, ERP is a big, obviously, is a big thing in the industry today, how we help our clients to select the best solution. In terms of in terms of ERP. And finally, we’re gonna come to the table with our capabilities development. So strategic planning, financial management or design HR management.

Always in the same mindset of helping entrepreneurs to develop their full potential. And to be successful and to achieve their dream. Can you tell us a bit about about your role specifically, and where it fits?

Yeah. So so my role is, very I feel fortunate every day, that I’ve been able to move in move in the company. And then since the last three and a half years, I’m here in British Columbia looking after operation here in British Columbia and the north, So that means overlooking our network of branches across across the region through our three areas including including the north making sure we are in front of as many entrepreneurs every day by feel that my responsibility is to make sure that all Canadian entrepreneurs know about BBC. And then they can make their choice.

But with we have a lower penetration rate here in the West Coast. So it’s a real growth play for us. We wanna be out there. We wanna make sure we’re gonna be touching as many entrepreneurs as possible so they could see what’s available for them.

I mean, after all, we are your development bank. We are Canadian Crown Corporation. So I have the responsibility to make sure that every day, each and every one of our employees are out there touching as many Kenny entrepreneur as possible with financing offers with advisory, even with insight and trying to provide them a different angle on their own business. And you mentioned the term Crown Corporation, just for our listeners that are familiar with it.

It refers to sort of a hybrid entity. It’s, like, a private, for profit enterprise, but it’s owned by the government, either provincially or federally. And in in BDC’s case, it’s federal, but it’s removed in terms of control, giving them sort of more independence. Just thought I’d I’d fill in that gap.

I’d like to spend a little time comparing and contrasting a development bank like BDC versus like a a chartered commercial bank. And when you and I first chatted, actually, you relayed a really funny anecdote about an interview you did with, a candidate like an informal chat, I think it was, who was considering joining BBC. And I think it speaks to the purpose or the values that an organization like that kinda lives and breathes. Would you be willing to actually share that, that story with our listeners?

Sure. So eventually when I moved to Vancouver, it was a very unique time. It was June of twenty twenty third three months into the pandemic. Everybody was working from home.

And I was trying to build my network in Vancouver’s and the only thing I could do within health authorities rules was taken off. So I’ve been walking to seawall with stakeholders in Vancouver. And probably some of them will listen to this podcast and will recognize themselves because I walked to seawall quite a lot. And this day, I was walking to seawall with a potential candidate who wanted to come to work for beauties.

Obviously, at some point in time, I asked the question, why do you wanna come to BBC? And he provided me with an answer that really encapsulate what I feel is one of the difference between BDC and the other financial institution. And he told me that he said, you know what? It’s been fifteen years now that I worked hard every day to make sure and ensure that the bank is more profitable.

I wanna take the same energy to make sure that my clients are more profitable. So it’s not against it’s not against the objective of the Canadian financial institution because We’re all shareholders of chartered banks, and we’re very happy with their financial results and their dividend. But the reality is that it’s just a different mindset. It’s a mindset where We come to the table every day with the mindset of I own one percent of your company and every day I’m interacting with you.

I wanna make sure my one percent increase in value because your ninety nine percent will increase in value. And it’s a very fulfilling role, to be honest. Anytime anytime we can build this relationship and build this trust with with that line to the point where they’re gonna tell us things like, I’m gonna tell you that, but don’t tell my banker.

It means that we build that deep relationship and we are in a position to influence and to help them grow and and develop that full potential. So for me, it’s always the most fulfilling piece of the role, to be honest. Such an interesting perspective on on values and and purpose, and hopefully gives our listeners some thought about about everything that you do day to day in in your work at your place of employment and how you’re able to make a difference. Something I’m curious about. I mean, I worked in a chartered bank for a number of years. Does BDC compete against the chartered or are they complimentary?

Maybe it’s both in in in what ways specifically?

Yeah. I truly believe that there’s an area for BDC and we’re not we’re not competitors.

I roll and the the best demonstration of this is each and every one of our clients are working with a chart bank. We don’t offer any short term financing. We don’t offer any credit line. We don’t offer any day to day activity.

This is not why we’re made for. Were made to be there to diversify source our financing and and help Canadian entrepreneur to be able to see different perspective in a pretty in a pretty stable financial market. So we come to the table with a different offer a lot of time with terms and conditions or are gonna be different And then the client can make the decision around what they wanna do, who they wanna work with, sometimes we’re gonna be willing to take some more risk And other time, we’re gonna we’re gonna see some deals, which aren’t probably not BDC deals, and it’s and it’s fine. At the

end of the day, my responsibilities to make sure that Canadian entrepreneur are exposed to all the alternatives in the market, and then I trust their judgment to make their choice and make the best choice for their own for their own business. We’ve covered a few points, but maybe you could expand if there’s anything we’ve missed, like A lot of our learners are thinking about their own careers. And maybe mobility, you know, what are some of the pros and cons of working at a public organization like BDC versus a similar role as like a lender at a chartered bank or a a consultant at a management consulting company.

Yeah. I guess probably it’s in the nature of the business because working for for traditional financial institution comes with lot of pros. One of them being the business gets sourced for you a lot of time easier than in in a chart or in a organization like BDC. For us, because we don’t have this short term relationship with our clients, we we need people who are out there.

We need people who are curious who are self started. We’re gonna be grinding to be in front of as many entrepreneurs as possible. So it it’s a different persona to be successful. But at the same time, we have more time to build this relationship to get in-depth with our clients and the discussions and to provide value to the next level through yes financing, but advisory services.

Those advisory discussions are bringing a more holistic conversation about a business model And it does build bet better better banker. I’m I’m convinced of that because when you are able to to interact or to diagnose a business model rather than only the financial needs. It does make you a better bank.

Yeah. That it’s interesting perspective because as a former banker at a charter, I know that you wanna be able to you wanna be able to get in and dive in dig in on the business and truly understand it. But there are those other responsibilities you mentioned, like the, you know, overdrafts in dealing with the day to day accounts and some of these other pieces that, I guess, you could say BDC is not bogged down with, and they’re able to spend a little bit of extra time. So that is, certainly Yeah. I didn’t wanna get in too much details, but We often hear overdraft and annual reviews being in the way of doing some business development, then this is not a reality we’re facing as much. In our current context.

Something that I’ve always really admired about BDC is how much the organization leans into thought leadership for business people and for entrepreneurs.

And, I think it’s maybe just the educator in me, but I I think they put out a lot of good content. That’s easy to understand for, you know, non finance people, like, like, founders and entrepreneurs.

Yeah. I think it’s part of our development role. And some of this this role is obviously to to deal directly with preneur, sometimes to do it, indirectly to other financial institution.

But this all content management piece It’s a huge piece because we know that a lot of entrepreneurs are not gonna come to the bank for different for different reasons, but knowing that they’re gonna be on bdc dot c a consuming content around financial planning, around strategic planning, around, HR management, For us, it’s it’s a great way to help them improve.

Before they even get to more of a transactional need to come to come to us. So we know that financial literacy is a very stressful topic for for entrepreneurs a lot of time talking to a banker could be could create a lot of anxiety because they don’t feel that they are part in the car in the conversation with with their bankers Same thing for their account. And so we tried to put some very accessible, easy to consume material on BBC that can be consumed whenever they are available, and our experience tells us that the entrepreneurs are consuming a lot of this material at night because they are very busy in their businesses during during the day.

So, I mean, b d c dot c has more than eighteen pieces of material will cover all business challenges from improving operations to boosting sales. It’s and and it’s also available in different formats. So either ebooks, webinars, business assessment, templates, videos, we try to make it affordable to everybody And most, I mean, the vast majority of that is is free. So this is also this is part of our role to to be out there and provide entrepreneur with as much material as possible.

Everything feeds into one to the other. So you’re gonna see it on our on our TV ad that’s gonna feed our our email list, which are gonna feed our social media. And every quarter or every six months, we’re gonna be publishing some studies studies on different different topics that are coming out of the survey. We do with our entrepreneurs to get the pulse of what’s going on.

Since the pandemic, we’ve been serving entrepreneurs every three months to see how it’s been how it’s been evolving. And we’ll we’ll keep on doing it because now we kinda built a baseline of information about the the general mood of entrepreneur in Canada, and knowing that We’re probably not out of it yet, and it may get a little tougher before it gets better. It’s interesting to see how the how the mood or the intention or the level of confidence of entrepreneurs are are evolving, and it’s help us to be more pertinent in developing content, but also in feeding our account managers and in topics that are of interest of of our clients today.

One thing I’ve seen put out occasionally on on social media is stuff around, sort of ESG and or sustainability. So without getting into too many wormholes, what I’d like to get a perspective on where BBCs at when it comes to thinking about, you know, ESG or sustainability.

Yeah. We locked we like to talk about sustainability because, I mean, sustainable development re resonate more with what we are. Make sure that we bring in the approach to grow that will meet the needs of, I mean, current generation, the future generation, but keeping the balance between like the four pillars. The four pillars between obviously the economic pillar. I mean, we need to help businesses grow, strongly grow and be resilient.

Second pillar be be be be make making sure we leave anybody behind. So we do a lot of work with underserved markets, being black entrepreneurs, woman entrepreneur, making sure that as a development bank, we’re gonna be covering all these areas where maybe the some gaps was create were created over overtime indigenous entrepreneur is a is a great area where we are active. We also wanna make sure we help them build some some low carbon and clean economy, businesses. So this is at another area where we’re trying to be to be forward looking and trailblazing in bringing conversation around certified buildings with with our clients who are planning on building new new buildings.

Making sure we make them aware of what’s available out there because a lot of time, this is probably not, top priority for for every entrepreneurs in the day to day or their business. And finally, we wanna make sure that they engage with clients, employees, partners, that altogether were were were stronger to face the challenge we have in front of us. But it’s it’s like I said, it’s trailblazing work. We need to be out there. It’s our role to bring the conversation to create awareness and making sure that we do it the right way for the right reasons.

How did you end up at BBC? So that’s a that’s a very funny story. I end up at BBC because as I was heading to, John Molson business cool in the Concordia University in Montreal. BBC was a tenant.

It was in one of my commercial in one of my dad’s commercial building. And cleaning was included in included in the lease. At summertime, I would clean the branch. So as I was doing my work, my summer job work, I got in touch with the business center manager asking them if asking him if they were taking some some students or internships.

And he come to see me after the holiday. I did that and I got the first summer job after my first year and then came back the second year and And then after my after I graduated, I was offered an account manager role in a small called Sherbrook near the Vermont border down the in Southern Quebec Rest is history. I’ve been I’ve been moving around the company, and up until three and a half years ago when I was offered to come here, lead this, great group professionals here in British Columbia and in the north.

Can you tell us a bit about your career journey within the organization?

You’ve had lots of roles. I I did a lot of roles. It’s it’s interesting because in career management, people like to think that career needs to be planned and career needs to be a straight line. And in my cases, I I gotta say that the vast majority of my roles the roles I got were not roles that I applied.

They were roles that came my way for for different reasons, but every time the common pieces is I was trying to master the role I was in and trying to shine outside of my perimeter. That’s how I describe it. So I started as an account manager, so it did well. And then this role, at that time, we were doing everything from underwriting to this bursting, to admin, to special accounts, and then there have been some specialization coming over the year.

And then I started to move a bit in geography. So from this, from Southern Quebec to the South shore of Montreal, and then opportunity came came my way My first BCM role, my first leader role came. So it was like twenty nine. It was in my hometown where I was cleaning the branch, actually, drummondville, and then moved to corporate functions, worked in marketing, worked in advisory services, moved geography, worked in the West Island, covered the North of Quebec, and all these opportunities kind of came naturally.

One at one after the other because I always been very interested to see what’s going on in other departments and trying to be on projects. And I’ve been asked to be on on bigger projects sometimes.

When we reviewed our advisory services model and was part of it, it’s been very, very interesting because it was a line of business that I didn’t know as much. And eventually, I worked in that line of business for four years. So today, I can I can say that I have a pretty decent understanding of the this organization because I was privileged enough to be moving around? And, every day, I’m thankful for all these opportunities that were provided to me. Some of them like it said, maybe I sees or I managed to get in the way, but but being here now in British Columbia with my family, it’s a blessing. And I’ve been fortunate enough to change change role without never changing a employer.

That’s that’s wonderful.

One of the things, like, theme, I guess you would call it, that’s emerged in some of these conversations I’m having, particularly with folks at larger firms is that a willingness and an ability to be mobile geographically can open a lot of doors. Like, if you’re willing to say, yeah, I would consider a a two year stint somewhere else doing something different can really, really change the trajectory of your career, to your point, to be able to do things that are very different without ever actually having to leave the firm. Yes. And it’s something that you can prepare.

I mean, when we move to British Columbia, I move with two teenagers, fourteen and eleven at the time. Every time I tell I’m telling that story with people with teenagers, they’re like, hey, my teenagers would never do it. So may maybe I could try what we did actually when So it was so imagine March twenty twenty, pandemic hit from that moment. For us, it all ends on deck.

I mean, he worked e development bank. At that time, there’s no Bcap, there’s no ass asscap or the only one that that are pulling out some COVID money and that it’s busy. It’s very, very busy. Kids are schooling from home and it’s chaotic and like everybody else in this country.

And then this opportunity kind of arise of having the opportunity to come to British Columbia. So what we said with our own kids, we said, okay. It’s on the table. You take the time you need, You talk together.

And at any time, you can say no, and you don’t have to provide a reason why.

We got back to a business because it was busy. It was busy for my wife too. And then about ten days into the process, we sat down for dinner one night, and they said, okay. We looked into it.

And we’re in. And today’s day, I gotta say that they never complained about it. And it’s it’s been a great journey for them. It’s been a great journey for us.

I think we are building some some future adults that are more resilient, that are more open to the world, that are in our cases bilingual, So, yeah, it’s been a blessing, and and British Columbia is a great place to live. And we are like I said, I’m fortunate and I’m recognized every day of of the the size of the opportunity that was provided to me on the professional side, but also on the personal side. What’s one piece of advice that you give to your early career self if you had the chance to do it now. Let’s say that I came to the to the table with an entrepreneurial mindset.

And maybe with a little bit too much correct character.

So Okay. Okay. I’ve had some I’ve had some opportunities to be able to build more humble in my approach. And I think that over time, I’ve I probably got better at being more sensitive and more empathetic to my colleague and not always not always be so demanding for for an organization.

When you’re so passionate about the client needs, and you’re passionate about delivering good good quality service, you get to a point where you need to balance your passion about your clients and the the the reality of an organized as an organization to deliver. And, so for me, I’ve I’ve been, yeah, it’s not been not always been an easy, an easy journey, but, I think I was humble enough and able, and I’ve been supported to bounce back. And today, I’m having similar conversations sometime with colleagues who wants a lot fast, and, can share my experience to say that you’re better off at the long run because one of the element I didn’t share with you is that I left BDC for nine months.

And at the time, I was doing very, very well, but there are some some new changes and some some new specialization implemented.

And I decided that I would demonstrate them that they never work. So I provided them with a nine pages letter of resignation.

It was explaining to them that it would never work. I mumble enough to say today that we’ve been doing this approach for twenty years now, and it’s been doing very, very good. And it’s been very, very efficient. So it’s for me, it’s been a journey. And and and today, I’m, yeah, I think I learned from this, and I’m probably more resilient and, and more strategic in the in the conversations I want to get involved in.

So you run all of British Columbia. How many folks report up to you?

So we have a hundred and seventy five, roughly a hundred and seventy five people on the front line, which are in in different different teams. It’s also including the our corporate finance group for Western Canada, So I’m covering also the prairies for corporate finance. And we we also have a roughly another hundred BDC errors who are here in British Columbia. And different other functions at BDC.

So it can be venture cap, it can be marketing, it can be legal, any corporate functions, head office for us is in Montreal. So it’s a it’s an opportunity to to have employees across the across the country. So it’s a great group of professionals It’s a great team spirit. I enjoy every day working with this great group of professionals to be honest. Well, on that note, I mean, it does sound like a great place to work. Where where do you typically recruit from? So recruitment for me is a continuous process.

I like to say to the team that we we should stay away from what I call the post and hope. So you’re posting and hoping that somebody will will apply. In today’s world, would be with the personas that we’re looking at in terms of successful employees, it’s everybody’s responsibility in the company to be entertaining conversation with potential candidates.

Every time I’m out at an event, I’m gonna be looking for two things. I’m gonna be looking future client and maybe for future employees. It’s everybody’s responsibility to talk about the brand, to talk about the value the the value prop for employee and it makes sure that we nurture those conversations because timing is timing is everything. We can’t wait for for an opening to to find somebody who’s gonna be willing to process all the the different consequence of of changing organization.

It takes some time and people wants to make sure that they have enough time, enough information.

So for me, it’s, yeah, it, as as as much as it takes a village to raise a kit, it takes a village to recruit future future employees. So It’s my responsibility. It’s everybody’s responsibility. The leader’s responsibility.

So whenever we have an opening and our turnover has been low lately, But whenever we have an opening, we know what we have somebody who’s a good who’s gonna be a good fit and we’ll be we’ll probably make make the move and join us. And then it’s gonna become our responsibility to make sure that they are successful, and and we bring them to their full potential.

That’s another theme I’ve seen emerge in a lot of these discussions is is the ongoing nature of keeping the talent pipeline full. It’s a lot of moving parts. It’s it’s very similar to client relationship.

I mean, a lot of time, we’re gonna start we’re gonna start our conversation with our clients or our future clients. We’re gonna provide them with some value with some referrals. We’re gonna build our credibility, and we’re gonna get to a point where whenever a transaction is on the table, it’s gonna become natural. That we at least look into it and provide a provide an opportunity or a different solution.

And then maybe it’s gonna be the right timing. Maybe not. If it’s not this time, maybe it’s gonna be the next time. So it’s, yeah, it’s a continuous conversation that needs to, that needs to admin, and and I I like to say that it’s everybody’s responsibility in the company to find the right best colleague.

So when you’re having those discussions, what are two or three sort of skills or characteristics that you think every successful lender sort of shares in common?

So for for for me to success resides in four categories.

And whenever we have those four categories, the success is almost guaranteed. Okay. First one is technical skills. So we need some technicals.

We need people who are technically strong to be able to do the analysis, but not only to crunch the numbers and do racial, but also to see the areas of risk and earning the process identified potential risk and eventually identify potential risk mitigators. So That first piece is usually pretty easy to find. I mean, it’s coming out of university or coming out of whatever the good work you guys are doing. We can find some technically strong people.

The second one is the relationship skills. So ability to get in contact, as I said, the phone doesn’t ring at BBC. So so get in contact with entrepreneurs build the relationship, build the credibility, help accompany the the entrepreneurs to identify problems and eventually potential solutions and bring the solution to the table, convince, and close. So that’s kind of the second areas where it goes from doing pure business development to being in a transaction or being in a in a conversation where we we see some maybe opportunity arising and shoulder to shoulder with the entrepreneurs walking towards the solution and then eventually finding the solution other.

So that’s the second nearest. The third one is attitude. And for me, attitude is the best way to summarize it is how pleasure, how pleasant or painful is it to work with you? And that means that means how do you interact with your different internal stakeholders?

External partners. How easy is it to deal with you?

How solution oriented are you? How collaborative are you? How reciprocal are you with with some of your internal partners? So how easy is it to work with? It’s that’s the third one. And the first the fourth one is even if if you have the best technical skills, the best relationship skills, and the best attitude, you need frequency, rigor, and energy.

So arms and legs needs to move It needs to be highly organized.

It needs to be high velocity, good pace and activities, making sure you’re out there you’re meeting your COI, you’re meeting clients, you’re making things happen in your market.

And with my experience, whenever you have those four criteria, success is almost guaranteed.

I love that. So just to to recap and sort of paraphrase, tactical skills, relationship skills, attitude, and if I could summarize point four energy. Yeah. I call it frequency, rigor, and energy.

Frequence, rigor, and energy. I like that a lot. I like that a lot. And and how easy you are to deal with externally and internally.

Sometimes overlooked some excellent sales folks that maybe aren’t that easy to work with, right, even though they’re good at closing deals. So it’s important to note that you also work with a a team, and you have to be a, a contributing member of that team. So I I love that insight. That’s super helpful.

What’s your top networking or business development tip? There’s only one.

If you wanna get referrals, give referrals.

For me, successful people in networking are the one that are taking more care of their network than their own needs. In a lot of cases, I’ve seen I’ve seen people being very successful at digging in their own portfolio or in their own network to find opportunities for somebody else.

And one of the strongest characteristics of a good networker is somebody that care more for the network than from themselves.

Every time I’m walking in a business center and I hear people saying, oh, I went out I went out for lunch with this person and they never brought me anything.

My answer to that is, what did you bring them? Successful in networking is you you need to take care more of your network than take care of your own business. And your network will take care of your business. Love that. Did you have any mentors along the way that were particularly helpful for you? Maybe you’d wanna give a shout out to?

So by the time by the time we’ve been on this podcast, you probably understand. I could have a bit of character. So I’ve had mentors But those mentors are the one that have probably provided me with the most pain in my career. They’re the one who were able to to address the challenge the challenge I was was presenting because I obviously like everybody else, I’m I’m not perfect, but I’m thankful for these people who were able to tell me the true And at the same time being supportive to help me overcome those those challenges. And today, I feel that I’m appointed my career where I I need to give back. And in some cases, when I see eye potential employees who are highly productive employees, who sometimes can get frustrated in the process of a of a big corporations.

I think I’m pretty I’m pretty well positioned to sit down with them and to talk about my story. And because I’ve been through and I got I got the marks. But today, I I think I’m I feel more in a giving back mode than in a challenging mode.

What are you, reading these days or watching, listening to, like, thought leaders, authors, blogs that you recommend?

I’m not a big fan of fiction. I’m a big fan of real stories.

So either sports, politics, so So before before doing finance, I did a year in political science. So I’m very interested. Not by the that the rivalry in politics, but the politics in general. So I’m gonna be, consuming a lot, a lot of politics, especially now with what’s going on in the world.

Gonna be very interested to get the different perspective on the same story. So for those of you who don’t know about press reader, I’m a big fan of press reader because I like to read the news every day. So you’re gonna a lot of time, and then COVID, there was meaningful differences. But for me, it it it provides me a bit of, critical judgment around what’s going on and what’s going on in the world So I’m not a a fan of anybody, but I’m a fan of the difference in angle of on the same news of the norm the same same reality.

I’m gonna be consuming a lot of biographies.

I’m interested into real stories.

That’s that’s more what drives me to fix So we’re definitely coming up on time here.

I’m I’m always curious though what keeps you and people in your industry up at night? I think that the the banking industry is gonna be facing some challenges in in the following years with open banking con coming our way the challenge that our our employee are gonna be facing is the is also how we interact with our clients. I mean, what happened in the last three years with with COVID kind of brought into the business world that consumer expectations.

I was I heard that expression the other day that our allies been amazon defying So in the last three years where we’ve been used to a client experience on the consumer side, and it’s gonna come to the business side. And our industry is pretty traditional, a one on one human relationship. And that’s gonna be one of the challenge I think we’re all gonna be facing is this umneichannel approach where how can we build into a traditional human relation, other point of contact, true technology, true AI. And so I I think the biggest challenge for us is gonna be, yeah, how we can evolve our people to navigate in this new environment of omnichannel.

Marketing’s gonna talk to the client, and then the client will talk to us to our platform, talk to us to our call centers. But then when a when an important moment will come, they would expect us to be there in person, and how we balance all that and how we try to walk our way from my client. Your client, it’s the bank’s line. And if everybody at the bank will want to to provide them with the best line experience.

So I think I think there’s some good challenges in front of us. It’s also yeah. It’s also an another opportunity to to evolve and to improve and and to provide a a better client experience. So it’s positive.

It’s also a bit of change management, but we’ve been doing a lot. And I think we’re able to do even more. Those are really good answers. Well, Jean Philippe, this has been really, really super informative.

I I appreciate your time and all of your insights, and on behalf of all of our listeners, wanna thank you very much.

Hey, Kyle. Thank you very much for having me. It’s been a great conversation, and hopefully it’s gonna be useful for for your listeners. And And again, keep keep the good work you guys are are doing. It was a discovery for me, but it was a very, a very good discovery.

And for our listeners and fans out there that love net learnings, Please don’t be shy to leave us a review or a rating on Apple Podcasts or wherever you get your shows. Help us get the word out to all the folks in the finance and banking community that are looking for industry insights and career wisdom from all of our wonderful guests. Thank you for your listenership.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance, and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning wherever you listen to your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next time.

One of the big things is that you maybe are forced to come up with your own thesis and not so much follow whatever the trends are the moment. You know, right now, we’re in a big AI trend. And I would say two or three years ago, we were in a big web three trend. And and here on the ground, we’re in a big businesses that work trend, and we’ve been that way for decades.

This is Net Learning.

The podcast that keeps finance and banking professional ahead of the curve.

In each episode, we focus on career growth and practical advice. While mixing in the occasional war story, join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Petity. Today’s guest is Marcus Whitney, Healthcare VC, board member, keynote speaker, and best selling author of the book create and orchestrate. Among his other unique credentials and accomplishments, Marcus is a world master jujitsu champion, a co founder and minority owner of the Nashville soccer club, and he was recently named to Nashville business journal’s Power one hundred list, for twenty twenty three.

Marcus has no small feat. Congratulations. Welcome to the show, and thank you for joining me. Thanks, Kyle.

Really happy to be here.

First, maybe we can start. Can you tell us a bit about yourself and your firm’s jump start health investors and and jump start Nova? Yeah. Sure.

So, well, I’m I’m forty seven years old and was born and raised in Brooklyn, New York, but have lived the last twenty three years of my life in Nashville, Tennessee. So two pretty different places, but really happy to have been born and raised in Brooklyn, and really grateful to have been the last twenty three years here in Nashville. We’ve experienced tremendous growth in this city. And there are many reasons for that.

Some of it is, you know, the incredible brand of music city and the tourism that we’ve had here. Some of it is the fact that it’s a a a no income tax state. So a lot of people enjoy doing business here. But our health care industry is a very, very strong industry and has been that way for more than years.

And so jump start health investors is an early stage venture capital firm, and we’re exclusively focused on health care innovation. So we invest in companies all across the United States that are innovating in healthcare and making things better for both the population that needs better healthcare, but also for the workforce.

Okay.

So assume I’m the founder of a HealthTech startup, and I’m going to market looking for a venture investor. This is your chance for totally shameless plug. Why should I work with the jump start group of capital partners? Yeah.

So we’ve been in business for nine years. We’ve invested in almost two hundred companies. We’ve had rate returns and great success. We are networked across the entire health care industry, whether you’re looking for connections into health insurance companies, health systems, health services companies, health technology companies, or even brokers.

We’re very well connected across the industry. We’ve got a great platform supporting early stage companies and specifically those founders called jump start insight, that we’ve built over the course of last nine years knowing what early stage founders really need from a support perspective. And also, we have strategic health care companies as investors in our funds. So really great partners from HCA Healthcare based here in Nashville to Eli Lilly, you know, fantastic pharma company to Cardinal Health.

So we’re we’re just basically, I think the early stage healthcare venture firm for you to consider. I like it. You mentioned you’re located in Nashville, and it’s interesting because that’s not a legacy tech hub in the same way that, like, a San Francisco Seattle, you know, maybe Austin.

What is the technology and maybe more specifically the the venture ecosystem like in Central Tennessee.

Yeah. So we’ve had a really robust healthcare venture ecosystem here probably for the last thirty five or so years. Really a derivative of the success of HCA health care. Many of the executives left there, they made a lot of money, and they invested in sort of what the next generation of care would be.

They were very knowledgeable about the space, about the regulatory issues around reimbursement, and so they were able to build the next generation of businesses But for the most part, those businesses were not really technology businesses. They were really services businesses that those executives really understood through their HGA experience. From a technology perspective, we’ve really grown that. I would say largely through attracting new talent to move here.

So people come to Nashville. They love the the quality of life. They love how friendly everybody is here. They they love what they used to love, the the low commute times, the lower cost of living.

And so, you know, we were we were bringing in talented people from the coast for, I would say, most of the last ten years. And then most recently as the city has really ascended to a top tier two city, been able to score some really great headquarter relocations. So Amazon has set up a a very large base here. Oracle is setting up a headquarters here Microsoft has expanded their base here.

And so Google has a has a really nice presence here. So we’ve been growing, I would say, both through organically relocating individuals here as well as bringing big corporate relocations here. So we’re starting to really get some strength from a tech perspective, but certainly nowhere near what you would see in Silicon Valley, you know, Boston or New York. That’s still something we’re really growing into.

Are there distinct advantages to being a player in the venture space in, an area that’s maybe not as, built out?

Yeah. I mean, I think one of the big things is that you maybe are forced to come up with your own thesis and not so much follow whatever the trends are at the moment, you know, right now, we’re in a big AI trend. And I would say two or three years ago, we were in a big web three trend. And and here on the ground, we’re in a big businesses that work trend, and we’ve been that way for decades. So I think we kinda stick to our knitting, because we’re not on the coast, and we focus on what do we do and and what do we do differently and better than everybody else? And we just try to get better at that and continue to that competitive moat here. So probably just not following the the herd as much is is one of the big advantages that we have.

Mhmm. Great perspective.

Well, we’re on the subject of being in Nashville. I have to ask where do you land on country music?

So so it’s pretty interesting. My my my wife works pretty deeply in the country music and tech industry. She she works in Spotify. And I’m actually on the board of the country music hall of fame.

Wow. So, you know, I grew up in in Brooklyn, New York. My my sort of musical favorite genre is hip hop. There’s no question.

That’s what I was born and raised on. But, you know, being here for for several decades, I’ve really learn to appreciate great country music. And especially, I would say the songwriting aspect of it, really coming to appreciate just how clever and witty the songwriters are and and how they’re able to take all sorts of interesting life scenarios and emotions and put them into song lyrics. And so, you know, I certainly have my my snobbish opinions being on the hall of fame board about what good country music is versus what maybe a lot of the commercial fodder is in and I’m really into good country music.

Some of my favorites are Chris ableton, Sturgleton.

There there, you know, there are some incredible acts out there. Yeah. Phenomenal artists. Let’s make you talk drill down a little bit more into the venture discussion, if that’s okay. You know, venture capital to buy side function, to type a private equity in that capital is being deployed to private companies as opposed to purchasing shares in, like, a public entity, I always think of venture as, you know, if you think of, like, a PE funding scale, it’s PE, but for earlier stage companies, but but you’re the expert. How do you characterize or define venture capital?

I think that’s a really good description. I think just to maybe take it one step further the maturity of the companies really changes the nature of the work that we’re doing. Right? So so in private equity, you’re dealing with very mature companies, and you’re largely looking at financials and how you can optimize financials and how you might be able to roll up several mature companies into one that’s more efficient because you’re taking out some of the overhead and your your you know, multiplying the the effectiveness by maybe combining capabilities.

At the venture scale, especially early stage venture, what we focus on we’re really optimizing to try to achieve product market fit. And so it’s it’s a lot more art than than private equity, I would say, because you have to in you have to engage with the market. You don’t achieve product market fit on your own. You have to engage with the market, and the market is a collaborator in the process of helping find product market fit.

And so as venture investors, we have to be, I think, pretty, pretty good at that process of achieving product market fit. Think we have to be good mentors and supporters of founders because they are working in the unknown, both in terms of what the future of the market’s gonna be, but also like the future of their business. It’s not a clear going concern yet. And so, you know, we have to be very supportive to those founders.

And ultimately, we have to be able to underwrite risk I would say in a in a different way than than private equity does. Very little failure is allowed in the private equity level. You know, you you can your your failure is basically maybe a lower multiple than targeted, but, you know, you can you generally, you can’t lose money in private equity. That’s not that’s not okay.

Adventure you’re going to have a reasonably high failure rate, you know, across your portfolio. Forty, fifty, sixty percent, seventy percent, sometimes of the companies will fail. That’s not a failure rate I strive for or that I think is acceptable, but it is it is a a working model that has generated great returns because many of the greatest returns ever have come from one or two companies in any given funds portfolio that generate a hundred x their initial capital invested. So I would say, you know, the risk profiling, the actual activity of value creation and the way that we support the founders and leaders of the company are three of the ways that venture is different from private equity.

That’s really interesting perspective. And I I actually did wanna talk a little bit about sort some frameworks and rules of thumb and things. And one of them was around portfolio construction. So I’ve heard venture referred to as a game of home runs as opposed to batting averages, which is sort of what you’re describing.

I think, like, a much narrower band of potential outcomes and private equity. And as you go earlier, in the company life cycle. It becomes quite quite a re potential range. And I guess sort of the the rule of thumb you hear you just alluded to is like, you know, three to four are zeros, some kind of one x’s and and some some rocketship returns.

Can you maybe explain so it’s sort of a two part question. I’d love to talk about the stages of venture, because even within the early there’s, you know, there’s seed, there’s angel, there’s the alphabet soup of different series, How does that sort of profile change when you’re very, very early? And what are those stages? It’s a lot of questions.

In one, but maybe you can Yeah. No. No. No. No problem. If I were to sort of draw some high level buckets, I would say There is early stage, late stage, and growth stage.

K. Those are kind of the three big buckets in venture. And those aren’t stages I’ve made up if you were to go to pitchbook dot com that generates great quarterly reports on the venture capital industry. That’s kind of how they segment the the different stages into those three buckets.

Growth stage looks a lot like private equity. You know, at that point, these companies should be very mature. They’re able to take on lot large capital investments at a time. So it would not be odd to see thirty, forty, fifty, you know, million up to hundreds of millions of dollars invested in the company at the at the true growth stage.

Late stage, later stage is really sort of the the the series b to maybe series d range, and that is usually going to be sub a hundred and fifty million in terms of the size of the be round that’s going in. But still, more mature companies, they’re clearly scaling at that point of their development. And there are also companies that I think are should be well poised for an exit, whether that’s a strategic acquisition or an IPO. Early stages where we invested jump start health investors. And there are really sort of three stages in early stage that that have definitive differences. So there’s pre seed, there’s seed, and there’s a. Pre seed is kind of the first money after friends and family that could be considered institutional.

So we have a fun family called jump start foundry. All it does is make pre seed investments as doing that for nine years, it invests a hundred and fifty k in companies. Generally, they’re gonna be valued at two million dollars, and it’s a very standard investment model that we do there, and we invest in, you know, forty plus companies a year at that at that scale. So that is a that’s that’s kind of the size of the checks that go in at the pre seed stage.

That’s general size of what the valuations might be. You know, two to four million dollars is kind of the right range for a pre seed value company. K. Once you get to seed, Now you’re in the the real game.

You know, the check sizes are getting more into the millions of dollars. I think right now, the median round for seed was around three and a half million in q three of this year. So that’s kind of the size of the rounds. The valuations are kind of been that ten to twenty million dollar range.

So you’ve got some some reasonable value there. Usually, those companies are generating revenue. So they have some level of product market fit, but maybe not the kind of product market fit you would consider scalable. There’s still some stuff to figure out.

There’s some still some product to build out, some team to build out there. And then series a is the most mature of that early stage group. And those those rounds are are generally more in the eight to fifteen million range. You know, your valuations are more in the twenty to forty million dollars of of of value there.

And that’s really the beginning of scale. Usually, those rounds are used to sort of build out a more mature management team used to to to really grow out revenue harden, even maybe the security in the business or some of those more mature things that early on you know, they’re almost not worth investing in because the company is not generating enough revenue. So those are kind of the the three big buckets and and a little bit of what what differentiates them.

What I would say is really changing in the market right now. You talked about, you know, a game of home runs. We’ve had this massive rate of change of interest rates really driven by the federal reserve, you know, at least in America, increasing the federal funds rate from zero percent to north five percent in a year’s time. That changes a lot. It it changes the way the public equities are valued, which ultimately ends up changing the way that private equities are are valued. And then downstream of that, it it changes the way that venture capital companies are are valued. And so We we’ve had we’ve had a rewriting of the values of companies as a result of that raise of of interest rates.

While that has happened, the IPO market has largely shut down. So we’ve had very, very few IPOs over the last year and a half. And when you don’t have IPOs, it’s it’s hard to get home runs. Right?

I mean, you know, mostly when we think about IPOs, we’re thinking about home runs. So if you don’t have an IPO market, then that means does a game of home runs actually work in venture capital? And I think a lot of early stage investors are are shifting their mindset to say, look, the game of home runs really might have been a zero interest rate era game, and in a five percent interest rate era game, maybe we need more hit rate. Maybe we need to expect our valuations are gonna be lower, less companies will get public.

So, you know, less failure is allowable, and we need more companies to get to that exit at lower terminal valuations.

So I think we’re actually in the process of changing our narrative around venture being a game of home runs to venture being a batting average and and and hit rate game. I I think we’re very much in that process of changing that mindset.

How long would you say it takes? Cause I would assume that the change in valuation and perception trickles down from the public markets, the private equity to venture. On a lag. And and my understanding is that there is some stubbornly high valuation expectations from some founders and and certain funds.

Did did you find that in the market? Yes. But we are now in the place where everyone is pretty much there. So, you know, the the loan it took a year.

The the the public markets priced in last summer. Right? So they priced in immediately, which forced you know, the big tech layoffs that happened in q one of this year. So all the companies laying off minimum seven percent of their workforce that happened in q one.

That was because the public markets were writing down the stock last summer. Right? We just have had the private market write downs really start to take effect I would say in q two and q three of this year. So we just have reports that came out from Carter and pitch book talking about the the two year valuation swings, especially in that growth stage category, valuations down a median of sixty one percent.

Yeah. Over two staggering. It’s staggering. Yes. Now now the valuations in the early stage did not go down as much, but what we haven’t been able to really quantify is how many companies died.

Because they were not able to get funding. Deal volume, the number of deals closed is down overall in venture capital at least fifty percent. So you know, we we’ve priced it in now. We’ve we’ve taken our lumps.

Everyone has written down their books, and now we’re trying to figure out how we create value from here. So you you sort of touched on this around, the number of deals closing.

One outside perception I’ve always found about venture is that, their deal junkies per sexy. They’re, you know, you’re going out and finding opportunities and doing tons of due diligence and, like, all this negotiation. But I feel like there’s this other part of the business too. And that’s supporting and mentoring founders with the operational piece and understanding the product market fit, like you mentioned, helping them grow the business and manage risks, acknowledging that this will vary from firm to firm.

Like, on balance, what is the actual breakdown of responsibilities look like? And was it different two years ago when deal flow was high, rather than now, or maybe are you doing a little bit more sort of like farming and close operational work with your port Port Coast Yeah. Let me work back from the the variation in firms. And so, you know, I would say that different firms have different strategies.

And those strategies come in many different aspects of the way that you operate your firm. One of those is gonna be fun size. So how big is the is the fund. And then from there, you get into what size checks do you write, and then you get into do you lead deals or do you follow?

This is a big distinction. If you lead, you’re setting the terms. You’re almost certainly taking a board seat and you’re very leaned in and engaged. If you only follow, and there are many venture firms that only follow, then you you come on the back of somebody that’s led the deal, done all the hard work on the term sheet, you’re probably not sitting on the board, and you’re really just making an investment in the asset and then tracking its progress over time.

So that’s a really big distinction in how engage you’re gonna be with the founder. Right? And then there’s just the general are you are you into working closely with founders, or are you into just watching your investment? And that is a different thing from firm to firm to firm.

At jump start, we are very much into working with founders. My my background was entrepreneurship and technology, my partner was also an entrepreneur. So we have a lot of fun working with the entrepreneurs, and we we get a lot of, satisfaction out of helping them make sure that they feel like they’re not alone in this. Like, when we write a check, partners.

And we wanna make sure that they know that they can come to us with really hard things that maybe they can’t go to their other teammates with. You know, but they’re we’re here for them to talk through the hard things because starting a business, growing a business, these are really hard things to do. Right before I was on this podcast, I was having one of my weekly thirty minute sessions with one of my founders. And that’s kind of every Friday afternoon is mostly a bunch of thirty minute one on ones with the founders in my portfolio.

So that’s that’s the way that we do it, and that’s how we like to do it. We like to go into our board meetings having collaborated on on what the board meeting will look like with the founders. So it’s not like this, you know, meeting full of surprises. We know everything before we go into the meeting.

That’s just our strategy, but it’s not by any means, a universal strategy nor is it necessarily the best strategy to generate returns? I think funds need to operate in a way that best reflects the values and the strengths of the fund managers. So for us, we think mentorship is a strength, and so we do it, but some some folks are just really, really good at picking deals. Mhmm.

Given that you work so closely with folks and and you use the word partner, I I love that. Approach.

Of course, every deal and every team is different, but, like, are there certain specific qualities or characteristics that you’re always looking for in a founder, like absolute must haves?

Yeah. For sure. I mean, I wanna go back to that word partnership. I mean, if they can remember that we are ultimately partners and not treat us as somebody who they have to manage and and keep certain information from or only tell us the good parts and not tell us the bad parts That’s a that’s a huge deal. That’s a huge deal. We we can’t have surprises. We we have to have trust.

We have to have a willingness to partner. And we have to have a willingness for them to listen and be coached. You know, they don’t need to take our advice a hundred percent of the time. They are the management team.

We are not. We get that. They they’re closer to the problem, but sometimes, you know, having a little distance from the problem or being able to see that same problem play out across an entire portfolio gives you a little bit of wisdom and some perspective on what might be the the right solution to the problem. So it’s I I think partnership with us as investors is one of the top things, that we really look for.

And and, honestly, has a lot to do with how we feel about ability to continue to invest in a company or to continue to effectively support a company is what does that partnership look like? And then from there, I think they they’re going to have to be optimistic because, again, growing companies are really hard. Yeah. So you have to be optimistic, not irrationally optimistic, but you have to have a positive attitude and a can do attitude, and you have to be willing to work harder than everybody else.

You’re gonna ask your team to work incredibly hard. They have to look at you as the model of what that looks like, and they have to know you’re not asking them to do anything that you’re not already doing yourself, that has to be sort of a built in thing. So those are just a couple. I I wouldn’t say it’s an that’s an exhaustive list, but That’s a that’s a those are some really important things to us.

Yeah. No. That that’s a that’s a really good list.

For our listeners, like, we have a lot of listeners and members of the CFI community that are call them sort of career curious, just looking to move up and and and be mobile. And for those that are considering a career adventure or or making a move over, why might someone want to consider a career in venture capital? I I would say the most important thing about wanting to be in the venture capital space is that you really are passionate about solutions and and creating value because that’s what we do. You know, in venture capital, ultimately, we back businesses that solve problems, and that are that are that should be a net positive for the world.

I mean, I I especially feel that way as a health care venture capitalist, everything we invest in should be making the health care industry better, whether that’s better outcomes for patients, lower cost of care, better access to care. And so you know, the people who work with us, they’re impact motivated. They they care. Hey, how many patients are we seeing across our portfolio?

You know, have we have we resulted in any live saved we resulted in more affordable care. Have we resulted in a better quality of life for the caregivers, for the nurses, for the doctors? Are we making it easier for them to do the thing that they are are, you know, doing to take care of our families and our communities every day. So I I think impact has a lot to do with it.

When you’re in the finance world, there’s there’s obviously a lot of compliance, and there’s a lot of integrity that has to be there. That’s critical in the finance space. But sometimes it can be a little bit a little bit I don’t know. Not it can just lack some inspiration, right?

You know, in terms of, like, how am I really making the world a better place through my work? And I think venture is a is a way that you can both do finance, you know, and you might be into finance. It might it’s it’s it’s a way that you can both do finance, but also know you’re really making an impact on the world, bringing new things, bringing new creative solutions into the world that could make things better.

How about a game?

Okay. Let’s do it. Alright. I think I’m gonna do middle school money manager. So this one we played before with some guests.

I’m gonna give you a list of words or terms or acronyms. Gonna be sort of in the in the venture space. And you have to give me your best explanation, but doing so as though, I were in middle school. So it’d be very, you know, clear, very articulate.

No. It’s really easy on these calls for people to use way too much fine jargon. So you gotta really simplify things for us. Do what words you picked?

Thinking him. Okay. Yeah. Let’s well, let’s see. Some of these are for my own benefit because I don’t even totally under Sanum.

Let’s start with safe round.

Oh, boy. Okay.

A safe round is like an IOU.

Okay. A safe round is like an IOU. So if we both want some candy, but you’ve got, candy.

And I would like some of some of that candy.

I can write you this this IOU, and you can give me this candy for now, and you hold that you hold that note. And at some later time, you can present that note to me and say, hey, remember, that day when I I gave you those three pieces of candy, this note says that a year later, you’re gonna give me five pieces of candy for those three pieces of candy.

And I gotta come up with the five pieces of candy.

That’s a good starter explanation for what a safe notice. It’s a lot more complicated than that, but that’s kind of the essence of it. No. That was that was pretty good.

I gotta say. That was that was that was very good, actually. I’ve I’ve heard people use like lemonade stand analogies and so on. That that was a good candy one’s good.

Alright.

Liquidation preference.

Okay. Why don’t we try to continue on with our candy metaphor since you like that and it was working. Let’s do it. Okay. Let me think about how to how to do this. Okay.

If you have been if you have been learning how to make cookies with your mom, Okay. And you’re feeling really positive about how good these cookies are, and you think you can sell these cookies. To people on your block. You think you can make money to sell these cookies on your block, but you don’t have any money for the ingredients.

Okay? You have no money for the ingredients. You need twenty dollars to be able to buy all the ingredients so you can make these cookies and then walk door to door and go sell those cookies. Okay?

So I give you the twenty dollars to go to the store and buy all your ingredients.

Then you make the cookies.

But the deal is when you sell those cookies, and let’s say there’s twenty houses on the block, and you’re gonna sell each cookie for two dollars, one cookie per house. Okay? That’s gonna make you forty dollars. Right? One cookie for every house, twenty houses, two dollars per cookie. That’s forty dollars.

When you collect that forty dollars and you’re totally out of cookies and you come back, before you get before we split the forty dollars, you have to give me my twenty dollars back. That’s the preference piece. My twenty dollars has to come back to me first.

Then we have twenty dollars left, and we split the twenty dollars.

That’s liquidation preferences. Sounds like a good deal. Well, hey, I put my twenty dollars in. That’s right.

I need my twenty dollars back. That’s fair. Yeah. No matter how good the cookies are.

I got okay. That’s another good one. Yeah. That was another really good one. Okay. I’m looking at my list here and We’re we’re high oh, like, we’ll we’ll hire you.

You can explain finance topics really, really easily. This is great. This is pretty hard. I gotta say.

It’s pretty hard. These are an easy words. I picked hard words. Okay. Well, we’ll do we’ll do another one more hard one.

Vesting.

Vesting. Okay. We can do vesting. Yeah. We can do vesting. Okay. Let’s think about vesting.

About cookies. I don’t know about you. Yeah. No. No. No. Let’s let’s let’s think about let’s think about vesting.

Yeah. I I think I think we’re I think we’re good. We’re gonna we’re gonna stick with cookies. Okay.

We’re gonna stick with cookies.

Alright.

So Here’s a way to think about vesting. Here’s a way to think about vesting. You are being recruited by your parents to rake the leaves. In front of the house.

Okay? You gotta rake the leaves in front of the house. And instead of just thinking about it on a day to day or a week to week basis, they want you to really care about doing it for an entire year. Okay?

They want you to think about doing it for an entire year. So what they do is they say, okay, we’re going to give you an awesome batch of cookies, and we’re gonna give you, and we’re gonna give you a cell phone, but but we’re gonna do that in each season. And we’re gonna kinda break it up, and things are gonna get better as we get closer to the end. So for your first season, let’s just let’s just take, you know, winter.

For your first season, you’re gonna get a couple of cookies. Then when spring comes, you’re gonna get four cookies.

In summer, you’re gonna get eight cookies, and then the fall you’re gonna get that iPhone. But if you stop in the spring, you get your two cookies, you get your four cookies, you don’t get your eight cookies and you don’t get your iPhone. To if you stop in the summer, you get the two cookies, the four cookies, and eight cookies, but you don’t get your iPhone.

And most importantly, you don’t get to stop in the spring and the summer, but then come back in the fall and get the iPhone.

You have to do it continuously all the seasons to get that big price. But it’s yours. It’s guaranteed. All you have to do is rake the leaves every week all year for an entire year.

It’s guaranteed that there’s no take backsies your parents cannot deny you at the end. It is guaranteed you’re getting the iPhone, but you have to rake the leaves every single week four year. I love vesting. Love that.

That’s vesting. Alright. And I think I would even take ownership over cleaning the yard, if that were the case. Yeah.

Well, that’s that’s that’s the whole point. Alright? Make the incentives worth it. Precisely. That’s awesome.

Thank, thank you for those. Those are great. It was a fun game. I’d love to transition into talking a little bit about your book and some career type wisdom that that was in the book.

I I I love it. Actually, I got the e version as a parent of several young children sitting down and actually reading a book is not a thing for me anymore, but I can certainly listen to a book while I’m doing dishes or driving or what have you. So I’m not myself an entrepreneur, but I see tremendous value in the lessons that you shared in the book. Create an orchestrate.

And it was about your entrepreneurial journey largely. And the recommendations you make, even just as like professional employee. I think there’s there’s tons to to take away. Now I don’t wanna give away everything.

Obviously, I encourage our listeners to actually go out and purchase a copy because I think it’s a great book. But if we can maybe go through just kind of a few topics that you covered, and then you could weigh on them, like, directly from the author. Does that work? Yeah.

That’s great. Let’s do it. Okay. So the first one that I found fascinating, and I I think you credited.

You didn’t come up with this, but you spoke eloquently about it was the four burners theory. I think that was family, friends, health, and work. What’s that all about? That’s right.

Yeah. So it’s it’s it’s a recognition that you have limited time and you have limited energy.

And there are trade offs. Probably the easiest way to put it is there are trade offs. And so everything can’t be the main thing.

And those four burners that you just mentioned friends, family, health, and work are are kind of like the four core components of life. Right? I mean, you know, you may have more things in there, especially as you think about things that are just for you, or you think about your community, you know, those might be other burners. But for most people, friends, family, health and work are kind of the four cornerstones of of of life.

And we’ve all had periods where work kicks up, And unfortunately, one of those other three burners has to take a hit. You know, what is it gonna be? Are you gonna sleep less and eat worse? Well, then that would be health.

Right? Gonna have to tell your friends, hey, I’m not gonna be able to hang out this month because work is is kicking up. Okay. Well, that your friend’s burner will get turned down.

Sometimes, and we hear plenty of times about how family, you know, misses out, where you miss things with your kids, or you miss time with your spouse. And it’s just this recognition that you are working with the same twenty four hours in a day every single day, and At different times, different burners will will require more from you. And you’re gonna have to trade off other things. I think some people get frustrated at the inevitability of this.

And I think the point of the four burners is to just give you a visual to sort of understand If all four burners are on high, you’re gonna burn something. It’s gonna be a crappy meal. You can’t.

Yeah. You can’t cook you can’t cook. So you probably are gonna have to focus on something like two at a time and really get those dishes right and then maybe transition to the other two. So it it’s really just a metaphor for thinking about your time, your focus, and how effective you can be at any one thing or any two things at any given time.

Yeah. I think there’s probably value in just understanding the framework and that it’s real and that exists. Right? There’s no necessarily science to it.

You also talk about the idea of not self qualifying. Right? So you spoke in the book about your journey to becoming a computer programmer and removing terms like aspiring or entry level. Can you can you expand upon that?

Yeah. I mean, for for me, I have found that identity is an incredible driver of of habit and of behavior.

And so if you if you want to have certain habits and certain behaviors, it’s very, very helpful to first work on your identity.

And so in the book, I was talking about my transition from being a college dropout who was waiting tables, a waiter, to a programmer. And I was not a professional programmer, meaning no one was paying me at the time. I was not a very experienced programmer meaning I didn’t have years of experience underneath me, but I wanted to make sure I was doing the things that programmers did. And so as opposed to calling myself an aspiring programmer, which you can be aspiring forever.

I just said I just said I’m a programmer. But what do programmers do? Well, programmers study and programmers practice and programmers built things. And so I went about just doing those things.

Didn’t matter that I hadn’t been paid to do it. Didn’t matter that I wasn’t that experienced, but I I think that had a lot to do with it only taking eight months for me, you know, in a self taught situation, to book to switch to becoming a professional programmer and getting my first job. And I and I think it wasn’t just some like law of attraction thing. It was I avoided any qualifiers that would have limited my my habits and my behaviors, getting me to where I really wanted to go.

Right? So it’s just an understanding that self qualifying can have a really negative impact on the the choices you make and how you spend your time and can actually delay the progress that you’re seeking in transitioning and becoming that thing. Must have a profound impact on on confidence overall.

Yeah. For sure. I mean, yeah, I I found it to be I found it to be an incredible lever in life, you know, as you were giving my intro earlier, you talked about me being a world master jujitsu champion, and I’ve only been training jujitsu for three years. Now, to be fair, I was a you know, a wrestler in high school, and and I have a background of being on the mats.

But I I think there was a lot of fear that I had to overcome to to get to the point where I was competing again, especially, you know, in my forties, and dedicating the kind of practice time in doing so with you know, very, very young people on a regular basis, kind of being the only forty something, you know, training seven AM in the morning with a bunch of twenty and thirty somethings. And a lot of that was just me making the decision to identify as an athlete.

Full stop, you know. I I saw myself as an athlete. Well, what do athletes do? Athletes?

Know, get, athletes get trainers, athletes get nutritionists, athletes, put in the time, athletes focus on their sleep. Athletes study, you know, studied whatever that the sport is that they’re working for. They spend time in the tape room, and I did all of those things. And then the result was, you know, winning sort of the the biggest tournament that I can win at at this stage of my life, you know, twice now, two years in a row.

And and I think that’s entirely credited to my identification, you know, as an athlete, right, not saying, you know, oh, one day I wanna be, or I’m or I don’t know, you know, at this age, and just saying, no, you know, I’m an athlete. And then what what do athletes do? Do the things that that I that my identity calls on me to do. Yeah.

That’s powerful. In the first chapter of the book, you lay out a really interesting analogy. I I’m a former sports guy falling off a little bit over the years, but it was between sports and entrepreneurship.

And the idea like, the statistical probability of children ever making, like, the major leagues or playing a sport professionally is minute.

And you talk about how even knowing that, we don’t pull our kids out of Little League or out of youth sports. Right? Intuitively, as a society we understand, that the lessons they learn will be valuable throughout their lives and their careers. And you asked, rhetorically, what if we approached entrepreneurship the same way? Like, what if we taught children about entrepreneurship and gave them opportunities to live it and breathe it even if they never actually become entrepreneurs. Would you expand on that a little bit? I thought it was fascinating.

Yeah. I mean, look, I I think that there are plenty of young people that are able to make it through their youth because sports exist. Yep. Oh, yeah. You know, they they they they may not be great in the classroom that may not be they’re gonna grow up to be, and they may not also grow up to be professional athletes, but sports gives them a space to grow, to learn leadership skills, to learn team building skills, to learn rules, to learn sportsmanship. And in many ways, to also learn things like math.

You know, like, sports is a place where math is very applied. So I think there are all sorts of lessons that that millions of young people have learned in world from the the the theater of sports.

Entrepreneurship, I think, speaks to a certain personality type. I talk about the book is ambitious creative rebels. And I think a lot of kids may not necessarily take two sports and are in school and maybe get in trouble because they also don’t take to the structure of the way that classes are set up. They don’t have the benefit of having the entrepreneurial theater where they could thrive and be successful.

And and I think many many people who have been very successful entrepreneurs because they have that rebel in them. Could have very well ended up being criminals, you know, and and I don’t I don’t say that as, you know, entrepreneurs are criminal minded. It’s it’s more they’re not necessarily oriented around the status quo. You’d like to break rules.

Right? The most successful ones tend to break the status quo. Exactly. And thankfully, the reality of the free market is that it it it not only celebrates, but it rewards those who seek to break the status quo.

You know, in in the effort of making things better. I mean, I think about a lot of people who were who were class clowns, and it’s like, look, they had an objective. They were trying to make you know, their friends happier. They were trying to make people laugh.

You know, now, you know, it’s they were also being disruptive. You know, we we celebrate disruption in in the entrepreneurial space and in the free market, but we, you know, we we put you in detention for being disruptive in a classroom. Right? And so I I just think that there there are millions of young people out there who would really benefit from the opportunity to be exposed to and understand that entrepreneurship is a real viable path in the world.

And quite frankly, as they grow up in the world, they’re gonna grow up into a world that is run by entrepreneurs. Yep. I mean, is there any doubt that that what we’re doing right now recording this podcast isn’t is not enabled by an entrepreneur? Is there any doubt that Elon Musk, has has more power than, you know, almost any human has ever had at any point in in the history of the world right now.

And ultimately, that’s not just because of his he’s a scientist. It’s because he’s an entrepreneur. So, you know, it it’s we’re we’re we’re missing that. And my point was just sort of calling out that we’re doing a disservice to our young people to not properly expose them to this thing.

That will be an inevitable thing they’ll run into in their lives. Yeah. I thought it was I thought it was incredible.

One more was the time budget. I’m paraphrasing, but I think you said something, like, it’s your responsibility manage your time as you would manage your money, in terms of, like, investing at wisely, what’s your secret sauce?

Well, I I think just coming to the place where as an axiom, I’ve understood time is my most valuable resource. There’s nothing valuable than it. And I and I don’t get any more of it than I than I currently have. And so I think from that perspective, of valuing it highly, even more highly than money, I’m then much more judicious in how I spend it.

And and, you know, and see it as a true important responsibility to manage it appropriately. And then understanding that there is a skill to managing your time well, and the better that you manage your time, the more you can get done, you know, and not only necessarily the more you can get done, but you can make sure you get done the things that really matter to you. You know, it’s hard to get really big important things done if you don’t know how to manage your time. So I I think it’s critical for entrepreneurs who are going to have so many things they’re gonna be focused on to understand how to prioritize their time, how to manage their time, and how to protect their time.

And that’s why I think the concept of budgeting time and in making it analogous to money because you do all of those things. You know, you manage your money, you protect your money, you’re very thoughtful in how you spend your money. And some of it, you know, some of your money is is kind of fun time money. Some of your time should be fun time time.

Yeah. But, you know, for the most part, that comes after making sure you’re paying your mortgage or your rent and making sure you’re paying any critical bills so that you don’t get a bad credit rating and making sure you’re able to feed yourself and making sure you’re able pay your taxes. You know, the the must dos come first, and then you get the fun time after. The same is true of time.

You know? Yeah.

Marcus, what’s the biggest regret of your career?

Do you have any? I I generally am, windshield, not a rearview mirror kind of person, and I also have a general philosophy that I wouldn’t be who I am now without all the experiences that I previously had. And so regret usually makes me feel less grateful for what I have today, and I I don’t love to do that. I can certainly look back on ways that I behave and say, well, you know, I’m a little embarrassed by the way that I behave, not necessarily regretful if I learned from it.

And and I think you know, there there were times where I and and I wrote about it in the book, the the section, the chapter about press, there were times where I was not clear headed about what was the most important thing in my role as a leader of a of a company. And and not being focused on making sure the company was successful for the betterment of everyone who was pouring their their, you know, blood sweat and tears into the into the business focused on accolades from a press perspective. And, you know, those were tough lessons, but they’re lessons that have stuck with me. You know what I mean?

Ever since that’s happened, I’ve certainly been in the press, but I don’t really care much about it. You know, I I only really care about how my businesses are performing, but there was a time where I was really obsessed with that because I was younger and just less mature, and that’s just the reality of But generally, I like to steer clear of regrets because I am the byproduct of all of my past experiences and mistakes are inevitable.

That’s a more terrific perspective. Where can our listeners go to learn more about you, your book, or or your companies? Well, you can go to marcus Whitney dot com And from there, you can certainly, you know, see where my book is, get links to either listen to it on audible or buy it on Amazon or Barn’s Nobles or anything like that. So marcuswhittney dot com is where you can find out more about me, but also about the book.

And I also do speaking. So if you were interested in that. And then if you were interested in learning about our investment platform, jump start health investors, you could go to jump start health dot co. That’s dot c o, not dot com.

So jump start health dot co, and you can learn about our various funds, our entire team, and everything we’re doing in the health space. Terrific. We’re coming up on time. There’s there’s been terrific chat.

I I can’t thank you enough. I really appreciate it. There’s one question I try to ask everyone, and that’s what can I do to help you, or what can our listeners do to to help you?

Oh, well, listen. I mean, you reaching out to Ask me to be on this podcast is in is incredible. So I think you’ve already done done your work. So thank you for having me on the show and and allowing me to share, you know, just my my life’s perspectives on on these various topics.

I really appreciate that. You know, we do have a a podcast for anyone who’s interested in health care innovation that’s called health further. And if you’re interested in hearing me and my partner, Vic, talk more about health care innovation and and and the finance world and how all these things kinda come together, then I would say subscribing to that podcast help further would be great. But that’s, you know, that’s kind of it.

Okay. Listen, thank you again so much. Really appreciate your time. All the best. Thanks, Kyle.

It was a it was a blast. Thanks.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance, and banking professionals. If you enjoyed what you heard in this episode, make sure to follow net learnings wherever listen to your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next time

A lot of folks have have, been concerned about ESG as a driver for positive impact. At the end of the day, we’re talking managing the risks and opportunities of these issues to a company, not about the good work that they could do out in the world.

This is Net Earnings.

The podcast that keeps finance and baking professionals ahead of the curve. In each episode, we focus on career growth and practical advice. While mixing in the Asian War Story. Join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and inter Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Peterson. Our guest today is Noah Miller, co founder and chief advisory officer, at Roe Impact, a North American based ESG Advisory firm.

Some of our listeners may also recognize Noah as one of our CFI instructors and authors. He’s had a hand in the development of many of CFI’s ESG courses, and we just love tapping into his deep expertise.

Noah, thank you so much for joining us on the podcast. My pleasure. Thanks for having me, Kyle, and the the crew at CFI.

Right on. Listen, as you can imagine, we’re gonna talk ESG today, quite a lot. In particular, I’m really excited to have Noah talk a bit about his career, but then we’re gonna weigh in on the state of ESG careers. So we can get some insight about what sorts of companies are hiring and in what capacities. And that’ll be both within financial services and elsewhere. This will be a great discussion for folks that are really into learning about the ESG employment landscape.

Now to start, a lot of our audience members will have heard about ESG, but often through, like, an investing lens. And, of course, it goes so far beyond that as we know. We’ve asked you to do this a bunch of times, but Can I just ask you to define ESG? Like, what is ESG other than a political football in plain English and your words? Absolutely.

Ultimately, what we’re talking about is a management framework for addressing the risks and opportunities of changing environment, changing societal expectations in a changing economy. So, really, it’s just a reaction to these risks and opportunities and the ESG acronym gives us a holistic frame work to be able to discuss and and think about it.

Got it. So, again, in plain English, Why does ESG matter?

Because at the end of the day, whether or not we’re talking about these things or not, climate change is creating billions of dollars in physical damage. We know that labor issues are real risk in terms of labor walkouts or strikes or having the ability to retain Tom talent.

And we know that managing a company requires good governance, the policies, protocols, and performance measures that enable you to successfully manage a company. So whether we call it ESG or just effective management, we’re talking essentially about the same concepts.

Okay. What do you think is the biggest misconception out there about ESG.

Yeah. So I think there are a lot of misconceptions out there, Kyle, but one of the biggest ones is that ESG is about your values.

So there’s a lot of talk around these are our corporate values, or we wanna invest in alignment with our values.

At the end of the day, ESG is really about value creation. How do we create more value by being more responsive to the needs of our stakeholders?

Considering environmental social and governance issues as real business issues.

That’s ultimately what we’re discussing here, and it’s important to really differentiate those two because a lot of folks have have, been concerned about ESG as a driver for positive impact act. At the end of the day, we’re talking about managing the risks and opportunities of these issues to a company, not about the good work that they can do out in the world.

Got it. So I’ve heard it characterize, and I’m gonna paraphrase. So correct me if I’m wrong, I’ve heard it characterize as, like, impact investing or the concept of impact is like a company’s impact on the external environment, whereas ESG is sort of the external environment, whether it’s a labor or climate related issue on the company itself. Is that a fair characterization?

Absolutely. Absolutely. It’s this it’s the impact is, right, what are you doing outside of the four walls of your company to positively address the environment or your various stakeholders?

And the flip side ESG is really how do these issues influence our company’s performance? So spot on, Kyle. Okay. Okay.

No. That that that’s helpful context. I mean, it’s always struck me as a sensible risk management framework, right, for any kind of operating company, but it has really, really taken a beating in the media. And it seemed like this looked like it was led by, like, special interest groups maybe on the political right, certainly in North America.

But I’m starting to get the sense that there’s actually more, like, a widespread notion now out there that that ESG is just a sham. Like, for example, I I called out an article a while back now and see if I we have a members only community, and it was about how Philip Morris international PMI scored a better ESG rating than Tesla by what is by all ratings, like, a reputable global rating agency and it had people just totally up in arms. So it kinda begs the question. For me, what’s wrong with ESG right now?

Like, obviously, you don’t believe it’s a sham. But what’s wrong with it? Why is the public perception so down on ESG?

Absolutely. And there’s a lot of really great points, Kyle, And I would say right now ESG really has a PR problem in the sense that the brand of ESG is now equated with these political leanings or, you know, woke business or these concepts that, as you mentioned, the right, are really trying to emphasize in these anti ESG policies and rhetoric But at the end of the day, right, whether we’re calling a ESG responsible investment, you know, good management, we’re really talking about how do you manage these issues as it relates to your business? So thinking about the Tesla and Philip Morris example, Philip Morris is being raided, Tesla is being raided.

Right? On the way they’re managing the risks of climate change to their business, the way that they’re managing their people, and the way that they are putting controls in place to ensure that they are addressing these things holistically across the business, which all of which has nothing to do, right, about the impact of their products or services. So in the Tesla example, obviously their product, the, you know, their the electrification of the grid in electric cars, it’s inherently positive yet the management practices at Tesla still have wide, you know, widely reported discrimination, a widely reported challenges with governance and safety, So it’s it’s more about those issues and how you manage the company versus the outcome of your product or service out in the world.

Got it. Okay. Yeah. I mean, it’s a good characterization. I think it has a a PR problem.

That’s certainly a good way to think about it, because it does according to what I’m seeing. Alright. Cool. So maybe you can tell us a bit about row impact.

What problem or problems is row solving in the market. And then if you could perhaps break that into both the advisory arm and the the crane tool, just fill us in a little bit about about Roe Impact? Yeah. So at Row Impact, as you mentioned, we’re an ESG advisory and software company. And we really focus on two key segments, both investors and operators.

On the investor side, what we’re really focused on is quantifying the impact of their portfolio.

And, specifically, and currently, as it relates to the crane tool, what is the emission reduction potential of their portfolio or a specific Portcoast technology.

So that’s really about looking to the future in forecasting, what is the impact of your product or service when it’s deployed out in the world? So very much focus on that more impact angle. How does our technology or product advance emission reduction in these various scenarios?

On the other side of the business and our work with operators is really around ESG implementation. You know, the fundamentals of ESG planning implementation and reporting And our platform for that, Gemini, which is our commercial platform, is essentially a digital version of ESG planning, tracking, and reporting best practices with guidance on how to leverage the range of data tools and machine learning models to simplify the process and accelerate performance.

Are your clients mostly public or private?

So we have a range of clientele in terms of public companies, recently IPOed companies preparing to IPO companies all the way to your two person climate tech startup pre commercialization.

So on the emission reduction potential or the forecasting work, that’s really focused on earlier stage companies that have a particular product or service or technology that is going to avoid emissions in the future or reduce them in a in a various scenarios.

On the other end, with the ESG implementation work, Similarly, small to medium sized companies that are planning to scale or are facing increasing investor expectations and customer requirements around ESG That’s typically where they find us. And how do we start to execute on the fundamentals so that we can get the range of value and be compliant with these increasing expectations across their customer bases and from the regulatory environment.

Right. Which is changing quickly? On a daily basis, Yeah. Okay. Thank you. Love to turn our attention to your career, a little bit, and it it looks a lot different from many of the folks that I interview who are in more of sort of a purified finance or banking type role.

But what a journey? Like, you spent time in organizational development active military service, you played on the Israeli National Across team while also serving as his director of strategy, development, and impact only then kinda later in your career did you start getting into ESG.

You have a master’s in mediation and applied conflict studies, I believe, and an MBA in sustainable innovation.

Like, I barely know where it starts. So maybe we can just go chronologically. Right? Let’s start from the beginning of your career. Maybe give us like a three to five minute run through. We can start with Curig Green Mountain, and then bring it all the way home to today with with Roe Impact.

Absolutely.

So Cherry Green Mountain now, Cherry Doctor Pepper, you know, one of the largest average companies in the world.

Back when I began my career, really in two thousand ten out of school, Cherry Green Mountain was the only public company in Vermont, and at the time of a fortune five hundred company in in a pretty well known company for, I would say, a lot of themes that are reminiscent of ESG. So things like employee engagement and appreciative inquiry, organizational learning, and these things that were pretty avant garde at the time from a management perspective, And I started my career there working in the enterprise organizational development office. So essentially support boarding pretty much all departments internally around managing change. So change management was the sort of day to day responsibility in workshops, in working through implementation challenges for various initiatives across the company.

I had a chance to work with folks that were in supply chain management doing all of the supply chain stewardship work. I had folks that were operations leaders and HR leaders and essentially enabling the whole company to go through the change management process at the time, which was going through an acquisition of Carig taking over Green Mountain.

So it was a really interesting experience to see the commonalities internally with kinda core management or governance issues. Mhmm. And how these management and governance issues influence various functional areas like supply chain management and operations and sales.

So it was a really, you know, fascinating look again at what a lot of governance activities include from an internal perspective across entire functional setup of the company. And then it took me to Israel to support the Israel Across Association social venture as a founding member of that ultimately would be what today we call, you know, ESG program management. So we would work with a variety of corporations, academic institutions, governments, nonprofits, to essentially mobilize collective action on these lacrosse themed community development programs between Palestinians and Israelis and we’d work closely with a lot of the CSR leaders from these various sporting corporations.

So that was a really good in sight into, I would say the particular relevance to ESG was the absolute necessity of stakeholder engagement and collaboration in executing a lot of these initiatives that require coordination across multiple parties and, a real consensus building and collective, you know, movement in a shared That all led me to being drafted into the military, and I would say after that experience, that, again, underscored the criticality of governance, in, of, you know, ultimately to training in development. So, you know, being here in a training discussion, it was, I think, the most illuminating look at without proper training and in clear governance of that training, it is really difficult to create any new actions or new behaviors from a organizational or group level. I’m sure. Yeah. What a case study?

Yeah. Absolutely. And then, you know, Fast forward a little bit. After the military, I’d returned back to business school, got my MBA and sustainable innovation from the University of Vermont.

And it was after that that I had began to develop my own portfolio of ESG related clients, you know, back then we’d call it strategic CSR.

As well as CSR beings, right, core corporate social responsibility. Right? Exactly. Exactly.

Because I would say, you know, ESG was still a a really fringe term back in thousand seventeen for folks that were either in really alternative investment spaces or working at, you know, some international development fund, but most folks were still operating in corporate social responsibility, sustainability, you know, director of corporate philanthropy. These kind of roles that were the predecessor to a lot of modern G roles.

Got it. So fast forward a little bit. I had spent a couple years serving as the senior director of the ESU practice for a a West Coast Consulting group some strategy group. I had a really fascinating experience across, you know, across different industries, client types, you know, types of ESG challenges.

And it was after a couple years doing that work that I really wanted to digitize a lot of the work we were doing, and I was able to find my founding partners at Row Impact who brought the data science and software engineering backgrounds that were required to really create the tools ultimately that I would have wanted to use as in my role as a consulting practice leader and fractional ESG director for multiple public and private companies.

Can I ask that was a great background, by the way, but did you make, like, a conscious decision to say, I’m going into ESG or did it just kinda happen organically? Like, it just sort of evolved.

You know, Kyle, I feel so lucky that ESG became a a a popular and kinda made stream concept because I was really conflicted around I’m very fascinated environmental issues, but back then sustainability departments were rare. They were small. There wasn’t a lot of openings.

Probably not a lot of funding either. Not a lot of funding. You know, then there was the social impact space and the nonprofit space and Again, there wasn’t it didn’t scratch all the itches that I had. And then there was the, you know, the governance element in all the organizational development So I couldn’t really decide where to go when I was trying to do it all. So I was working in functions that enabled me to address those issues was able to build up a client portfolio of what today is very similar to the work I do today with ESG Consulting work. And that’s how I was able to to sort of accelerate the my own ESG Consulting work as the rest of the field, you know, caught up and and ESG became a, you know, a main concept.

Got it. Okay. Yeah. No. That’s it sounds like you your timing was was really good. What do you consider to be the biggest miss or, like, regret of your career. Do you have any?

Yeah. You know, I’d say my my biggest regret is I always had wanted to have an experience in a big four consulting firm.

I always struggled to have the timing between my service and international experience, having a family in the, you know, the the timing never seemed to line up for that kind of experience.

So that’s my one regret is having a wishing I’ve had the chance to see what a what a big four looks like Yeah. On the flip side, I’d say the the professional grittiness and resilience that I had to develop in selling my own book of business and trying to figure out where to slot in gave me a lot of skills that I don’t think I would have developed without that necessity in a in a more cushy big four role.

But I would still would’ve liked to have it. Yeah. No. That that that makes sense. You definitely carved your own path for sure. Did you have any mentors along the way that that were particularly helpful on your professional journey?

Yeah. You know, I’d say in each role, that I described in terms of my own background, there were people that were teaching me even if it was not not intentional in terms of both what to do and what not to do and how to act and and not ideally how to act.

I’d say some of the biggest influences I I had were really coming back to business school post military and seeing that there was this world of environmental social governance work and needs that was just emerging as I was returning back to the states. And that was, I’d say, was one of the most influential kind of group of mentors who were doing this work way before it was cool and kinda laid the foundation for the rest of us in terms of methodologies and framework and ways to think about it. So I’d say it was really that experience from a directional perspective that was really powerful, especially coming out of the military folks typically or, you know, what do I do next? And, I feel very fortunate to have met people that were doing this and building a, you know, a graduate program around other than the big four, which you mentioned, if you could travel back in time, what would you do differently if if anything?

Yeah. You know, I think if I could go back in time, I would have perhaps been a little bit more intentional in the long run about where I was ending up. I was a bit following, you know, a cliche, following my heart, following my passions, following where my skill sets were. And I also felt at the time that my work abroad and in the military, there’s a very short time frame for that. So I needed to to jump in the in the small time frame I had.

But I’d say if I went back and redid it, I would’ve wanted to have, I think, a little bit more of a long term plan of where does all of this lead and and luckily it it led to this discussion and, you know, this world of ESG work. But for the folks out there, I’d say it’s definitely great to have a game plan at least thematically of where you wanna be directionally going to connect those dots. Yeah. Is that kinda like the the one three five year plan just to help make sure you’re able to check-in periodically and regroup. Exactly. Exactly. And making sure that, you know, what you’re doing today is moving you forward to where you wanna go in five years, which you know, at the time and especially serving in the military, and I didn’t have that long of a of a purview.

But in retrospect, I think that would have been especially helpful in just, you know, charting the path over a longer time frame, longer time horizon.

Okay. Are there any authors, thought leaders, podcasts, books that you recommend our listeners check out? Yeah. Well, I I have to, you know, mention, you know, shout out to the the Semba sustainable Innovation MBA program UVM is Stewart Hart is, you know, the one of the godfathers of this work, books like capitalism at the Crossroads, conscious capitalism. Those are two classics that I would say are sort of foundational to this work.

Some other great books, you know, what’s his name? Mark Porter over at Harvard and shared value creation. He has a lot of writing around the stakeholder value creation concept of how do you create value for all of your various stakeholders critical to ESG. I’d say that’s another area of literature to check out.

And also I would say books like Peter Senge’s fifth discipline in purpose that talks about systems change is critical. And I’d say it’s that that notion of changing systems that’s so critical to when the rubber meets the road in the ESG implementation work. Having a real understanding of that is, you know, gold in terms of getting tangible movement within an organization.

Right. Yeah. Okay. Thank you for those.

You wanna play a game? Let’s do it.

Alright.

Let this is a fun one. And I can only play it with people who aren’t, like, purified finance folks. And, obviously, we just went through your background. You don’t, you know, you don’t work at bank or a brokerage.

So the game’s called finance or fiction. What I’m gonna do is I’m gonna go through. I’m gonna give you a word or an acronym. And you have to tell me if it’s finance related or if it’s not completely maybe made up, maybe just not finance related. Alright. So I’ll give you an example, net income. Finance.

Okay. There you go. So you got the hang of it. Right? Alright. First word, it’s actually an acronym. Ebedax, e b I t d a x.

So that feels like a trick question. I’m gonna say no with the x.

That that’s fiction, EBITDA. That is a word. So I don’t know what the but the x the x threw me off. Yeah.

Start off with a tricky one. EBITDA is EBITDA earnings before interest, taxes, depreciation, amortization, and exploration expense. Depending on the expiration. For, like, oil and gas companies, depending on the accounting standards, have different ways to account for exploration.

So that was a tough one.

Oh, that’s a good one exploration. Alright.

Alright. Straddle.

Straddle. I’m gonna say that that is in the context of investment finance?

Yeah. You got it. Yeah. Straddle is an options trade.

Don’t totally understand it. I’m not a a trading guy, but I think you buy and sell, a put and a call on the same underlying asset. And you make money if there’s volatility, something like that, but it is real. It’s an option trading strategy.

Okay. Sandwich. Yeah. I feel like these are all questions. I’m gonna say not finance.

That’s correct. Yeah. It’s it’s lunch. Alright. Alright. It’s just stuff between Brad. Not a fancy investment strategy.

No. Okay. Number four. So far so good. You’re you you’re two and a three. Lumina Bond. I’m gonna say fiction.

It’s fiction, guys. Made up. Totally made up. Alright. That was a chat GPT generated.

Fake fake finance word. Alright. Last one, candlestick. Fiction. That’s a finance word. That was a tough one.

It’s a type of chart that’s used by traders that they’re doing technical analysis. So Candlestick. That is a finance where you got a candidate chart.

You lose some of you.

Not bad. Three out of five. That’s pretty good. Pretty good. I like that game, actually.

Yeah. That’s a tough one. Candlestick. Got it. There you go. Okay. That was funny, actually.

I’ve been I’ve been dying to do that. I this is this is not recorded. We’ll snip this after. I have a long, long but I’m I’m gonna try to save some of them for for later.

I thought I could get you on those.

Dude. Those are hard man, like, sandwich. I’m like, is that, like, split strategy. Yeah. I didn’t want to, I I was hoping you would say finance.

Okay. Ready. Back on to get back at her. Yeah. Okay. Alright. That was fun. Thanks.

Thanks for playing along. Let’s dive into some discussion around the professional landscape out there. So gonna talk about roles and opportunities within financial services, but then also roles outside of banking and insurance think, like, corporates of all stripes. But before we go to either, let’s sort of zoom out for a minute so we can understand kind of the full scope.

Let me ask, for our listeners that maybe don’t have a finance background, but are still really into ESG.

And what other functions within an organization? So like outside of the finance team. And what other functions are there opportunities to make your mark with ESG skills and expertise?

Yeah. So I would say every functional role is gonna require some extent of ESG capabilities in education So when you think about implementing ESG, let’s just riff on this for a bit. Recurement. Right?

The chief procurement officer is gonna need to understand ESG in order to reduce the emissions or associated impacts of the products or services that they’re procuring. That’s part of their company’s you know, at this point, finance emissions or purchased emissions, for example. K. From an ops role, you’re gonna need to understand how know, improving energy efficiency and reducing water use and all of these things are direct cost cutting measures that improve efficiency, improve, you know, resource use.

When you think about legal councils, all of the explosion of ESG disclosure regulations that are That’s true. Driving this forward, they’re gonna need to understand not only the regulations really to how to speak to these issues when you think about sales and business development with all of the ESG procurement requirements trickling down from these public regulations two of the private companies that or any company on the supply chain that’s working with these public companies under these regulations, they’re gonna need to be able to speak the language in determine and really, you know, substantiate their case of how their ESG work can positively impact the ESG commitments of that public company or that brand name buyer.

So whether or not it’s direct capabilities, everyone’s gonna have to learn to speak the language and be familiar with these issues because they are cross functional in nature, and implementation requires the coordination across a company to to make it happen.

Right. That’s an interesting point. And I guess I guess HR would be another one. Right?

Like, with human capital management being such a big part of of ESG, great point, great point with human capital and diversity equity inclusion and, you know, really the, you know, right? The the people elements of the work. Right? And at the end of the day, we know organizations are just collections of people with a common goal and tied by a common bond and Right?

That all requires, you know, upskilling and and and organizational learning and building the systems and structures to implement it across a group of people.

No. That no. That makes sense and helpful for context. So with that sort of backdrop, let’s start with financial services.

What types of roles and responsibilities exist out there within the sector? So thinking like, you know, banks, brokerages, asset management firms, insurance, and so on.

Yeah. So I would say there are many straight shades of ESG across these different groups. So, you know, let’s take insurance, for example, where, you know, insurance folks are gonna have to be able to account for climate risk and labor risks and all these issues when creating their insurance terms, you’re gonna have to think about the, you know, the on the financial services side, folks that are needing support with due diligence and M and A transactions and that will all require an understanding of environmental social and governance issues and how they relate to those, you know, to those needs Can I ask, sorry? I don’t I don’t wanna interrupt, but I’m I’m interested in M and A specifically, and I have my own thoughts. But why why is ESG particularly relevant in the context of M and A?

Yeah. I would say, you know, to sum it up short and sweet. It’s all about managing risk, right, where today, you know, there’s a lot of great data out there around the due diligence being done globally in that ESG issues, you know, uncovered within the due diligence phase have prevented some significant transactions from occurring because of that risk exposure too. Whether it’s climate risk or reputational risk, you know, due to not being compliant with disclosure regulations.

The other on the flip side, Kyle, there’s also the massive market for decarbonization services and products and all of the things that are required to make this global transition to a net zero economy.

That’s a multi trillion dollar opportunity in terms of everything that’s needed to make that happen.

So you have a lot of a lot of groups a lot of companies that are looking at M and A as a way to boost their own ESG credentials in value proposition by acquiring groups that have products and services and technologies.

Interesting. Okay. So so we have insurance, M and A, products and services, are there any others that that you wanted to touch on? Yeah. I’ll I’ll just quickly draw upon just the, you know, the invest investor persona or role.

You’re having this explosion of various ESG impact funds and that requires, right, the skills to formalize an ESG strategy to have that due diligence for investments to be able to support your portfolio companies in providing the data that’s needed for reporting. That will all require ESG capabilities and knowledge, whether you’re an ESG director officially, or the person in charge of ESG in terms of incorporation into that investment strategy.

And at the end of the day, Kyle, I think it’s important to call out too that every company will need an ESG lead in some shape or form whether it’s a Right. A finance company or, you know, your your broader sort corporate landscape because of all these requirements that trickle down from these global disclosure regulations into the public companies where, you know, ahead of stainability or ESG is becoming table stakes, and then private companies or, you know, other companies in their supply chain are now seeing that they really need the issue director as well in order to meet all these procurement requirements.

Right. So you’re seeing this real proliferation downstream around everyone needing to be able to have these capabilities provide this data to be compliant, really, with these regulatory and customer requirements Got it. Got it. We hear the terms ESG analyst and ESG practitioner, and I’m just curious to get your take.

Are these the same thing. And if not, what are the key differences and similarities? And forgive me if that’s kind of a dumb question. I’m not sure.

Oh, that’s a great question. And I’d say, you know, there probably is not a single answer broadly, but I’ll just give you, you know, the way the way I cut the pie. You ask kinda. Right.

Exactly.

I would say that ESG analyst is really someone who’s doing traditional analyst work, right, doing research in analysis on companies on potential investments on macro level forces that are influencing the market.

Whereas an ESG practitioner is really about the doing in terms of supporting the execution of ESG implementation work whether as a consultant or as an in house director, and that’s really I’d say aligns with the operator segment and the practitioner and then the investor segment and the analyst, you know, that’s a a good way to sort of categorize them in terms of buckets.

Okay. That’s that’s helpful. What are the most important skills or characteristics do you think, you know, maybe technical and qualitative in order to be an effective ESG analyst or practitioner.

Yeah. So I would say, you know, Let’s start with just the domain expertise.

At the end of the day, you need to have a little bit of familiarity with the issues themselves. Right?

Climate change, labor management, the broad section of corporate governance issues without an understanding of the issues themselves really hard to interact with that information, whether qualitative or quantitative or to have the context to understand it. So that’s one element is just familiarity with these issues that are discussed in how they are relevant to an organization.

On the flip side too, it helpful to have an understanding of just of business functions.

So understanding, you know, ops and HR and finance and the basic functions that need to be contributing to a company’s ESG performance so that you’re able to provide good assessments or analysis on where they should be able to improve or what are the, you know, the key areas that they need to advance to be compliant with your due diligence requirements.

So it’s really helpful. Again, the main expertise of these issues as well as just an understanding of how a business operates in the functions that are required so that you can have real insight into how to how to actually help them in to assess their performance.

From an operator’s perspective, you know, some of the things you just cited around, like, cross functional understanding of the organization and, maybe understanding KPIs, I’m I’m wondering because we keep hearing every time I interview someone within the finance function of the corporation, we’re hearing about the evolution of finance as a function and how important it is to speak the same language across the organization. I’m wondering if there’s sort of, like, natural synergies between the finance group and, you know, ESG rollout within that organization just because of the the sort of key piece of the flywheel that that finance is.

Right? Just in in terms of getting data from all these different areas, being able to make sense of that data and and deriving actionable insights from it. So it seems intuitive that, folks who are interested in financing that have good data skills are probably also going to be relatively successful in in making sense of ESG information as well. Is that accurate?

Is that fair? I think that’s a really fair assessment because, you know, at the end of the day, carbon accounting, for example, or greenhouse gas accounting, right, a common activity within a company and a, you know, in a, a portfolio.

At the end of the day, right, that’s an accounting exercise. And if you understand accounting, you have a pretty good head start on a understanding carbon accounting in terms of the basic functions and in in fundamentals.

So I’d say that element as well as all the modeling experience that an analyst has and being able to model the return on investment for a, sustainable investment, whether it be a new HVAC system facility or investment in a carbon capture to take that, you know, project investment that you’re able to model out the, you know, really the ROI, because at the end of the day, we know that none of this stuff moves forward without an ROI component to it.

And being able to really speak the language from a, you know, domain expertise and these issues and connect them to the return on investment, the return on impact, very similar skill set, I’d say. So I think you’re spot on that inherently financial analysts have a good skill set for a lot of the ESG analysis and finance work that’s required to to move it forward. Got it. Got it. Okay. Cool. Where do you see these jobs or these roles kind of going in the next five years in terms of evolution.

Yeah. I’d say that there’s gonna be this continued explosion of ESG roles and needs across organizations in general. You’re seeing it in nonprofits that traditionally write their they already have a mission that’s ESG centric, but creating ESG directors to operationalize this stuff from a management perspective.

You’re seeing on the other side, really niche finance groups break out that are doing a lot of the, you know, green bond development and supporting access to carbon markets and all these different, both sort of subverticals and market opportunities that are becoming more and more lucrative because of the big need for things like quality, carbon offsets, investments in these technologies that have a significant emission reduction potential.

So I think you’re just gonna continue to see this proliferation of the roles whether they’re called ESG roles or simply, you know, within the roles and responsibilities of ESG being under your, you know, your role, think it’s just gonna continue to expand rapidly across, you know, every type of organization there is.

So you sort of touched on something that I was I was curious about outside of financial services. So we’re going back again to, like, corporates and and operators.

Certain sectors obviously need a lot of ESG expertise. You know, something like energy, for example, would be one.

Where which is fairly obvious, but are there any sectors or industries that might surprise us where, like, there’s a massive need for talent, but that’s not being filled.

Yeah. So there is such a talent we’re out there right now. So I’d say there it’s really, you know, a seller’s market from an appointment perspective, but what I think a lot of folks are starting to see and and and recognizes, you know, not only is it energy that’s needing a lot of this kind of work, but it’s really any heavy industry, you know, manufacturing, food and bev, anything that’s making a tangible product and moving it around the world, that’s a very obvious need. In terms of needing to cut, you know, the emissions associated with all of this heavy industry.

But what so let’s less obvious, let’s say, is on the you know, the high-tech side, right, where folks typically respond, you know, where we make a software product or we’re in technology. We don’t make a physical product But at the end of the day, we know that there’s crazy amounts of emissions and an impacts associated with all of the data centers that store that data We know that there’s significant water required to keep those systems cool. So there’s all of these elements behind the scenes that may not be immediately apparent, but folks are starting to recognize that high-tech companies need ESG roles and responsibilities because folks are starting to focus on peeling back the onion further and further and seeing you might not make a tangible product look at the emissions associated with holding on to that data.

And that’s, I think, a real aha moment for, you know, the broader market is this isn’t just about folks that are making stuff and moving stuff, it’s really about every organization because we all touch it in some shape or form. Right. Right. And, of course, financial services finances it.

So there’s Right. There’s that element too.

What about geographies or markets? Like, are there Are there physical geographies or jurisdictions where there’s more or less opportunity for folks that wanna work in ESG? Yeah. Well, I’d say, of course, you know, EU immediately jumps out just given how advanced they are with the sustainable finance disclosure regulations, SFDR going into into effect the UK and France, although not the UK anymore, but the UK specifically also has a lot of increasing ESG disclosure regulations pointing to the need for a lot more roles and support in that space.

You’re also seeing an explosion of ESG disclosure regulations in market like China and India Singapore and these places that are starting to have, a more rapid pace than we even have here in the US around these rural And those, I think, are really exciting, you know, particularly given CFIs, you know, diverse learning, you know, students in the broad scope that you all have. It’s really exciting what’s happening in those emerging markets that I think is really the unmet opportunity so far.

Yeah. Is there could you use kind of evolving regulations as, like, a proxy for where opportunity is going to emerge? I think that’s a really smart way to think about it. You know, the stick.

Right? So at the end of the day, the stick is really moving a lot of this forward, and it’s coming particularly from the regulatory entirement. So, yeah, I’d say that’s a great way to anticipate where the roles gonna be. It’s where the rules are gonna be.

Right? Yeah. Rules lead to the roles. Yeah. I like that. That’s, that’s a good catchy way to remember it.

How should people think about the differences or the similarities between ESG work in public versus private companies. What are your sort of general thoughts on that? Yeah. So in a public format, I would say the stakes are just so much higher.

Right, particularly around the quality of your reporting because of all of those regulatory requirements. Mhmm. But on the flip side, I would say For private companies, that’s really where the rubber meets the road in terms of ESG driving, really the core elements of what you need as a high growth, you know, private company capital, right, brand name customers, employer retention, good good credit terms and insurance terms because of your superior ESG performance.

So I’d say it’s very similar from a day to day role. The stakes are much higher publicly because of the, you know, the the reputational risk exposure of putting all these things out in the public and needing to abide by all these rules. Right. Right.

And the ability for, you know, the buy side to vote with their wallet and and really punish the stock price as well. Right? Well, anyone that’s still listening at this point I imagine is either they they they really love the podcast or more likely they’re, like, a legitimate ESG enthusiast. So I think I think this advice should be sage for folks that have that have stuck around because we all run into skeptics, and and not even just skeptics, but, like, downright haters.

So you’ve been doing this a long time. You’ve been doing ESG since quote before it was cool. What advice do you have for our listeners when they get into, like, a heated discussion with a coworker or a family member about about EOS. Do you have any sort of general advice? Yeah. Yeah.

I would say always keep it framed on the business case. Right? We know these things exist of billions of dollars of climate damage.

No one can argue with that, whether we call it, you know, a divine act of god or physical climate risk. So I would say keep it focused on the dollars. We know In in the other thing Kyle is if you’re talking to folks, we can always say, well, look at the news today because we have daily examples of, you know, the of labor strikes that are hard dollars and cents in productivity, right, and water shortages so that, a facility can’t operate So, again, you know, I would keep it focused on, you know, jobs, supply chain ops. Keep it focused on the business.

And it should be a easier discussion to to help illuminate. Why does this stuff matter to a business in today’s, you know, today’s world?

Yeah. It can be really easy to, like, draw a line in the sand and and and start butting heads over over values, but it’s interesting point. It’s a valid point you can’t change people’s mind necessarily. And I’ve heard before during interviews and and chats that, like, shouldn’t try.

Don’t try to change someone’s mind. Just highlight what why it makes sense from a business perspective. And I and I love that that lens of these are the risks is what’s happening, you know, regardless of of what you call it or or why it’s happening. It’s happening.

And, you need to be prepared as an operator. And if you’re investing in those companies, you need to stand those risks. So no. That sounds like, that sounds like really good advice.

If you weren’t doing what you’re doing at Row, what what would you be doing?

Yeah. Great question, Mel. Maybe I’d be working at CFI. Maybe.

Yeah. I mean, I if I wasn’t at Roe, I would say I would be probably trying to get more into shareholder activism in terms of, you know, twisting the arms of some of these big and dirty companies to you know, to move in the right direction. That’s either gonna be my next thing post row impact or if I wasn’t doing this, I think that’s probably where I’d gravitate towards. But hopefully, that’ll be the next chapter of, you know, getting on the the boards of the dirtiest and worst companies and putting them in a headlock to to move in, you know, this direction.

Well, that’d be an that’d be interesting work for sure. Where can people go to learn more about you or or Ro or even just ESG more generally? Yeah. Well, that’s a a great starting point is, of course, CFI is ESG specialization.

That’s, you know, sounds for the blood. That’s where I would point folks first. And then, you know, from a row impact perspective, row impact dot com, as well as the crane tool dot org, which is one of our public good tools. It’s a website that we our website speaking to the mission reduction potential tool that we’ve developed up the prime coalition for catalytic Capitol.

You can check that out and you’ll get a lot more, context for some of the stuff we talked about emission reduction potential, scope for emissions, forward impact.

Awesome.

Noah, thanks for your time. This is a really useful chat, and, on behalf of our listeners, thank you for your insights and your wisdom today. Thank you for having me, Kyle. It’s been a blast. Alright. Till next time.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning wherever you listen to your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next time.

Join Kyle’s chat with Julio Martinez, Co-Founder & CEO of Abicum.io; an FP&A automation software that drives efficient growth for companies of all sizes.

In this episode:

-CFO Tech and the evolution of FP&A.

-Julio’s global list of Fintechs doing incredible things.

-The benefits of “going wide” in your career.

-The modern challenge of attracting and retaining talent.

-How a 1-year sabbatical in India forever changed Julio’s professional perspective.

-The value of mastering technical skills early in your career.

-And much more!

Julio brings 20 years of finance, investing, and entrepreneurial experience across many countries and continents. This is a must-listen for finance, Fintech, and investing enthusiasts.

You could give our listeners one single piece of sort of general business or career advice, what would that be?

Go I think going wide, and accumulating a wealth of very diverse and divergent experiences.

Really equip you later on, and you don’t really know when to flourish at a different level. So I think that you know, going white and accumulating as I’ve done, right, and different sets of experiences when it comes to international geographies or No one says within finance or outside of finance, going wide. But then in every single experience, pushing very hard to extract the most out of it, really can make you a very well rounded professional that maybe later on, you know, makes you capable of accomplishing endeavors that, you know, maybe a few years ago, you were not even thinking about.

This is Net Learning. The podcast that keeps finance making professionals ahead of the curve. In each episode, we focus on career growth and practical advice while mixing in the occasional war story. Join us as we tap to the minds of leaders and experts at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Patterty. Our guest today is Julio Martinez, co founder and CEO at Abachem, which is an FPA automation software.

Julio brings twenty years of finance, investing, and entrepreneurial experience, having held roles in wealth management, investment banking, and venture capital to name just a few of them. Julia. Welcome to the podcast. Thank you for joining.

Kyle, thank you so much for having me. It’s a pleasure.

Excellent. Well, We often get started on these episodes by asking our guests to tell us a bit about their company. I think it’s important for context before we jump into what Abicum does, to maybe zoom out a moment and talk about the finance function at a corporation. So whether it’s, you know, a tech company, a manufacturing business or whatever large professional services firm, companies all have a finance team, and FPNA, which stands for financial planning and analysis, is a critical division within that finance team. So let’s kinda start there. In your words, what is FP and how does it fit into the overall finance function at a corporation or a government issuer?

That’s a good question, Kyle. FPNA is the most strategic side of a finance function. Right? A finance function needs to make sure that the business is operating from a financial perspective tightly. Right? So you are paying the bills.

Make sure that you collect the money. You need to book the transactions in your accounts and all that stuff. Right? You need to post an audit.

All all that is what we call operational finance. But as we know today, finance is way more than that. Right? Finance has a direct impact in a strategy, think of M and A, think of planning, budgeting, looking into the future, producing scenarios for better decision making, with financials, but also operational APIs.

Find financial planning and analysis, FPNA is the glue that encompasses all this strategic side both the finest option.

Got it. Okay. That’s that’s really good context. And so with that in mind, then tell us a little bit about about Abichem and how Abichem does FP early.

Okay. So Avacom is is a SaaS. Right? It’s a b two b SaaS. It’s a software that we deploy in our co customers in the mid market.

And really empowers these finance teams to become more strategic.

Before us, oftentimes, what we find our customer base is that there is a lot of manual tasks. These folks remember finance folks, extremely talented, very well prepared. I really to ready to drive, you know, business impact, then stay stuck in manual task for fifth sixty, seventy percent of their time, and this is manually copy pasting around Excel or Google sheets, index match, Samives, and so on to clean the data. So there is a lot of manual task that we automate end to end. So first of all, is getting the the automation layer right for these finance teams to, you know, have both operational data but also financial information ready at their fingertips.

The second thing that, you know, you you can see a very different dynamic before and after us is in enabling finance function to be a business partner. So oftentimes, the finance folks want to really be that trusted by sort for marketing, for sales, for HR, for but they don’t have the time, they don’t have the platform spreadsheets, spaces are awesome in many ways, but they are not prone to collaboration.

So — True. Yeah. — they find a lot of difficulties in Slack, Microsoft Teams, email, like, for trying to influence the rest of the organization.

We are a native collaborative platform that, yeah, really makes it very easy for finance team to do bottom up, budgeting, re forecasting scenarios together with the rest of the rest of the color.

Very cool. And and then to make it just a little bit more concrete, can you give us one example Maybe it’s with respect to, like, sales software or CRM or something like the old way versus the new way just to make it more concrete for people.

Totally. So imagine first day of the month.

The the fiance team is really, you know, working with accounting to see when the numbers are gonna be closed. That’s gonna happen maybe on the fifth. And then they know they need to report on the fifteenth or the twenty.

And once they get that information until, you know, they it takes them ten days to really clean that data, normalize that data, and are analyzing and taking a look at that data, then they will have a couple of days to really run around the company like a a headless chicken trying to, yeah, hey, marketing, you know, yeah, what’s what’s the forecast for your budget? Like, I’m not following these. Hey, HR. Like, what was the latest number score hiding? Or, you know, we had attrition, what was that, trying to update a model just to keep, you know, and and make some numbers flow.

With us, For instance, on the third of the month, we produce a flash report where, you know, we are not solving for accuracy, but with machine learning, we we can really forecast for many businesses, you know, how that’s gonna look like later on so they can produce a temporary re report that is starting to influence better decision making in the company. So then you can front load all these meaningful conversations, then you can start to collaborate within the platform and instead of, you know, taking a couple of days only to fill up a gap Like, they can really with operational metrics in the platform at their fingertips, they can really go to marketing and say, hey, You know, I’m seeing that the last three campaigns were not performing, as we were hoping for.

So what’s the plan? Are we reducing the budget, you know, with changing channels? And then you become the spanner that is really boasting the challenging question that is really value additive to the to the base So the it’s a very clear change in dynamic before and after us. So what you know, what about the business is is most exciting to you.

And then conversely, what what keeps you up at night, you and the management team?

Yeah. That’s a good question, so what’s most exciting always for us is customers. Right? When when we pile up more and more customers, this is, you know, a big and ginger for us. You know, finances complex, right, and and people are very demanding. So having more and more customers also comes with more demands and know, greater pressures to develop and better and better products. So this is very exciting and, you know, serving and actually fulfilling our mission, which is literally making every finance team the hero in their organization.

That is what’s thrilling for us. Maybe to it to your second point on what keeps keeps us up at night. I I think it’s retaining and and attracting the best talent in in the market. I think that the market has improved more recently, but I think this is a this is a classic and operating with the highest standards in a very, you know, demanding environment, building a culture of high performance but at the same time building a culture of happy people, people that, you know, are able to produce their best work in the company. This something that, you know, it is sometimes not not easy to to represent.

Yeah. And I’d love to talk a little bit more about culture. We’ll we’ll circle back to that later in the discussion. Right.

I just wanna kinda round out some more sort of fintech topics. We have we have a lot of investing enthusiasts among our audience. And so it’d be cool to kinda talk fintech more generally and sort of some themes. One of the things I’m I’m always curious about over the last kinda I’ll call it five to seven years.

It seems like fintech has just exploded. Like, it’s in our vernacular. We have a term for it. It’s like its own industry I’m hearing offshoots of it.

Like, I’ve heard you say things like CFO tech on social media. Like, there’s even kinda spin offs of of FinTech And I guess what I’m curious, like, as a finance person, I know that technology and finance has been evolving for a long time, But why this recent explosion of FinTech? Is it has it been cheap capital? Has it been the availability of data?

Like, what in your view has caused financial technology to just go crazy lately.

Yeah. I’m I’m gonna focus here on what we call CFO tech maybe, and maybe, then I zoom out to the broader Fintech space.

But when it comes to enabling finance teams, especially in the mid market, right, but enabling finance teams in corporations or mid market companies I think that there has been a revolution lately. So there there was previous software, but, you know, you know, how legacy solutions are. Right? So difficult to use, difficult to implement. So they came with a lot of baggage. Right? It it’s complex of where It’s expensive, difficult to deploy, and so on.

However, the finance function was neglected for a long time. In in in finance in in corporations. Right? So think of it. Think of the wave that we saw in HR tech.

Or the ways that we saw in marketing deck or in. So in the end of the day, innovation, West of innovation have really changed how sales teams, marketing teams, even HR teams, I really like to emphasize how similar the HR wave was in the past. Because they are they can be considered a cost function as well, so that some people consider finance a cost function as well.

And, hey, they are in touch with every department in the company, like finance, but unlike finance, they don’t have access to all the wealth of data. But HR was actually in power with HRIS, like the single source of truth, hiding software, like ATS, finance was still neglected and became the most on the leverage function in the company, right, think think of all these extremely talented people. I I always say the same. Ready to have an impact.

And then, yeah, you have a old fashioned ERP, and, you know, maybe a bunch of a spreadsheets and But, you know, you are not able to upgrade your game. You don’t have data. You don’t have a low code or no code. EDL solution to really clean your data and master it.

And so finance has been really neglected. And I think now in the last three to five years. We’ve seen this catalyst where people have realized, well, it’s it’s a term for finance to really have a broader impact in the organization.

We also see that because expectations on finance teams have really skyrocketed. I think both members and, you know, investors, both in private equity and and venture capital are really placing more and more pressure on finance teams. And, you know, the equation is not really working for for this folks. So I think this is really the catalyst and the broader perspective around CFO tech and to empower finance teams in in corporations.

The broader fintech topic is, you know, it’s very new ones, right, because there there is worth tech and there is lending and there is effects and some but definitely definitely has been as booming. It’s a sector that has been booming for over the for the last ten, fifteen years, and I’m sure we’ll continue seeing a lot of innovation there.

Okay.

Have rising rates forced you to think differently about your business?

Totally.

Totally. I think it it was definitely a a wave that made us all rethink our growth model, and that was clearly something that impacted, I think, every single venture backed business.

Right? So we had a venture venture backed company. So we were in a market where racing capital had a very different dynamic than it has today.

And growth, you know, was was considered the prime goal of the company. And therefore, everybody was, you know, growing at basically all cost with raising interest rates. Obviously, the cost of capital became way more way more expensive.

And think every single venture backed company in the world had to rethink very, very swiftly what that meant for their business and obviously, obviously, the paradigm the paradigm became sustainability, efficiency, and a very different growth model. So definitely that was the case for us as well.

If you consider that to be sort of like a theme, I guess, for the investing enthusiast, I’d love to ask about some other themes. What are some other kind things you forecast in the next three to five years that people should look out for in the fintech space?

In the fintech space, definitely, there are a few trends that are gonna be changing a lot how we think today, and I’m sorry to use a buzz word, but machine learning, and I insist on machine learning, but So AI, right, an an an artificial intelligence, we we continue seeing more and more applicability on that. I think we need to exhaust first, m l into a robot advisory or credit scoring or there there are very good number of applications forecasting accuracy. So not not everything is pure generic artificial intelligence or everything that has become more popular in the last year, but but definitely fintech.

It’s been a long while that and I’m saying, like, the last five to seven years, we’ve seen more and more companies using ML. And I think that’s a trend that we need to consolidate, and we are for instance, our sales were heavily focused there. Right? It’s not only some AI applications, but actually, you know, there are many companies out there already using ML in a way that makes a lot of sense and a lot of value.

Abakim has offices in New York and Barcelona, and you have a, you know, a personal footprint in both of those locations. So I I’d love to get your take on some companies in both the European market and the North American market. Like, are there one or two businesses in each. They’re doing, like, really cool things that you think should be on our radars.

High percent. So we have offices exactly. In in New York and then also London in Barcelona. Oh, London too.

Sorry. Yeah. So, no. No. Sorry. In the there is a lot of fintech in London that they are doing very cool stuff.

I think on the on the European side, I think that there are two new banks that have really changed and scaled to a magnitude that has made everybody including regulators rethink what finance and fintech means And those are n twenty six and revolute. Those are well known in in the European markets. And, obviously, European regulations and the multi country strategy that you need to follow that or scale makes things more complex, but these these folks have scaled to a magnitude.

That, you know, they have not they have gone beyond being a challenger bank and, you know, they are well established now, and they need to deal a lot with regulators. And when I started in fintech, they were just nascent companies, like super small, and I just find mine blowing what has happened and the user experience that they are providing both to consumers, but more importantly, these days to SMBs. Right? They are really comping the SMB segment. And that’s right. That’s n twenty six and Revolute? Okay.

Cool. Also, there are some other companies there that are, you know, our customers as well. Like, you’re going South Africa, and they do payments and software and software platform for small businesses in Africa.

Like, they are a game changing company for SMBs in South Africa, and I think that what they are building is really, really cool. And we also work with other fintechs like London, for instance, money box. It’s a mobile savings, and I was on investment app. So really cool stuff, and they have been a long around for a long while. So really mature company that has scared a lot. So these are companies that we admire a lot. What about a year in the US, one of our customers is Acorns, for instance, it’s a running app and also saving app that allows you to also invest very easily, and they have been they they were one of the peer pioneers, but really have they have scaled very wisely as well.

How about a little game?

Looking forward to it.

It’s not it’s not hard. It’s it’s just I call it speed round or lightning round, something like that. We’ll we’ll go through we’re kinda workshopping the names. We’ll go through a couple of questions.

It’ll be either or or a quick hit or the example I use is like, you know, chess or checkers. You just tell us, it’s kind of a get to know you. We wanna get to know Julio. A little better.

Okay. Ready?

Ready to go.

Apple or Android.

Saltier sweet.

Sweet.

K.

Dogs or cats?

Ducks.

What’s your favorite podcast?

It’s not a trick question.

I’ve been I’ve been listening lately a lot to the Huberman podcast.

Huberman? Yeah. Huberman on on Hilton will be that has been, you know, a great addition in the last couple of months. So it’s super top of mind now. Okay.

Valueer growth.

Balio.

Interesting for a venture guy. I know.

You can tell him about school.

Your first job.

I was a BARman.

Okay.

The the very first one.

You have any hidden talents?

I think they are so hidden. I can barely find them. You wanna keep them hidden?

Fair enough. Okay. You get a a a night off to go out on the town. Are you going to a live concert or a comedy club?

Life concert.

And you’ve got a couple of days.

No worries in the world. Are you taking a road trip or are you getting on an airplane?

Road trip. Yeah. Like to drive?

I like the experience of row road trip in. So, ideally, maybe, you know, you take a play and and and then, you know, go or some somewhere very exotic, and then you you take a road trip, but, you know, just stopping and, you know, getting the bike for a road trip, I really like it more than the driving. That was an unexpected answer. It’s kinda both. Play playing then car.

What’s the best business book you ever read?

Probably evaluation by Mackenzie. I think this is a business book that I really like. It’s certainly technical, but really cool to illuminate value. And and it it really shaped how I was thinking of business value.

Okay. Interesting.

Love that. Good feedback.

On that topic though, are there are there any other books, like, or thought leaders, types of resources that you would recommend to our listeners?

Yeah. High percent. So Other books for assessing business. I remember principles by Ray Dahlio. That’s a great book. Yeah. I really enjoyed that one.

Also in terms of thought leaders in our space, right, in the FBI space, which is a bit more. But but I think Betty very interesting for CFOs and, you know, finance professionals in general on the corporate side. I think CJ Gupta is has a popular newsletter called mostly metrics, and he’s doing a great job.

He’s doing a great job, I think, high quality content. And, you know, delivered in a very fun way. So that’s very cool.

So I would highlight it. Okay then. What do you do outside of work? Any hobbies?

I understand. Yeah. I’m very active. So first of all, I have three children. So they keep me busy on on on a regular basis.

But they are mostly mostly surfing on weekends. I got really leg surfing, and we go we go there as a family.

Then I’ve been practicing martial arts for for many years. So, and, you know, I continue doing that, practicing fitness fitness in general. Like, that’s something that I I value a lot. I like to play chess. That’s an old hobby of mine. It’s a source that I admire.

And and that’s it. And I guess that’s something simple, like, having dinner with the family every day. Important for me. Love it.

Love to transition into sort of some career stuff. Get a bit of your career wisdom. So I was reviewing your LinkedIn profile. And I I like, I was blown away by the breadth of experiences you have.

You’ve worked in, like I said, wealth management, investment banking venture, and you’ve done it in New York, Sao Paulo, you’ve also invested in or sat on the board of a ton of companies around the world too, London, Singapore, Tel Aviv, I’m sure at some point, if you’re not planning on it, you should consider writing a book because there’s there’s tons of good stuff in there, but Before we get into the specific experiences, I wanna ask you about one item on your profile that really jumped out, and it said sabbatical. Life is too short. Location was Mumbai. Tell us a bit about that.

Why was that important to you? And what did you what did you gain from it?

That’s a great question. So unexpected. That’s great.

So Well, I took as a practical, and this is something I highly recommend to everybody. Right? I think there is a lot of fear when it comes to career planning in everybody’s minds before doing that, but I highly recommend people to take six, one year or even more time off to really learn some other staff in life. Right?

And and this is what I did. I was in corporate finance already. That was back in two thousand and six, and this is when Mohammad Unos won the Nobel Peace Prize for microfinance and all of his great work in Gramminbi. And I had been following his work for a long while, and I was very into it and thought, okay, I have this window.

I’m young. I’m twenty four, and I can really go is and learn more about microfinance and, hey, have a great experience along the way as well. And this is precisely what I did. So I decided to yeah, leaf everything and went there.

So I really took away, first of all, you know, pursuing a natural curiosity or know, professional interest or a new purpose, which was, you know, microfinance and how finance can really change and impact things. And actually that led later on to spending time in the wall band, right, in the micro finance team. Right? So things, things end up connecting later on in your in your career, and you don’t really anticipate that.

But also, you know, I was immersed in a new fascinating culture. I played a lot of chess in the street. I started journaling and meditating. So know, obviously, these type of experiences come with a wealth of staff that just makes you richer for for the rest of your life. And and honestly, I I still look back at them those days and and think, wow, you know, that really had an impact in me. And then afterwards, I just continued. To be honest, a very conventional career, I guess, in finance and entrepreneurship later on, but that break was really game changer to me.

Well, because you have such a breadth of experience, I’d like to talk about a few of your previous roles. So for context, a lot of our listeners, looking to advance their careers, maybe kind of introspective about their positions or their experiences.

So I was hoping you could specifically tell us what were some of the most important things or lessons you learned at each of these different stops? I’ve cherry picked a few items off of your profile. They’re all really high profile, but kinda unique. Now the first one is wealth management at bank inter.

What did you learn in wealth management?

I had a very technical role there. So I was analyzing and picking stocks to advise our high net worth individuals as to, you know, helping best, right, and also, you know, assembling that with a fund strategy.

So I was beginning my career in finance back then. So I went down a technical route. I think something I I learned there is that getting your technicals right very early in your career and understanding deeply what you’re doing is critical, but it took me some time to realize that, you know, the world is just bigger than you know, finding comfort and finding security in how I’m able technically.

Like, that really limits you later on. So I became very strong there, but I think at least in that experience I neglected maybe you know, looking for more exposure on the customer side or, you know, something more relational, which actually than I learned later on.

Which is also very valuable. But that that’s interesting. Technical skills, figure them out, learn them early, but don’t don’t get pigeonholed kinda. Right? Yeah. Totally.

Okay. So the next one was private equity consultant, the World, IFC. So international finance corporation. I think you may have just alluded to this.

Yes. This was was mind blowing. Right? And and I think the bottom line that really I took away from that experience that that has really form my entrepreneurial journey later on is that if you want to have an impact in society, The most important thing you need to do is to improve SMB to improve the SMB sec.

This is, you know, after a lot of research, after my experience in, you know, working in microfinance in India, but, you know, more than that. And, you know, I took an MBA in the middle, and I focused a lot of a lot of my time spent a lot of time in development, and and the biggest takeaway is keep it keep it short and simple, right, is, you know, improve the SMB space, whatever you are. And this is the biggest the biggest opportunity you have to make people an economy and society flourish and prosper. And that was my my my bottom line there.

I spent time in in South African, Kenya, evaluating micro finance investments, that private equity is alongside the IVC and the World Bank had made in in those countries. And it was mind blowing to see how those with limitations, of course, but how those investments had made those those countries and those projects flourish, and they had a very tangible impact, right, both economic, but also, you know, you have some social parameters. So you make sure that. So So what I took away is if I want to have an impact and live by a higher purpose, just impact SMB.

And and the mid market. And this is actually, you know, many years later on, something that really guided my thoughts around Avakum and what we’re building here.

Interesting. For our listeners that aren’t familiar with the acronym SMB, small and medium sized businesses, and and even in, you know, much more advanced economies, an overwhelming majority of companies that exist are classified as smaller or or mid sized Right? So in terms of having an impact on the largest number of people, that certainly stands to reason.

Totally. And and You know, I’m I’m a big believer of that. Right? So, obviously, you can devote your life to health and, you know, have an impact on on people’s health or you can but heroin, finance have a great opportunity to really also have an impact. And sometimes we forget about, you know, how much is in our hands to improve things.

That’s great.

So you also worked in investment banking I never had a city. Tell us a little bit about that.

I think this is what really catapulted.

Many things that were in the making in me. So after spending some time in the World Bank, I decided to move into more traditional investment banking. So I spent time in as you said, New York, Sao Paulo, and London. And I think I gained two things, basically.

One was wealth of international experience. I had lived in some other countries in the past, but that really gave me a broader international exposure that, you know, I really loved and and appreciated at the same time, I managed to move from the technicals to the business, I would say. So from, yeah, all the modeling, all that stuff. That that is all perfect, and it’s very important to get it right and to mass or that, and obviously you guys know our worth about it.

So it’s critical to get that out of the way, and then with that under your belt, you can really concentrate on having, like, that broader business impact, and that comes later on in your career. And this where at city, I I really learned how to how to hopulate with.

And then you transition to Banco’s Sabaddell in consulting and venture. I co I combine them even though the roles are probably different, but they were the same firm.

Yes. This is essentially when I move from more traditional finance despite the diff the different angles around, you know, analyzing companies to invest in banking. I think it’s quite similar to be honest. Right?

It’s They rhyme in some ways. Yes. It’s basically evaluation. And here I moved to tech.

So that was the massive opportunity that I had to move from a more traditional finance role, which I love Right? So banking, you know, it was all very fun.

But I moved into a bank that gave me the opportunity to develop a very ambitious fintech initiative. So we deployed many millions. We hire a lot of people, and we build something very fun foundational around fintech products and, you know, investing in venture capital all over the globe in the US, London, in Tel Aviv, in Israel as well. So That was the transition. And what I took away there is, you know, finance was red, but I really found that building products and particularly building fintech products and understanding, you know, early stage and and helping people build successfully those businesses was was my purpose, basically. Right? So that was something that I became extremely passionate about.

Was there a particular moment, like, an aha moment that’s where you said I gotta I’m going out on my own. Like, I wanna do my own thing. You’d seen enough kind of venture stage companies that you just knew.

Yes. I think I think it was the overlapping moment when first I saw very clearly the market opportunity that if DNA represented.

So after sitting in the board of these many companies, after working with so many startups. I’ve been having to spend back then fifteen years or more in finance myself. Right? I found like This is a massive opportunity to help FP and A and finance teams in the mid market to really upgrade their game and really fulfill all their potential.

Like, I became very obsessed about it. And I thought, well, hulu, like, let’s be honest, I have an unfair advantage here. Like, I’ve spent many years in finance, many markets Like, I think I know what to build. Right?

I I I may have a couple of ideas here to make something that is really transformational for ourselves, right, finance for finance. At the same time at the personal level, I I really wanted, you know, the next level challenge, let’s say. I think we all in our career sometimes find this moment. I already had three kids.

The family was well established. My my wife is a it’s a superhero in the family. So, you know, everything was in in the right place. And then I thought Well, cool.

I really want to challenge myself.

You know, you’re about to become forty, and I passed that now, you know, unfortunately. And And, hey, like, you know, it’s an awesome opportunity now. You’re, like, high level energy, you know, probably good experience. So a good combination of different parameters, So I decided to just, you know, get a chance and it’s becoming very successful. Yeah.

So one part unfair advantage, one part midlife crisis.

Yes. You’re you’re going through me.

Here you go.

You obviously have a ton of exposure to the startup. We’re all but I’m sure that’s different than actually starting your own company. So what were two or three of the biggest challenges you faced in actually getting Abacus come off the ground?

Getting it off the ground at the beginning was fairly challenging. Right? So we launched one week into lockdown, COVID lockdown. So it was initially That’s unfortunate timing.

Yeah. So if it it had been in the making for some time, of course, but but when we decided to, we just literally quit our jobs and make it full time. Like, we we ended up locked down for over two months. And then with all the subsequent consequences that that had So imagine that back then, I I at least I was not used to hire remotely to to, you know, pitch to investors hundred percent remotely to, you know, really make the business take off during that time where, you know, many were predicting the end of the world and a ten year recession.

Like, back then, psychologically, it was, then, obviously, science and technology made you know, the crisis will way shorter and actually turn it into a boom for for venture capital.

But But back then, you know, COVID was really the first thing. And then the second the second thing that I remember taking it off the ground is when COVID open up the opportunity to a lot of cap capital in the market. Right? So continued quantitative easing and, you know, low rates and you know, we we know what happened in the tech world, and the consequence was an asymmetry in power with talent.

It was very, very difficult to hire and retain good talent across the world. I think we perform better than many others, but still taking it off the ground was was really challenging in in that changing times.

Yeah. You often hear folks say, well, the there’s now the the world is your potential hiring pool. But what’s often forgotten in that is that there’s a side door that your your employees are feeling the same thing and companies recruiting them. So, it changes the attraction game, but it certainly changes the retention game in some ways too.

Now the flip side, what are sort of two or three of the biggest wins you feel like you’ve had with Abicum so far?

So first of all, I think it’s our customers.

We are literally privileged to have an amazing customer base from the very beginning. Right? I think from Our our first customers were really amazing companies across segments, fintech, but also SaaS, and mobility and marketplaces, and then private equity backed, and then listed companies.

So, you know, we are building a product that is really game changing, but we feel privilege and honor every day that we have dirt trust. And this is definitely our biggest win. Right? So happy customers, across sectors, and that continue to grow.

So, you know, knock on board. Like, this is literally our reason why, and it’s our core value. Right? The biggest value we have is customer obsession, and we’ll repeat that all the day.

So definitely blessed. And then I think the second win is definitely our team.

So it’s it’s been a journey, but having the capacity and all the learnings to hire the right people to continue shaping up together the right culture for these right people, for, you know, who determines who we are. I think we are at a very sweet moment where you know, we have the people that we want on board. We continue hiding in certain functions.

But, basically, you know, I find that our talent pool is amazing and and well established.

So, you know, I think it’s the two the two core fundamentals now.

Yeah. I I mentioned earlier, I’d love to talk a bit about about culture and you segued really nicely into that. I I have a bit of experience working with sort of early stage companies and would classify my classify myself as a very small small scale investor. I’m using pair of quotes.

Nice. But there’s always really you know, unique dynamics, particularly with FinTech. And this is why I wanna talk about that because you kinda have your your technology camp and your finance camp and a little different. There’s certainly some crossovers.

So sort of a sort of a two part question, how do you think about corporate culture in the startup contact? Yeah. So I’m I’m opinionated about this one. Right? So I think that, obviously, culture matters a lot.

However, that comes with nuances in the startup world, right, especially in early stage. So when companies grow and they become corporations or maybe, you know, after three, four, five years in your startup journey, Probably you want to become more intentional about culture. However, at the beginning, probably survival is what matters most. Right?

The first year, the first two years. You want to build something people want. Right? So product market fit is critical, staying close to customers.

Really talking to customers and fostering that feedback, that obsession very deeply hiding the right people building building those values. So I think that what’s critical at in the early stage of the startup journey is to really make sure you obsess about product market fit, which means obsess about your customers.

And then make sure in the foundational team and in the early team to agree on the key values.

That are gonna guide your principles. And and this is what we’ve done. Right? So you you you have your core values.

Three, four, five maximum. Right? So you you you people don’t need more. People won’t remember and then make sure those make sense.

Are respected. I understood. And people live by those values, and and I think it’s more a framework.

Because Then later on in in the journey, probably with a different scale, different problems come, and then maybe you can be more intentional. And then the second part is, is there anything really unique that you’re doing at Abacus in terms of building a really unique culture? Yes. So what what we do in particularly at Avakum is to really emphasize our core principles and what we do is you know, we have an old fan that we call store, which is, you know, related to to SOCism and and some some of the core values that practice.

We are over one hundred people now. And, you know, we we we need to keep that company communication flowing in in every direction. At the same time, we do a a quarterly offset for the whole company. So, you know, we gathered together, and, you know, we still believe that despite being all in different places.

Sometimes meet every month anyway, but despite our New York, London, and and Barcelona, Probably we are still humans, and we are wired to operate face to face once in a while at least and build those relationships and make them more meaningful so that later on you kinda extract the value. So we continue doing that. So, yeah, I think it’s also We also came to the realization and that comes over time where you kinda start front loading you know, a more flexible culture prioritizing, you know, a high demand environment where people really are very demanding, right, as a culture. We are, you know, we have highest standards.

We’ve been in investment banking, and we, you know, so that that that gives you a sense. Right? But at the same time, it cannot be the same thing. Right?

So you you want to be that platform for people to flourish for people to really become fulfilled and have a very meaningful job and a lot of impact and also be surrounded by the best people.

So it took us a while to get that balance. Maybe we were more extreme at the beginning, and I think now given the the teammate that our teammates are really giving very positive feedback about, you know, and it’s in glassdoor and everywhere. So I think we’ve become very well known in the in the in the startup world and in the fin fintech world for having a very thriving culture.

What’s the single most important skill or characteristic that you look for when you’re hiring?

I think it’s good off mindset.

I think it’s so growth mindset or attitude, which I think it’s basically the same, I guess. So the attitude I want to see is growth mindset.

That’s it. I can elaborate, but I think it’s self explanatory. That’s pretty self explanatory.

You sat on a lot of boards. Are there any interesting sort of changes or trends emerging in, like, corporate governance that you think are worth highlighting?

Yes. So I I think corporate governance is still in many ways in the making when it comes to, I’ve been exposed to family businesses or when when you are not bank investor backed, right, and and you are an entrepreneur. So there are still some limitations.

But common trend that I’m seeing across the board is the expectations around the CFO as trusted by store for the business at the board level as well. So back back in the day, a few years ago, probably what they wanted is to sure all the all that is okay. And then I have my financials, you know, every month. And this was the intervention that finance teams had. What we’ve seen now is that the CFO is really playing a very different and is expected to play a very different game. And we see that I’m a big fan of Frank Slotman, the CEO at Snowflake, previously ServiceNow, and so he created billions in value and, you know, a very iconic tech CEO.

Great story. It’s a great story. Right? I mean, I think I think it’s obviously very inspiring for many people, I guess. And and and hey, but I love how he thinks of his CFO.

So he’s brought his CFO from company, the same one, from company to company to build and deliver value. So his partner is not the COO, the, you know, CMO, CRO, whatever. No. It’s his CFO.

Right? So I play attack. He plays defense, whatever set up they have. Right? And then he can and he’s open about it.

And I think more and more boards, more and more investors are really looking at the CFO under that lens. What is the business value? Not the financial come forward. Right?

Oh, yeah. Everything is taken care of. No. What’s the business value that you are bringing to the table?

And and this is definitely a trend that we are leveraging, right, even we are building what we build, the Internet software, and we empower these guys to really fulfill that.

If you could give our listeners one single piece of sort of general business or career advice, what would that be?

Go white.

I think going wide, and accumulating a wealth of very diverse and divergent experiences.

Really equips you later on and you don’t really know when to flourish at a different level. So I think that, you know, going wide and accumulating as I’ve done, right, different sets of experiences when it comes of international geographies or No one says within finance or outside of finance, going wide, but then in every single experience pushing very hard to extract the most out of it, really can make you a very well rounded professional that maybe later on, you know, makes you capable of accomplishing endeavors that, you know, maybe a few years ago, you were not even thinking about. That’s great advice.

If you weren’t the CEO of applicant, what would you be doing?

Hey. I love finance, to be honest. Right? So what I’m building and what we are building at Avacom is for finance folks.

I don’t consider myself anything different than what my comp my customers are. Right? Our customers is FP and A finance professionals, and I still consider myself like, just a, you know, finance fault. Probably, I would be doing that.

And then probably some more surfing if I’m honest, but, you know, Those both sound good. What can I do to help you and the Abicum team?

Well, we are very active in social media. Actually, and I think a year ago, something like that, I decided to boast more and more about, you know, our thoughts about finance and tech, and and FP and we’ve built a great following base, across different profiles in the company. So a shout out to our profiles would be amazing there.

Yeah. Well, we’re happy to happy to post that on our show notes, and I recommend for our listeners to to check out the site if you’re on a finance team and a function or otherwise, like, Check out the software. It’s it’s really a heck of a product. Where can they go to find more about you?

Like, what LinkedIn? What other social media? Yes. Our our website, avacom dot I o, or just if they drop me a note in my LinkedIn profile, I’m more than happy to direct them to to the right people.

Cool. Well, listen, Julio, this has been terrific. I really wanna thank you on behalf of our listeners for for your time and your insight. Guy, thank you so much.

It was a blast. Alright. Good luck. Thank you.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning wherever you listen to your favorite podcast, or visit us online at corporate finance dot com slash podcast. See you next time.

Join Kyle as he sits down with Meeyeon Park, VP Content at CFI.

In this episode:

-Buy-side & sell-side dynamics, including a breakdown of Capital Markets roles.

-The energy on a trading floor.

-The importance of patience in role.

-How and why Meeyeon ended up in corporate training.

-A new game—Lender or Liar?

-Motorcycles vs. Mac trucks.

-And so much more!

This was a fun chat with a ton of interesting perspectives and career insights from a seasoned finance pro.

The big thing about working at a financial institution like an investment bank is that you mature very quickly.

I think that there is a degree of, like, mental maturation that you do there in that type of role where it’s very demanding. It’s quite high stress.

There are very high expectations. It’s oftentimes unrealistic, but they’re just very high and you have to do the best that you can to manage those expectations.

Those are opportunities really don’t arise anywhere else.

This is Netler the podcast that keeps finance and banking professionals ahead of the curve. In each episode, we focus on career growth and practical while mixing in the occasional war story. Join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and inter Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Piederty. I’m really excited to introduce today’s guest, Meon Park, VP content here at CFI. This is actually a first of its kind hosting an internal guest, which is kinda cool. Meon, thanks for joining me. Of course.

I’m super excited because we just haven’t done these internally yet. So it’s very exciting to be the first guest. Maybe we’ll set some kind of a precedent. That’s that’d be awesome.

So for our guests, if you don’t already know me on, she’s quite a breadth of experience across a number of finance roles. She’s been on the buy side, The sell side, and she spent several years with a corporate as well. And for the last three plus years, she’s been leading the development of curriculum here at CFI across our capital markets training, and most recently, Meon played a lead role in launching our financial planning and wealth management certification program.

She’s also a lot of fun to work with. I like to think so too.

Absolutely. Me on, we’ll get to all of that. Maybe we can start sort of high level. I really like the way you break down the buy side and the sell side in particular investment banking.

I think you do an elegant job and kind of bring an l like an educational lens to it. So can you start there for our listeners? Like, real easy question. Tell us how the capital markets work.

Yeah. I guess so very, very high level. When you’re working in capital markets, it’s a exciting job in the sense that it’s in financial markets. Everything is constantly moving.

But if I were to give a sort of interview question response to where capital markets, I’d kind of break it down into three components. I’d say that capital markets are financial markets that bring buyers and sellers together to trade anything from all sorts of asset classes like stocks spawns, commodities, currencies, and other various financial assets.

Of course, they the the most well known as classes, simple ones or stocks and bonds, but what Capital Markets also does is that it helps people with ideas, people that are entrepreneurs, bring those ideas to fruition to life into companies, and it helps small businesses grow and to larger ones by doing IPOs, whether they’re equity or debt. I’ve always found it interesting. I think there’s this, like, myth out there that once like, especially for people that are junior in their career, but, like, once you get into financial services, all of a sudden, you kinda get it. I don’t know about you, but that’s certainly not been my experience.

Like, I know commercial lending really well. And I also have a good sense of, like, what other folks at a commercial or credit union do, whether it’s, like, the retail division or or wealth management. But the reality is, like, there are just so many areas of financial services and and finance sort of more broadly. Like, I don’t think anyone’s really an expert in all of them.

And so I find it fascinating to hear you talk about your career because what goes on behind the scenes at an investment bank really is a mystery to me. And so, like, am I totally off base? Am I maybe you’re an expert in all these areas?

No. I think it’s a I think that’s a very true statement. I think Capital Markets is just generally an incredibly nonlinear industry own industry, but like sector. It’s it’s not an easy place to learn steps a, b, c, d, in like a sequential and logical order.

Totally. So when you go into an investment bank, the the whole thing is it’s not just like there’s gonna be this one cookie cutter role, the one that everyone knows. The role of an investment banking analyst. It’s like the reality is that an an investment bank is a big institution, they offer various different lines of services, and within each of those pockets is a developed expertise that tends to be kind of deep and narrow.

And so it’s it’s never gonna be the case that you, you know, work there for a year and know it in and out. It’s gonna take several years for you to figure out not just your role, but the significance significance of it in a broader investment bank’s operations and to really understand, like, how that machine works, like, how the cell side works.

Yeah. And I’m glad you brought up cell side. I interviewed a hedge fund trader a while back, Rob Polke’s, and he mentioned that buy side entry level is really tough. But but you did it, and then you flipped over to sell side, IBD investment banking division, which I think is a little bit an opposite route.

Could you maybe walk us through that process? Like, why did you go that way? Yeah. That’s like a common that’s a really great question.

It’s a common one that, like, I’ve I haven’t been asked very often, but more so, like, today than a number of years ago when I was younger. But for me, I I tend to not do a whole lot of reflection in the past. I have I’m usually kinda like focused on moving forward. And luckily, there’s lots of exciting things ahead of me, but That question is really interesting because it does require me to do a bit of kind of like reflecting an introspective reflection.

So I when I started, my very first internship was on the buy side. It was with Brookfield Asset Management and their specialty funds group. They were just launching, they were doing fundraising, they were doing marketing, getting all their investors together. And then after that, I went to Ontario teachers in their fixed income portfolio management group, and that’s where I got like a real taste of, you know, like traditional buy side front office type of role.

And so, for me, I started from the buy side and went to the sell side, not because of anything special, except for the fact that that’s where I just happened to land my first internship and made some really, really great mentor relationships, and had that bridge connected for me.

But it’s really interesting to say that it is so tough because people probably have the impression that It’s much tougher at an investment bank because you always hear about, oh, there’s, like, so much work to do. There’s so many hours. Everyone’s so demanding. You hear all of these big, sort of, very, not exaggerated, but these really, really big stories, and they mainly come from the sell side. But I think that it’s really accurate to say that it is quite tough on the buy side, and I would say more so than the sell side. And it’s just by virtue of the that when you go into a buy side shop, typically you’re not going in with a big group of new hires.

So whether you’re coming from an MBA program or any sort of graduate degree and going in as an associate or you’re going in right after undergrad, there’s no real such thing as, like, the analysts.

Yeah. There’s no analysts of Pymco class of twenty twenty three type of thing. Okay. That’s a sell side. Like, that’s a sell side. It typically is because on the buy side, when you hire analysts and associates in, you don’t you don’t hire them in high volume.

You typically have people that are interested in the career very long term from a very early stage.

And the nature of the work does not require twenty or thirty analysts.

And so because of that, you end up going in more or less alone. And you go into an environment where you’re typically supporting maybe like one or two portfolio managers, and there is no there is no kind of training. There is no there there’s mentorship, but it it only works out if you and the person that you’re reporting to develop a great relationship and happen to get on very well, and they want to be in that kind of mentor type of role.

And so you don’t have the kind of social resources, and it’s very it’s very challenging in the sense that they don’t have the programs that the investment banks typically have where they take twenty or thirty analysts in from undergrad, they take twenty or thirty analysts and from the associate pool, and they have these massive training programs that last a week or two during summer, get everyone acquainted with each other so that you can have people to lead on and learn from and just have this calmer artery with. You don’t, you generally don’t have that on the buy side because they just don’t have the type of work that requires a high volume They have very low turnover, and so it’s not like they’re taking in tons and tons of people, expecting tons and tons of people to leave. Which which is the case in the sell side investment bank of roles. Generally, what, like tend to churn out. Mhmm.

I don’t I think that the industry has probably changed quite a bit since I was in, like, about ten years ago, but if you have, like, a group of ten analysts, I would say Like, at that point, like, five of them would leave by the end of the year. Oh, well, exactly. Yeah. Because at the end of your first year, you have from like a PE firm’s perspective, like enough experience that they would want to hire you as a second year analyst, you’d be well prepared and easy to onboard.

And they like to kind of pitch the enticing idea that, you know, your your work to life balance is gonna be a little bit better. It really it really is not. I think it’s very similar. But after the first year, people typically at least, you know, ten years ago felt a little bit of burnout and expected that the next year, they would be doing very similar things.

And so when a recruiter comes knocking on their door and says, I have this great PE opportunity. They were usually very quick to jump on it. Yeah. The the grass is greener kind of idea.

Interesting. Yeah. You you’d mentioned how they don’t normally take in big cohorts on the buy side. I’ve I’d find that really interesting and, I guess, intuitive now that you say it.

Would that be true at, like, a BlackRock or some of the really large firms? Or Yeah. So for me, I’m only familiar with, like, the Canadian. Asset managers, and we’re a lot smaller than, like, the US and global ones.

I would assume that, like, BlackRock, placed like BlackRock, it is much it is larger.

But relative to the bulk bracket banks, it’s still significantly smaller. Right. Like, I don’t I don’t very I very rarely see on campus recruiting, asset managers doing huge intakes from top universities there. That’s interesting. So if you are fortunate enough to find your way into, you know, something close to an entry level role on the buy side, Would you say that it’s more important that you come prepared with technical skills than, say, an investment banking role where they’re gonna put you through kind of the ringer of training?

That’s a great question. It’s in the most ideal world. Yes. I think — Right. — the buy side Well, generally, I think from what I’ve seen, the buy side will tend to they prefer to hire their investment analyst.

So the one that would support their portfolio managers or assistant portfolio managers from master’s degree programs And typically, ones that are quite focused on finance, like, masters of mathematical finance or financial engineering, or something that has clearly given them the opportunity to at least academically study what they’re about to do.

By side shops, I find generally prefer that because, as you said, they’re not they’re they’re not generally prepared give you a huge onboarding and a how to of everything.

Got it. Okay.

Question. Either the second part I can answer. No. No. That’s that’s good. That’s really, really interesting context to hear it directly from somebody who’s been there.

So, okay, obviously, when you talk to folks that are young in their career, it’s always so sexy to, like, I wanna be an investment banking analyst. And and you did that. Can you it’s sort of a two part question. Can you tell us a little bit about what does a day in the life look like for an investment banking analyst on the sell side?

And I guess specifically, How is it different in DCM or ECM or, like, M and A? If you could kinda break that down, would be super helpful. And you were in debt capital markets. Yeah.

So for a day in the life of an investment banking analyst, it can look very different depending on where work in the investment bank. And I think that over the years that it’s over the decades since I’ve been there, they probably re brand of the title. I wanna say I typically see like Capital Markets analysts now for that Capital Markets’ roles.

The report, of course, into investment bank. But the what you do as a DCM or ECM at debt and equity capital markets analyst is like fundamentally than what you would do as a classic industry group analyst within the investment bank, which is also categorically different from what you would do if you were an M and A analyst. And so Sorry. Can I pause you there?

I’m just curious. When people talk about, I wanna get into investment banking, investment banking, which of those four categories is it they’re typically talking about, the traditional? They’re always talking about the classic industry group banking roles. So whenever whenever someone’s just saying like, oh, like, my dream job is best in banking analysts, they’re always talking about the classic industry group one or the the ultimate one, the one where everyone wants to get started, which is M and A.

Okay. Okay. That’s helpful. Thanks. Yeah. So, like, when you kind of think about it, if you’ve at an investment bank, and we’re trying to we’re not gonna I’m not gonna I won’t, like, verbally go through, like, a whole org chart, but imagine, like, there’s IBD, which industry group coverage teams.

There’s product teams, which is M and A, DCM, and ECM. And I say because M and A is a product.

So if you’re an M and A analyst, you’re gonna be looking at only M and A deals or potential M and A across various different industries. So it doesn’t matter whether it’s media and telco or oil and gas or pharmaceuticals, you’re looking at just M and A, and that is your area of expertise. Your expertise is that product, which is M and A. DCM, ECM, same thing. In the sense that it’s asset class specific. So if you’re in DCM, your specialty is bonds, and it doesn’t matter what industry or whether it’s government, it’s just bonds, bonds, bonds, same thing with equities. Whereas in industry, you’re focused on getting to know an industry altogether.

And when you’re when one of your clients needs financial advisory services, they will You’ll talk about what the solution that they’re looking for is. And if it’s a product related solution, which it will be, you’ll bridge the gap to your M and A. Colleagues or your DCM or ECM.

And so the the day in the life of DCM is very different in the sense that so if you are in an industry group coverage team, your team is the relationship manager for all of the companies that fall within your industry. So for example, Media and Telco, if you are in the Investment Banking Classic Division, and you are part of the Media and Telco team.

You would be responsible for managing the relationship with Verizon, AT and T, Rogers, Telus, all of these types of companies. And of course, depending on where whether you’re in the US or Canada, or elsewhere. Or elsewhere, of course. But your managing director is responsible for maintaining and procuring developing a relationship with the CFOs of that company, CEOs, and making sure that, you know, when they do need some financing solutions, you’re that first call.

Now with DCM and ECM, what’s interesting is that They’re not the relationship manager, but they’re sort of they’re always gonna be pulled into the conversation.

And they might have relationships with more more realistically like the treasure. That’s the person that they’re gonna talk to most frequently.

They may also have frequent conversations with a CFO, but it depends really on the dynamics of your firm and how the teams operate.

So a DCM or ECM team is going to have a very close relationship with their peers in industry group coverage so that they can make sure that, you know, when a client comes in and needs financing solutions, it does seem like it’s a whole team that’s helping you get your whatever you need done. And so the interesting part of a DCM analyst, let’s I could give you I wanna try and give a good accurate day in the life.

So Let’s do it.

So with DCM, you’re not market facing directly in the sense that you don’t actively have a pulse on markets because you’re trading securities every day. But you do need to have a really good pulse because of all the clients that you work for. They are gonna be looking for solutions, and you wanna make sure you’re always up to date on fixed income markets. So while you’re not directly market facing in the sense that you’re not active in capital markets, you’re not trading securities day over day, you are day over day keeping up. So that means that you would start your day by listening to the morning call from and trading, as well as reading up on any overnight markets, and really just listening to any type of resource internally so that you can get a pulse on what the markets are doing.

Now that is kind of the the most market facing opponent of the job. The second part of the job is more similar to a kind of industry group coverage team role role in the sense that you are going through your clients debt financing solutions that they currently have with you, looking see if there’s any opportunistic fundraising that they could be doing and really working with syndicate as well as the industry group peers to see where you could be active. So the the role is almost half and half.

Physically, origination teams don’t sit out on a trading floor with their sales and traders because you don’t want it, it would be well, it’s not allowed for regulatory purposes. Because It’s not even allowed in. Flow like that. Yeah.

But in, like, theoretically, you’ve you fit, like, kind of right in the middle. You’re not live on the trading floor. But you’re also not, like, tucked away in an in an industry group role focusing on kind of project oriented things. You’re looking at very specific bonds.

You’re looking at specific clients. You’re looking to do things that are more transactional.

Whereas your industry group peers are doing things that are much more long term project based bottoms up analysis. So the role itself is very much like straight in the middle. And so is the kind of work that you do as well as the work life balance that you have?

In sales and trading? Yep. No. Is this would this would this be like a mirror image on the ECM side as well?

Just dealing with — Yeah. — employees instead of fixed income? Yeah. They’re very, very similar roles, just different asset classes.

And the the type of the type of it’s funny because it’s like the type personalities as well as a type of work, life balance, and lifestyle is very similar in the sense that it’s right in the middle. Of the sales and trading team as well as syndicate versus your industry group coverage peers. The origination team really lies, like, very much in the middle.

And so if they’re in the middle and work life balance, who has who has the worst work life balance? Well, I would say it’s probably no secret. That the in the industry group coverage teams have the worst work life balance. Okay.

Yeah. They’re and they’re spending a lot of time and they’re the spreadsheet folks. And Yeah. So a lot of their, like, the junior roles will be focused in, focusing on things like updating models, for example, if there’s, like, any sort corporate earnings release, like any sort of newsworthy events, updating comparables, updating scenarios that they might pitch to certain clients.

That’s that’s a lot of the work that’ll be done by a junior investment banking analyst.

It’s really maintaining a lot of different, like, databases, updating different pitch books and assisting your associate with whatever that may be requested from a client at any given time.

Okay.

And so that tends to take quite a bit of time because at the end of the day, when you’re dealing with people that are kind of like c suite executives, whether it’s CFO or the treasurer of the company, they typically have their day to and then they follow-up at the end of their day with a lot of the stuff that they would like from an investment bank’s services.

Got it. Okay. Well, remember earlier I said you have a really elegant way of explaining it. I I I do really enjoy that. Millon actually has a course as well introduction to capital markets, which goes into some level of detail on this on this stuff. If you get a chance to check that out, I highly recommend it.

Okay. So, obviously, at CFI, we have hundreds of courses.

So I’m gonna ask you, this might be a tough question to distill it down. But for someone that wants to go into origination, like you did. We’ll call it DCM, but they can only take three courses. Only take three CFI courses. Which three would you recommend that they take?

So I’m it’s gonna be three, but it’s kinda like four, but that’s because it’s origination broadly. So With origination, you could either originate debt or equity. So the first two courses, I would say, are introduction to capital markets to give you a good lay of the land, and then origination fundamentals which really goes into kind of day in the life of DCM, what you do there. And it goes into great detail. Basically, was my regular day for three years. K. And then based on whether you find DCM more interesting or ECM more interesting, I would say, like, our credit fixed income course would be a great one or the equivalent in equities.

Okay. That’s a fair answer. Those are the three courses that would take. I thought you were gonna cheat with four, but you kinda went into Yes.

Worked it off. So Three sub a sub b. No. I like that. That’s good. That’s awesome.

Let’s play a game Oh, yes. I love games. Alright.

So I was trying to find new new fun ways to engage, and you are a very seasoned finance expert, but you didn’t work in commercial lending. I Or did you? Did I miss anything you received?

No. My secret life as a commercial lender. So I have an idea for a game. It’s called lender or liar.

Alright? The the you’re you’re the rules. I’m gonna give you a list of, like, a word, a term or an acronym, and you have to decide if and tell me if it’s a real word that’s like common in commercial credit or if it’s made up. If I’m a liar.

K. K. You handle it? Yeah. Let’s go Alright. General sorority agreement.

Lie.

Lender, liar. That’s a liar. That was a lie. Yeah. No. Definitely general security agreement is one.

That was an easy — GSA. — g the the other GSA, a general sorority agreement. Yeah. Definitely made up.

A suspension of claims.

That sounds real. Wonder.

That’s fake. That’s made up. No.

Is it is there something that’s, like, related to it that is real?

Sometimes sometimes people assign what’s called a subordination of claims. Mhmm. Oh.

Oh. Yeah. It’s close. It’s close. It’s close.

Alright. This one’s an acronym.

EBITDAR.

Oh, that is real.

That is real. Do you know what it is? Yeah. Earnings before interest, taxes, depreciation, amortization.

And what was it?

Plus rent.

Oh, plus rent. Yeah. Yeah. It’s, like, it’s used in, yeah, in in a in some types of credit underwriting that you would I know it’s real because I’ve heard EBITDAR.

And I just remember the first time I heard it, I just thought, oh, like, this person is joking. Yeah. Yeah. Real.

That’s a good one. That’s good.

Unaccrual loan.

Unaccrual loan loan, I’m gonna say that is a lie.

That’s correct. Yeah. That’s that’s a lie. It’s actually a non accrual loan. Non accrual is a real a real term.

How about this is like this gets into well, okay. I won’t give any clues. ESA, it’s an acronym, environmental social assessment. I think that’s right.

I think I’m not right, but I think that’s true. That’s that’s a lender. An environmental social assessment. They have different phases, phase one, two, and three.

But it is it is a real term, I think.

ESA is an environmental site assessment.

I got you on the ESG workaround there.

So close. So close. I haven’t been keeping track. I don’t know what your score is, but you’re doing really well, actually. Too wrong so far.

Workout.

That’s a term in commercial lending.

It seems like it could describe a process, but I don’t I don’t think it is. So I’m gonna say it’s a lie. Is it no. No. Real. It’s a real term. A workout?

So, yeah, a lot of it may be called restructuring your special loans, but when a when a problem needs to be resolved. It goes to the workout group for them to work well, basically. It’s a really common term in the US, actually.

Workout. Yeah. There you go problem loan workout. That’s okay. One more.

I got a whole list here.

A a camel’s rating.

A camel’s rating?

Camel’s an acronym. Oh, I’m trying to think it’s like Moody’s is in there. SMP is in there.

DBRS is Canadian is not in there, but wanna say it’s a lie.

No. It’s a real thing to you. Oh, no. I’m dating I’m, like, fifty fifty at this point.

Cammels is a rating system developed in the US, like a supervisory rating system to measure the condition of a bank’s, like, loan portfolio.

Stands for capital adequacy, assets, management capability, earnings, liquidity, and sensitivity.

I believe.

Oh, so the cat moles. There’s two a’s in there. Right? No. No. No. Assets. Did I miss it?

Oh, capital adequacy is to see? I see I see. Yeah. Yeah. So, yeah, it was, that was a tough one.

That was pretty good, though. That was fun. I like that team. I might use that again.

Thanks for playing along.

Was fun. Did you ever work anywhere where they had, like, a fun ritual or tradition or or something like that? Like, I and I asked because I feel like the pandemic kinda stifled fun in the workplace. I don’t know how you feel about that, but particularly, like, with financial services firms and big corporates, I think it’d be cool for people to be able to, like, bring some of that back. Do you have any do you have any cool traditions?

Well, I think a tradition that lot like, I think every group on a trading floor has is when the non farm payrolls come out. So it’s US employment numbers. You kinda wanna get some people do, like, closest to the actual number or they’ll pick a number and do over under. Okay.

So it’s a fun little monthly thing, and we usually just, like, say the loser of the group will have to get coffee for the team members, and you don’t wanna do it for the entire trading floor because there’ll be a lot of money. That’d be like several hundred dollars. But you’re within your sub team of like four or five people. That’s always a fun little tradition.

It’s a little cheesy, but it’s always fun.

No. That’s a good one. Actually, I like that. You mentioned trading floor while we’re on the subject, You kinda hear about, like, the culture, and I’m sure it’s evolved over time, but, like, what is it like or what was it like being on a trading floor? Even though an origination, you weren’t there all Like, what’s the vibe like?

So it was really interesting because for me, I actually was on the trading floor. I wasn’t actually behind, like, some sort of glass door or separating too far away. I actually was on the trading floor. We sat not facing sales and trading team, but I did get to experience it, and it’s kind of in the close form possible.

The the best part of being on a trading floor is just the energy. It’s always it’s always fun. It’s always kinda different yet the same. So for example, if you’re in sales or trading, you’re looking at the same set of securities every day. If are in derivative sales, or if you’re in fixed income sales and you cover certain asset managers, you’re kind of looking at the same list of clients every day. But each day, brings like a different type of energy and you really feel it throughout the day. So everyone is not quite boisterous.

It’s it’s a bit loud.

But it’s it’s really energizing. It’s not necessarily for everyone. I I mean, I remember the very first time I went there. It was it’s very shock it can be very shocking if you’re going from the buy side.

The thing Right. Yeah. You went the other way. That’s right. Yeah. Like, the thing that Rob said about being things being difficult a junior kind of entry level investment analyst on the buy side.

One of the things is that it’s very quiet there. And, like, everyone is usually, you know, quite focused on their work, and there is no, like, of a trading floor. There’s no one kind of, like, yelling things across to their trader. So it makes it very it it can make it a bit awkward.

To be more vocal.

But on a trading floor, it’s just it is just part of is it the nature of the work. And the information passes very, very quickly. One thing that you’ll always hear people say is, oh, you could learn by osmosis.

And that’s exact it’s exactly how it is. You get to learn so much from so many different people on the trading floor, whether it’s a salesperson or a trader in their various different asset classes that they trade. So the it’s really nice to have that environment, and I don’t know how how a pandemic has impacted it because I’ve been away from it for so long, but I can’t imagine a work from home to situation for a bank on their trading floors. I wonder what that would look like.

It would take a like, there’s a lot of A lot of the, like, certain traders require a lot of screens, a lot of electricity.

Right. And it’s a really big setup. So I just can’t do doing that from home all the time. That’s one thing. Just physically. I think the infrastructure is not really something you could set up and someone’s living room right away.

What inspired you to flip over into education, if you don’t mind my asking?

This is an interesting piece, and some of it was just it’s what found me and not not not necessarily that I went looking for it. So CFI is based in Vancouver. And when I joined, it was a fully in person environment based in Vancouver and everyone came to the office kinda every day. So when I was looking for so what happened was I was working on Toronto still. I was working for a large Brazilian private equity owned company.

And wanted to move back to Vancouver because that’s where I’m from. But at the same time, the kind of capital markets experience that I had was not necessarily be something that I could pick up here in Vancouver very easily. Much smaller city. Right? It’s much smaller. So for example, if you’re at a major Canadian bank, whether RBC, CIBC, BMO T. D.

The jobs that you’re gonna look for in capital markets in the Vancouver location are very few and far between because everybody wants to work in Vancouver. It’s the the weather is nicer. I I think the city is the best in Canada, and there’s and once someone lands that role, they never leave.

And so When I came here, I kinda started to just broaden my horizons and say I’m kinda looking for a high growth relatively kind of startup ish company, maybe a couple years in, at least financially stable. Mhmm. And and then I found CFI where it found you? Where it found me, yeah, through the Google algorithms.

Yeah. But I noticed that they were looking for things that were very much in my background.

But it wasn’t the role itself. And so I’ve always enjoyed the idea of teaching in the sense that I’ve benefited massively from having met the right people at the right time in my career and having those people take a really great interest in me and helping me find and open new doors and new opportunities.

And so I was really grateful when I found this because I’ve benefited so much from people helping me in my life and taking an interest in me as a mentor.

And I felt like this was a great way to kind of back on a mass scale?

It’s like a way to scale up, mentorship in a way. Right? And somewhere with, like, one person at your company, you can really deliver a lot of value to a lot of people. Yeah.

Because a lot of the learnings that have done. For example, even just like finding my first job in origination and understanding what that was, it it wasn’t even a part of people’s vocabulary when we were graduating. The only terms that I heard were I would be an investment banking analyst, and you never hear about origination. You’d never hear about ECM or DCM roles.

Learning that kind of stuff, like, I I just find that there’s so much more opportunity than people initially think there is. And to be able to share that on a wide scale. I thought that was really exciting.

I think we do. Oh, I’m a little biased, but I think we do a pretty good job at CFI five sort of demystifying financial services because it is, like I said earlier, like it no one’s an expert in everything. And, historically, it’s been fairly opaque. Like, you just there’s not that much in not there about like what someone does.

And I did a lot of coffee chats over the years, and I kinda consider these interviews to be something of, like, a virtual coffee chat that a lot of people can tap into. I had a guest to actually talk about that once, and I tend to do agree with them. It’s like, what do you do? How do you do it?

And so it’s been fun to be able to just hear about a day in the life of all these different roles and to be able to share that with with our learners too.

Yeah. I mean, like, for example, when I graduated, was no such thing as like podcasts like this, right, where you could really just be a fly on the wall or peep of people’s coffee chats. I I went out and I bought a book.

I bought a paperback book. Do you remember what it was called? No. I do remember what it was called.

I think it was called breaking into Bay Street, which is the — I’ve read it. — main file corridor. Here we go. There was there was a podcast before a podcast existed.

It was the only place where we had the info issue. And I just remember thinking now that we have all these resources, it’s just so it’s so crazy how accessible everything is days.

Yeah. Do you have any general career advice for our listeners and our members? I mean, you know our target audience as well as anyone.

One of my big things is, like, my one of my first bosses in origination, he said something that was that’s always stuck with me was, especially right when people join. He’s like, you know, I think it’s so remiss to kinda get this opportunity that is really hard to come by because there’s just at the end of the day, it’s not like the role is like so amazing and so glorious. That everybody wants it, but, like, the hardest part is that there are very few seats available.

And to come in and do do one year and then just bounce out the door. Like, he found that it was very short sighted to think that, you know, the grass is greener on the other side. I just kind of wanna work hard for a year. And I think I’ve learned everything that I need to here, and then just bounce to another opportunity.

And the idea was that, at least the way that I kind of received that was there’s nothing worth that is worth burning that you’re gonna learn within twelve at a place like an investment bank. There is so much more opportunity and so much more learning and growing that you could do in that role. That is really hard to come by anywhere else. And to leave it in such a short time frame, you’re not getting everything that you could from that. Like, for me, the big thing about working at a financial institution like an investment bank is that you mature very quickly.

I think that there is a degree of, like, mental maturation that you do there in that type of role where it’s very demanding. It’s quite high stress.

There are very high expectations.

So oftentimes, realistic, but they’re just very high, and you have to do the best that you can to manage those expectations.

Those are opportunities that really don’t arise anywhere else. And I think it makes you a much more mature professional in that three years of experiencing that type of work environment than you could working six years in general corporate. And I think it’s a really unique opportunity, and that’s one thing I would say is, like, even when if there’s something that you are working so hard for and fighting so hard for, like going into an investment analyst role at a top tier asset manager or going into an investment banking this role at like a Goldman Sachs. If you’re fighting tooth and nail for that, like, you want to really ride out that opportunity, try to get your promotion and get as much as you can out of that role.

If they typically have the they want to stay in the role as an analyst for like two and a half years, and then they either promote or let go of you after two and a half years, they typically put those time frames in there. For a reason. And I think one of them is that that is when you will mature professionally in that role as well as like mental in that role so that you could be prepared for the next stage. And I think it’s really important to kind of understand that nothing that is difficult to come by is something that you should let go of so quickly, even when it turns into challenging times.

That’s sounds like really, really good advice. I’ve had other guests talk about patience and role as well and how. Yeah. Patience.

Part of it is I think a generational thing.

Yeah. Yeah. Like, just don’t look to move. You’re also not really endearing yourself to the folks that hired you or to the organization, particularly if you’re gonna stay internal and swap somewhere else. It’s just, yeah, you don’t, like, don’t be impatient, soak it all up. I had someone else say that, you know, deals are kinda like movies. And if you see enough of them, you start to get a sense of how they’re gonna end, and it takes time to get there.

So, yeah, good advice. Interesting. Okay.

I’m curious. You you always hear these stories about you know, crazy interview questions when you’re trying to go into some some of the really high profile roles, like the management consulting and and IBD Yeah. What was the toughest interview question that you’ve ever been asked? So here’s the funny thing is that I’ve actually so I did two interviews for the classic investment banking analyst role at the main Canadian makes, but I was never asked any of those weird questions, like How many pianos in Chicago?

Do you think could fit in a going seven fifty seven. Or how many golf balls do you think could fit in Central Park? Like, all of those so many. Who cares?

Alright.

I think I think a lot of the con at least like when I interviewed, I really enjoy interviews. I I’ve I think I had great stations with those people. I only made it to I made it to final rounds for for both of them, but I didn’t get selected for that one. I ended up in origination anyway.

So that doesn’t matter. But, I guess it kind of also depends on the candidate that they’re speaking with. They might kind of swap up some of the questions. Yeah.

But I’ve heard a lot of those questions haven’t actually had to answer any of them myself, but, like, the whole, like, purpose behind it, I think it’s, like, some of it’s a little bit mean. Especially someone that is coming straight out of university, you know, very bright eyed and bushy tailed and a little bit nervous. But the whole idea is that just wanna know, like, how do you approach abstraction? Like, how do you structure your thoughts?

And that’s all that they wanna hear.

So, like, if you don’t know Central Park, you could just say, well, I’ve never been to New York, and I have no idea the scale of Central Park. But I do live in Vancouver, and I kind of know how large Stanley Park is. And so I’m just gonna do it in that way. And then you’d start breaking down, like, okay, like a golf ball is, like, roughly like this big, and then you give the area of the golf ball or the volume. And then you go on and on and on and you just kind of try layer piece after piece after piece.

Yeah.

Can can I ask you my favorite interview question? Mhmm.

This this one always gets me.

Meon, What what would you say is your biggest weakness?

Oh, oh my gosh.

This is the one that people like to always, like, kinda package up into, like, a length. Like Yeah. There’s a few strategies, but Oh, I I over commit, you know? And, like, I — I’m a perfectionist.

— too much. Oh, that’s the worst one. It’s like, I’m a perfectionist. Right? Like, the idea That’s why I’m going with this.

Let’s give some advice to our our listeners.

Like, I’m a perfectionist. Often what that comes out comes off that is that I’m late on my timelines.

That’s how I kind of hear it. When someone says like, oh, I’m a perfectionist, I would hear it as sometimes my deliverables are late and they are late. And they are late. Because you’re putting too much work into it.

And so that the way that I kind of we hear that weakness is that sometimes you just don’t know when to let go.

Fair enough.

Yeah. What? Inter interview prep. Always a challenge.

I haven’t had to do that one in a long time. What do you say it? It’s your weakness?

I’m trying to think what I would say is mine today.

I probably should I probably should have thought of that before I asked you the question in anticipation of being of having it flipped around.

I don’t know. I would say structurally, you wanna answer something honestly.

The the perfectionist answer that you suggested. I read it a different way. I think that’s someone saying, like, I don’t have any flaws. If anything, I just I try too hard and I too much. And they they try to pretend like it’s a like it’s a weakness. I don’t know if I was really being introspective, though. I I actually I do sometimes struggle with multitasking.

And, you know, you probably wanna be careful about how forthcoming you are with that response as a customer bank, but it’s good to know. Right? And and then I say that because So I I have an analogy. I think everyone everyone sort of thinks and operates like a vehicle, and everyone’s a different type of And some people are motorcycles, and they can, like, start and stop and change directions really quickly.

And I consider myself more of, like, a Mac truck. So it takes Yeah. Yeah. It’s a little funny, but, like, it takes me a while to get going.

But when I do, I you know, I get to I get up to speed really quick. You know, I’m like, I make a lot of progress. Oh my god. This is an amazing answer for anyone that does.

But don’t force me to like pump the air brakes because it’s gonna take me a while to get back on if I’m if I’m totally derailed. That’s something that I know about myself. So I try to, like, schedule accordingly. I don’t know if that’s a weakness or not, but I guess the broader point is, like, just it’s good to be introspective and it’s good to acknowledge that people have strengths, people have weaknesses.

And I think the best way answer that question is just to say, you know, what you’re doing to sort of work on it. Yeah. And so I would say because of this Mac Truck analogy, I tried it time block as I can. Like, I I try to not have if I have if I need to have four meetings in a day, it was terrible days, but I try to have them in a row.

So that, you know, you make it earlier or late and then you’ve got kind of a block of time to be creative and and focus on other things rather than going like into a meeting and you got forty five bits and then, you know, another meeting. So does that answer your question? That’s such a great question. Now that you’re interviewing me?

I love it. I’m gonna recycle it. Are you a motorcycle? You feel I feel like you’re a motorcycle or a different vehicle.

The things I think that I think I’m good at multitasking, but I think that truly, like, every single person is best.

Like, mono tasking.

I think everyone does better when they are, you know, they have time dedicated to one focus, one project, and they will do better work if that is the case. When it comes to multitasking, I think certainly some people are, like, far, far at it than others. But I would say it probably like, I’m like a sedan.

Like, I can maneuver here and there, but I’m not gonna maneuver as quickly as a motorcycle.

I definitely do better, like, by, like, blocking things out and having dedicated time and, like, getting in the saddle for, like, fifteen minutes before I could power through something rather than, like, doing five minutes of it here, five minutes of it there.

A sedan. Great. Classic answer. But that’s that’s such a great answer to that question because I’ve heard a lot from a lot of interviews.

The one that I get is the whole perfectionist thing. Yeah. It’s the worst answer. Anyone listening, like, don’t say it, please.

Don’t say it. Yeah. The only thing that I hear is that you will take too long to do certain pass, and they’ll eventually have to kind of, like, push you. Yeah.

Well, yeah, not hiring that person. One final question. I try to I try to ask everyone. I sometimes forget.

If you weren’t doing this VP content at CFI, what would you be doing? Oh, geez. Strugal.

No. Just kidding. In Vancouver, so given where I am, I think I would be trying to start something of my own, something of my own that would be software based, and it might actually be in the wealth management space. Interesting.

Very interesting. It’s yeah. It’s I think it’s a great time.

To be in kind of like software development generally still, even with, like, their fruition or the up and coming of AI, but think that’s what I’d be doing. I think I would probably be trying to make something of my own.

That was actually a very, yeah, that was that was a really good answer. I I should’ve clarified. You could’ve said anything. You could’ve said, like, the the, you know, the princess of whatever. Oh my god. It was like completely it was like anything you want, but that’s a good, it’s a really good answer. It’s money grew on trees, I would be an equestrian.

Okay. There we go. So now we alright. We got the realistic and the the money doesn’t grow on trees version. Yeah. One was entries.

That’s awesome. Me on listen. Thank you so much for your time. That was really that was a really fun chat. Really appreciate your time. Of course. Anytime.

You know where I am. That’s true. Just down all here at CFI headquarters. Thanks for listening to this episode of Net earnings. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning wherever you listen to your favorite podcast or visit us online at corporate finance dot com slash podcast. See you next time.

In this episode we chat with Kyle Kreppenhoffer, Principal at Ashdown Capital—an independent commercial financing broker in Western Canada.

We discuss:

-Pros & cons of a big name bank vs. smaller, independent firm

-The art of a quick “no”

-Myths about commercial lending

-Common competitive sticking points

-Transitioning from individual contributor to people leader

-Playing the ‘long game’ and building your personal brand

-And so much more!

If you’re in (or interested in) commercial lending or the private credit game, this episode has more nuggets than a 5-year old’s birthday at McDonalds.

I get to the bank. The way you learn is, you know, you rate credits, you rate reviews, and then you submit them to your mentor or to your credit manager, and then they come back all marked up and ready. Cooper. Then, so there was a point where I hope I was trying to they really tested me. I was getting hammered with you to reviews, and this is trying to I was just trying to gear up the to do list, and they kept the reviews kept coming back. And I just lost.

This is Net Learning.

The podcast that keeps finance and banking professionals ahead of the curve. In each episode, focus on career growth and practical advice, while mixing in the occasional war story. Join us as we tap into the minds of leaders and expert at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Petardy. I’m really pleased today to introduce our listeners. To another Kyle, and that’s Kyle Crep and Hoefer, principal at Ashdown Capital.

Kyle brings nearly fifteen years of financial services experience, including commercial banking, indigenous infrastructure investment, and private credit advisory.

He also hosts his own podcast called Finfluencer. Kyle. Welcome to the show. Thanks for having me, man. It’s different being the guest like we were talking about before. So, we’ll see how I do up a side of the table. I’m sure I’m sure you’ll do just fine.

Now I get excited about a lot of these interviews, but I feel particularly good about this one because we’re gonna talk a lot about commercial lending. And that’s an area of financial services where where I spent, obviously, a number of years prior to joining CFI.

Now the term commercial lending can mean a lot of different things to different people. And we hear, you know, subsets like small business, SMB lending, middle market, These sort of refer to, like, you know, company or loan size, but then there are also types of lending. Like, there’s ABL, there’s senior secured. There’s commercial real estate, transition capital.

There’s factoring. There’s a whole host. And it’s kind of this big universe of financing options that for a lot of outsiders feels really opaque, kinda confusing. And I would argue even a lot of more junior bankers They don’t really know the whole spectrum all that well.

So Kyle, I’m gonna ask you to take kind of a thirty thousand foot view, and just tell us a bit about, like, the credit landscape. How do you think about and define commercial lending?

So, I mean, broadly, I mean, commercial lending is ultimately financing pretty much anything a company needs to buy.

And from, you know, in terms of breaking down, the types of commercial any out there. I think about it in a spectrum. So you have you have, let’s say, cost of capital on your y axis you have risk on your x axis.

And at the bottom, where risk is lowest, That’s where the banks tend to play. Right? Traditional lenders, they have low risk tolerance, but they’re also the most affordable form of debt capital. And then on the other end of that spectrum, you would have private financing.

So high risk tolerance albeit more much more expensive than the banks. And within each of those categories, I mean, you have you have different shades of gray. So different risk appetites across different banks. Same thing goes for private lenders. And within the private lender landscape, I mean, it gets factoring. You got ABL.

He got equipment not to over complicate it, but, I mean, it’s hard to put all this stuff in a box, honestly.

Yeah. Yeah. There’s a lot of a lot of areas of of overlap, I would say. And I know we’ll get to this, but I’m sure that’s sort of where a firm like like Ashdown comes in. And actually with that background and context, and where does Ashdown fit? Like, what does what does your company do and and how do they do it?

So as shown, it’s a debt broker. It it’s like a commercial mortgage broker, but it’s more than just mortgages, so think working capital, equipment, M and E financing.

Again, like, ultimately anything a company needs to pay for, we helped find a financing partner for that. And You know, again, broker is different than lender. Alright. We don’t have our own capital. We’re placing financing. And so the goal for us is to generate competitive tension across multiple lenders and try and get the customer not only the best financing possible, but give them a couple of options.

Right. Okay.

And so is there any, maybe, a bit of background on the company? Like, when was it founded? Is there is there a story behind the name?

Yeah. And I should have asked this. I don’t remember the story behind the name of thicc. So Brad Brad Kendall and the founder of this in BC with his partner, Ryan Turner. I think the Ashdown thing has to do with, you know, where they feel like they had a holding company within the family that was called Ashdown, and there’s some Genesis to a grandfather.

That’s a really crappy answer, unfortunately. But Ashhem was founded. I wanna say five years ago by a couple of HSBC guys. Just felt, you know, felt that there was a better way to help support companies and with their financing needs.

And so these guys went, you know, they’re really strong. Brad was a really strong relationship manager at HSBC. So we had some excellent customer connections and kinda went out on his own. He was working out of a garage for a while, and some customers really liked the idea of it. And It just fly willed. I mean, now Ashdown is twenty three brokers in total. Twenty one of them are in BC, and then we’re just we’re just trying to get or feet on the ground here in upper, so hence why I’m here.

And just for our listeners outside of Canada, British Columbia is BC. That’s our western most province in Alberta immediately to the east of us. So big big presence in in western Canada, Let’s say okay. Let’s say I’m the director of finance at a manufacturing company, and you and I meet at an event and We start chatting about consolidating and refinancing the company’s debt. Walk us through the process and the timeline.

What that would look like with Ashdown.

So I it’s really important that the broker doesn’t add to the timeline. And so it should if you’re gonna go through a bank, should be the same six to eight weeks that you would expect without the broker. Private lenders have a have a capacity to build be a bit more nimble. And so the the closing times can be a bit faster for with us specifically, It’s pretty quick.

So usually the first thing we do is, you know, somebody has a finance in me, but say, we say, okay. We’ll send us some financials. Let’s have a look. And assuming, you know, the math makes sense, at a no names basis, we call around.

We call it a few letters that we think make sense given the circumstances.

And assuming we get some enthusiasm, we’ll come back to the customer with any proposal for an engagement. Right? It’ll have in your pricing, which we’re entirely success based. And then it’ll have some additional due diligence items within that engagement letter, you know, it could be a personal net worth statement.

It could be equipment listing. I mean, whatever. And appraisal or whatever. Yeah. Yeah. Whatever makes sense.

And assume the customer has no objections to that, you know, they sign and then we’re we’re cutting off to the races once we get our due diligence items and, you know, there’s some There’s some work required with by the customer with us. Right? We’re gonna ask a bunch of questions because Again, the point is that we are trying to provide a complete package and deal summary to the lenders.

To minimize the back and forth for it that tends to happen.

And as part of that, we’re trying like, we’re gonna try to shield the customer from as many questions as possible. That’s not like we can’t anticipate every question, but we’re really just trying to minimize that process because the as long as you minimize them back and forth, like, that’s really gonna accelerate the turnaround time and term sheets, which That’s really what we’re looking for. Right? For sure. Okay. So you’re saying kind of a sixty week soup to nuts closing.

Set some drag at longer rate, like I mean, sometimes we’re all along for the ride on these. But the timeline will never extend because it was.

Right. Yeah. And if you’re doing it Well, you’re shortening it maybe significantly too. Yeah. Yeah.

But, yeah, I think customers lose some time. It’s I’ve seen it often where customers are spinning their wheels with the wrong lenders.

And just because this is, like, this is all we do. Right? You think about, like, this is all I’ve done for fifteen years. Like, I’m not good at anything else. It’s easy for us to recognize the types of letters that make the most sense for a given deal. So I if this isn’t a big deal, I won’t even I won’t even waste my bank’s time with that. Do you know what I mean?

Yep.

Yep. Now that makes sense. Keep the client focused on what they do best, which is running their business and you facilitate the transaction.

So So I wanna talk about commercial credit today. We’ll call this q three twenty twenty three. We’ve seen really a staggering rise in interest rates here in North America. How are you seeing that play out in the market?

It definitely affects the real estate market. Probably.

Most. Albert is a in a bit of a bubble. Right? Because we’re almost counter cyclical given the the energy market. Kind of cyclical is maybe not the Raybird, but I know talking to the guys in BC, There’s a lot less enthusiasm out there than there is out here. Now that’s everybody’s kinda waiting for the next shoe to drop out here. And so I think they set up their loan loss provisions in anticipation.

You know, there’s a lot of businesses that are gonna get moved down to there. Specialty, special loans groups.

I think three quarters of the deals that I’ve worked on have ended up being proud of financings, which might be an indication of of where companies are at in terms of their financials. But I don’t know that we’re at a point where the higher interest rates are actively stretching businesses because most of the businesses out here anyhow, they’re still profitable. Right? Like, business is still growing.

So it’s the point where the recession starts impacting on the, I think, there’s gonna be a problem. Income renewal time for some of the, you know, the fixed rate term financing, I presume too. The real estate stuff for sure. Yeah.

Because if you had a a rate locked in for the last five years, then you’re gonna be going from I don’t know, three percent to, I don’t know, six and a half percent, maybe more. Yeah. Yeah. Big jump with potential, you know, tenancy issues or turnover problems too.

Right? What do you think about from if you’re talking income properties and you’re going to be It’s difficult to make a six percent cost of borrowing work because it kind of implies that you need a six percent cap rate just to cover interest only on the facility.

Right. There aren’t many properties within a a strong market that have a six percent cap Like you think about Vancouver. I mean, what’s Vancouver’s cap rate? I don’t know, sub three.

Yeah. I’m multifamily. Yeah. I mean, it depends on the the asset class, but Yeah. They’re they’re definitely sub six.

You know, it’s interesting. I spent about six years at RBC, and that’s not a short while. Like, I saw plenty of deals, but I didn’t see a full cycle. Right? And you were talking about waiting for the other shoe to drop. Like, I was two thousand fourteen to twenty. I saw some weakness when when oil prices got rocked, basically.

But you started with TD back in two thousand and nine. It kinda right in the GFC, and you were still in the game heading into COVID. So so you’ve really seen more cyclicality, I would say. And we often hear about access to credit being tightened or loosened depending on market conditions and you have indicated already that we’re seeing a bit of tightening, what’s it kind of what’s it like professionally to actually live through a cycle? Like, maybe from the point of view of both, you know, the bank or the and the banker and the client.

For the banker’s perspective, I mean, for the banker’s perspective, There’s a lot more scrutiny on each deal. Like, you think about the annual review season, which is kinda like the banker’s tax season. Right? Yep.

Yep. When things are going well, you’re just trying to get the reviews off. Right? You’re trying to minimize how involved you get in this given deal.

You don’t have the latitude to do that in a downturn, particularly in a black swan downturn, but you’re talking late. The financial crisis or COVID, where you don’t necessarily know if that there’s a light at the end of the tunnel. Do you know what I mean? Like a recession?

Everybody knows a recession will end, but remember how scared we were in twenty twenty. We weren’t sure what we were dealing with. And — Yep. — you wanna support me, customer, so obviously it was much possible.

It’s something like COVID. I mean, you can’t just kick out every customer. It’s not practically possible, right, US? So you have to support everybody as much as you can.

But it’s a real balance because, you know, you think about COVID, every customer who’s coming to the banks.

For principal payment deferrals.

And that creates there’s a balance for the bank in managing that because it’s just a lot of adding up all those principal payments collectively. Like, that’s such a big number for the banks and managing that liquidity.

I mean, that’s I guess what the government had to do with what they did. Right? So but anyhow, all that to say, the credit risk management is a lot more cautious through those periods. And so that kind of trickles down.

Obviously, the best banks are always gonna try to land through the cycle. Right? So don’t get super excited when the economy’s on fire, but don’t just start kick out customers and turning off new business when things aren’t going so well as well. But it requires a lot of courage to kind of went through went through a downturn, obviously.

Did I answer your question?

It does. Yeah. I guess what I was trying to tease out was maybe tell me a little bit about or tell our listeners about the competitive landscape. Right? So when you’re kinda on that, excited period and you’re out when you’re doing business development, like, the competitive landscape must look very, very different from you know, high rates, low growth environment.

Yeah. It probably does. I mean, again, some banks are different. Right? Some banks don’t get as exuberant in those good times. And so they’re always just trying to maintain their their credit appetite.

But some banks actively pull back in the downturn.

And so for those steady banks, that’s an opportunity to acquire market share. Right? And so you really wanna make sure that your people are still going out and you know, doing all that new business activity that you’re helping on them to do. The balances, I think what happens is, like as of right now, think all banks would say, look, we’re still open for business sort of thing.

I think what they mean is we’re open for good business. And I so I think the says they end up being a bit more selective than they otherwise might have been when it comes to putting on new deals, and it could be that can be frustrating for the customers probably at times because what’s a good deal? Oh, I’ll know when they see it. Right?

Yeah. Yeah. Totally.

Well, on the on the subject of of deals, I know every deal is is different or unique, but you’ve been doing this a long time. And I imagine you’ve seen some consistent themes emerge over over that time, especially when you’re dealing with, like, you know, really a lot of competitive tension. So what are the most common, kind of, two or three sticking points in your view when you’re negotiating with clients and prospects? Like, is it always rate? Like, is it fee, covenants? What are the two or three kind of major sticking points?

I do find the rate, the smaller the company, the more rate sensitive, and rate and fee sensitive, and they tend to be And if I had to guess, it’s because they they quantify that stuff in the context of their personal salary.

The more professionally managed sophisticated businesses like to be a dramatic, like a public company. One, there’s a lot they recognize there’s a lot more in their deal than just rate, but two, The big companies, they they have so much more access to market data. Like, they know what the it should be for their particular transaction because if they have a syndicated deal, they have several letters actually coming in and presenting market updates to them. So There’s a bit more transparency on those bigger companies. The big thing in general, like, on the smaller companies, it’s personal guarantees.

And, obviously, nobody wants to provide them. But from smaller companies where you don’t have where the banks have a hard claim just find sufficient enterprise value, let’s say Hi, Rome. Say a million bucks of EBITDA.

The banks want a personal guarantee. The vast majority of the time.

Some customers are like, no, I’m not providing personal guarantee. That’s the point of the court is to, you know, to limit liability.

But that the event you run into this challenging argument with the back where Beck says, well, if you’re not gonna support the company, why should I? And it’s I posted a video about this a while ago. I mean, in my mind, the personal guarantee shouldn’t be the big nasty thing that customers think it is. But I’m certainly sympathetic to the opposition to it.

Yeah. That’s good feedback. And I I actually was planning to ask a follow-up when you answered it. Is it different at the smaller end of the market versus maybe more widely held or professionally managed.

So, yeah, that’s interesting.

Business development as I recall, fun part, but a a a very big part of the business banking game. Certainly for client facing advisors, And, you know, while it comes more naturally to some people than others, I actually believe it can be taught in practice.

So we don’t want, you know, your secret sauce, but do you have any business development tips that you could share with our listeners? It’s tough. Right? Because it’s such there are a lot of books on things that you need to do as a salesperson or whatever, but I don’t know that any of them are scientifically proven to be better than the other.

Right. My big thing was find something that you can consistently do I believe that you should do a little bit of everything, and that included cold calling, but trying to get my trying to get my team to cold call to bank. It was like pulling teeth, and it’s The challenge with something like cold calling is you’re gonna try it a couple times. You’re gonna be like, oh, this sucks.

It doesn’t work. And in most cases, the reason it didn’t work is because it did do it halftime. So if you need to hang in there, I think if you did three hundred calls, and you still felt that way and you just weren’t getting anywhere? Okay.

Then that’s a reasonable big point. If you did three calls and you felt that way, I just don’t think it I just don’t think you’re good at it yet. And, so that was a big one for me. The other one is events, like, going to events.

I think that’s really good. To go to, but it’s so uncomfortable, especially starting out to walk into a room of strangers. And so, why don’t you just have to do it? Like, It’s gonna get over it.

Everybody’s there too network. Right? It’s a friendly environment.

There was sometimes a tendency to take a friend with you to get you in a room. And I guess if if that’s what you need, okay, my only objection to that was the intended I people tended to use that as a bit of a creche. So you ended up sticking together the whole time. And at that point, you’re like, well, you’re not really meeting anybody new then.

I So I’m actually a big believer in going going alone. Right? Just talk about and go and go to a vet and a Bethela where at least separate at the door, right, circle up later, but I guess going to an event with partners better than not going to an event all. Right?

So Yeah.

But what did you do when you’re at BD?

I loved events. And so my next question was gonna be less around business development, more around sort of networking, specifically. Because we we have a members only community here at CFO. We’ve had some really, really great dialogue.

And someone brought up a question about networking. They were early in their career. They’re in private equity. And they were trying to figure out, like, Who do I approach?

And once I’ve made a contact, like, who do I follow-up with? And how quickly and it just got me thinking back on those days. Like, I I enjoyed business And I think the point you made around everyone’s there to network, it’s easy to forget that. Right?

I mean, like, most of these people There’s a varying degree of of comfort with doing that, but they’re not there for their own good. They’re there to meet people and they’re there either maybe sell their wares or make contacts or whatever it is. So if you can get over that little initial hump, I think it’s important. I always found that I would talk to a lot of people.

One of my policies was always better to take a card than to give a card. Like, to the extent that people still, you know, carry business cards because then you’re in the driver’s seat around, you know, when you’re going to follow-up, and if you’re going to follow-up. And, you know, if there’s synergy and someone’s willing to give you their car, you should follow-up. Right?

That was sort of my that was sort of my policy. Now you may not do business with that person, but it never hurts to at least remain connected, at least on LinkedIn. You know, I interviewed a guest a while back, and he’s he prefaced this conversation by saying, like, I don’t want this to sound too transactional. But he thinks about networking as a call option.

Every time you meet someone, like, you just you never know what could happen. So, you know, be brave. It’s part of the job and you can practice it and you can get over the hump for sure. You know what she only too is I think the younger you are the less experienced you are, the more prone you are to this.

You’d go to events with the goal of walking away with a deal.

Right? Like, immediately. Pretty much. And yeah. If you didn’t get a deal, then Yvette was a complete and art bust. But I feel like that’s the wrong mindset. I think you’re there to build relationships.

And So first, obviously, you gotta meet somebody new. You gotta follow-up. Are you gonna establish a reporter? I don’t really play a lot of games about should I fall up on day two or day three or whatever.

Like, I just follow-up assuming I didn’t hate the conversation entirely. But Right. I think it’s more about To build a relationship with somebody like that, I think you need to add value rather than take value. And so usually, like, what I’m trying to do is Who can I connect you with in my network that’s gonna help you achieve whatever you’re trying to achieve?

Unlike, unsolicited, no ask and mature, and just trust that over time, like, you’ll build really she ships, and people will just remember you for that stuff. It’s a really long range.

Mindset. Right?

You might get nothing to return, but — Yeah. — I feel like if there’s Carmen in the world, we’ll pay you back. Yeah. Generocity is is very important and very underrated, especially if you are in a role where you can take the long view, and you’re not just worried about this quarter’s numbers or or what have you.

Yeah. Totally.

Do you have any Judy transaction horror stories over the years, we anonymize company data or whatever, but it’s always good to hear about, you know, a bad dealer too. I have so many.

Where where to start.

My Reverend in the bank, I think this was probably the first year. And I I for people that don’t know, like, I almost got fired from the back. I was having a hard time. Like, when I joined TD, I was an associate, right, to the training program, And I didn’t necessarily have, like, amazing grades at school, but for whatever reason, I’d come under this come to this feeling that I was an absolute rock star.

And I got to the bank, the way you learn is, you know, you rate credits, you rate reviews, and then you submit them to your Metro or to your credit manager, and then they come back all marked up in red ink or whatever. So much red ink. Oh my god. Then So there was a point where I hope I was trying to they really tested me, and I was getting hammered with you to reviews, and I was this is funny.

I was just trying to clear off the to do list, and they kept the reviews kept coming back. And I just lost.

Oh, no. And I think the next day I came in, like, the current manager at the Farm Pence Group. He’s not he he’s at Canadian Western now, I think. He sent it down.

And he kinda in a polite way, this plight is can. Like, he kinda gave me the ride act, and he’s like, look, man, wait. You gotta get it together. And so they started slamming me with more and more paper, and I just buckled down. Right? I just I was like, I need to make this work. So anyhow, I ended up writing a lot of new deals for whatever reason, like, and I became known as this new deal guy.

And so one of the new deals, I think it was like a movie camera, rental business, and It was coming from another bank. We were trying to win the business.

And they put me on this deal. It’s right through it because you’re like, Always gets it done.

And it was such a messy deal. I just I don’t remember specifics about it. Like, why it was such a problem, but I do remember that there were, like, five different legal entities, like operating companies with five different sets of financials, like, five different everything.

Different urines. And I just I never had such a hard time with it. And it took you, like, seven seven weeks. I was working on it.

Until finally, the customer was just, like, you know, where we’re gonna stay with RBC and meet me at the RM. We were almost relieved. Like, it was keeping us up at night. And so the lesson from that deal would be ask for help because at the time, I guess I felt like asking for help was, like, a sign of weakness.

Do you know what I mean? Right.

I wouldn’t do that again.

No. That’s sage advice for sure.

I’m curious. What is a typical day look like for you now that you’re in a brokerage role, an advisor role as opposed to when you were actually at the bank. Like, maybe give us some pros and cons.

Well, certainly more podcasts.

That’s That’s good.

I like them. So certainly more control over my day really, like, don’t really have a lot booked, but typically I’ll try to book, let’s say, four meetings a day. Let’s say, Coffee’s first coffee at nine o’clock. That’s coffee at ten thirty, a lunch at twelve. And then maybe something else said to call one thirty.

And so the afternoons are available for certainly pushing a paper that I have to push. I mean, we don’t have ton of analyst capacity. Like, it’s still very much up to me to get what the deal’s done. And then throughout the day, I’m obviously fielding.

Inquiries on existing deals or whatever calls I need to kinda manage. So like as an example, there’s a deal in front of lenders right now and If they need something, obviously, I kinda wanna get back to them as quickly as possible to keep that process running. Other than that, I mean, for me, the more he’s was, like, I get up early. Right. I get this morning. I got up at four just in a habit.

It’s the only I have little kids, so it’s the only time I have for me time. This is, steer times, like, between four and six or the evenings, you know, kids can come up with five. So I’m with them until let’s say seven. And if I had a gas, I’m a tech, I’ll do some me stuff at the end of the day, but otherwise I’m pretty much in bed, but I ate various.

He was doing a lot of time left. Is that a good question? That sounds like a dad for sure. Well, I was curious to kinda contrast it with the bank, and I and I recall, obviously, you didn’t cite morning overdrafts.

Nobody likes those. You don’t have to do you don’t have those anymore. It sounds like you don’t do, you know, reviews. It sounds like there’s an awful lot less sort of compliance stuff.

So maybe just because I know we have so many folks in banking, and I’m sure a lot of them are thinking about, you know, doing what you did. What are some of the reasons to kinda stay with a bank versus go it alone? Like, there are a lot of, like, I recall a lot of good reasons to be with a big brand, but I’d love to hear your thoughts on it.

Yeah. I mean, you benefit from a ton of stability. Right? Your career at the bank is an annuity in a lot of ways. Right? But the paycheck will always be there.

The pitfall for I mean, I think the reason a lot of the guys at Ashdown left was they felt like they felt the little handcuffed by policies, you know, within the back that at a necessary level, be it man. Licki mentioned that there’s a ton of admin.

Most most good backers are deal junkies, but the amount of time, but you actually get the spend on deals within the bank. Unfortunately, as soon as much as he’d like. Right. And then here, for me, it was agency.

You know, we when we had one with kids, we realized my wife works for a back to you. We realized how constrained our schedules were, and being it it got worse as I got higher up like as a people manager. It was way worse. You’re not getting more freedom.

You’re getting less freedom because people need different below. People need you from above, and you’re kind of a pinch plug for everything. And so the beauty of The brokerage is, you know, really you’re your own boss, ultimately. Right?

Like, you’re as busy as you want. Running your own franchise. Yeah. Very much. And, you know, there the cons to that, like you alluded to is You don’t realize until you leave how impactful that big bank banner is behind you.

Until you lose it. And then you’re like, oh, well, it’s a lot harder to get in the door now than it used to be. Right? So That’s okay.

I think that I think So it works well for people that are really hungry. Like those strong business developers that have really great relationships with their existing customers, so they can honestly bring bring those connections over. But if you’re not really self directed and you get antsy about going to events or picking up the phone where You know, if you’re what some people love staying close to credit. Mhmm.

Alright. They’re great analysts. Yeah. That can be tougher.

To transition into, like, a broker role because, like, a broker role is, it’s a beaty heavy job. Yeah.

So It’s not impossible to do, like you said, like anybody can. Right? You know, you’re not born with these innate gifts. It’s just some people have gotten the rhythm early on.

Right? For me, it was late. Like, who’s who’s a career analyst for, like, nine years. So I never I was never a sales guy at mid market.

Mid market’s high volume. So you got a ton of reps. Mhmm.

And so something I thought to work out. I would not say I’m I’m the best of the best of the stuff. I’m good at systems.

Right? Like, I know the things that I need to do I can push myself to do about. So, I mean, I I do have that. That’s interesting.

I would’ve I would’ve pegged you as a a natural BD guy. But that’s, yeah, a lot of years in an analytical role. And that actually dovetail is nicely to another question I wanted to ask, which was What was it originally about commercial banking? You said you went into an analyst role, but what was it about commercial banking that was attractive to you at the beginning of your career?

You know, you gotta learn this, but I fell backwards into it. I didn’t even know where it was. Really? It was a finance undergrad, so, like, every finance undergrad You’re gonna go into investment banking.

Right? Even knowing what investment banking actually is.

Yeah. We hear a lot. Yeah. Yeah. For sure. Right? But So it was a financial crisis.

Right? I graduated in, like, April of o nine. I feel like the market might have bottomed around that time. But, CDA posted a commercial associate job.

I did not know what it was, but, I mean, it sounded decent. And the idea of working for a big bank wasn’t terrible. So — Mhmm. — so I just applied.

And kinda did the did the interview rig of a role, and they were foolish enough to hire me. So and the thing was, you know, I wasn’t sure if I would be there for very long. Not that I necessarily knew what else I wanted to do. I, you know, I had ideas that maybe I’d go on again, going on, IV or or read equity research or something that.

But what ended up happening is they kept giving me opportunities to try new stuff and move.

Right? You think about it. Like, I think within a year and a half to join in the bank, they let me move to Calgary and join the special loans group, which, again, The idea feeling was that I was moving really early, but they’re like, if he wants it, he can add it. So he helped me go to special loans for two and a half years.

And then, you know, we wanted to try Toronto. So they let us go to Toronto, and I joined the AB Oak Group for a year. Didn’t really love that all that much. And then went back to Vancouver and enjoyed the National Accounts Group, which is like our the corporate syndicated financing stuff. Yep. And then we finally made our final move out here to Calgary twenty sixteen. I I joined national accounts.

At Calvary here as well. They pay for all of those moves, like, all in all, they were super supportive, and they let me have a bunch of different careers with one employer. So — Right. — kept it kept me entertained.

And and you have thoughts I know on the value of mobility in your career? Did you wanna did you wanna share those with our listeners? Well, biased honestly because I’m a byproduct of Ring, but, you know, it was a big deal. It was a big deal at the bank for sure.

Especially as an associate because they wanna be able to put individuals in marketing, like, less sexy markets like Grand Prairie or somewhere in in Sustain. Somewhere smaller. Yeah. Exactly.

And it can be hard to get people to buy into those. Especially, like, at the time I joined, there were a ton of associates. So I was I was mobile until the road wasn’t really mobile. I said, yeah, mobile. And then a couple months in, you’re like, I was like, yeah, I’m mobile for calorie truck.

Yeah. Which everybody’s been well for Tallard and Strong. But we have your no trade clause to go to big smoke. Right?

But But the advantage of moving was that I would not have been able to work in places like the special loans group or the ABL group beforehand. And I might never have had the chance to go to the national accounts group without that experience. Either. So I I think the mobility is beneficial, especially before kids. Right?

Before putting having kids and putting debt roots, the mobility thing gives you an opportunity to see more in a shorter period of time.

It’s not necessary, but it’s super helpful.

Kyle, in your view, what’s the biggest myth out there about commercial lending? If people know about it at all. It’s probably that I assume I assume we’re talking about working in commercial lending. Yeah.

Yeah. I think a myth out there is that you’re just going to be slinging deals and working with CFOs and CEOs all day long. And I’m not saying that doesn’t exist, but especially when you’re earning your stripes early on, there’s gonna be a ton of men learning systems and processes Commercial banking is super policy heavy, especially in mid market. Like, the smaller the facility, the more policy focused it is, like in in corporate corporate credit.

There are really much in the way of policies When I say policies, I mean, like, leverage policies or covenant requirements for a different product type. Most of that stuff is pretty aligned. But, yeah. So the admin, I think, can be kinda soul crushing, but as you, you know, when you’re moving in the b d silent rule, you kinda get away from that a little bit, which is why A lot of people like those jobs.

Yeah. Well, you spoke about a lot of the roles that you had. You had a lot of roles. You moved around.

You learned a lot. You went up through national accounts.

Or national, you know, national accounts. I think it was called. But then you went on to actually become a people manager, senior manager, and we we led a team of bankers. And I have to imagine that That’s not an easy mindset shift, right, to go from being an individual contributor and probably a very good one to becoming a leader. Can you tell us? A bit about some of the things you enjoyed and some of the things that you found challenging about that transition.

It’s such a common dilemma. Right? The individual bit contributor. What made you successful in the individual contributor role? What necessarily make you successful?

In the manager role. Right? And it’s an issue of delegation.

It takes a while to figure out. And I I often think about I remember I’m not really a hockey guy, but I remember, talk of Wayne Gretzky as a coach where problem how frustrating It was for him because nobody could play, his well hole. And you’re like, well, of course, it can’t. You know, the greatest player that’s ever lived. And I’m not comparing myself to Gretzky, but it’s an extreme example to make a point that it can take take nine to learn how to delegate effectively and be okay with the other individuals’ level of work. So as an example, like, and everybody wants to rise and grind for twelve hours a day.

And you need to be okay with that, especially in a tight labor market where you just you take what you get. Sort of thing. Right?

And so that was really, really challenging. I feel like it got better of year two, but I’m probably the wrong guy to ask about that. What I found particularly hard is you have a lot of copper battery as an individual contributor?

Yeah. But as you get further up, it’s kind of it’s interesting.

I’m kind of I’m kind of with solo Grain, you know, so I can make I could move with this, but I found it interesting how isolating it can be once you move into managerial worlds because even though Some people pull it off, but even though you’re part of the team still, you’re kinda not. You know what I mean? Because you’re a manager sent. And you at the end of the day, you have the influence to impact somebody’s compensation and the rating.

And so the management thing is so weird compared to being a contributor. And I so I’d I don’t know that I it was necessarily my favorite aspect. Like, I never I didn’t care about being a manager. You know what I mean?

Like, they’re ultimately I I saw value in the skill set of words, like, heading up a team. But I’m not power hungry. So I wasn’t really getting a time out of it beyond the the experience. Yeah.

So don’t know that. Like, I don’t know that I miss. Not being a people manager if if that makes any sense. No.

That’s that’s fair. I think a lot of folks that are junior in their career presume that, you know, a linear growth professionally will include some time as a as a people manager. And your your Wayne Gretzky analogy really resonates. They always say that the best players sometimes make the worst coaches.

Like, you hear that all the time and It can be a big it can be a big mind mindset shift. So that’s interesting to hear you say that. Did you want to share anything about what prop did you leave TD? Because you were most recently a people manager and go to Ashdown.

Yeah. That’s fine. That’s to be a debbie scanner, but we I I thought I was on and off about trying something different, not that I necessarily knew what else to try.

But, you know, you’d get promoted or a change would happen and you’d kinda get over it and you’d kinda move on. Right? And the challenge I had was I didn’t have a lot of bandwidth at the end of the day to think about what else I would do. And so I I kinda felt like the only way I was gonna be able to Actually, think about what else I would do differently, listen to to just leave and take some time.

And so I got I got sick. Right? We talked about this. I got sick. About a year and a half ago.

I was in the hospital for a while. I saw a shortcut diagnosed dentist, which is not a fatal thing, but Pretty scary at the time given circumstances.

And it was just honestly it was just a push I needed because didn’t wanna be, you know, I don’t know, a wheelchair, let’s say, when you’re fifty. Again, they they can manage this stuff pretty well, but I didn’t wanna He had a wheelchair wearing fifty, thinking about all things that I was too afraid to try. And so — Yeah. — I talked to my wife, and she was like, alright, go do your thing.

So here we are.

Would you do anything differently?

No. I don’t think I would, to be honest with you. I did not appreciate how how challenging it would be without having a big big bear behind me, but that I would do anything differently other than maybe advocate for us to spend more money at market.

Yeah. Fair enough.

It’s a lot easier to sell stuff when you spend a lot of money on marketing, isn’t it? Yeah. It doesn’t hurt.

I know you’ve come prepared with some sort of important general career advice. Some of it’s more specific to commercial or financial services, but we would really appreciate kinda your wisdom and expertise in this area. Do you wanna do you wanna share those with us? I think you had alluded to we talked about the value of mobility, but you wanted to talk a little bit you know, patience enroll, quick nose, and the idea of developing a personal brand, maybe take some time. Sure.

Let’s talk about the quick note thing. So this is banker specific. Right?

Customer’s biggest complaint is that, you know, they’re working with a banker on a request weeks, weeks and weeks go by. Customers of the banks. Bakers are like, yeah, maybe we can do this. Give me give me some more time. Give me some more time. You know, and let’s see.

Takes eight weeks to find out that, no, we can’t help you. And it’s super frustrating for the business.

Because it took them eight weeks to realize they need to have an alternative plan in place. And so I think the best thing that an account manager or an error, a relationship manager can do is when those new requests come in, like just Figure out a process or methodology or whatever such that you can lock in a deal really quickly.

And just say, no. I don’t think this is for us. Perfect rub, you’d have somewhere else to send them in India such that Now you can say, hey, you should have talked to these folks instead. They might be able to help go.

But quick no. That’s that was what I would always advocate to to my team. Easier said than done, but it ultimately assist a function of prioritization because the slow note usually had more to do with the fact that an account manager has so much going on. Like, some of them have, like, seventy borrowers.

Plus all the admin that comes with that. So you just have to you just have to recognize the new customer requests, like their They’re number one. And in terms of patience and role, I was super impatient. I barely wanted to The moment I got for six months or even a year, I was thinking about the next day.

And when you’re younger, I mean, it’s just a pervasive issue. It doesn’t endear yourself to the management team when you ask to move that early. And at the same time too, like, recognize the, like, your career is a marathon. It doesn’t feel like it when you’re young, but I assure you.

Like, You’re gonna be doing this stuff for a long time and, you know, a year, a year here or a year there. It’s not gonna make it different. And so I see a lot of value in staying at a role logger so that you can perfect the skills need it in that role. I think longer term, you’re gonna be better soon.

You’re gonna be better off. But, I mean, that’s I don’t know if Let’s feedback that I don’t know if I would have listened to when I was younger. Do you know what I mean? I just I feel like that’s just you just kinda have to kinda crop and learn that yourself.

That’s why we have these conversations. Right? And I mean, it’s great to hear from someone that’s been doing this for a long time. If you’re a couple years enroll and starting to feel the itch, you know, like, I wanna do something different, I wanna try something different, it’s good to hear that, you know, the marathon analogy is a good one.

Right? I mean, it’s a little bit like investing. It feels volatile and it’s easy to get impatient, but you know, if you just look at the S and P five hundred balance once a year and you chart it, you know, just going up. It’s a long it’s a long time and you can play the long game.

You also want to talk a little bit about personal brand.

Yeah. So what I find I didn’t think about this all that much in the bank. Yes. With you.

Well, you leverage the the big brand when you’re at the bank. Right? It’s kind of a habit. It’s kind of a default.

Right? It’s true. And you don’t really think about personal brand. I don’t even know if the Bags want.

Did I have a personal brand? I don’t I don’t know if you’re thinking about it much, but it wasn’t it wasn’t until I left. That I that I started thinking about it more. And even if you you work, you you work for a bank through entire career, the value I see in having a personal brand is You can move from one bank to another throughout your career.

And if you have a personal brand that appeals to people, they’re gonna wanna do business with you no matter where you’re at. If your success is entirely predicated upon, RBC’s brand, and then you leave RBC. That’s that’s not. Great for you.

Right? So, I know, I don’t necessarily have a massive personal brand. I mean, I’m working on building something, but I see a lot of sense in it personally. So But again, and this is just me talking out loud, really.

Well, in the earlier you start, the easier it is to do. Right? Yeah. It’s so true.

It really is true.

I’ve listened to your podcast, Finfluencer, and I really like it. You’ve had some really great guests on there. Can you tell us a bit about the show And kinda what prompted you to start your own podcast? It’s not and I ask because it’s not traditional for someone in financial services to to jump into the, you know, media game. Exactly.

So part of the part of the motivation was we talked we’ve talked a lot about brand. Brand. So how do you create a brand?

Personal brand in a as efficiently as possible. And I think, you know, video conflict, a lot of stuff. I think that’s, honestly, like, is talk to a marketing company? There’s no more efficient way to to attract eyeballs than that.

It’s keeping you with me. Obviously. But so how it started was I would have coffees with, let’s say, a wet. Let’s say a factoring company.

Right? And I’d be like, okay. Well, how does this work? What kind of companies do you work with?

Mechanically, like, walking me through it. What’s the difference? Between, notification and notification factoring. Like, wait.

This helped me understand how this product works. Like, all the questions that a customer, presumably, a potential customer would ask, right, prior to using them. Yeah. But the problem was, you know, that conversation in a one on one coffee, it’s a private conversation. So it it ends up remaining private. So I said, what if what if we did it on our podcast and democratize that information so that the company the the company doesn’t have to answer those questions.

It’s much in that initial meeting. The customers are it comes to them informed, and Company gets some free marketing.

Like that that seems like a pretty good setup, but at the same time indirectly too, like I I build some sort of personal brand awareness as well. Other than influencer, what are some other resources that you’re into that maybe our audience should check out, like, thought leaders or books or podcast series. Anything like that?

Hey.

Kids’s kind of constrained when I watch a lot of baby shirk these days. But I do listen on audible. I do listen to Ryan holiday holiday holiday holiday. And not to get not to get weird, but he’s a he’s a he’s like a stoic philosopher or historian.

And, you know, I I like to listen to that stuff to help manage my sort of internal monologue anxiety, whatever you call it. So it’s fine. I find his books kinda compelling, but otherwise seeing podcasts. They usually escape, you know, and for some, like, tornado behind and stuff like that. So I’m not constantly just trying to pick up knowledge everywhere I go.

Yeah. We I I almost hear fifty fifty when I ask people that question. Some folks have a a litany of business books and authors and and other folks say can’t wait to start into something fiction and just not think about work. So, yeah, to each their own, where can people go to learn more about about you or about Ashdown?

So I am on LinkedIn. It’s probably the best place for me personally, but I mean, I’m also I’m on LinkedIn. I want YouTube. I want TikTok.

I just I kind of post on TikTok. I don’t really hang out there. Put the podcast clips up there. And then for Ashdown, Ashdown Capital dot c a.

Ashdown Capital One work.

K. And listen, you’ve been really generous with your time and your wisdom. I I appreciate it, and I wanna thank you. One final question. What can I do to help you? Get the word out, man, especially for me and Ashdown here at Calgary. So anything anything you can you can do with this podcast would be amazing.

Any contacts in Western Canada, make sure you add Kyle Crepinhoeffer on LinkedIn and connect for a coffee. Kyle, thank you so much for your time. Honestly, this was really insightful. And on behalf of our listeners, till next time.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance, and banking professionals. If you enjoyed what you heard in this episode, make sure to follow net learnings wherever listen to your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next time.

Check out Kyle’s chat with Bill Vlaad, CEO and Managing Partner of Vlaad & Company, Bay Street’s premier independent executive financial recruitment firm.

In this episode:

-Three characteristics that the most successful financial services professionals share in common.

-Less heralded (but still awesome) career paths in finance.

-Job searching with a rifle vs. a shotgun.

-Campus recruiting and Bill’s path to IBD (which started in a pulp and paper mill!)

-Why a lack of expertise is often misinterpreted as a lack of passion.

-Expert deployment of the metaphor as a literary device.

This episode is absolutely packed with industry insights and professional wisdom for anyone who wants to reflect seriously on their career.

I think the next generation is gonna need to focus more on it being a people business because the ones paying our salaries our clients. And they want services that are best for them, solutions that work for them. And with ESG, with climate issues, with the state of things outside of finance, we’re looking for solutions that don’t just have a present value. The highest number wins we’re putting in elements to our products that are sometimes difficult to model out. And because of that, it it is becoming more and more of a people business.

This is Net Learning.

The podcast that keeps finance a big professionals ahead of the curve. In each episode, we focus on career growth and practical advice. While mixing in the occasional war story, join us we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Peterty. Today’s guest is Bill Vlad, founder and CEO of Vlad and Company, Canada’s premier independent executive financial recruitment firm. Bill, Welcome to Net Learning, and thank you for joining me.

I’ve really been looking forward to this, Kyle. Well, the pleasure is all ours. Now you’re a self described, reformed investment banker, And according to the company website, you’ve also, quote, served time in corporate development and being fired twice. So we have lots to unpack today.

But before we get into any of that, tell us about Vlad and Company.

The high level, we are an executive search firm focused in finance. Canadian focused.

And it’s been around for sixteen years. We have a couple of offices across Canada, and it’s been a real pleasure to serve this market. We’ve seen ups and downs, lots of turbulent times in the last sixteen years, but it’s an industry that is really dynamic.

It’s in all the newspapers all the time, so you feel like you’re making a meaningful impact. Mhmm. And putting people into those careers and high grading their their career trajectory.

It’s a very empowering position. I’m I’m really fortunate to be on the the path that we’ve been on for the last many years with the team that we’ve assembled.

Your newsletter, Bill’s Buzz, is the hottest weekly drop on Bay Street. And I I I think everyone I know in financial services subscribes to it. For any of our listeners that don’t, by the way, I highly recommend you check it out. I’ll leave a link. What is the story behind the newsletter, Bill Spouse?

I call it my ketchup. It wasn’t designed or invented for the purposes of spreading information, it it turned out to it was because of I was born on a Friday, and there were some moves that came out on the street in a over the last few days. And I said, I’m gonna put those together and send it out to the people that I know.

They liked it. Kinda, they told two friends, and they told two friends. And it became a regular publication that I put together, but it wasn’t structured, it had a, you know, as the information came out on the street, I would put it out on Tuesday at three, a Monday at five, And a couple of things happened. One is we had a, like, a a mentor of mine who called it and said, you know, I like this material, but it’s getting a bit spammy.

So why don’t you send it out on a regular basis? And you know a good time when the market closes? Give it as like a signal to the street that it’s time to go home. And we have a lot of people who read build spas and they say, if they’re still at their desk when they get it, they know they’ve been slammed for the day.

And the other thing was the name was Bill’s buzz is kind of a water cooler talk. What’s the buzz out there? What’s happening, Bill? And it’s become a brand that has also added the value of weekly allowing us to have a a cold or sorry, warm reach out to the candidate.

Base out there to the to all of our readers. So when we have to call them for a mandate, because we are executive search, even if we haven’t reached out to them, They know who we are. We’ve been communicating to them in some way for sixteen years. So it’s a very, very, fortunate Happenstance.

It wasn’t the main reason for sending the product out, and it’s turned out to be a real win for the company. A real accidental success. No. We love those.

And that was an interesting segue, actually, talking a bit about the business. For our listeners, and I include myself in this group, a lot of folks don’t really know the recruiting business or the executive search business. Can you sort of walk us through how it works?

Yeah. It is one of those businesses that everybody has heard of them. But not really sure exactly how they work. So every industry has a recruitment element to it. Recruitment firms or agencies sometimes they’re called or our third party service providers that act as catalysts to increase the connectivity between those that are possibly looking for work or that are capable to do a particular role and those searching for it. So think of it like a and this is a really bad but I’ve said before, like a butcher.

You I’m the butcher, stand behind the counter.

And why do you come to Vladimir Company for its candidates? Do I know where the me came from? Do I source better organic products? Do I have a much more diverse offering when you come in?

Are my prices better? And at the end of the day, it is a bit of a a commodity in the sense that we are trying to line up a need from a from a client. That is trying to add people for some problem that they have. Somebody’s left.

They need to grow. They’ve got a management issue.

And I have to find someone who matches the criteria that they’re looking for. So needle in a haystack, if you will. Our job is to get rid of as much hay as we can and find the the needles.

That’s a great analogy. Essentially recruiting in a nutshell. And as I said, every industry has it within finance where we focus, the specialization is understanding the technical knowledge, understanding the deal flow that they’ve worked on, some of the personalities of management, where the career trajectories are going. So that’s the specialization that is necessary within finance. But, you know, you could say the same thing in the film business or marketing or or sales or pharmaceuticals, they all have their own little niche.

No. That’s good. What what keeps people like you in the Financial Services recruiting business up at night.

Other than my four children, that’ll do it. The you’re always beholden to the whims of the market very much so in financial services and that, you know, you you do have a bad day in the market. You have a good day in the market. The government comes in and levels new regulations on on products that today don’t or tomorrow may not exist.

Mergers, clients disappear.

Right. But I I think really what keeps us up is We’re dealing with very high level performers type a characters that expect a lot.

And so the crossing of the ts and the dotting of the highs in this business is essential.

They expect that are their clients expect that of them, and therefore, they expect that of us. So when we’re dealing with trying to present a series of candidates to the client. Do we know the second derivative of who this personality is and how they would fit into the culture of this new firm. And you’re always wondering if I miss something, is there someone else I should be contacting, is there somewhere else I should be looking?

But with time and experience, you you get comfortable with recognizing you can’t boil the ocean, and recognizing that makes me sleep a little bit better, I guess.

Your team has a terrific reputation in the financial services world. Maybe give us, like, the thirty second elevator pitch why they should choose to work with you. And and maybe we can take it from two angles. So the first is for companies or, I guess, your clients, and then the second is for candidates or individuals. Like, why and how should individual finance and banking professionals engage with you or your firm?

There there great question. It’s a it’s a tough thing to answer because every client has a different need. We in one of our presentations, we actually open with what is your problem? What is your not what’s your problem?

What what problem are you trying to solve for? Right. And based on that, our solution will be designed. But generally speaking, I think that one of the strengths that we have is we know this space very, very well.

If you were trying to hire a CEO of a telecom company or a chief operating officer of a ball bearing company. We’re not the firm for that, but when it comes to Finance in Canada, there is very few corners, pockets, hallways that we haven’t walked down the we haven’t mapped out that we haven’t really taken the time to get to know and also provide commentary on. I think it’s not just about knowing who the bodies are, but being an advisor to the space and giving the context for What is happening? Why is this candidate within the universe and the context that we’re in currently?

Why are they best suited? So things like our fall call the bills buzz newsletter, our compensation surveys, things like that add the value to recruiting beyond just finding a body. And I think another thing is we work from new graduates all the way to the c suite of the firm, and we think that’s really important because when our clients ask us what’s happening out there? They ask us that because they wanna know across the spectrum what is happening out there, not just what’s happening out there in the executive boardroom or at the management level, but what are the vice presidents thinking?

Well, how are the Anderson associates negotiating their summer internships and what’s happening with new hiring of out in Vancouver or what are you so you have to have that cross the spectrum exposure, and and that’s what we’ve always built our firm around. You know, you have a really interesting cross section, a very large cross section of of financial services. So super interesting.

Love to talk a bit about your career experiences, particularly your time in financial services, and maybe some lessons learned there before we get into kinda how that led to the recruiting business. So if I understand correctly, you started your career with BMO Capital Markets. Maybe we can start there. How and why did you get into capital markets originally.

I actually started at CIBC with Gundy, first out of school. Well, that’s a that’s a really interesting story. And it and a story speaks to where the market was then versus where they are now. Anyone who’s worked with me know that knows that I wasn’t the world’s best investment banker, which is why I’m doing I do now, if I was a great investment banker, I would still be doing that.

I love the industry, but the industry requires a a discipline and a cadence that it didn’t suit Bill Vlad, but I really liked being in the atmosphere. So the story goes, and it is, at least for me, interesting, coming out of school or actually I wasn’t even coming out of school. I was still in school. For those that are listening to the podcast and then are still in school, you know recruiting happens day zero.

You’re they’re coming into campus. And at that time, I had worked in a sphere that nothing to do with finance. I was in international development over in Africa. Came to my MBA at, Western Ivy.

And was expected to put on a suit, which I I didn’t even own, and go in front of companies that were asking questions about depreciation and an amortization and how to balance a balance sheet and how to, you know, the the the DCF modeling and all these technical questions. And I didn’t know, you know, top from bottom, but what I did know was a I I grew up in a pulp and paper family in a small town that I was in and out of the Palm Paper Mill as a summer student in many different capacities.

And at the time, they were looking for somebody who knew something about how pulp and paper was made. And my interview essentially consisted of what do you know about a batch digester versus a continuous digester? And what’s the difference between long and short fire fire poll? And I can answer those questions, and and the person who hired me had the courage to say, that kind of knowledge, we can’t You can’t train that.

Train. Go you’re in the program right now, focus, and we’ll see you in a couple months. Now that spoke to an environment where it was very much a candidate driven model at the time. They they had a a tough time finding people who fit within different groups, understanding the the full technical spectrum.

So they could hire a little bit more credulously.

Today, it’s not that environment. And what we’ve seen happen over the last sixteen years is much more fine tuning. I call it the Starbucks modeling of of recruitment is you’re looking for the extra hot non fat latte with sprinkles on top, like, very, very specific. And the generalities getting somebody because they’re a good thinker or a proven talent in in something has a risk component that doesn’t often get past the hiring recruiter.

It’s just a little too risky in this market to to hire based on passion. And so it speaks to how the market has evolved over the last thirty years. You know, a little while for the last few years. Mhmm.

And so was cap was BMO Capital Markets the next stop there? CIBC, into BMO Capital Markets in Forest Products. There was a period in there where there was some transition. I went into the debt Capital Market team, very interesting transition from investment banking down to a product group.

That didn’t resonate well with me. That’s when I got laid off. It was a great decision by the firm. I think it was probably, two years of additional credit that they gave me sticking around.

They probably should have pulled the shoe before, but they had some they they really did show a faith in me to develop into a more mature investment banker.

It was a time and a place that didn’t resonate for. I guess, as I said, my cadence, and the cadence aspect is something I’ll come back to again because that’s one of the things that we look for in professionals is technically, you may be strong, culturally, you may work with the firm, but does the product that you’re servicing?

Does it work for your cadence I have four sons, and each one of them beats to a different drum. And when I am helping them guide through their career, I asked them, is this type of role that you’re looking at? Does it beat to the same rhythm that you’re looking for? And it takes a lot to be to to look inwardly and say, that’s not right for me.

And and especially with young professionals who are the the the energy in the excitement of getting a job. Sometimes they they don’t wanna see what’s in front of them as being an obstacle or as not fitting. It will it’s more of let’s get in and deal with that later. But real career success, I think, has a lot to do with finding a place where your rhythm works And for me, the rhythm wasn’t working in investment banking.

I ended up going into corporate finance. Oh, sorry. Sorry. Corporate Development at George Weston. Great.

Career opportunities. Corporate Development is a is a wonderful opportunity to see the inner workings of a company. Yeah. And especially one like that where it’s very family oriented.

It started and has a long history. From there, when I started, and and that particular role, the share price was x And then eighteen months later, it was half x. And there was a large restructuring that went on as a result, as part of that. And it was the first time where I found myself flat footed and not really sure what the next step was.

And I went to go see a recruiter. I went to go see somebody like myself, and they I was very honest with them. And that’s another thing I would tell people is I can only be as helpful as the information you share. And if you tell me that you can slam dunkus a basketball, and you can’t.

When you’re hired, slime dunk a basketball, and you can’t.

That’s on you. So you need to be honest with the recruiter as to what your capabilities are, what it is you really wanna do. I was very honest with this recruiter. And he looked me in the eye and said, have you ever thought about this career?

And I hadn’t. I spent some time reflecting on it, talking to a lot of mentors, and you know, fast forward a a few months. I found myself in the space and very thankful that I did because it was it answered a lot of the the wants and needs and desires that I had at the time that I wasn’t really aware of several years earlier as I was grinding it out in investment banking. Right? And and much better aligned to your cadence, as you were saying. Yeah.

You you meet and interact with, you know, so many people you you must have some funny stories or anecdotes from over the years. Is there anything you’d like to share with our listeners?

The funny stories are probably fewer than you might think. The scary stories are more the ones that resonate. Scary is good. Well, this is, like, scary. Scary is, you know, there are people out there that just don’t have the self awareness to And then in this market player, sorry, not this market, but this industry, there are a lot of very strong performers who can’t look themselves in the eye to admit to a falter, a, you know, a a deficiency.

And sometimes that perpetuates or culminates into real problems. And so Some of the scary stories that we have are, you know, the candidates who are notorious liars. They’re they they actually a problem with telling the truth. And in good recruitment, you ask enough questions like a a police investigation that you can usually triangulate answers and find where there might be cock which is lying in the corners.

So those are the stories that tend to resonate around here, around our firm because it’s how do we do the business better? Funny stories, you know, you get people who come in and they’ve, you know, they’ve got a huge ketchup stain on their tie and they’re they’re super embarrassed and sweaty because they just were down on the food court and spilt their lunch on their tie. You know, that’s those are just fun little humorous anecdotes, but the ones that really resonate in terms of improving a business come down to making sure that we do our job really, really well.

Other funny stories that we have, there there’s more than one dog named Lassie in Capital Markets and Investment Banking. And There are a couple of, you know, John Smith’s, and we had a scenario where we were interviewing a, let’s call it a John Smith.

And we had interviewed the John Smith on the paper. Had the John Smith, you know, up and down sideways, really good person.

In walks the John Smith for the in person interview, and everything was on the line, misaligned, and we found out that we actually contacted the wrong John Smith for the in person interview. The same thing happened. My one of my first days, as a recruiter, I didn’t have an office. I was working out of Starbucks. And I was meeting a mic.

And I, like, you I’m sure you’ve met people at Starbucks, and you say, I’ll meet you at the front of You, Mike? Yeah. Yeah. I’m Mike.

And I sat down with Mike, and I started interviewing with Mike in five or ten minutes. I’m this isn’t going well, and I realized the mic I was waiting for was still standing at the door and I had a different mic. So, you know, those might be funny to me. Probably not as funny to the listeners, but, you know, there’s We take this job very seriously.

We’re we’re not saving lives, but we recognize that this this is probably next to somebody’s family and maybe religion, in some cases, the most important thing in their lives. And so we try to come in with with an EQ and a and a respect, a an an empathy for what the individual is going for. And so Not a lot of it do we find funny? Because when they’re uncomfortable and and sweaty and, you know, disoriented, That’s not funny.

It’s not funny to them. And so we try to appreciate where they’re coming from and move up and forward. One of the things I used to do, don’t do it anymore, but I used to start a lot of my technical technical interview technical interviews with the question.

Please tell me what are some of the main differences between the binomial pricing model and the black Shoes model.

It’s the first question. And you just see their face just widen.

And I say I’m just kidding. I’m I’m not gonna ask technical questions like that. And just it gets them off their their their concern, their their gate of, you know, it’s just gonna be high intensity. I don’t know where Bill’s coming from in the interview, and I just put them at ease by saying, let’s just relax.

I’m not gonna be asking questions like that. How are you doing? Tell me how you how you are. And when you do that, you’re getting more genuine answers from individuals.

I really wanna know who these people are. I don’t want them to tell me the story that they think I wanna hear because I will place a person that doesn’t exist.

I wanna know who you are essentially as, you know, the essence of who you are that will make me better at doing my job.

I’d love to unpack that a little more and just kinda talk about the recruiting business is, you know, a lot of our listeners and and members of the CFI community are either in banking or finance roles or aspiring to be. And and so I think I think you have so much valuable expertise here. If you don’t mind kind of, peeling back the onion a bit, what kind of trends are you seeing today? And and just for time stamp purposes, we’ll we’ll we’re in q three twenty twenty three. Yeah.

Well, right now, there’s a lot of trepidation.

If it bleeds, it leads as they say in the media. And the media really is latching on to stories of restructuring and layoffs and Pending recession, doom. Demise, doom. And while it’s a a good reality to always keep, an eye on, there’s a lot of real there’s a lot of hopefulness.

This is a market where individuals are restructured in large numbers and e in that to the cadence aspect, there are people who will fit a different cadence much better. And so the Smart money. Maybe it’s not the way right way of putting it, but the courageous hiring manager will say, I wanna find somebody really solid out there and high grade my team, bring in somebody really impactful. And so one of the trends we’re hearing or not just hearing or we’re experiencing it firsthand is quiet hiring.

So, you know, that you may not be on the billboards or the, the job boards or it might not be splashed around in the news that you know, we’re hiring a hundred people in this particular product, but there’s still good hiring going on.

Now how do you position yourself for roles like that? It’s very different. You have to be laser focused. And if there was anything that I would say that is consistent over the last sixteen years of us doing this business is a rifle, a pro to job search is always a more effective one than shotgun.

You’re gonna get exactly what you hit if you’re using the shotgun. Some of it will be in the bull’s eye and some of it will be off the range entirely. And if if that’s what you end up kind of married up to or aligned with is is just happenstance that they it got shot in the process because of your rifle or because of your shotgun rather, then two or three or four years down the road when it doesn’t quite work out like you’d hoped, you don’t really have anyone else to blame about yourself. A rifle approach is always the more effective way of going through a career.

And what that requires is a lot more due diligence. A lot more thoughtfulness, a lot more homework on your part before going into a job search.

And knowing where you want to put your hat, not just taking the first job that comes around and saying, okay, that that’s good enough. This is the next train. I’ll jump on the next train, but having a calculated plan and and actuating that, and it it’ll take more time. Your chances of transacting are is less.

But if you go deeper, then you’re getting a much more, a much more well rounded interview experience you’re gonna present better. You are going to be asking the the types of questions that really get to the heart of whether or not it’s a fit for you and likely have a much more successful career. Now I recognize people have to pay bills, And sometimes you have to take the job that’s in front of you, but I’m speaking to a longer career development strategy and the rifle approach always better. And that’s the environment that we’re in right now.

Okay. Another terrific analogy, are there any particular skills or roles that seem to be in really high demand at the moment. I’m thinking maybe, like, you know, data skills, coding skills, ESG expertise, something something like that. Right.

I would say the one that I have a biggest question in Mark about is the AI. It didn’t exist in March of this year, and look how far it’s progressed. And and therefore, a lot of things about coding and programming. It’s up in the air.

I don’t really know. But let me speak to ESG. That is a hot button. It’s been a hot button for some time, and I think it will continue to The the interesting thing about it is its definition is it it varies quite widely across the street and there has been a increased number of programs that have been offered to give you, you know, ESG quality experience and and education.

How you deploy that and how you employ somebody with that is still a bit of a a new horizon. And so it it’s a hotspot.

But in that, there’s a lot of there are a lot of land mines that you could possibly step on because the the definition isn’t clearly laid out yet. So we have seen, although, a lot of hiring, a lot of mishiring in that particular space, because what has been asked four hasn’t been delivered or what has been promised hasn’t been delivered. And that’s because of this evolving definition of what constitute ESG and and how do you actually determine success in it? What are your your KPIs in that particular space? How long those same lines? The impact investing is very big in the in the street. And again, how do you actually measure success?

In that particular space and how you differentiate yourself from from others when the definition of impact is still relatively nascent.

Other hotspots that are I mean, let’s go back to traditional, our traditional economy. Mining is a space where, you know, it’s it’s coming back around again, and the amount of demand that we have from clients for individuals who have good mining clients and experiences in in mining transactions is heating up once again. It was, you know, nowhere to be found two years ago, and it’s it’s starting to rear its head. The diversification is a constant problem in this in this industry, but I would say that speaks to many different industries.

I think one of the positives or one of the evolutions of recent months. Maybe it’s, you know, recent years or since COVID is the definition of diversity has evolved as well. And that might be to try and release a little bit of pressure from hitting certain targets that have been imposed internally for diversification, but that can be used for good and for evil. So it’s a it’s definitely a hot topic and requires a lot of early nuance and understanding before jumping into a mandate is, you when you say DI, what exactly are you trying to accomplish and how are you going to actuate that change?

I would say those are probably two of the the bigger things that are the trends out there right now. So you just touched on something interesting. Around DEAI when it’s embedded in the mandate. And I guess something I’m curious about is when when you do get a mandate from a company, sort of on average, how market ready do they tend to be when they come to your firm?

I got and I guess what I’m asking is, like, do they usually say, you know, here’s the post, go find us a star Or is it more like, you know, we’re looking to fill x role with somebody that has, you know, y experience and and and z years of — Yeah. — expertise, like, and we want your input. Like, how many blind spots do they typically come to you with? You get a whole wide range.

And it’s interesting because you there are there are clients that are easier to deal with than others, and their level of preparedness is not often a good indicator of how smoothly a search will go. Oh, jeez. Yeah. You would think that the client who has all the teas cross and all the dies eyes audit and, you know, every variable considered would be an easier search to find or to close.

That’s not always the case. I think The most critical element of a successful search is really understanding what the key drivers are for the search. Why? What is what is the problem you’re trying to solve?

And having a client recognize that you can’t high you can’t hire a purple squirrel. It’s analogy. I don’t know why purple squirrel is a big thing in I have heard it before, actually. Yeah. And it it the the unattainable. Right? I want, you know, a right handed pitcher that we’re gonna pay no money to and can hit, you know, fifty six home runs a year.

You you can’t have all of that. What what is really important? And so a good recruiter spends its time in the early days really getting down to What’s the most important thing? Then what is the second most important thing? And any no level of preparedness is going to is going to get you ready for for that. You need to you need to ask those questions as a recruiter, really getting down to the brass tax.

But I I think also when you outsource something as important as hiring a key individual in your team, there is a responsibility for the recruiter to manage expectations. And so sometimes when a client is not prepared at all, that’s fine. As long as you can hold their hand and walk them down the aisle, affect and let them know, you know, down the road, what is going to occur, what is, like, most likely to occur. That’s where most of the value from a search firm is derived.

You you don’t have the luxury in the eleventh hour when candidates are throwing in variables that you know, weren’t considered until the eleventh hour for either strategic reasons or because people’s we’re dealing with human behavior. Right? I mean, they are we are irrational creatures. And so things do take sharp left turns in the middle of the night and preparing a client for those possibilities is really where it comes down to a successful search or not.

So, yeah, it’s not always about how cleanly written the job description is or how prepared the interviewer is when you show up with you know, in your nice new freshly pressed suit, a lot of it comes down to behind the scenes, whether or not the stage manager has the show under control.

In your view, what are the most sort of sought after roles at various stages of a candidate’s career? Like, know, not that many people will even get into investment banking. For example, let alone make MD.

Right. So what are some of kind of the more common career paths that that you tend to see. I know you mentioned corporate development. It was like a really cool place to work.

Yep. Maybe maybe tell us a little bit about some example career paths. See. It’s interesting because in in different jurisdictions, so I’ll answer it two ways.

The first one is that in certain jurisdictions, the products don’t exist let’s say, for instance, leverage finance. It’s a very common product in the US and in London. It doesn’t exist at the same density in Canada as an example.

So you can ask for that kind of job as much as you want in Toronto. They just are not around. So the demand might be there, but the supply is not there. Now so your question is what are some of the more common roles?

I think that it’s it’s like many industries. There is, like, a entrepreneurial, or sorry, a apprenticeship type of pathway. If you follow that apprenticeship ship pathway, your opportunities are greater. So there’s many reasons why we take philosophy or law or business because it’s a nice background to expose ourselves to many different considerations.

If we get into underwater welding, you’re pretty much you know, limited underwater welding as a career. So within the financial, within the markets, investment banking does tend to be a place where people like to at least start their career. You do find that the transition is pretty quick, quicker as the years have gone on, sixteen years ago, it would be unheard of to see, you know, somebody move before two and a half, three years into a private equity role. Now that’s maybe a year and a half.

And, after three years, they might have been in their third job already. The corporate finance roles at and counting firms are really good entry level points as well. You gain a wide spectrum of different products in a short period of time. You you you have to work with your peers in audit and tax and consulting in in in in one project.

So you get you touch a lot of things in a short period of time.

I think that there is a general trend to go from the sell side to the buy side. That tends to be the pathway, a path of most traveled. It’s difficult to go the sorry. Not difficult to go the other direction. It very rarely happens that somebody goes from the buy side back the sell side. They’re usually, there’s something that there’s an there’s an extenuating circumstance of why that’s happened. And there are also pathways that are very to travel unidirectionally.

So as an example, research, right, very technical. It is very independent.

You don’t see very many people go from that space to investment banking. You could go from investment banking into research that happens sometimes Sometimes you can go from research into sales and trading, but you don’t find the reverse happening very often. There’s also a a pedigree. Some rules are just very, very hard to find.

And as a result, they have to pick up the litter. So Right. The asset management, then you can call that with many different definitions. You can call that private equity because you’re essentially managing assets.

Right? You can call that the typical buy side, asset gathering, portfolio management type of asset management, those roles are fewer and farther between. And and because of that, Two things happen. One is people tend tend to stick around in those careers a lot longer.

Maybe they know the asset that they have, they know that the the great chair they’re sitting in. And the second thing that happens is because there isn’t a lot of movement, they don’t hire a lot, they can pick from the the best of the best.

And there are just certain places that we, they they tend to pick from. What we’ve seen during COVID, however, is with a reduction of the the talent pool.

Firms got a lot more hiring managers, got a lot more creative.

In their hiring methodologies. And so they picked from areas that they may not pick from in the past. They may have taken other career trajectories that they hadn’t considered. Maybe the portfolio manager gets somebody who was in operations at a particular company because they saw how they operated in that oil services business, and they they wanted to get that technical skill set into the system. Or they may have picked from a school that they didn’t have the exposure to because now the technologies are such that you can hire from a university that is further away. You didn’t have to go to the campus to hire. So there were actually a lot more barriers to entry, reduced, because of the again, necessity is the mother of invention.

We you need bodies, and so you had to be creative as to where you hired from. But Generally speaking, the creativity has a lot to do with the financial culture of the country, the US because they have a lot more financial products. They can take a few more gambles, a few more risks. In Canada, you don’t have as many products.

And therefore, you don’t have as many people. Therefore, you have to be fairly center of the lane in terms of how you actually hire. And so that’s one of the challenges as a recruiter as creative and as as talented as you may be If you are not a round peg, I may not be able to put you into that round hole. It’s just it’s not, you know, don’t shoot the messenger.

It is because the hiring manager has very definitive requests. And they there is an an element of risk. They’re not willing to digest with hiring outside of those very defined qualifications.

That’s a really interesting segue. We have a lot of young folks kind of in our ecosystem and and probably seen this before. They want investment banking, PE, you know, maybe some of those traditional buy side roles, like, like asset management. Right.

I think a lot of folks don’t understand the full financial services landscape. And given how competitive it is and how hard it is, if you’re not the exact, you know, round peg to fit into the round hole, Can you give us in your view two or three or maybe more kind of roles or functional areas in financial services that you think are underrated? Right? Like, maybe you can’t get that capital markets gig.

Like, what’s another role that’s interesting? Think of different asset classes, like real estate, for instance, there’s a lot of people that just shy away from real estate. It’s great space. You see a lot of and we understand the assets.

We we live in houses, we work in buildings, we get what we’re doing. Some of us have never been to a mine before. I don’t know how they pull these rocks out of the ground. Yeah.

So being able to work in that kind of space, when you when you deal with capital allocation or when you’re dealing with various financial products short term long term equity debt preferred and how they work within a space like real estate, you can obtain a lot more knowledge quicker because you can relate to the asset class that’s something that I think would offer more opportunities. I’m I’m saying real estate, but there’s a lot of other, say a lot of other spaces, and you can ask me for two others, and I’m gonna, I’m gonna blank out the fixed income side is also an area which has always been the sickly second cousin.

For some reason, it’s never been as sexy and has been or sought after, but the exposure that you get to to so many more invest different types of investors, different styles of investors, different durations literally lengths of of investments and and why the purpose of each one of those, you you’re gaining an understanding of not just what happens today, but what could happen twenty or thirty years and how that impacts a firm’s financial capital needs So cap the fixed income side of the business has a lot of and I don’t mean this to be I was gonna say derivative products. I don’t just mean derivative products, but products that spin off of a of the main product line of fixed income.

There are interest rates and and and and other other optionalities that you can get into there’s a depth to that business that tends to get lost in a lot of new people. They just take the investment banking or the equity route and hope for the best. A lot to be learned on that. There’s also a lot on the the asset management project finance side where you’re dealing with maybe a slower cadence Okay.

More thoughtful, larger institutional products.

I’m thinking of the manulife’s of the world and the Fidelities and the CIs. There’s a those are huge companies with a ton of opportunity that often gets missed in the classrooms or when they’re coming to present to the classrooms of the great career opportunities.

For for another reason then, maybe it’s it’s a lesser known. And so that’s where the rightful approach from earlier, comes into play, the Blue Ocean strategy. Why swim where all the sharks are? Why don’t you go somewhere where there aren’t as many sharks?

And you might have a a greater success? Well, I missed a really big component of career opportunity that I think that your listeners could value. And that is I’ve been speaking mostly to the institutional side. There’s a whole retail aspect to the markets that are is huge.

You know, and we know how that works. We all have our money invested in some things some way. So don’t forget about that aspect. There is, you know, the wealth management side of the business.

There is on a trading floor, there is a huge component that is dealing with the institutional, and there is almost equally the same size on the retail side. So for every product on the left. There’s probably a product on the right. Yeah.

No. That’s that’s terrific. Can you talk about career change in general? Like, it’s hard. Right?

I mean, I I can honestly say personally. I’ve never taken a position that I didn’t at least at the time feel like I could see myself for hiring at, and maybe maybe it’s because I’m a little bit old school. But in your experience, like, how and when do people know that it’s time to make a move? That’s a good question.

I mean, do you remember in high school or university at First Love and you had to ask your buddy? I, you know, I just don’t know if it’s if it’s working out. Well, if you have to ask your buddy, if it’s not working out, it’s probably not working out. Right?

And the careers are are not that different. However, I would I would challenge you on this, and that is it’s not often a passion until you’re really good at it. And so people say, well, you know, I just don’t have a passion for this. It’s too early.

It’s too early. You don’t wake up and have a passion for woodworking until you would work for many, many years. You’re just doing the do. You’re just trying to learn how to be good at it.

Once you’re good at it, then you can get passionate. So I would say too many people make career changes too quickly because they are unhappy or antsy because they’re not excellent at it. There’s a lot of this business that is you’re gonna be not excellent at. And where what I would say happens more times then then I I wish to see is people don’t spend the time to to analyze this situation with their own management, with their own hiring, or with their own manager.

And I would say that that is a lost opportunity. If you were back to the relationship, if you were having troubles in the relationship, would you just pack your bags up and leave, or would you sit down and say, listen, I don’t know what’s happening here. I don’t know if this is working out. There are a lot of people who come to us looking for a new opportunity and one of the questions I insisted our team asks.

The candidate is, have you socialize this. Have you talked to your manager about the reasons why you’re here with me today? It might not be, hey, wanna go see Vlad and Company to look at this opportunity, but you’re looking at a new opportunity, which must mean that you’re either unhappy with where you’re at, or it’s not fulfilling whatever considerations you’re looking for for career advancement, but have you talked to your own shop about that The the tension and stress that comes with the change of human equity moving from one shop to the the next should not be under, estimated.

It’s a lot to figure out, you know, who your seatmate is and where the bathroom is. And, you know, what what is the the proper re rapport with your your boss. And that that that creates a lot of distraction in a career. And many of those things can be eliminated just by saying, hey, something’s not working where I’m at currently. I just need to work on that for a little bit and give it a, you know, a really good try as opposed to just saying, alright. I’m gonna turn a page because I’m upset today.

So how do you know if it’s not working? I think the answer lies somewhere deep within you, and I’m fortunately, people often don’t go deep enough. They just take the superficial angina and they don’t go any deeper than that to find out if there’s actually real structural problems.

You and your team interact with I probably tens of thousands of finance and banking professionals a year. Are there any, like, skills or characteristics that the most successful people tend to share or or have in common? Sure. I think a real genuine sense of curiosity, most of the jobs out there require you to do due diligence.

We hear due diligence. Right? Well, due diligence is digging and digging and digging and digging and really making sure that you’re not just getting the answer you want. But the answer you need.

And that is, you know, comes down to cadence. Some jobs are are easy, and the answer comes quick. And others, you have to you spend a lifetime digging through. That’s one of them.

Empathy, you know, you’re dealing with other people’s money off very often. And you think, well, capital markets and financial services and and the market, you know, making money, that’s that’s the least humane business that empathy goes a long way in this space. And more so as banks and and the and financial service providers are are trying to differentiate themselves. Empathy is playing a bigger role, you know, because you have to ask yourself, my client, what does my client want?

What is the most important thing for them?

And I’m going to solve the problem I’m looking for based on what is best for them. And that takes a sense of empathy that goes beyond just what your own personal object atives are. And we forget that sometimes. We come in and say it’s, you know, how do I make the most amount of money? Well, the first question you should ask is, what’s the right thing for my client that will then make us all the most amount of money.

So and and and another thing that I I think is really important, especially for young people, his sense of humility, it is not a career where you are going to have everything turn out the way you want it to. It’s a very dynamic industry that’s been evolving for hundreds of years, and it will continue to evolve. And the solutions today are not the solutions that are gonna work tomorrow. And that means you’re gonna you’re gonna make mistakes.

And so you have to be respectful of the fact that this is a career development. You are trying to build your toolbox. You don’t just show up on day one with all the answers. Right.

And unfortunately, that’s lost in a lot of people, and they try to blame their tools when things don’t work out. But really, if you spend a moment or two and think about it a little deeper, It it might be because you don’t have the humility to recognize the solution starts with with you.

So, so curiosity, empathy, and humility.

Three very I don’t know if you were expecting those answers. You know, we can talk about technical toolboxes and we can talk about showing up early to to meetings and always want you to do more in rolling up your sleeve. And and those are important, but You know, I think the for me, it’s always been, do you play well in the sandbox and those three variables that I just discussed kinda will take you through, not just this career, but I think many different types of careers. Yeah. But in this industry, there’s a lot of people who veer out of the industry. They start here one of your earlier questions, and they veer out. So having working on those particular skills will mean that you will be as effective as you can be in this industry, but if you recognize the cadence not right for you, you don’t have to start over when you go somewhere else because you’ve already built those really critical elements of humility, empathy, and curiosity.

No. I I don’t know what I was expecting, but those are really, really hit answers. And I think to your point, they’ll they’ll carry you forward whether you’re playing in this sandbox or having to learn a new one, those are sort of three cornerstones of being able to be adaptable as well.

Is finance a numbers business or a people business? Mhmm.

It’s becoming well, becoming It’s hundreds of years old, but I think the next generation is gonna need to focus more on it being a people business because the ones paying our salaries are the are the are our clients, and they want services that are are best for them, solutions that work for them. And with ESG, with climate issues, with with the state of things outside of finance, we’re looking for solutions that don’t just have a present value, you know, the the the highest number wins. We’re we’re putting in elements to our products that are are are sometimes difficult to model out.

And because of that, it it is becoming more and more of a people business. Again, I think that’s one of the another reason why those three variables of success, the curiosity humility and empathy that I discussed will play a bigger role because you’re trying to solve for problems that you can’t just put into excel and expect the the right answer. It requires depth of character and and and knowledge of your client that that probably has never penetrated the street as much as it has as it as it does today.

Great answer. Thanks. If any general career advice do you have for our listeners? Sort of one or two key takeaways.

Trying to solve the career question for hundreds and hundreds of listeners in one simple.

Be true to yourself. This sounds all very esoteric and kind of, you know, hippy dippy, but what I see happen more times than I’d like is People setting themselves up for disappointment by not being true to themselves, what is really important to them. It takes a lot of courage, to say that’s not gonna work for me. That’s not the right thing for me.

And I, again, early, as I said earlier, I know bills have to get paid, but You know what’s really painful is getting fired. It creates a definite part of your professional DNA is taken away from you and I’ll tell you the present value of that loss is a big negative. So if you spend some time at the beginning and really be true to yourself, about what it is that you want. I think you’ll save yourself in the long term a lot of heartache.

There’s a lot of people who are mean, the school system perpetuates this. Right? You you there’s more larger and larger numbers, the number of CFA and MBA and LOBs and and the accreditations that we get are just at record high levels.

And we assume that that’s what it takes to be successful. Just keep hammering on all of these letters after our name. But at the end of the day, it comes down to who am I and what is it that I really want to accomplish? Now I’ll tell you being sort of the, hey, I’m gonna put it out in the universe and the universe will answer to me, doesn’t work in finance.

Okay? You do have to work for what you want. But if you’re blind and just kind of putting your head down and running into the, running out into the, to the markets hoping that something is going to, you whatever the first thing that you run across is going to be the right thing. You’re gonna set yourself up for disappointment.

So spend the time to really figure out what you want and and and do that analysis frequently what you wanted at twenty three is not the same thing you wanted after you when you’re thirty three or forty three. So spend the time to do it almost like a career coach. I’m not a career coach. There are some good ones out there.

But, you know, you would spend a couple of hundred dollars every six months working on your car and making sure that it runs well. Why don’t you spend some time on your career, spend a few dollars on it with a career coach to make sure that you it’s also fine tuned and that you’re getting what you most want out of your professional engine.

We’re coming up on time here. I I wanna be respectful of your time, but Before we go, what can I or maybe members of our audience do to help you?

We love information. I mean, that’s what we we thrive on. We can’t do our job unless we know what’s going on out there. And, you know, we have our bills, buzz, where there’s moves, and people just assume we know what’s going on.

We love to hear what’s happening. We’re not gossip mongers. We just we want to understand what is moving the market. You know, we’re not looking for tattletales.

We’re not looking to find, you know, the cockroaches in the industry of what’s not working necessarily. But, you know, so it’s a it’s a it goes both ways. We we share as much as we can, but we love to hear. We love to know what’s going on out there.

There are opportunities that are popping up all the time in the market. And if anybody has a need to hire, I mean, that isn’t an easy thing, but also You know, we’re there for your your your listeners that if they need to know more, they can reach out to us as well. We have things like the fall call and and bills buzz to try and solve a lot of those solutions or or give a lot of that information away to a large group of people, but it goes both ways. We we will If we receive, we shall give as well.

Okay.

And we we plugged Bill’s buzz, but where can people go to connect with you or or your firm?

V l a a d c o, so vladco dot com. That will also tell you when these various products are coming out, like fall call. That that’s probably the best place. It also we we post all of the current opportunities that we’re working on on our opportunities page.

And there’s an opportunity there. There’s a a place where you can send in your information. It doesn’t necessarily mean you’re applying for a role, but so that we know you’re alive. Yep.

And it keeps us in this, you know, it keeps you in the flow of what’s going on in the market. Bill, this has really been terrific. I wanna thank you so much on behalf of our listeners for for your time and your wisdom today. Well, the pleasure’s really been all mine.

I’ve really enjoyed this conversation. I hope it’s been helpful to your team. And if you wanna follow this up, you you you nail this as q three. You wanna do this again in the future.

I we have more than happy to do it with you. Love it. I can’t wait. We will definitely be reaching out.

Take care. Thank you.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning wherever you listen to your favorite podcast. Or visit us online at corporate finance dot com slash podcast. See you next time.

Join our conversation with Devon Thompson, Managing Director at RBCx.

In this episode:

-A day in the life of a tech banker

-Trends in FinTech and financial services

-Why banks are measured against Apple and Google (not other banks?)

-Venture debt vs. SaaS lending

-Characteristics of a successful banker

-Leadership, mentorship, and sponsorship

Devon also gives us a career retrospective—and with more than 20 years of financial services experience, this episode is packed full of professional wisdom and career advice.

I love the collaboration between larger financial institutions and fintechs. I think it keeps an open dialogue. I think it keeps disruption at the forefront of the conversation. I think ultimately, I’m in financial services and I’m in this role with RBCX.

You know, to support the conversation for all Canadians. Like, I want all Canadians to have amazing options for their banking and and for what that banking provides beyond.

And the way we do that is through healthy competition and disruption and So I I do think that fintechs play a really important role in making sure that we have that healthy dialogue and that kind of push Yeah. The push for innovation.

This is Metler.

The podcast that keeps finance and baking professionals ahead of the curve. In each episode, we focus on career growth and practical advice, while mixing in the Asian War Story. Join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and advances.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Peterson. Our guest today is Devin Thompson, managing director at RBCx.

Devin is an accomplished banking leader with over twenty one years in financial services across a variety of roles, including commercial lending, risk management, and technology banking. She’s been recognized as an influential woman in finance by BC business here in Western Canada, And when she’s not working or spending time with her family, she’s giving back to the community through coaching and other mentorship initiatives.

And I would be remiss not to acknowledge that Devin was also a mentor of mine during my time with RBC. And for that, I remain grateful. Devon. It’s so nice to have you. Thank you for taking some time. Thanks Kyle. Really appreciate the invite looking forward to the conversation.

Very many people know RBC. They’re a massive global financial services player. I’m not sure that all that many people outside of the tech community know RBCX.

What is it? Sure. So we exist to support the tech and innovation ecosystem. You know, our North Star is to be the premier partner for tech and innovation companies across Canada. We do that through the banking platform where I’m anchored, you know, running through tech focused capital offerings to help our clients grow and scale through our capital team, which supports all of our venture capital private equity companies through financing as well as fund to fund investments. So we are investors right now in sixteen funds across Canada.

We do that through our platform team where we offer, you know, operational expertise to later stage companies on anything from marketing operations design technology to support their scale and their growth, and then finally through venture. We grow, build, scale, and acquire technology companies to really, you know, build out a really unique offering for our RBCX clients and RBC overall, the relationship we have with Canadians and being a bit disruptive.

This sounds very much like a, like, a hybrid sort of combination of venture and operational expertise and traditional banking services. Like, is there anyone else doing what you’re doing in the market?

Yeah. I’d say simple answer. No. There’s certainly folks that are building different components of what we’re up to, but with all of the offerings that we do from the financing side, the advisory side, the introductions to investors, the acquisitions, we’re going through the fund to fund investments.

There’s no other institution doing what we’re what we’re too, which is really overwhelming in some moments, but also incredibly exciting and empowering to to be blazing this new trail and to really keep disrupting ourselves. You know, how do we keep pushing and how do we keep a driving innovation forward. So it’s been it’s been a fun ride. I’m sure.

Like to talk just a little bit about, you know, banking and financial services. We’re we’re gonna evolve into FinTech. We’ll take the conversation in a lot of directions. Sure.

Let’s just imagine a person that has no primary banking relationship, total clean slate. And for a moment, let’s assume there’s something of a cynic and and skeptical of banks. Sure. Not that far fetched, I guess.

That person might say something like banking is a commodity. I’ll just go to the closest bank, and I’ll set up accounts there. So that begs two questions. The first is that person wrong.

And if so, why? And the second, why should that person choose to bank with RBC?

Mhmm. Yeah. It comes down to people and building relationships and adding value. If you are making that a transactional service offering, then absolutely it becomes a commodity.

The piece that we really wanted to differentiate and the reason that we exist is to have the relationship with clients in the ecosystem that is wildly unrelated to banking. And so offering our clients introductions, access to network, profiling them, doing things that are well beyond the traditional norm of what a banking relationship previously was. I think really speaks to wanting to disrupt and wanting to do things really, really differently. And so, yeah, I would I mean, I’m biased, but Fair enough.

And then that’s that’s also really good in. From, like, a client’s perspective.

The the CFI community, though, is all is very large. And we’ve had, you know, millions of finance and banking professionals take our courses. So you never know what kind of talented individual’s interest you might peak. Maybe you can shed a little light on what makes RBC and or RBC acts a great place to work.

Oh, sure. So I’ve been with RBC twelve years. And in those twelve years, I’ve held six different roles. I think that really speaks to the diversity and breadth of career possibilities within an organization.

The the piece that keeps me, you know, energized and anchored really is is twofold. You know, you surround yourself with an incredibly talented group of team members. I am absolutely astounded by the folks that I get to interact with every single day within our organization. And then the fact that we get to partner with these wildly incredible clients in in the market is just So, you know, beyond what I could have ever imagined, I think the the values piece for me, you know, RBC is very rooted in values.

So client first collaboration integrity diversity inclusion and accountability. That really helps ground me and helped ground my career. And then coupled with the RBCX culture, which is really innovation, curiosity disruption. I found it’s a very unique offering and coupling right now, and just certainly keeps me, you know, outside my comfort zone a lot of days.

Fair enough. So for the folks on your team or or those kinda generally in technology banking, what does a typical day look like? Like a day in the life? To the extent, I guess, that any two are even similar.

But Sure. Yeah. I would say I think that’s the fun part of it as every day is is really different. And the piece that our teams really take ownership on is being able to always be really agile when things come in and they’re you know, a hot priority, they’re able to really be nimble and adjust, which is absolutely what I love.

I think I can share maybe just some examples. Last week, we last week, we held a dinner with, you know, thirty of, you know, our close founder and investor groups and, you know, just building relationships, chatting, sharing ideas. That’s, you know, something that’s really important to us. We’re working with capital markets.

One of our companies is interested in building a roadmap to help their really just measure their ESG and figure out how they’re gonna integrate that in. And so we’ve worked with our partners on our climate team and capital markets. I would say, you know, We also just hosted ninety founders in perfecting your fundraising session, virtual session where we really walk them through the funnel? What does it look like?

What do you need to say? What, you know, how do you go about researching before you approach an investor? All of those really key pieces And then look like parts of my day are portfolio quality and making sure that we’re aligned with, you know, the regulatory requirements that keep our banking charter aligned. So, of course.

You know, it’s certainly diverse, and it it depends day to day, but really interesting deal flow conversations and and, you know, pieces that we’re activating in the market to support clients.

Makes it really unique. I I never really know when I wake up in the morning. Truly what’s gonna happen? That’s so fun.

I’d like to ask a bit of a maybe a nuanced question perhaps obvious for you. Can you help us understand the differences and, I guess, the similarities between venture debt and SAS lending? Like, My understanding is there’s no reason a SaaS company can’t go get venture debt. So, like, what what makes SaaS lending different or unique?

Sure. Both very different. So venture debt is done in complement to an equity raise. So when a company is to market doing a fundraiser.

They typically seek a venture debt facility to go alongside that to extend runway. And normally you would see depending on who the investor syndicate is, you know, what their milestones are, why, you know, everyone’s excited about what they’re up to. You know, that company would be able to activate perhaps twenty to forty percent of whatever that equity raises. In venture debt.

And so that venture debt facility is done at a rate of of debt. So prime plus x percent, depending on the riskiness of that that deal, and they would take warrants, which is, you know, an option to participate in the equity upside of of that. And or, you know, it’s a very risky early stage type of product. And so not all warrants are exercised.

And it’s done as, you know, also our product specifically. It’s a one year interest free term facility, and typically the founder would, you know, draw it down on one of the last days. And then we would amortize it out over two, three years depending on again the risk profile of that company. So it really is very flexible, no covenants, very founder friendly. Mhmm. Diluted.

Non dilutive. Well, warrants offer minimal dilutive, I guess. Very modest dilution. And you know, really helps to extend the runway. It really is meant to put the founder in a better perhaps bargaining position. So it allows them maybe to ink one more contract with a large customer or allows them to negotiate a really interesting partnership before they run out of burn to go back to the market to go through another fundraise. So it hopefully allows them to really build up their valuation.

Gives them a bit more breathing room before they need go out for another equity raise. And then SaaS line, you know, recurring revenue operating line, that’s really a working capital facility. So you take it based on whatever the monthly recurring revenues. You would multiply that by a specific multiple, again, depending on What are the in what’s the investor syndicate?

What are some of the KPIs? Was their unit economics? What do they wanna do with it and grow? Sometimes we’ve carved out portions of an of an operating line to use for acquisition financing.

It really is very dependent on the company, but yeah, working capital in the day to day needs of a business as they grow and scale is, you know, a very different offering to a venture dev facility usages are very, very different. So as an as an ex commercial guy, I would I would liken the SaaS facility to a traditional RCL, but for — Yeah. — you know, a company with recurring revenue that’s a little bit more predictable and you could base terms off of, I suppose, the length of contracts with their customers and their churn rate and so on. Right?

Absolutely. Okay. Interesting. Very interesting. Now, of course, nothing’s perfect. So on a daily, weekly, monthly basis, what are you and your team finding to be the biggest challenges?

And and how are you overcoming those?

Yeah. You know, we’re in, you know, I’ll date myself. I worked for an insurance company in two thousand and eight. So I’ve gone through a cycle that looks very similar to this.

And it is a really tricky place for founders right now to fundraise to get the valuations that I think a lot of them have to have anchored on. Believe that, you know, they they really wanna see for their companies and and for their teams. I think though it’s also a moment of you know, coming back to reality and kind of this new normal where they’re gonna see these types of cycles. And that’s really tricky right now for our team because, you know, the bank is not the place to go, you know, as a bridge to equity, for example, or you know, to to allow that founder, you know, additional funds as they continue their round with investors.

That’s not really a play for our facilities. We don’t have a product for that. No no bank does. No financial institution does.

And so you will see the next You know, I would probably predict six, perhaps twelve more months of really digging keep with with founders and companies on? What’s their burn? What are their top priorities? How are they really being strategic aligned to what they’re delivering to their customers and making sure that they have the right people in place to do that.

I think there’s also going to be lots of companies that don’t make it in this cycle. And that’s very normal. That’s, you know, the part of this kind of, you know, cycle that we’re in, I would also say the companies that are built within these markets. And that make it through these types of cycles are incredibly strong and gritty And it’s completely possible to do that.

You just, yeah, you need to be laser focused on what you’re trying to accomplish. Yeah. That makes sense.

Between these podcasts and, you know, webinars and different initiatives that we do here at CFI I’ve had the pleasure of speaking with a lot of entrepreneurs and and C suite finance folks. And I always like to ask them sort of in their view makes a good financial partner, like a banker or an investor? Today, I wanna flip that question on its head though, and I wanna ask you what makes a good client?

Sure. Yeah. Great question. I think for us, it’s really having a partnership with a client.

You know, we can only support based on the information that we’re given and how much the client really trusts us, which is really up to us to to build that trust in to be an extension of that client’s team. And so the more a founder feels comfortable telling us and allowing us to come on the journey with them, the more things we can do, the more introductions we can provide, the better advice we can we can share and the more connections we can we can introduce them into. So for us, it really is we we want kind of that buy in for a long term relationship with our clients. And that’s really important to us.

You know, clients have expectations for us as their financial partner, and we have expectations of our clients. We really do feel like it’s a partnership, and we want to be on this journey with them together. I want to talk about FinTech a bit, for, for those not familiar with, you know, financial technology we had the pleasure of interviewing a fintech founder recently ex private equity really creative and sharp. And he had some interesting insights, but but you and your team have a really unique vantage point across a really, really large cross section of super innovative companies in this space.

So Are there any trends you’re seeing that you’re able or willing to share with us? And and I I would say sort of more the glow more global, the better.

Yeah. I think overall, if you take a look at when a lot of fintechs were founded, it was post two thousand and eight. So interest rates were very low and access to capital was very easy and way that fintechs typically have grown is really aggressively and through investors and venture back And so that was how they were built and how they scaled themselves. I think this is a very different type of environment. It is no longer growth at all costs. It is really around sustained economics.

And what is the eventual path to profitability? What are the KPIs and a much more responsible trajectory for those companies?

And there’s still lots of capital on the sidelines. There’s still capital being deployed to companies, I would say, you know, smaller number of companies are accessing that capital now. And so I think fintechs are in an interesting position right now with rising interest rates and lower access to capital that they’ll need to figure out really how to survive in this type of environment and the ones that can be agile and pivot and build partnerships.

I think they will do incredibly well. And I I love a collaboration between larger financial institutions and fintechs. I think it keeps an open dialogue. I think it keeps disruption at the forefront of the conversation. I think Ultimately, I’m in financial services, and I’m in this role with RBCX, you know, to support the conversation for all Canadians. Like, I want all Canadians to have amazing options for their banking and and for what that banking provides beyond.

And the way we do that is through healthy competition and disruption. And and so I I do think that fintechs play a really important role. In making sure that we have that healthy dialogue and that kind of push, yeah, the push for innovation.

I love it. There’s a real leader in your field, obviously, you have to stay up to speed. Are there any podcast books, thought leaders, or or sort of publications that you’re a fan of?

You know, I I follow a lot of the tech reporters, you know, big fan of you know, beta kit podcast and their publication.

I follow Sean Silkoff from the globe and mail, I would say I also follow a lot of our investors.

So we’re invested in sixteen funds across Canada. I follow a lot of them. And what their outlook is seeing, but then also a lot of the global investors and what they’re seeing and how it’s intersecting and what are the trends. So I, you know, certainly micro pieces within, you know, western Canada, Canada, and then you need to have a broader scope on things as well.

Like, what’s the context that you’re putting all of those insights into? And I I don’t mind getting diverse thoughts and perspectives on that. I, you can’t just listen to one, you know, commentary on, on that. You need to really broaden it Yeah.

That’s interesting.

I’d I’d love to move on to kinda more career themed questions just to be able to maybe download some of your wisdom I cherry picked a few roles from your LinkedIn profile. I thought we could make sort of a game out of it. I will, yeah, you know, games are fun. Right?

We’re we’re — Sure. — trying new things here. I will I will read the role off of a list. And then the idea is you have to tell us the single most important thing you learned at that professional stop of your journey.

Okay. But you have to do it in in one sentence or less. Okay.

You brought this up earlier. So we’ll we’ll go back to insurance underwriter.

Advocating for myself and knowing when to prioritize my mental health and well-being.

Financial analyst at a large consumer electronics company. The importance of using an understanding data to make really key decisions in the business.

That literally comes up on every single discussion that I have with everyone and it’s remarkable how important data science and business intelligence has become. Okay. Number three, commercial banking relationship manager.

Putting myself in the shoes of founders in a variety different industries.

Number four, risk manager or credit adjudicator.

Yeah. The crucial nature of knowing the financial piece of the business and a credit document, especially if I wanted to be a leader. Okay. Great lesson. And then the last one is leadership. So VP commercial, a people manager in in commercial banking?

Yeah. All of a sudden, my career took second place, and my team members’ growth and development became my top priority.

It must have been a must have been a major, like, mind shift to be able to just do that on the fly. Right?

It it takes time. You need to if you wanna be in leadership, you need to really want it truly. It’s not about a title. It’s not about, you know, the power.

It’s truly around making a difference for people. And doing everything you can to move mountains and get things out of their way so they can be better. They can do what they love most.

About a a a hole that’s greater than the sum of its parts. Right?

I wanna wind back the clock a bit when you joined RBC as a commercial banker. What was it about commercial lending that was attractive to you?

Yeah. I because I was previously in insurance and retail banking, I really felt that commercial would open me up to the entire conversation.

And it allowed me the portfolio aspect of it. I loved being able to advise and support a variety of different companies and founders, and that was really, really attractive to me.

We have a lot of current and aspiring bankers within the CFI community what are two or three absolute must have critical skills or characteristics that you think every successful commercial lender needs to have?

Curiosity, accountability.

I like both of those a lot. And the ability to build trust and rapport.

Curiosity accountability and the ability to build trust and rapport. I love it. I mean, as an ex banker myself, I that resonates a lot, and it’s very interesting to me that none of those have anything to do with financial analysis or or credit actions.

You know, CFI can teach you the numbers. You sure can.

You can’t.

You cannot teach people relationships and trust and you need to really own it and live it, breathe it, and to have it be a part of you.

Love that. How has commercial banking changed over the last Cade. And that, I guess, is an extension to that. Like, how do you see it continuing to evolve over the next five or ten years?

Yeah. I I’ve seen a lot more technology integrated into into banking. I’ve seen it’s a lot faster piece. I think there’s a lot more macro pieces to the equation in commercial banking now.

So the trends have been for me really exciting. I love that we’re integrating more technology. I love that we’re continuing to evolve as an organization and in supporting our clients. I would also say client expectations are very different now.

I’ll I’ll share from experience, you know, our clients at RBCX, they’re not comparing the support and partnership they get from us. To another financial institution. They’re comparing us to an Apple or a Google or, you know, when they walk into Starbucks, that’s the client experience that they’re comparing us to as they so should. And I love that.

I love that that has really come to the forefront. The reason we’re here is to support clients and communities.

And we’re ready for the we’re ready for the challenge. The Apple client experience is setting the bar very, very high. So Right. I know.

That’s wonderful. And as a as a user of financial services, no longer working there. I mean, I I get it. I agree because Apple to me is the benchmark of what a product’s supposed to look like and how it’s supposed to work and reliability.

So that resonates with me too.

I know you’re big on mentorship. So I’d love for you to share a bit of your wisdom on this topic, and and maybe I can give you a two part question. You can you share more thoughts beyond that if you want. First question is what makes a good mentor And the second question is what can people do to be a better mentee?

Like, like, how can they get the most out of the relationship or maybe make it more of a two way street? I’ll I’ll turn it over to you. Yeah. I think mentorship for me and each mentorship would perhaps define it a little bit differently.

I think the listening piece is really crucial. You know, my job is not to solve the problem.

My job is to be a sounding board to listen, to ask great questions so that that individual can walk their own path through their own journey. So I’m supporting them in that process. As a mentee, I would say you need to be all in. If you’re gonna ask for mentorship, if you’re going to enter into that type of partnership, you need to come prepared and ready and be really authentic. If you’re not gonna share honestly and openly, then it’s really hard for the mentor to provide that sounding board that’s, you know, helpful.

And then I would also say the mentee I really hope that they’re open to radical candor because building a really trusting relationship and providing feedback that’s based on kindness is is incredibly crucial. I’ve had some of the toughest feedback from my greatest mentors. And if I wasn’t open to hearing that and dismissed it, then I wouldn’t be who I am today. I’ve really had some some great mentors that I build a trusting relationship with.

I knew they had my best interests at heart. And and they wanted to share my blind spots with me. They wanted to hold up a mirror so that I could see my blind spots, which is incredibly powerful and a really a really great gift. It can be hard to check our egos at the door sometimes, but it’s the step that that that’s absolutely required to to grow really and to understand.

It’s a choice. It’s a choice. Yeah. It is. It’s a it can be a hard choice, but but a a valuable one.

I’ve heard this concept as an extension of mentorship around about sponsorship. So how would you define the difference between sort of like a mentor within an organization and a sponsor? Within an organization.

Very different. Yeah. Mentorship is I mean, mentorship can be peer to peer, mentorship can be really ad hoc, and it really is advice and sounding bored and safe space. I would say sponsorship really differs in that you’ve found an advocate within the organization that is really going to put you on projects that are gonna profile you that is gonna pick up the phone, that hiring manager, for that job you’ve just applied to, and seeing your praises. That sponsor is somebody that is really invested in you succeeding.

And that is a crucial part of, you know, building your career and finding people that are gonna support you as a sponsor. And as an advocate within the organization. I’ve been really fortunate to have a variety of of sponsors, and they’ve been incredibly impactful in my career. And a sponsor typically would be above you in the hierarchy within the organization, right, someone with with influence, Typically. Yeah. Yeah. Okay.

You’ve led various teams at the bank and and throughout demonstrated the kinds of leadership capabilities that that gets someone promoted into an MD role. So you’re doing a lot of things right. My question is, what are Devon’s lessons and leadership? Do you have two or three that you’d be willing to share with us?

Yeah.

I am values aligned leader. So I lead, you know, from my heart. It needs to be authentic. For me. I need to bring my whole self into work. I would say the big piece for me is the team is my number one priority. I think about them all day every day.

What’s in their way? How can I support them? How do I, you know, challenge them to think differently? How do I push them when they need a little nudge everything is really comes back to what kind of team you are building and you’re cultivating.

You know, I remember early on in my career, you know, you’re building your pipeline, you’re looking to hire and grow your team. And I think it’s really important to be thoughtful about how you build that team? What skills are you missing? What experiences and insights could you be missing?

You know, how do you bring diversity of background thought experienced at the table. And, you know, I remember, you know, stopping a panel interview that I was meant to be doing, you know, in a week’s time because I did not have a diverse group of people to interview because I hadn’t built the right pipeline. I hadn’t done enough work to cultivate and ensure that I was pulling from a really great cross section of talent. I had allowed and used the, the people that have put up their hands and applied to the posting.

And as a leader, I really believe it’s important to you need to be recruiting all the time. Every single week, you need to be thinking about how do I reach out? How do I support to really build that pipeline? It’s not just about who applies to the role.

If you wanna cultivate an extremely driven and high performing team. You have to put in the work to build that team. And, yeah, recruiting is a big piece of it.

You know, I hear this theme of talent management and human capital management coming up a lot in terms of just having an optimal team and having the right amount of cognitive diversity, but alignment around values and just how important that is on any team, not not just in banking.

And that’s kind of an interesting segue, I think. Did you have somebody wanna add to that? I would just say it’s for me, personally, it’s not talent management. It talent partnership.

I’m not here to manage. I’m here to partner and encourage and support.

And then I forget the other words you used, capital Human capital management. Human capital management. Again, you know, that language for me is really tough because it doesn’t resonate Nate with my values. I I really believe that I am here to support my team. I’m here to partner with them. I’m here to be their cheerleader.

I’m there to give them candid feedback, and I’m not here to micromanage them. I’m not here to consider them assets. They are not they are partners in this journey alongside us all. And, yeah, that’s how I’ve built my leadership. That’s wonderful.

As a former career changer myself, often think about our members that are in the same boat and and sort of how we can help them position for a transition, like, into financial services.

And you alluded to some of the qualitative skills earlier. They they weren’t it wasn’t technical acumen, but I wanna ask particularly as it pertains to tech banking Is there a place for folks that are, you know, maybe have deep domain expertise or technical backgrounds? Like, they’ve worked in software development or they have background in clean tech or biotech.

Is there a place for them in a in a tech banking role, even if they don’t necessarily have a lot of finance experience.

Absolutely.

So I’ve just hired a new director for the BC region and she comes from a background that is very deep in tech advisory, digital transformation.

And we can teach the financial acumen around that. That’s really important to us that we bring in ex founders, ex operators. We have XVCs, within our practice. And we really wanted to build something that was really unique to offer and partner with founders. So I would say a lot of the pieces we can teach, and we’re looking for really broad experiences different expertise and that really matches the ecosystem that we’re that we’re supporting. Very cool.

When you think about your career so far, which is illustrious by all measures, like, do do you have any regrets or or things you you might have done differently?

I would say as I’ve progressed, I’ve gotten stronger in my boundaries at work certainly in figuring out what choices I’m going to make as I, you know, run through work priorities and family priorities. So I think that comes with time as you figure out, you know, you make the mistakes and you know, I I’ve learned from those those moments. So I would say having better and stronger boundaries early on in my career would have been a better way to honor myself. You know, I left a job because an organization because there I I just did not have the right support around me to be successful and and they’re I allowed that to happen. And once the dust had settled, I realized I had a light state I’d allowed myself to be treated that way. I had put work above my mental and physical health And that was a really tough lesson to learn. So I think that’s one of the biggest regrets is I finally did end up coming to the end of myself, but I think I could have gotten there sooner.

And I I wish I had. I I left it too long and I allowed that to happen. Yeah. So that’s I’d say that’s my biggest regret is really honoring myself and my own.

My own mental and emotional well-being.

That’s such a valuable lesson. And thank you for sharing that personal anecdote. I I think it’ll be meaningful for our listeners to hear someone in your shoes be able to say something like that because I I know we all think it from time to time, and it’s good to know that we’re our we’re on the right track.

Where can people go to learn more about RBCX? Or to to follow you. Are you active on social media? Yeah.

I’m on LinkedIn mostly. So, yeah, RBCX has you know, also LinkedIn. We put out content. We spotlight our clients a lot and, we provide different insights to the community.

And we also have our own website. So we’re r b c x dot com. Okay. I’ll make sure we get those into the show notes.

For for people to check that out. And we’re coming up on time. I wanna be respectful.

There is one question I I like to ask you everyone before we wrap. If you weren’t managing director at at RBCX. What would you be doing?

Oh, wow.

A scuba dive instructor in the Galapagos islands.

I love it. When it we get such a diversity of answers. That is a good one. That is a very good one.

My favorite dive site in the world. It was absolutely incredible. I’ll go back any day. Interesting.

Devin, this is this has been wonderful. Thank you for joining us and for sharing some of your wisdom. Great conversation.

My pleasure. Thanks, Kyle. Appreciate the chat.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow net learnings wherever listen to your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next

In this episode of Net Learnings we chat with Rohit Mehta, President & CEO of Horizons ETFs—one of Canada’s largest ETFs with $27bn in AUM.

Tune in as we discuss:

-Why Rohit doesn’t eat steak for lunch

-ETFs vs. mutual funds

-Emerging trends in the ETF space & sources of future innovation

-What career progression looks like in the fund world (spoiler alert: sometimes it starts in the mail room)

-Tips to advance your career and transition into leadership

-Why it’s important to stop and smell the roses once in a while

-And so much more…

This episode has more juice than a double-leveraged ETF. We hope you enjoy the conversation!

I’m a huge people person. So the coolest thing is being able to build a vision with a team, but then to be able to share it. So one of my key tenants is around transparency.

I’m a huge believer. One of the biggest assets of any organization is as people. So I’m my philosophy, which I love to be able to to share is around is around that performance culture where it’s transparent, it’s empowered, and accountability. So that’s one of the the things that I’m most excited about. This is net learnings.

The podcast that keeps finance and baking professionals ahead of the curve. In each episode, we focus on career growth and practical advice, while mixing in the occasional war story. Join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host Kyle Petity. I’m really pumped to introduce our guest today Rohit Meta, Rohit brings nearly twenty five years of experience in the asset management, mutual fund, and ETF world. And he was recently appointed president and CEO of Horizon ETFs, one of the earliest ETF providers in Canada, and currently the fourth largest by AUM, Rohit.

Welcome to the podcast. Thank you so much for joining me. Thanks for having me, Kyle. It’s great to be here.

Yeah. And first of all, congratulations on on your appointment to the big chair. We’ll talk more about that later, but I’d love to just start by talking about Horizon ETFs. You made news recently by announcing drum roll, please.

A no fee ETF. I think it’s a zero m e r. Right? That’s totally wild.

And, absolutely. So maybe I’ll just start by talking a little bit of horizons, ETFs, and then, for sure, you touched on a recent launch that’s made a fair amount of news. So when you look at horizons, Horizons ETFs, what we do is actually in our name. Horizons was, as you mentioned, one of the first ETF companies in Canada, and we are the fourth largest.

And so we’ve been in this space encounter for nearly twenty years. Today, we’re managing north of twenty seven billion dollars across a hundred and thirteen ETFs. Oh, wow. Now as you just mentioned, we launched a suite of ETFs recently.

And within that suite, one of the ETFs is our equal weight bank ETF, and it’s nine basis point management fee, but for the next Twelve months, so ending July thirty first of twenty twenty four. For the so for that next twelve month period, it’s zero management fee zero Emmy. There’s not literally the first of its kind. It is the first, here in Canada today.

Having said that, if we go all the way back to ETF Innovation in Canada, the first ETF in Canada in nineteen ninety, the tips, the Toronto index participation or the Toronto thirty five index participation fund actually was no fee. Oh, wow. Even back that even that all that timing Back then, and it wasn’t terribly successful, but over time it has evolved and is now XIU What is currently XIU, which is the largest ETF in Kent.

Wow. Okay.

And so tell us a bit about the company you mentioned AUM, how many employees do you have? Are they mostly located in Toronto?

Absolutely. We have sixty five employees mostly, located in Toronto, but as we do work with advisors across the country, we do have colleagues that are across the country. I’d say also when we talk about horizons, it’s important to note that we are part of a much larger organization. We’re part of Marie asset. Which is a South Korean based organization.

And globally, as an organization, we manage over seven hundred billion dollars of assets and over a hundred billion dollars of ETF assets globally. So here in Canada, we’re the fourth largest provider, but globally our footprint is even larger. That’s great context. I appreciate that. I was actually gonna ask about how Marie fits in. So that’s helpful. What are kinda Two or three characteristics that Horizons is sort of best known for, because you’re coming in new, maybe you contrast that with, like, the old and the new.

Right. So Horizon is a is an incredibly strong base. It’s been an extremely successful organization over the nearly twenty years. And so, in my view, there’s an opportunity to really strengthen the foundation that we have to be able to build up for that next wave of growth.

But that there’s a current theme or there’s a thread that is throughout the organization, and that or permeates the organization, and that is around innovation. So innovation is something that is, you know, germane to horizons. It’s actually also within our global DNA. So, Marie, as we were just mentioning, Ashley stands for or means future in Korean, and when you look at a Marie as an organization, Globally, we pride ourselves as global innovators.

So you can see that what we do here in Canada around innovation, we’re gonna continue to be innovators And when we look globally, it’s actually something that Canada should be incredibly proud of. When we look at the ETF space, I’d mentioned that the first ETF in nineteen ninety. That was the first ETF in the world. It wasn’t just a Canadian innovation.

And further to that, Canada, has globally has been innovators around the first fixed income ETF, the first currency edge DTF, and Horizon has been has been proud to contribute to First, here within Canada as well as well as globally. So, overarchingly, that innovation fits so well within our global organization as well as within the Canadian fabric.

What are three or four of your most popular ETF products?

Yeah. If you take a look, I mean, there’s obviously time, things, ebb and flow, you know, market backdrop, But right now, there’s a few themes that we’ve seen significant amount of flow into. One is around cash management. We’ve seen volatility in the marketplace, We’ve seen the challenges just in terms of twenty twenty two.

We saw the challenges around, you know, traditional fixed income as interest rates rise, challenges with duration. So we have a number of solutions, you know, whether that are high interest savings ETF with the ticker cash or are Canadian and US zero three month T bill ETFs being C bill for Canada and U bill for the US have raised over a billion dollars combined, you know, year to date, And that’s just a function of investors being able to get, you know, five percent annual yield in a zero or virtually zero duration. Arena. So that’s been one theme.

The second one, which is which ties into broader trends just in terms of what demographics, etcetera, but has been around income through equity. So generating higher income through equities that might be low dividends or no dividend paying and that’s through covered calls. So our covered call lineup has seen a significant amount of growth. And in a covered call, what we’re doing is you have a basket of of securities and will write calls on up to fifty percent of the portfolio on a regular basis.

And when I say writing calls, what that means is you’re selling away some of that future growth in order to gain cash flow. So as volatility increases, you’re you see those premiums that they’re called on the, on the calls increase. And so, you know, we have, you know, our QQCC, for example, which is on the NASDAQ one hundred, or on the in the energy space, ENC, those are a couple of areas where we’ve seen significant growth. The third the third theme, because you asked for two or three.

So I’ll give you three. Is around enhanced exposures, if you will. So our enhanced DTS, which is you’re looking at whether it’s we’re just talking about our new bank ETFO, HbNK, you can also what we’ve done is introduced a series where you can have lightly leverage. So instead of one to one or a hundred percent exposure, you get a hundred and twenty five percent.

Exposure to that underlying. So to that to that ETF for investors that are that are looking for just slightly more return potential, obviously slightly more risk exposure as well. So that would be like b n k l, for example, where we use lightly leverage.

Can I ask maybe a silly question or naive question? Sure. Would that incremental return on the product you just talked about come in the form of yield because of leverage or would it manifest as, like, potential gain?

So that’s a great question. It’s actually both because what we do is we own the underline, and then we, instead of owning So h b n k is what it will own, instead of owning a dollar for every dollar in in the Black Liberty TF, it will own a dollar twenty five of it. So it’s getting that additional dividend yield. It’s also getting that additional capital exposure. Okay. Got it. That that’s really helpful.

Alright. So maybe now they’re into the technical weeds a little bit. Obviously, a lot of people know ETFs exist and many of them, I think, probably anchor relative to, like, a mutual fund. A lot of people know what a mutual fund is. This is a lower cost way to sort of access a variety of underlying securities And so maybe you could really help explain, like, what is an ETF functionally? How does it work?

Sure. So on its face, and we could spend a fair amount of time getting into the minutiae, so happy happy to drill down as as far as you like to go. But I think simplest for, you know, for viewers or for listeners is an ETF is a mutual fund that trades on a stock exchange.

Okay. So you’re pulling assets together. It like, you do it in a mutual fund. It’s gonna own a basket of securities bonds, equities, etcetera.

And on a unitized basis, so multiple investors will own that mutual fund or that ETF But buying and selling that takes place through an exchange. So on a mutual fund, you put an order in and you will get the net asset value at the end of the day for the five thousand dollars you put in to buy that that mutual fund. On the ETF, you’re gonna buy that ETF on an exchange like the Toronto Stock change throughout the day. So you could buy it at nine forty five in the morning or twelve noon or two in the afternoon Or you can sell it at those times as well at any point in time throughout the day, and it will be representative of the value of the basket at that point in time during the day.

Got it. Okay. That’s probably deep enough and really, really helpful. But one of the questions then that I have is if I’m buying us an individual security, like, a share of a a bank, for example, the bid ask spread as a function of how much buying or selling pressure there is.

How does the bid ask spread work on the ETF when it’s, like, a measure of an underlying asset? Did did you understand what I’m asking? Absolutely. That and that’s a great question.

So let’s use your bank example.

So you wanna buy a share of one of the banks. We’ll just keep let’s say that banks, the bid in the offer is ninety nine ninety nine to one hundred and a penny. So that — Yeah. — said spread.

Sure. So let’s now just say that the ETF only owns that one bank.

Yep. So the ETFs instead of six. So what would happen is the ETF, you would wanna buy it. The ETF would aggregate up. So in that case, just the one, the one security, and the market makers will facilitate that. So you would go and you would pay, in that case, what the market makers will do is they can create units. So it’s the market makers that create the units, dude go to the exchange, and you would see that ETF that only owns the one bank ETF and you would look to buy it, And the the you’ll be buying it at roughly one hundred dollars and one and a half cents or two cents.

So That’s where the market makers, and that’s how and then selling would be the reverse. And so the market makers can can create units on an ongoing basis. Now you would never do it just for one security because then you say, well, I would just go buy the security. But when they’re aggregating sticks or hundreds of securities together, that’s how they are making and pricing the market throughout the day.

Okay. It’s definitely very nuanced. Even though they’re sort of easy to understand on the surface, there’s a lot goes on behind the scenes. There is a lot that goes on behind seen.

So it’s great that it’s a simple it’s a simple transparent package, which is one of the benefits of of ETFs. But there is there is a a number of of moving pieces behind that make that whole ecosystem work. So, Rohit, maybe you can help us understand the ETF world’s, like, supply chain. I don’t know how better to explain it.

So, again, we sort of started with, like, a bunch of publicly traded securities And then at the top, and then at the bottom of the supply chain is, like, me and my retirement account. Maybe an investment advisor suggested a particular horizons ETF form. HBMK will say. How does it sort of go from there to my portfolio?

And the reason I ask is, You often see folks in industry with a with a with a title like wholesaler, right, or head of distribution or sales, like, If this is a product that an end user can purchase, where do all those folks fit in within the supply chain? And you can sort Way in. Sure. Yeah.

This might be a a a multi problem questioner or answer, but let me start, you know, high level. An investor Either, you know, does their own research that says, I wanna go and purchase H. B. N.

K. Because I wanna own the, you know, large Canadian banks on an equal weight basis. And so they decided to get it by h b n k, or they work with a financial advisor, and the financial advisor says, you know, Kyle free your portfolio, I recommend h b n k. So in either of those cases, the purchase will be made through an account and through an exchange.

So if you’re doing yourself, you’re gonna be with a discount brokerage, and you would go into your discount brokerage account, which has access to the exchange, That exchanges. And so you would put in h b n k. You type it in, the number of units you would want to purchase, and the price that you’d be willing to pay, and you’d look within your your discount brokerage screen to see what the bid ask spread is, what the bid and ask is, and then you’d you’d purchase at the ask.

And you would make that trade, and then the back end would all work through going through the exchange, etcetera. And so in return, your account would move out the let’s call it the ten thousand dollars. And in return, you would get the unit value of ten thousand units, a dollar value of h b n k. The same thing would happen with with you the advisor in the case that Kyle recommends due to buy h b n k. They would say, they would have they or one of the members of their team would put the order in on their online system and make a purchase for your account in the amount of ten thousand dollars.

And they would be the same process. They would enter that trade. It would go to the exchange. They would be buying it at the ask.

They would get those securities. The money would move out. The cash would move out of your account, and the sec the units of the ETF would move into your Okay. So where does, like, a where does a wholesaler or a distributor fit into the whole picture?

Yeah. Great question. So wholesalers So as a as an organization like Horizons, there are thousands of financial advisors across the country that are working with individuals to help them, you know, build plans meets their financial goals.

The wholesalers support Financial Advisors. So we would work with them on on a regional basis with helping them with understanding Horizon solutions and how that can they could fit into portfolios to meet their clients’ needs and objectives keep them up to date on performance, changes, etcetera, and so really be their partner with all solutions related to horizons as well as industry trends, what’s happening, what to be thinking about. So really just a partner in their business, and they’d be working with with you know, a few different, you know, wholesalers in that example or a few different organizations.

And so we would look to be one of those. Got it. Okay. So I wanna make sure you’re staying top of mind with the folks that are yeah.

So it’s not they’re not actually distributing units. It’s really just an educational process in some ways. Correct. Correct.

Yeah. Okay. You talked a lot about innovation, and and it seems like you both your firm and and Marie are at the forefront of that. Without giving us your secret sauce, what are kinda some other innovative products that Horizons has on on their radar.

So that’s a great question. There’s you know, if I look at, you know, not just at horizons, but within Marie globally, I mean, we have monthly meetings where we have all the the countries around the world that are part of Marie, those organizations.

Working together, we have one common, you know, product list, if you will, innovation list. In terms of things that we’re we’re looking at. So I would position it in terms of opposed to specific solutions.

In terms of types of where innovation, where you’re gonna see it, and the types of pockets you’re gonna see innovation. So when we have over a thousand ETFs here in Canada, someone might say, well, there’s there’s just too many ETS or or where could you find innovation from? I think there’s gonna be three key themes where you’re gonna see innovation continue to come from in Canada and globally. One is around improved exposures, and our recent launch really highlights this.

So where you would buy? I wanna buy the six banks. I wanna get exposure to six banks. We said, okay.

You can buy the six banks on an equal weighted basis. But maybe you also wanna buy them on on a lightly levered basis, so getting a hundred and twenty five percent exposure, or maybe you’d like to generate more cash flow than the dividends are paying So maybe you want, you know, BKCC, which is our covered call, or maybe you want covered call that’s lightly levered. In which case we have that as well. So it’s around that improved exposures so that people can be more specific in getting the right packaging that meets their portfolio needs.

The second theme, and these three are not mutually exclusive. The second theme is gonna be around liquid alternatives. Now this is very Canadian centric. This — Okay.

— the liquid alternative regulatory framework came about in twenty eighteen and was a significant milestone within Canada and actually speaks to the innovative landscape in Canada. It was really a collaboration between the regulators?

The dealers and the manufacturers, the asset managers. In terms of a framework that is more sophisticated than your eighty one one zero two, which is the same framework for mutual funds and which is basically you can own securities on a long basis.

Liquid alternatives allow for leverage. They allow for shoring. And so that is that was a new innovation, a regulatory framework that came about in twenty eighteen. And so that’s where you’re gonna continue to see continued innovation around because it’s a new and growing space in the Canadian marketplace.

And the third key one is gonna be around income. If we take a look at Canada, and this isn’t just a Canadian centric thing, but we’ll focus in on Canada since that’s where we are.

Demographics.

We have an aging population here in Canada. We have an increasing longevity population in Canada. So in the next decade, twenty five percent of the population in Canada is going to be sixty five plus. That sixty five plus Grooping is also living longer, and we’ve gone from a period historically with defined benefit programs. Where people would retire and they basically have an income stream for life that was indexed to inflation.

Now we’ve moved to generally there’s a few pockets where there’s defined benefit programs, but at large, it’s defined contribution plans. So those defined contribution plans help Individuals as part of their employment bill a nest egg, that retirement nest egg till they get to retirement but then a retirement says, okay, Kyle, here you go. Here’s your defined contribution plan. Now you can use it to to manage your retirement.

But you have to manage, you are working with a financial advisor, have to manage that pool of capital to do two things. One to provide you with your cash flow to live, the second one is also the sustainability to make sure that it’s around as long as You live. So you’re not just drawing down the principal? Correct.

It’s not as simple as drawing down the principal, and it’s getting more complicated with those three factors. Aging population, increase longevity, and define contribution programs versus defined benefit plan. So those are three Really big trends, and you’ll see solutions that that will encompass or incorporate those three components or some will be just one or or the other. Interesting.

Yeah. I’ve heard that referred to as a demographic time bomb before. I’m not sure if you’ve heard that taxonomy. I haven’t.

I hope not. But I hope not too. I mean, that’s what our role is as as asset managers is to work to help that contribute to that ecosystem, that retirement ecosystem ensure that it isn’t the it isn’t the the time bomb. Yeah.

So just to reiterate, sir, the three are more tailored — Yep. — improved exposure. So more tailored exposure. Yep.

Liquid alternatives and income.

How does, if at all, does geography impact the ETF business?

Like, are some more popular in certain markets? Is there a home country bias in the same way that you would see with, you know, stock pickers?

For sure, geography, you know, and absolutely plays a part. And I would say if we just we focus in on on Canada, you know, for example, you know, we have just from the culturally, whatnot. We have a higher focus on an appetite for fixed income. You know, maybe you could argue that Canada is a more conservative investor group, but also you see that even in terms of investment selection.

So in Canada, in the ETF space, nationally, we allocate as a country as an investing country, you know, fifty two percent of our total equity assets into Canadian equities.

Now you say, okay. So that’s, you know, one out of every two dollars, just over, is going into a Canadian equity ETF versus global equity or international with ETF.

But why that’s why that is such a such an important number is because Canada represents three percent of the global market capitalization.

Right. Yeah. So that really highlights that home country bias. Now There are some other factors that naturally lend itself to having home country bias.

People are gonna live their retirement here. They’re gonna be more related to the Canadian economy or more impacted by the Canadian economy at large. And so and you also are all spending people are spending most of the Canadian companies. Get all the Canadian dollar center.

So there are reasons for that, but probably not quite as dramatic and as drastic as the biases that we we have seen over the years and continue to see. I have to imagine that just the growing popularity, really the boom in, like, interest in ESG has kinda shape the ETF landscape. Can you share a few ways that that it has? How do you see that playing out in the next few years as well?

So ESG has really come to the forefront globally, and it’s More much larger than what I call an ETF than all. What we’re seeing is within the ETF space or in the investment space at large, is that there are strategies that are coming out that are ESG focused, but the real push that, you know, I’ve seen is that the in the ESG has really been implemented or embraced by corporations.

And so how corporations run is becoming much more aligned with that environmental social governance. And that has led to candidly better organization. So it is instead of being more specific into ESG focused products, which if you think way back started off with really SRI and then evolved into it, it’s now less so about, let’s have something that’s ESG specific, but let’s now understand how it’s investing in order to invest in the best company. And many of the best companies are ESG. So I think it’s actually gone, you know, instead of where it started, SRI really started an investment standpoint, ESG has actually started on the corporation and with companies being and and doing a better job and needing that in order for per for public companies, particularly, to actually be considered for investability.

And so I think that ESG movement has almost You know, leapfrogged over the investment side into the actual corporate and the corporation side. And we’ve seen much more research just around the the benefits of ESG in terms of organizational success. Right. In mitigating risk and seizing opportunity. Yeah. Exactly.

We teach a lot of, ESG content. So that’s interesting to hear you say that. How about a quick game? What do you think? Sure.

I’m up for it. Okay. Okay. So it’s it’s called the lightning round. So it’s gotta be quick.

Okay. I’m gonna give you a quick question. It’ll be an either or. And then you just you just say what you’re thinking.

Say what’s on your mind.

Okay. So an an example would be like chess or checkers. Right? You just say, yeah, like, checkers or whatever. Okay. Are you ready? Sure.

Alright. You’re going out for lunch. Yeah. I imagine you don’t get a lot of lunches to yourself, but let’s say you do and you’re gonna go down here and sit by the lake, You’re getting a burrito or sushi? Sushi. Okay. Hip hop or jazz.

Hip hop. K. What was your first job?

I would mail, delivered flyers. These are paper flyers. Okay. Right on. Sweeter salty.

Sweet.

K. Favorite TV show.

Favorite TV show. No pressure. That’s a good one. Most recent one I was watching, my daughter was Blacklist. Okay.

Your hidden or secret talent? I’m good judge of character. Oh, I like that one. That was a good one.

If you’re hosting clients, why do you I don’t know if you still have, like, a direct mandate, but over the course of your career, would you prefer to go to hockey game or baseball game? Hockey game. K?

Growth through value.

Gross? Alright. Good. Good. I want I get I mean, I’ll give you a ten out of ten.

Like, there’s no real No. No, man. That was good, though. It was fun. I was trying to be very just, you know, genuine job in my head, and and it it’s actually those are fun.

Any you wanna expand upon? Sound like you’re gonna say something about sushi. I love it was funny. I was before we had this, I went down and I grabbed sushi for lunch.

So I try to stay relatively healthy because I love I love my steak and potatoes. And so I make a rule that I don’t eat steak at lunch Oh, and so generally speaking, I’ll have sushi or a salad for lunch every day that I’m not having a meeting. And even if I’m out for a meeting, it’s, I generally try to keep it into fish. A smart guy.

Smart guy. Alright. Let’s travel back in time a little bit to when you were more junior in your career. Just starting out What was it about the investment world that first attracted you?

So it’s a fun story.

My parents Love fun stories. My parents’ financial advisor would come to our house. And I I remember it vividly, and one of these individuals is still my mentor. And so now he’s retired, but we still chat today.

And so when I was thirteen, he came over, and I was asking him. His name was Andy. Said Andy, So tell me what a stock is. Tell me what a bond is.

And, you know, he he was very patient and he chuckled a little bit to himself. And he said, you know, you’re really interested in this stuff. And I said, I just said, yes. I mean, I was thirteen at the time.

Yes. And he said, when you finish grade eleven, which was the company’s rule. You have a summer job with me. And that was my interest.

And as soon as I when I was in grade eleven, I called up Andy and I said, do I have that summer job? And he said, absolutely. And so I never left the industry. From that summer, I worked every single summer.

In the industry. And sometimes I also worked in the school year when I was at university and never left. Are you allowed to disclose the name of the firm? Sure.

It was RBC, Phoenix Securities. Oh, okay. Okay. Yeah. I know RBC did DS well. I worked at at RBC.

That’s funny. And and I was going to actually ask you a question because you have a very impressive track record of experience. Right? I mean, you wrote with Van Grove, first assets, CI Financial.

That’s a really, really solid name in the Canadian ecosystem.

But your first job listed was as a dominion securities associate investment adviser, and I wanted to get your take on what did you learn when you’re working with high net worth individuals? Because to go back into kind of asset management away from client facing, was a a totally different move. So I’m curious sort of what were what were your initial learnings in wealth management?

My initial learnings, it it was a fascinating time. It was around You come in with with assumptions.

And so even at that young age, had assumptions about people’s knowledge of investing. And that financial literacy. So, you know, we were working with, you know, high net worth investors. So individuals have been very financially successful. Mhmm.

But when people are financially successful, you know, in their careers, whatever it happens to be, they work really hard and they work really hard for one of the reasons is for wealth. But oftentimes, don’t actually know how to manage that Yes, they bring on financial advisors, and they and they would come to, you know, groups that, like, I was working with. But I was still surprised on that level of financial literacy. For people who were, you know, in the on all frames, very successful. And then you went into the asset management game. So can you tell us a little bit about you know, your journey and kinda what you learned along the way and some of those stops?

Sure. So it’s actually, I mean, it’s an interesting journey So why work from all my summers and school years at RBC to Mini securities when I graduated, work for RBC to Mini securities?

And then I was looking for a change. And I said, what would I like to learn? So I had learned a lot about the well management side of the business. The financial advice side of the business, you know, between the securities, I did everything in my first job there as a summer student. A in Toronto was was in the mail room. So I got to see scope of domain of securities, you know, through delivering mail across the organization, which was pretty neat, and it’s a huge, very successful organization.

And then I said, for my next journey, I’d actually like to be on the asset management side. So the manufacturing side was fascinated by how products get built how they get brought to market, how they get distributed to one of your earlier questions, and I also saw the opportunity and said I wanna work for a smaller organization.

Where I can see multiple facets and have have broader exposure to the organization, particularly as I was still relatively young at a school at that point in time. And from then, I saw I had the opportunity at at Van Grove. What’s interesting that Sometimes that, you know, your LinkedIn or or CV doesn’t say is that that was two thousand and one.

From then until until twenty twenty, I didn’t actually change firms.

Oh, they were acquired. I was I was acquired through Okay. Vengbroke, we launched a business called criteria investments. That was purchased by first asset, and first asset was purchased by CI. And so it was an interesting journey that had a ton of experience and exposure and worked with some incredible people.

But, actually, you changed business cards along the way, but was through that that acquisition process. A loyal guy. So you’re actually with really one firm that whole time.

Correct. It’s in some ways. In some ways.

Yeah. What does career progression look like in the mutual fund and ETF world? Like, can you sort of map from, like, an entry level type, maybe an analyst role all the way up to, like, an SVP or director type role?

Sure. It’s not always linear, but let me start there, and I’d say that there’s there’s generally a few different traffic.

So for people who wanna be portfolio managers, Generally speaking, they’ll come in. They join an organization as an analyst. They would finish their university degree. They’d be completing their CFA.

Maybe a master’s degree, and they’d be working as an analyst. And then they would be getting more and more exposure in working their way towards being an associate portfolio manager and then portfolio manager. So that’s generally the portfolio management tracked.

On the business side, it is much more disparate in terms of the path for people to move into the, you know, SVP or or director roles as you had mentioned. Individuals can come through a variety of of areas, because that’s really on the business side of it, if you will. So come through sales. It can come through finance.

Come through marketing. It really it’s where that exposure to elements of different parts of the business. And oftentimes, people are gonna have more exposure. So it might start off in sales and then increase the portfolio.

I mean, that was my career. So it started off, you know, in sales and sales management. Then distribution, whereas sales and marketing, and then strategy, and so on and so forth, and then opportunities to run organizations. Which is what you’re doing now.

And again, congratulations.

I I — Thank you. — I have to ask. What’s the number one coolest thing about about being CEO and what and what do you find most challenging?

I’m a huge people person. So the coolest thing is being able to build a vision with a team. But then to be able to share. So one of my key tenants is around transparency.

I’m a huge believer. One of the biggest assets of any organization is as people. So I’m my philosophy, which I love to be able to to share is around is around that performance culture where it’s transparent, it’s empowered and accountability. And so driving that through. So that’s one of the the things that I’m most excited about in and I’m a big huge team player, so working as as a team and in my view teams win.

What’s the most challenging?

Is the responsibility, candidly, that that comes along with it. There’s a lot of people that are relying on on myself and on the leadership team. And I take that responsibility very seriously whether it’s, you know, speaking to you today, Kyle, you know, on a podcast, or or, you know, meeting clients or working on product, everything that we do is, I know it’s there’s a responsibility that comes along with that, which I enjoyed but it is it is challenging. For sure. What does it say heavy as the head that wears the crown?

Yeah. And so over the course of your career, you you were individual contributor, obviously, a very good one, and you did some people management. And now you’re, of course, the ultimate people manager. What advice do you have for folks that are kinda looking to make that transition from an individual contributor to a people leader type role within an organization.

I think it’s working with I mean, you talked about this earlier. It’s it’s that when we touched on it just around mentors.

Speak to people ideally that have known you for a long time or that you’ve worked with and ask them what kind of skill sets you have from a management standpoint that they can help you hone in on. And then asking for opportunities to work on projects, lead small teams so you can show the the contributions and and hone those strengths there. So that idea of starting small, not aiming to go from, you know, here to there, but how do you take on individual projects, etcetera, that’ll give you that that management exposure? And then I think it’s also just putting up your hand.

Not everyone enjoys managing people. And uh-oh, you know, you might be in a role where you’re excellent at what you’re doing And someone, you know, your your manager at that point in time will say, that’s that’s great. Kyle’s excellent at this. Let’s keep moving on board, but not knowing that you know, Kyle wants to do something else or would like to manage people and to get that exposure there.

So I think it’s important communication. Well, back to to let transparency communicate what it is that your career paths are. And and maybe there’s you’ll get advice from mentors, managers, etcetera, on areas that you need to develop in order to take that next step. If they don’t feel like you’re ready and if they feel like you’re ready, you’ll you’ll get opportunities.

Sage advice, what do you consider the biggest miss of your career?

And and what did you learn from it? That’s an interesting and tough question. I’ve been incredibly fortunate in my career, but if I look back, it’s making sure that you stop to smell the roses. That idea of embrace the journey and love that journey that you’re in. I looked back on my career, and there were so many wonderful times that I had over my career that when I was in the moment, I didn’t enjoy them enough.

And so how do I leverage that today? If you will, I do it a few full. What is I build vision boards so that I know where when I achieve goals, I make sure that I’m very proud of them. And I actually share that with my kids is it doesn’t matter what you’re looking to do.

Set your goals, make sure you’re having fun, do something that you love, and be grateful for whatever it is that you’re doing and be present. And even with with my kids, making sure that you’re present. So that’s I guess those are just things that you you gotta learn over time. But that’s one thing, you know, if I look at, you know, the twenty plus years that you were mentioning, which makes me feel old, but in in my careers, is I’ve been very fortunate that I and it could have enjoyed some of those moments more.

Yeah. That’s that’s amazing. Thanks for opening up about that. It’s true. You can really miss the forest for the trees if you’re not careful, and feels like you’ve just time traveled through your career.

And you gotta make sure you’re enjoying it. What’s something I can do to help you? I think this is, you know, what you’re doing even as we’re having a conversation today is is important. That idea of increasing that educational front.

You know, as I talked about working with high net worth investors, and many people just didn’t you know, we’re very successful, but didn’t know or weren’t on well versed in in wealth management. So I think continuing education is one of the reasons that that, happy to join you here today. If there’s ways that I can contribute it, so you have a whole slew of of participants. You have a ton of material courses, etcetera.

I think you know, continue to do the great work that you’re doing and giving, you know, individuals like myself an opportunity to spend some time with you. So thanks.

Thank you. We we certainly appreciate all all of your wisdom and insight. One question that I like to ask all my guests, if you weren’t doing what you’re doing, what would you be doing?

I wasn’t doing what I’m doing. I would be a, travel blogger.

I love.

Love it. I love I love traveling. I love people and I love immersing myself in different cultures. So I think that would be really fun. Maybe I start an emerging markets fund and give you an excuse to to travel a little bit professionally.

Fair enough. That’s wonderful. Listen, Rohit. Thank you so much. For your time today and your insight really, again, greatly appreciated all the best to you and your firm.

For anyone that’s interested in learning more about Horizon ETFs, or about Rohit, please make sure you check out horizons ETFs dot com. Thank you so much, Kyle. Really appreciate it. It’d be a pleasure to join you today.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance, and banking professionals. If you enjoyed what you heard in this episode, make sure to follow learnings wherever you listen to your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next

We chat with Pete Moore, Founder & Managing Partner of Integrity Square – a boutique investment banking and consulting firm.

In this episode, we discuss:

-What it’s like to do business and invest in HALO (Health, Active Lifestyle & Outdoors) – a $4.7 trillion category with tailwinds.

-How managers/leaders get cooked in a crock pot, not a microwave.

-The advantages of developing a narrowly-focused capital allocation strategy around industry or sector specializations.

-What it’s like to make seven figures investing in long-dated OTM options and then lose it all on an internet venture.

-More sports analogies than you’ll know what to do with… And so much more!

This episode has more ups and downs than a game of pickleball but with way more business stories, career insights, and hilarious anecdotes.

Gonna be an entrepreneur, you know, this is the craziest roller coaster ride you are going to go on. It affects every facet of your life. You might not get married. I don’t got married.

You know, I’ve got seven kids, but they’re all portfolio company investments. They’re not actual humans. So you kinda recalibrate and, you know, you miss certain parts of life that maybe you thought you could focus on, and you kinda waiting until alright. I forgot to do this deal.

I’m gonna, like, normalize my life and you realize that this is your life.

This is Net Learning.

The podcast that keeps finance and baking professionals ahead of the curve. In each episode, we focus on career growth and practical advice. While mixing in the Asian War Story. Join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and boxes.

Let’s get started.

This is a reminder that the views and opinions expressed by our guests today are his own. They do not necessarily reflect those of his firm, and nothing discussed in this interview should be interpreted as trading or investing advice. This podcast format is intended for educational purposes only. Hello, and welcome to Net Learning.

I’m your host, Kyle Petity. We have another terrific guest today. Pete Moore. Pete has an MBA from Harvard, and he brings nearly thirty years of investment banking and entrepreneurial experience.

Since it’s founding in twenty ten, Pete has served as managing director of a New York based Boutique private equity firm, and consultancy called Integrity Square. The firm works with entrepreneurs and businesses in the halo category. He’s a published author. His book is called Time to Win again, which we’ll talk about later.

And he also hosts a podcast that’s very popular, particularly in the health and fitness space. Pete, Welcome to the show. It’s great to have you. Thanks.

They’re gonna hire you as my hublaces. So I appreciate that. Alright. Yeah. My pleasure. This is great.

Look, we have a lot to unpack here. I think maybe for context before we get into the broader discussion, let’s start with Halo. It’s an acronym. And for our listeners that don’t know what Halo stands for and sort of what it encompasses.

Can you can you give us some back Sure. On the pickup where you left off on my resume. So back in ninety nine after Harvard Business School, I started working with a firm called Rockway Marine Partners, which was down in Florida. Right when I got down there, they had an acquisition lined up to acquire Gold’s gym international.

Being a varsity athlete, and, I guess, one of my accolades is I was the intramural athlete of the year back in nineteen ninety three at Emerory University, six forts Yeah. I I jumped at the opportunity to get into this category, which, you know, at the time, was just a health club industry, and then kind of brought yourself to health and fitness and then started to use the term wellness. So over time, I I coined myself as a health and wellness banker. And as I was using the word wellness, I always felt like it was like dropping a dead mic, and no one came to me with an awesome wellness idea.

So I went and Googled, you know, where’s the word wellness come from. And there was a guy who was a doctor at the Mayo Clinic back in the nineteen fifties. The name was doctor Albert Dunn, and he was a biostatistician looking at all the data and basically trying to come up with the AntonIM of illness. So if you’re not sick, you’re okay.

As you’ll see and hear from me, you know, I got a lot of energy. I want people to be amazing. I’m not looking to just keep people, you know, out of the health care system. So we’re taking around with some letters and we’re like, wow, the word halo health active lifestyle outdoors, kind of encompasses all the companies that are going after people that wanna have self care, wanna take you know, control their activities, wanna live a healthy active lifestyle.

So we coined the term halo, and we’re basically trying to say anyone who’s in the benefit of fitness, whether it’s food, whether it’s service, whether it’s destination travel, whether it’s fitness equipment, studios bricks and mortar, workout recovery. Everyone’s kind of under this overarching umbrella called Halo. And hopefully over the next five years, people say I’m part of the Halo sector, instead of saying, you know, I mean, in these one of these subcategories.

So from a standpoint of our firm integrity square, we’re trying to be the adviser to the Halo sector.

And our podcast called Halo Talks, and we have a boot camp, like a two week business school that we do online since COVID called Halo Academy. So I try to be as you see in the background here, I got a a Batman figure here. So I wanna be, like, captain halo. And our goal at integrity Square is basically trying to bring in as much capital as we can to solve loneliness, obesity, and diabetes.

And if they’re entrepreneurs that deserve to get that capital, they are going to figure out ways to to further that cause and create a halo lifestyle. And, hopefully, that eradicates a lot of the diseases that people are getting that are all based on their behavior and activities, and we could get people living a halo lifestyle. We’re gonna reduce the health care costs. People are gonna be happier. There’s probably less, you know, mass shootings. There’s probably less people on video games than there are people that are happier and and healthier. So that’s that’s our goal with the term halo.

That’s a great background context and a very aspirational future that, that I’m rather fond of myself. Just kinda connect the dots here for our listeners. Our global audience is a mostly finance and banking professionals. So I suppose a logical follow-up question Why should folks in the finance and banking community in particular care about Halo?

Yeah. Look, I mean, a lot of groups that are that raise capital You know, if you raise a billing to our fund, you could tell your potential investors, which are endowment funds and pension funds insurance companies, high net worth, investors are your generalist, and you’re just gonna do deals that that come to you or that you’re gonna seek out and you think they’re good management teams and and opportunities what’s happened more and more over the last fifteen years in private equities, you really need to specialize in certain categories and become effectively a resident expert because when you get a book on a deal, you basically have sixty to ninety days to decide whether that’s a good investment We think the Halo sector in general has a lot of tailwinds to it that I think people are going to con see continued growth.

You see that more and more consumers are trying to live this lifestyle. You see kids that are in, you know, youth sports that they’re trying to basically perform and train like professional athletes do. And that that gives a lot of opportunity for large companies, not just a Nike or adidas or an under armor or, you know, a cliff bar or a, you know, a quest nutrition. Like, there’s gonna be a lot of opportunities in the sector.

So what we’re trying to do is basically present the Halo sector as a category that if you’re trying to raise a fund and you’re saying, Hey, I wanna be in Yeah. I’m gonna do something in mental health. I’m gonna do something in, you know, the restaurant industry. I’m gonna do something in the halo sector But those are your three primary, you know, sectors that you’re going after.

We want people to use our term. Halo, which is more encompassing than just I’m looking to do a a rollout of or consolidation health club industry on the spa industry. So we dig the Halo sector.

Is, you know, four point seven trillion dollar industry globally. There’s ways to make a lot of money in this industry. There’s recurring revenue streams This is part of someone’s lifestyle, and it’s also enthusiasts brands as well. So that’s why we’re trying to basically put that up there and say, You know, if you’re raising a private equity or venture fund, you know, you should be considering halo as a as a a place to put capital towards.

Yeah. Maybe to build upon that. Like, talked about it being a really, really large industry, four point seven trillion dollars with tailwinds. Like, it’s maybe a two part question because a lot of investing enthusiasts listen to our show, So one of them would be, like, how can the everyday sort of average finance enthusiast get a piece of this?

Like, other, you know, their ETFs or things that are sort of tracking this space And two, what are what are some trends? Like, what are some interesting or emerging trends in the in the halo category that people should keep their eyes open for? Yeah. I mean, it’s a great point.

We came up with a halo ETF landscape that includes about fifty to seventy five companies that if we had our own you know, ETF that this is what the halo universe would look like. So we haven’t released that yet. We are talking to some banks about potentially trying to green light that over the next year or so. So that that’s a great question.

From a standpoint of companies that are publicly traded, that you can invest in. You got lifetime fitness, which is, the bellwether of the high end and and family side of the you know, health club industry. You know, I would argue it’s more of like an urban country club. At this point, they’re also going big into pickleball got my pickleball hat on in my shirt today.

Which is a big part of the hilo sector and getting people outdoors and solving some of the issue with loneliness and in chronic disease. So you’ve got lifetime fitness, and there’s some other companies that haven’t tracked as well recently, but exponential brands is a boutique provider franchisor of different concepts that are out there on the franchisor franchisee side, which the main one is called Pilates and and stretch labs. If you look at some of the companies that, you know, were were big COVID beneficiaries, you know, Peloton still publicly traded company as is as is nautilus.

There’s going to be several other big companies Over the next, that’s a twelve to twenty four months that are going to be public companies. There’s a group right now out there called Ever Commerce, which is a software company that powers several different types of bricks and mortar groups on a recurring SaaS revenue basis. Some of their competitors are a company called Zenote.

Another one’s ABC Fitness Solutions.

Mindbody used to be public. It’ll probably go public again. At some point, Daxco is another company that’s on the software side. So if you wanna play the space, you know, if if you wanna use like a military analogy, you know, you might not wanna lock in on who wins the war. You basically wanna provide ammunition and and military armaments, if you will, or, you know, like a defense system. So think about those companies on the software side, basically powering the billing, the AI, the marketing, the content management, you know, everything’s chipped to nuts that you need to run a health club chain or a franchisor.

One of these companies I mentioned Wellness Living’s another group out of Toronto, I think at some point, those companies are going to become publicly traded. They traded a multiple of revenue based on their SaaS. There’re probably gonna be some health club operators that come together and become public companies. That’s a little more tricky to to figure out, but you know, I could see a l a fitness or potentially some super regional chains coming together.

So if you’re a public investor There aren’t that many ways to play the space right now. It’s always been that way. Unfortunately, it used to be a bad black eye in the industry. It was a company called Bali’s total fitness.

That had some accounting irregularities and, you know, was always selling their receivables forward. So that wasn’t great for investors. A company called F forty five that went public through a spec during COVID, which we were always a naysayer on from a valuation standpoint and also from a business model standpoint. So what we do at Integrity Square, we’re typically looking through franchise disclosure agreements, which tell us what the unit economics are.

Of each one of the the franchise concepts. There’s something called item nineteen. That’s super important. So anyone on the audience here that’s looking at a franchise opportunity.

Typically, franchise wars that have strong networks and unit economics will publish summaries of of what their franchisees are doing from a revenue and an EBITDA standpoint. The ones that don’t publish it typically, you wanna dig deeper because there’s no reason not to publish that if it’s good data. So if they don’t have that, it probably is a good data. And then also in the franchise agreements, if you’re looking at those, there’s also a list of all the franchise easing.

I’ve found over time that If you call someone in the halo sector and you say, you ask them one question. And the question is, if you could do this again, would you? And if they say yes, it’s probably a healthy franchise or? And no, they’re probably trying to figure out a way to get out of it.

And it was bad investment and bad, you know, return on their on their time and, you know, probably a lot of personal liability. So to answer some of the questions related to, you know, how to play a space or how to think about it. Yeah. No.

That’s that’s terrific. And and an interesting way to sort of triage in a binary fashion with one simple question. Right? Like, what’d you do it again or or not?

Did you say it was three item nineteen when you’re reviewing the franchise? Yeah. So every if you wanna sell franchise in the US or in Canada, in in most countries, there’s consumer protection laws and and business laws that allow you as a a potential owner of a franchise to say, alright. I need to know everything I need to know.

I need to know if there’s any litigation the company. I need to know who the principles are, what their bios are. I need to know all the franchise fees that I’m going to pay. And that’s about a two hundred page document.

In that document, they’re broken up by section. So section nineteen or item nineteen is the is the area where the franchisor is allowed to publish all the results of their franchisees.

They do have some subjectivity on how they do that, which is causes concern because they might have a thousand franchisees, but only five hundred are reporting. And out of that five hundred, they might say, well, All of them haven’t been open for this amount of time or there’s reasons why we’re gonna keep some of them out, but it’s usually a pretty good indicator of what the unit economics are. And if you think about a retail location in the Halo sector, whether that’s a boutique studio, whether that’s a, like, a European wax where it’s like self care and, you know, personal care, or if it’s a workout recovery or spa, you typically need to make at least two thousand dollars in revenue per day.

For it to be a business that you wanna operate and that comes with some type of playbook. So the reason for franchising Historically was, hey, I’ve got this great business model. I don’t necessarily have the capital to actually roll it out myself. So I’m gonna let somebody else roll it out.

I’m gonna get four to to eight percent of their revenue, and I’ll basically give them an operating manual.

That should result in profits. So a lot of franchisors kinda jumped to selling franchises before they actually have nailed the model. Or figure out what their own special sauce is. So, you know, it’s it’s something you should always calibrate and you should do your research before you know, getting into anything. A lot of franchise wars now are trying to sell states or so large demographic market areas, DMAs, and that is a good system that has white space where private equity firms or venture firms could come in and help someone grow out of territory. And not be concerned that someone’s gonna post up, you know, a couple miles down the road.

Got it. Okay. It’s helpful. Is there anything uniquely challenging or even uniquely rewarding about working with business leaders and entrepreneurs and founders in the Halo ecosystem?

Yeah. It’s a good question. You know, historically, I think a lot of the gym owners, if I go back to, like, my gold gym roots You know, either had an affinity towards working out, wanna start their own business. Probably we’re deciding between opening up a bar, a restaurant, you know, a a shoe retailer, several of my clients had to be, like, in the sneaker and shoe business.

Yeah. And decided to to go into the health club industry because that’s where their passions were. So you have you have people that, you know, wake up every day. You know, they they they work out.

I’d say ninety percent of the people I work with you know, this is their lifestyle. It’s not a a side business or something that they don’t live that lifestyle on their own. There really are you know, indicative of the brand that they built or the brand that they represent. And then that’s important.

So I love the enthusiasm and passion. That they bring about helping people change lives, including their own, and employ people that, you know, maybe don’t wanna sit behind a desk you know, and working a bank or a consulting firm coming out of college. Yeah. We were working with a group called game plan that provides opportunities for d one, d two, and d three college athletes to get into the halo sector, either as group exercise instructors front desk workers, district managers, salespeople.

So I like to call motivational specialists right now. It’s not really showing somebody on this. We’re basically motivating them to to take action and the endorphins that, you know, and the way you feel about yourself, it obviously raises your your confidence level as well. So, yep, the thing I love about it is that people care.

Also, I don’t have to get dressed up for selfish reasons. I don’t have to put a suit in Tyler. I usually have my football with me. I got my wide receiver gloves.

I got a back end set, and, you know, I’m going on the road. And I I was kind of blessed with the fact that I got a degree from Emery and from Harvard Business School so I can talk to talk on the private equity groups. At the same time, I’m like the soccer goalie from high school, you know, in Long Island. So I’m trying to kinda toggle between, you know, I’ve talked to you about all the financial components, and I’ll go toe to toe with you on but at the end of the day, I’m basically like representing, protecting, and advising entrepreneurs doing their first or second private equity deal.

And if you’re not if you don’t have representation and you’re doing a deal with a private equity group or venture group, it it’s kinda like playing chess Did you play checkers, they’re playing chess? So you really need somebody to make sure, you know, hey, this deal makes sense. You’re protected. So we use Integrity Square My firm’s name comes from.

We used to all be in Union Square down in the fourteenth Street in Manhattan. So we used to always say, let’s let’s meet the square.

And then we said, well, if you have integrity, you’re allowed in the square. If you’re a client of integrity square, you’re protected by the square. So kinda old school, But I do believe that, you know, an entrepreneur who’s doing their first deal, this is the most important asset they have. This is basically their life. And we take it very seriously to make sure that they’re protected and that they have a deal that makes sense for them over the next, you know, three to five years.

Cool.

Let’s do a quick game. What do you think? Fire away, bro. I’ll get get to know you.

So I call it lightning round. It’s not time, but it’s gotta be fast. Right? So I’ll give you a list of questions.

Not here to sit around and think about it. I’m gonna shoot it up. I didn’t get that sense. I, in fact, we said about dressing up earlier, because I even wore my I even wore my CFI active shirt for you.

I thought you would I thought you’d appreciate that. I appreciate it, Bill. Here goes. The questions are quick.

It’d be like boxers are brief. Right? That’s not the actual question. We don’t have to talk about undergarments, but that’s sort of idea.

Okay? Go ahead. Let’s let’s start with a food question. Italian or Japanese.

Japanese, value or growth, value.

Country music or techno.

Techano or or hip hop. Okay. What was your first job as a kid?

I used to sell seashells, that I picked up in Santa Bell Island with little googly eyes on them, and I put little chains on them. I sell them a dirt gray for for a dollar each. Third grade. That’s an early entrepreneurship. I love it. Text or call.

Text, but, I I call people all the time. K. If you get on a private jet anywhere in the world, where are you headed?

Probably where I am right now. It was Patton Beach, California.

Okay. I like that. You got a day off. No professional commitments. Are you a going to the spa or b hitting a roller coaster at six flags.

I’m hitting a spot. SoulCyight going something active. I’m not I’m not I’m not a massage guy.

Okay. Fair enough. That was good. You were good at that. I have a quote, and I’m gonna ask you I’m gonna read it first, and I’m gonna ask you to whom it’s attributable.

You are competing in business not just to live but to win. Remember, the game of life and business is to achieve, to win, to contest, to learn from the losses, make adjustments, and enjoy the results of hard work. Whose quote is that? I mean, it might be my partner is Dave Ganlin, we might have put some iteration of that in a book. I don’t know if it was an actual, you know, coach or or an author.

Are you gonna disclose that to me?

Yeah. It it is from the book. Yeah. It is. I got my copy. My guy, Gallelly, who’s my partner and my chief marketing officer.

Scripted that up as, as part of our forward. And, look, at the end of the day, you know, your business, most of us have been either, you know, Varcie athletes or high school athletes. You really gotta if you’re an entrepreneur, you’re gonna win every day. You’re gonna lose every day.

It’s almost like if you played a doubleheader in baseball and you better figure out a way to learn from the losses, realize that every month, you’re not gonna go thirty, you know. And treat yourself like a professional athlete and kinda move forward to the next day. But I do believe, you know, with the book time to win again, that you really have to have confidence to go out there on the field every day, and that you wanna win. And those wins might not be, you know, objective.

They might be subjective. You might get you know, somebody that comes in and says, hey, you you saved my life because, you know, I lost twenty five pounds or, hey, my my kids been in here doing group exercise training made the JV team. You know, so you have, like, these little nuggets of positivity, and you gotta stack him in his wins because If you’re gonna be a an entrepreneur, you know, this is the craziest roller coaster ride you are going to go on. It affects every facet of your life.

You might not get married. I don’t got married. You know, I’ve got seven kids, but they’re all portfolio company investments. They’re not actual humans.

So you kinda recalibrate and, you know, you miss certain parts of life. That maybe you thought you could focus on and you kinda waiting until alright. I forgot to do this deal. I’m gonna, like, normalize my life and you realize that this is your life.

Got it. It’s great advice. Obviously, I don’t wanna give away the contents of the book. I’m I obviously want people to buy it, but I I cherry picked a couple of topics, and I was hoping that I could read read them off and then give our listeners from a flavor of the content while delivering a bit of added insight directly from the author.

So I’ll I’ll I’ll give you three you could just weigh in on each of these topics. And then if there’s anything else, you wanna add at the end. The the first one is man versus zone. This one really resonated with me.

I’d love to hear your perspective directly from the author. Yeah. Sure. So, you know, back in high school, I was the the captain of the basketball team.

We used to play against his team, Carrie. Back in the middle of the mountains. It was that was a w Tressper Clark versus Kerry. And, there was a guy who’s awesome players, like, six three was going to play St.

John’s I think it’s Derek Brown. He was a good friend back in the day. So we always used to play a box in one. And I I was the one that that guarded him.

And I was responsible for him, you know, up and down to four. And, I think he was averaging, like, thirty points a game. And, again, Susie, average, less than ten. And I always thought about You know, when I have a new client, let’s take a health club as an example, you know, instead of saying like, hey, here’s our personal training department.

Or here’s, like, all the people that work here. Let’s kinda just man up one on one. So, Kyle, if you come in and you wanna lose twenty five pounds and you wanna get condition for you know, flag football. Why don’t why don’t I make that my responsibility?

You know, Pete Moore’s responsibility as a personal trainer or as a motivational specialist, not like three people that work in sales or three people that are in personal training. But I wanna I wanna be your mentor. I wanna be responsible for you. And you know, you can’t zone up on a company.

And a lot of people that run health clubs and big membership bases think that the membership beast is too big to personalize it. So to give you an example, we are working with New York sports clubs. During COVID. And they had lost a hundred thousand members for several different reasons, you know, one because they overbilled people pissed people off, but there were two hundred thousand members as of, like, what we got involved on the restructuring.

And I said, how many Employees do we have. And we had, like, close to, like, two thousand employees, part time, personal trainers. So I’m like, you know what? That’s like, you know, like a hundred people, hundred members per employee.

There’s no reason why we can’t just get on the phone, or have a cup of coffee with a hundred to one. Right? So I’m manning up on a hundred members. But if you kinda look at it, you say, like, oh, I can’t.

I can’t talk to all these people. Right? I just have to, like, play zone, hope that they come in, hope they don’t cancel. That’s not the way to run a business.

Like, the what? I tell people now that, you know, if you’re in the health club business and you’re okay with with forty percent of your members, you know, leaving every year, you are less effective then, like, the the a lap band surgery that somebody gets. That’s like fifty four percent success rate. You’re, like, fifty four to, like, sixty.

So you’re basically, like, the equivalent of a lap band where you should be at, like, eighty to ninety percent success rate. And that’s all based on you and I having a personal relationship. You don’t come into the club. I’m gonna come pick you up.

You know, I’m calling you because you’re, like, you’re my guy. Right? And I’m responsible for you just like I am in a basketball game. So To answer your question, you know, man versus zone is there’s no reason why your personnel or man or woman isn’t responsible for actual people and have a relationship with them.

And then I say, you know, look, make it hard to break up with me. Right? Nobody does that in the health club industry. They think it’s just a number You know, but people thousands of people are canceling their memberships electronically or by sending in a certified letter.

Like, that is just unacceptable. Like, I wanna own this relationship. I wanna actually succeed with what your objectives are. And it’s it’s all me, not on, like, our company.

So that’s the man versus own. Such a great analogy too, and a lot of takeaways for the corporate world. Right? I mean, having worked in banking for a long time, it’s it’s easy to say, yeah, you know, talk to our associate team or what, but someone’s gotta own, take ownership of that relationship.

And to your point, make it hard to break up. That’s a really good takeaway. So that second one, only hire two times a year.

Tell us with our. You you know, I’ve been part of companies where they’re constantly looking for new pit people. Right? So they got job listings out there and they’re trying to hire a new personal trainer. They’re trying to hire Quebec’s instructor.

They’re trying to hire more salespeople. And the reality is Like, if I’m a if I’m a team, I remember being in in camp, you know, summer camp. Like, if you made the under sixteen basketball team, Like, there were ten ten people that made that team. And if there was one or two people that got hurt or couldn’t make it or something happened, like we weren’t, like, bringing on new people to be on the end of sixteen.

Like, you’re we’re just down to eight. You know, we’re down to seven people. Like, we’re playing, and this is the team that we’re fielding. And I feel like in a lot of companies, they spent so much time recruiting that they forgot the fact that, like, We got a bench.

Right? And and the only way I can get my bench players to actually step up is I have to test them. Right? I have to give them opportunity.

And by bringing in more and more people, it’s confusing from, like, how do I actually, like, have a culture? How do I have people, like, next man up you know, as as you hear in, like, division one sports all the time, you know, and the SCC is an example. Like, they’re not going to, like, recruiting people that are, you know, used to play in our, you know, you know, at the grocery store, something to come in wide receiver. No.

It’s somebody else on the tee. So I kinda look at it and say, look, they can be yourself as a baseball team. Alright? We’re gonna have this this amount of people.

And then right before the all star break, we’re gonna make some changes. And we’re gonna decide whether we’re doubling down and we’re gonna make the playoffs or basically dumping our salaries in order to, like, freshen our team for for next year. So if you look at at teams, there’s a consistent number of people on the team. They’re all wearing the uniform.

They’re all have the camaraderie, and they’re not constantly hiring people. And interviewing people because when you do that, you take away from actually playing the game that you’re supposed to play. So that I think is something that has not been implemented in most businesses But this book is more to, like, raise the thought and and have people think about why are we interviewing everybody all the time? Like, I got a manager.

I got personal trainers. I’m actually running a playbook, and I’m like, taking time out. It’s like every hour. To interview somebody else, I already got people on the on the bench.

So let me just have them step up. So that that’s where that one came from. No. It’s a good one.

Last one, identify your top players for next season now.

Yeah. So a lot of health clubs that are in growth mode or a lot of franchisees that are in growth mode, they’re constantly trying to bring in you know, fresh talent. There’s a guy that runs one of the largest orange stories, very close friend of mine, his name’s Terry Blakeic, and he’s down in in Austin, Texas. And, in an interview I did with him, he says, look, I can only grow as fast as the talent I could put onto the field.

He’s like, I cannot microwave a manager. Alright. I have to crock pot a manager. So when you think about crock potting, a manager and a person you gotta actually invest the time in them understanding how the playbook works.

Just like a quarterback, you know, who comes in you know, as a as a wookie. They’re not like necessarily thrown in to the game right away. Like, they they wanna be there for a year or two and, like, get them accustomed to is how this game is, is how fast it is. You know, here’s our offensive, you know, playbook, and it’s sophisticated.

Right? So I feel like a lot of companies look at You know, oh, I’m gonna go hire like a general manager from another club. Right? They come with their own playbook and their own way of doing things.

So the best way to grow a team is always through your farm system. And your farm system are, you know, there there’s people that Jersey Strong, as an example, is a good friend of mine, Doug, Doug Hallhurst, who used to be, like, intern in the office, and now I was, like, the CFO of the company at Jersey Strong. You know, there’s a guy who used to be, you know, a personal trader, now he’s running, you know, personal training and sales for the entire company. Right?

So that those are the types of people you wanna bring into your organization. And not necessarily, you know, have people come in laterally or in banking, you know, have people come in laterally, which usually doesn’t work. Because they come with their own way of thinking, and they’re not really part of, like, the DNA of the company. So I always say let’s figure out who our athletes are.

Let’s figure out who’s got potential and let’s coddle that and create our own, you know, franchise players.

Love it.

Like to transition into a couple of career questions, if you don’t mind. Going back to your days at Emery, in the nineties, you were thinking about career opportunities, and I think you started It was a JPMorgan Chase originally. What what was it about investment banking that that attracted you?

Look, my father was a CFO of a company, CEO, a of a beverage equipment and food company. So I grew up. I was really strong in math. Not that strong in English.

Didn’t really like to read much back in the day. So I was always looking at finance as a potential place for me to to land. Back in the day, Emery was not didn’t have the brand equity that it does today. So I had sent resumes to all the big investment banks and, you know, said I was overqualified.

They didn’t have a spot or whatever. They They tell you in those one piece letters. And I was at a a career fair in New York that my mom forced me to go to, and there was no one standing in front of the Chase Manhattan Bank. Booth at the time.

I got fast tracked into an interview there, went into their credit analyst program, and then people remember back in the day before direct deposit, these give you checks. And my check said Chaseman Hand Bank mergers and acquisitions group. Back in ninety four, I didn’t even know they had a burgers and acquisitions group in the bank. And then kinda just, you know, picked up on it from there.

So It’s a great learning ground because there’s no other place except investment banking and consulting where you can actually be interfacing or supporting a a CEO or management team at age twenty two. So you you definitely hit the ground running. And, you know, a lot of this business as you know, is, you know, an apprenticeship type of business where you gotta learn, you know, I kinda say every deal is like a movie. You know, and if you see enough movies, you kinda know how it’s gonna play out.

And then the financial tools and skills that you need, you know, it’s it’s really basic math. There’s really not. Much else going on in in in finance or investment banking.

So it was a great learning ground for me. I’m glad I did it. I was gonna take a job as a management consultant. And thankfully, I didn’t do that because they kinda ship you out to I got shipped to Huntsville, Alabama one time as a management consulting intern.

During business school, and I thought I didn’t know what I was doing there. So, Bankly was a great way. And also, if you have ADD, You know, you could work at three or four or five projects at the same time. And, you know, they roll off and cycle in.

So it was the right fit for me. Yeah. Good great answer.

So Integrity Square wasn’t your first entrepreneurial endeavor in the I think it was the early two thousands, you cofounded a software company that played in the fitness and nutrition space. Can you tell us a little bit about that and some of the lessons learned? I got plenty of lessons on Outlook, bro. I’ll tell you a quick story to to give you some context. So while I was at business school in nineteen ninety, e ninety nine, The internet was going crazy. I had worked at Chase, and I had worked at Donaldson Lufkin and Jenrette, and I had a couple hundred thousand dollars, kinda saved up from that and some, like, permits for money. And I was watching CNBC in between classes.

And I I my dad pointed out that you can buy long term equity appreciation security. So basically I had long term options on fast growing companies. So if AOL back in the day was at ten dollars, a share for a dollar, you could buy an option that says over the next two years, it’s gonna get to sixty. You know, if you look at that on paper, it’s kinda like a sucker bet.

Wherever owned the stock is basically generating a little more, you know, income for themselves by putting a way out of the way out of the money option. And while I was in business school, AOL went from, like, ten to, like, I don’t know, five hundred or something. So I had a couple million dollars In my bank account, I didn’t know what money was back in the day then, but I knew I wanted to get it to private equity. So I went down to private equity.

I thought I was the smartest guy you know, knowledgeable about what where the internet was going. I went down to private equity. They bought Gold’s gym international, and a good friend of mine who I worked for Now, and he’s an investor in our company, got named Peter Brock. You know, he was leading that investment on Gold.

It was his first fund on his own, two hundred million dollar fund. And I said, Hey, we gotta do an internet play here. We should do online fitness nutrition programs. We should do sales management software.

Sending leads to all of our franchisees, and he walked me to the front of the room. And he says, it’s called Brock Miranda Partners. I get twenty seven years old. See, I got a lot of energy.

I need you to, like, help me buy health clubs, do the diligence, PowerPoint, excel. Yeah. I don’t need you dictating the strategy. I’m not sure why I can’t put in posh v s at gold shim dot com, and I’m not that good with email attachments.

So I kinda sat there for a while. Try to be like a good, you know, corporate citizen, do my work, but I always had this itch of, like, hey, this internet’s gonna change the world. I think Gold is the best brand out there. And I started up a software company.

I got a three year contract with golds to basically run golds gym dot com. Went out to Arizona because I needed to find a tech team And every two weeks, I took money out of that AOL account I told you about and covered payroll. Dan, when the servers, needed to get paid, I would If I didn’t have any money left, I’d take credit cards out because they don’t teach you at Harvard Business School or any Business School. Like, Is it okay to fail?

Is it okay to wind down something? And this was my first, you know, foray. We raised some money from athletes and the NFL and some some private investors, but the internet was not ready. The broadband wasn’t there, and the health club industry wasn’t ready for this technology.

There was no WiFi. There was no mobile phone. So it was way ahead of its time. And one of the things I learned there is that even if you think you have a great business model, if your your client base is not ready to embrace it or pay for it, or there’s not the pipes to get it to them, if you will.

You know, loading up of a nutrition program on AOL, you know, on a twenty eight heat modem, you know, might take you five minutes to, like, download. You know, the nutrition plan went now. It’s like five seconds. So it’s way ahead with of its time.

And, you know, I basically went all in on this until November fifteenth of two thousand three. So from April first to to of two thousand to two thousand three, I was running a software company. And I jumped around to basically every independent health club operator as well as all the gold GM franchisees and are trying to sell them software.

As I was selling software and have them use our web platform, it was usually in their house because they didn’t wanna pay for a DSL line or a gateway or a dull computer. So as things were uploading, you know, a two meg picture of their group exercise room, divided by a twenty eight e modem, you know, I might be in there all night. So they’re like, hey, man, what’s EBITDA again? How do I do this model?

Can you help me with this bank presentation? How do I do stock options for my employees? So I was kind of a banker. Running around in internet clothing, and I was a crazy entrepreneur.

So if you said, hey, you know, I’ve got five clubs in Vancouver. I’ll be like, dude, I’ll be there. I’m gonna be in Vancouver. Wasn’t really gonna be in Vancouver.

I’m going to get to Vancouver and sell me something. So I was kind of like, I had two cell phones, one was Florida, one was Arizona. As we downsized, I used to, like, sleep on the floor of the of of our our software company. One of those, like, mats that you’d have on, like, a lounge chair.

And I literally pick up the phone no matter what time it was like, fitness. How can I help you? And I didn’t know what to do because I didn’t know how to wind it down. I didn’t know how to shrink it any more than we could.

And then November fifteenth of two thousand three, I went to Kmart to buy a work belt for my buddy for his birthday. It was like twenty two dollars. And I literally dropped every credit card I had, and I left Kmart without a work belt because I was all in on my on my venture. And then I went back to banking, literally, three days later in New York at a firm called Seagen, and basically used all the knowledge I I learned from the health club industry and how these people operate clubs in order to become a banker to the sector and did the crunch deal, financial for Equinox, Massage envy, urban active, several gold gym rebrands.

So I kinda used that that software venture is kind of a second business school, if you will. Yep. And because of that venture, when I meet with entrepreneurs, it’s a totally different conversation than you would have with a banker that worked on Wall Street that works in a financial, you know, Excel model and PowerPoint, and, you know, it doesn’t know what it’s like to transfer money from your personal account into your business account to cover payroll. So it was definitely a very humbling experience.

I thought I knew everything I needed to know. And, you know, it’s it’s really hard to build a business, and it’s really to your point growth versus value that you asked me before that you gotta build value and actually understand the business and then kinda grow from there. So I’m a value guy. And I don’t wanna see growth on a piece of paper.

It looks like a hockey stick. I wanna see what frustration you’re solving. How much does somebody wanna pay for it? And Are are you able to replicate that or scale that business?

That’s kinda how I look at things.

Sage advice. Know you have your own book and and podcast, and we’ll we’ll link to both in the show notes. Maybe excluding those, are there any other sort of, like, resources out there that you into our listeners for career guidance, career mobility, like, you know, maybe it’s a thought leader, a book, a series or something.

You know, there there’s a book called the other goal, g o a l, that, he talks about how to create a supply seen how to, like, operate a a a team and a group as efficiently as possible and what you can actually achieve. So that’s one of my you know, best books that I’ve ever read. I also like this book freakonomics. It’s like kinda tells you, like, the story behind the story.

And I think if you’re doing when you’re in a business, and you look at business opportunities or you look at competitors, you gotta figure out, like, why they do things the way they do it. And we run something called the Halo Academy, which is a two week business boot camp. We’ve been doing it over Zoom, but is an example for for listeners here, you know, planet fitness, you know, their their average membership is, you know, nineteen to twenty five dollars. And when I was going through, when they started coming out, I would go to these seminars and talk to the gold gym operators.

And I’d say, you gotta look out for this company, like, their business model works. And they’re like, they’re gonna be out of business in a couple of years. You know, they they don’t sell memberships at high enough rates. They don’t have personal training.

They’re off group exercise, didn’t have day care. And what what people didn’t realize is going back to, like, the item nineteen that I mentioned in the franchise agreements.

Plat Fitness was able to get ten thousand members per location, and they would do ten thousand members.

By spending thirteen thousand dollars a month on advertising, where the average health club spends three thousand dollars a month, and has four thousand members back in the day. So If you take a look at that, and then they have something called an annual enhancement fee, or a club maintenance fee, and that’s twenty nine dollars.

But it’s twenty nine dollars on ten thousand members, not twenty nine dollars on four thousand members. So the average planet fitness does two million dollars of revenue and about seven hundred thousand dollars of of EBITDA or clump level cash flow. And forty to fifty percent of that is with the annual enhancement fee. So if you say, like, what’s the special sauce of that business?

If they did not have, the twenty nine dollar annual enhancement fee, it would not be a good business to own. So as you kinda look at at businesses, it’s really important to kinda unravel You know, like, the the freakonomics was about, you know, why is it, you know, the murder rate down it, you know, it had to do with, like, abortion. You know, why are there, you know, hockey players In Canada, as an example, most of them are were born between January and April. You know, why is that?

Because they’re stronger Danna Kidd is born in in November or December. Right?

Based on their their, they’ve been a wrestler for another six months, so they’re stronger. So those kids actually get to be on the a team. And the kids are on the a team, get the best ice hockey time to get the best coaches. You know, so there are reasons behind, you know, oh, random, like, January to April.

Oh, what? That’s that’s a random coincidence. It’s not It’s not random. It’s because the development of a human, you know, between ages four and seven.

You know, if I’m always eight months older than you, I might be like, five times strong within you, you know? Yeah. So At a young age and it compounds over time. Right?

Yeah. Yeah. So so I I think you gotta always like, look at a business and say, Why do they do it this way? Maybe they got lucky.

You know, you go on Southwest Airlines, like, there’s nothing random about that. Like, they don’t have seat assignments because They wanna get that plane flipped quickly. They don’t have like kosher meals or like Italian or Japanese, you know, that you could buy because they don’t wanna stock the plane. Right?

They’ve got only seven twenty sevens, Boeing’s flight because they don’t wanna have a spare parts department that has, like, eighteen different you know, types of aircraft that you have to provide spare ports to. In Southwest, the reason why that that business model works is because all these little nuances that allow them to get a plane to the gate and off the gate in nineteen minutes. Where the average airline has forty two minutes between hitting the gate and leaving. So Southwest could fly two more flights a day than any other airline.

Because of the business model. So those are some of the things I I like to think about trying to unravel and then say, how can I apply that to the helo sector? Yeah. And it also like unlimited memberships have to be limited. Orange theory, you get eight eight eight workouts a month.

Whereas you go to a yoga studio or bar studio, they might sell you a monthly membership. Next thing you know, that person’s in there for two hundred bucks. And he’d been there twenty five times, you know, out of thirty days. So Orange Steer’s making twenty dollars per visit. And the bar studio or the yoga studio is making seven eight dollars per visit. Big difference.

Some great lessons there to be had about due diligence. So back in the day when I used to ask people for coffee to talk about their careers, I always made it a policy or, like, a priority, I guess, to try and add value for them know, they’re giving me their time, their expertise. And I I think that’s only fair that I offer something in return. So in the spirit of generosity, Pete, what can I do to help you or the integrity square team?

Well, look, I mean, we’re trying to get the hilo name out there. So anything that you guys are doing in and around the sector would be extremely helpful if you got entrepreneurs that you meet that are, you know, looking to to get into the space. You gotta go in eyes wide open. You know, Hilo Academy is is is really important for people to understand how the benchmarks work in the KPIs.

And if you’re gonna sit down with an investor, You know, you really gotta know the history of the industry that you’re going into. So I I would say those, you know, two things as like focal points So we’re at we’re at time, Pete. You’ve given us a ton to think about. I I thank you for that.

Is where can people go to learn more about Integrity Square, about the Halo Space more broadly? Yeah. Sure. I mean, our our main podcast, we’ve got over four hundred fifty podcasts.

So when you catch up, I’m happy to be on one of your anniversary shows. We’ve been doing it since two thousand seventeen now. So the full six years of podcasting.

So it’s hilo talks dot com. It’s on Apple, Spotify, wherever you wanna go. It’s it’s up there. It’s one of the top seven hundred podcasts in the health and fitness global charitable rankings.

We’ve also got Halo Academy, which I believe is the halo academy dot com. We could sign up. We’ve got a class coming up in timber. That’s halo academy one zero one. We usually take twenty five to thirty students that are all executives or entrepreneurs.

And then Integrity s q dot com is our firm on the banking side. Okay. Well, Pete, honestly, thanks so much for your time. Really, really insightful, really fun chat.

Cool. Alright, man. Well, keep doing what you’re doing. Everything matters. Appreciate it. Awesome.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an on a mission to enhance the skills, knowledge, and productivity of finance, and banking professionals. If you enjoyed what you heard in this episode, make sure to follow net learnings wherever you listen your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next time

We chat with Robert Pulkys, SVP Trade Execution at Waratah Capital—a Toronto-based Hedge Fund with over $4bn in assets.

In this episode:

-How trading is like a puzzle (but where people keep stealing your pieces!)

-“Must have” skills for aspiring traders

-How sell-side and buy-side dynamics have evolved

-What it was like on a trading desk during the GFC and the Coronavirus pandemic

-Who is TINA?

And so much more!

It’s ultimately it’s a large meta game and you’re you’re competing against some of the smartest people in the world, and and that’s what really can make it rewarding and extremely frustrating too because There’s enormous amounts of capital, both financial and brainpower that you’re up against.

This is Net Learning.

The podcast that keeps finance and baking professionals ahead of the curve. In each episode, we focus on career growth and practical advice, while mixing in the occasional war story. Join us as we into the minds of leaders and experts at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Petity. Our guest today is Robert Polke, senior vice president, trade execution at Warata Capital Advisors, a Toronto based hedge fund. Rob has over fifteen years, of capital markets, asset management, and sales and trading experience.

Prior to joining Worata in two thousand and thirteen, He had stops at several other high profile firms, including high street asset management and Ontario teacher’s pension plan. It’s our pleasure today to host Rob and to try and download a fraction of the wisdom he’s earned over the course of his career. Rob, welcome to the show. Thanks for having me call.

Just a reminder that the views and opinions expressed by our guests today are his own. They do not reflect those of his firm. Further, nothing discussed in this interview should be interpreted as trading or investing advice. This podcast format is intended for educational purposes.

Now Rob, by way of background, members of the CFI community work in a very wide variety of finance, banking, accounting, consulting, and leadership roles among others. But whatever it is they’re doing, feel like everyone sort of secretly wishes they were a trainer. So I’m especially excited today to talk about your experience as a professional one.

Maybe we can start by zooming out for a minute. How should people think about the differences and the similarities between a traditional asset manager and a hedge fund?

So we are, predominantly an equity long short investor hedge fund versus a traditional equity asset manager. Those guys would say have a hundred dollars worth of capital, and they probably deploy, you know, ninety five ninety ninety seven percent of that into equities. Leave a little bit of a cash buffer. Us, on the other hand, we can use leverage.

So we will go bigger than that hundred dollars. So we’ll employ leverage. And then the big difference is we will short stocks. So we’ll take bets against stocks as well, which a traditional equity asset manager probably won’t do.

And I think there’s some nuance around regulation as well and and and marketing and things of that nature? Absolutely. It’s very strict.

Most of our clients will be accredited investors, and there’s a much higher threshold. Left to pull on this thread a little more. Maybe we can talk kind of in general terms about the institutional equity landscape broadly. Like, can you kinda break down what makes up the buy side and the sell side? We we hear these terms a lot and and sort of how they interact with each other.

Sure. The buy side encompasses hedge funds, mutual funds, pension funds. And the sell side would be the broker dealer network whose primary job is, primary and secondary issuances of stock. And then within those within the buy side, you typically have portfolio managers who’d be making decisions on investments You’d have analysts supporting them and then you’d have a trading team for when the rubber hits the road, you know, deploying that capital in the market.

On the sell side, you’d have somewhat different roles. You’d have analysts researching stocks. You’d have traders doing the same thing I’m doing on the other side. And then you’d have an ECM group, which would be, you know, involved with with corporates, in raising capital.

ECM being equity capital markets? Correct. Yeah. At the risk of overgeneralizing, are there any kind of consistent themes in terms of roles across buy side versus sell side?

And I’m thinking, like, easy to understand dimensions, like work life balance, compensation, like, how should people think about if they’re making that decision at at that fork in the road?

It’s changed a lot. So when I started in the business, called two thousand seven, the the sell side had a lot more power. Commissions were higher. And what’s there’s there’s been a lot of changes in the broader backdrop.

One would be not the flight, but the the growth of passive investing. So ETFs passive management with extremely low fees is eaten into some of the sell side margins, but also the buy side margins. So active management has been tougher. There’s been a wave of consolidation on the buy side space, which has also helped drop fees.

But pragmatically for your audience, it’s a buy side compensation has probably been trending higher, and sell side compensation probably been going lower. Over the last ten, twenty years. I’d like to chat maybe a little bit about about hedge funds in general. Obviously, every firm’s a little different, but I imagine there are people analyzing companies that people executing trades like you. There are there’s a portfolio manager compliance.

And obviously there’s folks going out in, like, finding new investment dollars and managing those investor relationships. Like, how do you sort of break down the different functional areas within a hedge fund?

Oh, sure. So the the cornerstone would be the investment team. Again, portfolio managers, analysts, and traders, but then behind that, you have a massive support network. So traditionally, we’d have operations or back office, which would be making sure the trades get settled and and the day to day functions are going smoothly.

A lot of people like us would have a a risk group, which is very conscious of, you know, basic risks like beta, but also exposures to factors and different different things. So you’re not, you know, quote unquote blindsided by risk that you didn’t know you were taking. And then you would have a sales and marketing group, which would be supporting clients talking to clients as well as canvassing for new business. So sort of three major core divisions is one of them more of a natural entry point for people considering this as a as a career?

On the buy side, traditionally a place like ours, we’re looking to hire someone a few years out of school with a little bit of experience. And on the analyst portfolio management side, you’re looking at consulting or investment banking would be natural places to come in. On the sell side, the banks generally have big rotational programs. Whether they’ll be hiring at undergrad or MBA.

And that could be into an investment banking role or into, like a sales and trading role. Those would be the natural but buy side entry level is difficult. It’s extremely competitive. Certainly way more competitive than when I started.

I was lucky to get in. You’re being modest.

But, yeah, but buy side’s a tough, a tough, not to crack.

Now in terms of fund mechanics, let’s sort of talk fund life cycle. Do most hedge funds raise capital in like a closed pool? Or are you taking on investors all the time on a on like a rolling basis. The closed capital is more of a private equity model for, you know, most funds like us. It’s on a a rolling basis.

And, you’d have, certain liquidity constraints on when you can get in when, when you can get out. Well, that was my next question around sort of life cycle? When when does it end? Like, or how could someone take capital out?

There typically would be a notice period and a lot of that has to do it makes it easier for us to manage our positions, hedge funds to manage positions. You know, I I mentioned that oftentimes we are employing leverage. Mhmm. And the worst worst case scenario for any levered fund would be, you know, investors kinda leaving all at once.

And then it this usually in like a left tail type risk off environment. And then that kinda those fun falls would exacerbate themselves. You certainly saw some of that in March twenty twenty in in the GFC. These kind of things happen.

So that’s why there’s generally, constraints.

Well, we also saw that massive flows of cash can be bad even for a traditional financial institution. Absolutely. Yeah. And with interest rates where they are too, you know, that’s now competition.

We used to say post GFC. There was an acronym Tina, which meant there is no alternative. I you had to be in risk assets because rates on fixed income and cash were were so low that, you know, people reach for return, and and that’s pretty common in in that out that time in the cycle. Great insight.

Do you wanna play a game? Sure. Alright. Sort of making this up as I go.

So so workshopping the name, and I’d love to hear from our listeners if, if they like this, but I’m I’m thinking middle school money manager. Now it’s a word game. I’m gonna throw out an investing theme word and the the game is that you need to define it. But the catch, of course, is that you have to pretend I’m in middle school.

Just make it really, really easy And in fact, if you followed my portfolio over the last few years, you might actually think I’m in middle school. So this may not be such a reach. Do you understand the rules? I’m good to go.

Okay.

ESG.

That’s an acronym for environmental social and governance. And what that is trying to do is steer investors into taking into account some of the negative externalities. You know, there are let’s say there are issues with capitalism and then one big one would be, the problem with the discount rate and What that means is very far in the future the way financial modeling really works, it doesn’t mean a lot in the traditional finance apparatus, if you will. So ESG is is taking into account some of those externalities and and bringing them to the forefront of our consciousness.

And, you know, that that’s things like climate change or easy stuff low hanging fruit, like smoking, guns, anything where people thought maybe there was a, you know, a negative societal impact.

Where it’s not just about the bottom line.

That makes sense. I I don’t know when I wish I went to your middle school. That was, yeah, first. I forgot we were doing the middle, the middle school version.

That’s Okay. I mean, my my kids are coming home telling me to save the polar bear. So it’s obviously — Okay. — top of mind top of mind for them.

Alright.

Next word. Custodian.

Okay. Oh, so middle school version. The custodian is holding all our securities in cash. You know, it’s organization that safeguards that for us. What is a prime broker?

A custodian that will also lend us money, lets us take leverage, And they’ll also provide us the securities that we’re shorting. We have to legally borrow them before we sell them so that prime brokers engage in that activity as well.

What is our non middle school version again? Well, it was closer. What is a derivative?

Drivev is a security that derives its value from an underlying asset, a different asset.

Well, you definitely can’t use the word in the definition of the word.

No. Let’s try again. That’s a tough one. Let’s try again.

Middle school version.

Oh, jeez. I don’t know, man. Pass. Okay. Pass. Let’s look at some examples of derivatives. What is a put?

The right to sell something.

The right, but not the obligation?

Correct. That’s the the b school, as I recall it. Yeah. So easy version b, stocks of a hundred dollars, I might be worried it’s gonna go down. I could buy a put option, which I probably one of your questions for the right to sell it at ninety eight dollars. You know, maybe I was worried it would go down to to ninety so that I’m protected from losses below ninety eight.

Okay. What is a call option?

At the right to buy. And this this would be employed where, you know, maybe you thought a a stock would go up so you could lock in the right to buy at a certain price.

Okay.

One more, if you don’t mind. What is this paired trade?

Hair trade is a common in the hedge fund space, and an easy example would be us, buying a hundred dollars worth of, say, a bank ABC in Canada, less say it’s BMO, and we would take a bet against a bank like Royal Bank, for instance, suite short on the other side, a hundred dollars long, a hundred dollars short, and what you’re trying to do is insulate yourself from some of the beta of the market, and the return will simply be the difference between the two securities. So I think I mentioned BMO long. So if BMO goes down ten percent and Royal Bank goes down twelve percent, you made that two percent, and you kind of ignored the larger drawdown in the market ideally. So it protects you against, like, broader market moves affecting an entire sector.

When you pair you’re generally gonna pair them highly correlated securities, you know, one bank versus another. Right. And and that should insulate you from some of that beta, that market, the market ups in discounts. Well, that was pretty good.

Good explanations. We can practice, the middle school component later, but that was good. Not my Forte. That’s okay.

That was fun. Let’s go in a different direction. I wanna talk a bit about your role and and sort of your career path. So first, what is a SVP trade execution actually responsible for.

So I’m responsible for all the agency trading at the fund agency, meaning I’m doing it on behalf of someone. So the portfolio managers and those registered to buy and sell securities, it’ll come through me. And at that point, more often than not, it’s at my and my desk’s discretion. We have called one and a half and a one and a half other traders, one full time and and one backup.

And will be responsible for for the how that how that gets done in the market. Sir, what was the other part of the question? No. It was just what what is your sort of responsibility?

The follow-up question, which is maybe where you were going, is to the extent that any two days are alike. You know, can you walk us through what a typical day looks like?

They look a lot like from the top down level, but the nitty gritty changes all the time, and that’s one of the best parts of this job. So a typical day would be starting around seven thirty. We get in. We might have some overnight orders or predominantly North America.

There might be some stuff in Asia or Europe going on. We might be dealing with, and we might have been dealing with that at night as well. So we’ll, you know, keep an eye on the trading blotter there what’s happening. Then we’re catching up on news.

My team will will write a morning note, which will be macro based as well as company specific things. Anything that that’s relevant to our portfolio managers on a short term basis and long term for that matter. And that’ll be read by both the investment team as well as marketing. So, you know, they know what’s going on when they’re talking to our clients.

And then after that, we were kinda getting ready for the open. At this point, you you have economic data coming out often before the open as well as a lot of, you know, right now it’s around earning seasons. We’re quite busy. And our portfolio managers are probably, you know, gonna start submitting trades before the open, and then it’s up to us to strategize what we’re gonna do.

And that becomes difficult. Again, especially in earnings or volatile markets, and we’ll have a little bit of time to plan before the open. So we we could be trading, right off the we’re likely trading right the hop at nine thirty until four. And then over the course of the day, it’s dynamic.

The busiest parts of the day are right around the open and right around the close where there’s a lot volume. The open is the harder part to trade because spreads and volatility are at their widest. This is because the market is is pricing in new information.

Again, economic data, idiosyncratic company data. So the market really has to find a level. So that takes it that takes a lot of work, and it’s probably the most tricky time to trade. Things usually slow down around lunch. There’s kind of a lull in volume before it picks up into the end of the day. And then the end of the day, is it more ideal time generally to trade where transaction costs and our impact on any stocks will will be diminished and stocks kinda find a level? But, you know, wild things happen at the end of the day too.

End of the day, you know, we do some administrative stuff and then, you know, it’s it’s kinda on to the next one, on to the next day? It sounds incredibly interesting. Like, do you find it invigorating? Do you find it stressful, both? Maybe another adjective that I seen?

Both for sure. Inviguring because no problems really the same. The market’s different day to day. You know, one day you’re worried regional bank contagion. The next day you’re worried inflation prints, and it’s not all negative stuff. We got lots of positive stuff going on. There are a lot new dynamics in the market, especially in the last few years, where derivatives are probably playing a a bigger impact on on intraday moves.

So the ground is is ever changing, and that’s what makes it kinda fun. It’s a puzzle that never really ends for for both portfolio managers and traders. And for which you don’t have a a picture on the box, either. I’m sure.

What’s that? It’s a puzzle for which you do you do not have a picture You sort of churning? No. And people people are stealing your pieces and pieces are going missing and, you know, they don’t fit, but but, you know, it’s ultimately also, you know, it’s a large meta game and you’re you’re competing against some of the smartest people in the world, and and that’s what really can make it rewarding and extremely frustrating too because there’s enormous amounts of capital, both, you know, financial and brainpower that you’re up against.

But, you know, there are different time horizons and different goals for investors, so a lot of us can coexist in the ecosystem.

But it’s certainly, you know, as competitive as ever. And then the mark the market has new dynamics too, where especially since the post GFC central banks have played a bigger role and arguably, you know, company fundamentals, like in the in the days of Fisher and Buffet are are are different and markets are more efficient So extracting that that that alpha that we’re all seeking, yeah, is a never ending challenge. That’s great analysis and and good analogy.

So, Rob, what are two or three absolute must have skills for someone in the sales and trading game?

Absolute must have skills, passion is one. You do end up kinda living and breathing what you’re doing. And if you’re only, you know, tangentially interested or you got into it because your professor or your dad or or someone pushed you new and said, you know, maybe you do okay. You’ll you’ll make a good living here, but but you don’t love it. You know, you probably won’t last that long. Another big one would be communication, especially on the trading side, you know, not being totally clear what you’re trying to accomplish your intentions, or instructions can lead to, you know, bad outcomes.

And, like, that communication for me, it’s internally too. So I’m talking to portfolio managers, analysts, trying to get their thoughts and then apply that to to our trade strategies. And then so I have to communicate, you know, internally, and then I have to communicate externally when I’m using the sales trader or talking to a liability trader who might be using a bank’s balance sheet to help us and that communication to the other side of the street is imperative as well.

As traders, the the motto of the security traders’ association is my word is my bond, and our reputations matter a lot. Especially when we’re using other people’s capital trade, which which happens quite regularly. So that that two way internally and externally is paramount And then finally, detail orientation is pretty important as well. I’m much like a pilot or any anywhere else, I’m not suggesting that, we have people’s lives at stake, but we’re safeguarding their capital and it could be a pension. Some guy working somewhere is, you know, saving for retirement.

Could be, you know, a number of different investors, and they’re relying on that that money to be there for them. So not making mistakes and and being diligent is goes without saying this is very important. Passion, communication, and detail oriented. Those are three very important skills.

And and you know, you touched on something when you were talking about passion, and that was the the level of commitment that’s required. So how do you think about, you know, work life balance? That’s part one. Part two, maybe do you have any advice or strategies for our listeners around how they might tackle that same sort of issue in their role So it does depend on your functional role within the organ, like what kind of business you’re in.

So investment banking is, you know, I’m sure you’re, Your clientele is aware, you know, carries long hours and and very poor work work life balance, and that’s kinda part of the the structure and the He over there. Portfolio managers and analysts. It comes in waves for sure during earning season, especially they’re busy. You know, they’re they’re up at night.

They’re pouring through. They might have four companies hit after the close, and they got a lot of work to do before market open to ascertain, you know, what’s important and what’s not. So that that does move around. Sales and trading can be a little bit better.

Certainly, I I don’t work any anything like invest baking hours. It’s something that attracted, me to this. And I’m sure we can get in how I ended up here to begin with. So it does vary by role.

When I started career, I was at Ontario Teachers Pension Plan. And at the time, I’m not sure if they’ve changed it. We were trading globally from one desk in Toronto. So certainly there were some late nights here and there, but that goes with the territory.

So that can be detrimental to sleep and and fan life sometimes, but hopefully it’s not all the time. And, you know, proper organization will will structure that appropriately.

You sort of touched on this. What was it that led you to the buy side versus the sell side? Was it work life balance part of it?

I was lucky enough. So I started in the business. I went to Laurie. I went through the co op program, which I would highly recommend.

And my first job in finance was on a securities lending trading desks so that would technically be on on the sell side. You know, those are the guys who at the prime broker are lending us those securities, and and they they’re making a market in that too in that lending market. So they’re they’re charging us basically a fee to take those securities.

And while it’s not trading per se, it was, you know, it was kind of a trading desk type atmosphere, and I was pretty attracted to that. And I was lucky enough to get another co op job at Ontario teachers on the equity trading desk, and I kinda, you know, I was there for a couple weeks, and I kinda said this is for me. You know, I was I was dealing with people.

Similar, they were like me a lot and, you know, there was a it was kind of a fun atmosphere. You know, a lot like sports where it’s intense, but, you know, everyone can kick back and have a good time as well. But so I ended up kinda naturally on the buy side. I did have points in my career where I thought I would flip.

Maybe it was to try something new. Maybe it was, you know, kind of inertia, and I should move maybe move on to something else. I’m kinda glad I didn’t. The sell side has been contracting, generally speaking, over my whole career.

And the buy side I did mention earlier has a little bit more power. And by that, I mean, on the trading side, couple decades ago, A buy side trader was more it was more of a liquidated minrole. You were just you were just giving trades to brokers and and taking reports, and that was it. But there was a number of changes and a lot of that had to do with electronic trading where the buy side was empowered with tools to almost take on a sell side role and we could trade a lot of a lot of the securities ourselves through some computer networks that would mimic what they were doing.

As well as access to their algorithms and and direct market access so we could skip the human if need be. Where appropriate?

That’s interesting insight and and actually was hoping to be able to ask you something about skipping the human and you’ve dovetailed nicely into that generative AI. So we’re recording this and call it q two twenty three and it’s taken the world completely by storm. Like, what are your thoughts on this and how it may or may not sort of impact the sales and trading world. This has been going on already for a long time, and it’s just coming to the public’s view. Like, where’s your head on generative AI.

Right now, I suppose the AI stuff that we’ve seen in the last several years in our business has been, I guess, a lot of AI is probably just and machine learning is kind of fancy regression.

And the tools we have a allow us to do more with less. So we we generally have higher turnover than your regular asset manager and with two full time traders, we can do lot, and that’s been the case for a while. But I’ve likened it to to a pilot who’s sitting in the cockpit Like, you want the pilot there. Generally, he’s gotta keeping a a watch on everything, and and systems aren’t perfect. And the plane can kind of fly by itself. You probably don’t don’t wanna do that all the time. I’m not saying I’m just kicking back eating cookies, you know, with the co pilot.

But, you know, you that’s a hard question, certainly with chat, GPT, and some of the things we’re starting to see we’re starting to get a glimpse that AI breakthroughs won’t be linear. Right. It could be in for some serious societal level changes.

May maybe we’re on the cusp of that, how that impacts us. I’m not totally sure. It remains to be seen. I guess, The likely scenario if, you know, if if we keep progressing like this in AI is that markets even more efficient But then again, markets are often driven by human behavior.

So Right. You know, your buddy trading on Robinhood is probably not going to be trading through AI and, you know, he’ll make his own investment decisions. And there will be kind of anomalous relationships that are out there for asset managers to look at. But yeah.

I there’s pure speculation here. It could it’s gonna if it changes us, you know, society is changing with it and what that looks like, I guess remains to be seen.

For sure. Great insight. Thank you. If I’m not mistaken, you’ve finished your undergraduate program around thousand and seven, I think.

Is that right? O six. And then I went yeah. I went back to teachers briefly, and then I went traveling, which I’d highly recommend.

I did Southeast Asia and Australia, New Zealand. And then I came back kinda, you know, ready to start my career. Just in time for a recession.

Yeah, I started, late o seven.

And, yeah, not just, any recession, the great recession and, you know, volatility like we haven’t seen since the 1930s, and I was fresh.

I was kinda watching it with fresh eyes. It was new for a lot of people, you know, haven’t seen massive financial institutions collapse. I I think what helped me was I didn’t have any kind of preconceived notions on on how you should trade such a high volatility environment. So I I I did learn a lot as I went along. Then, of course, we get March twenty twenty where where the volatility was actually more extreme.

And I was like, oh, I’ve been here before.

So let’s find a ride. Yep. Yeah. No. That’s interesting that you would think coming in with with no experience would be a major disadvantage, but you’re saying kinda clear eyes, fresh eyes might have helped you learn as opposed to having an idea about what’s gonna happen next because you’ve, you know, quote unquote seen it before.

Yeah. Not not to bore you with it, but at the same time there were massive changes within, call it market microstructure where before exchanges like the New York Stock Exchange and Nasdaq had. They’d trade maybe eighty percent of their volume on the primary exchange and you you saw the regulators trying to promote competition. So you had a number and exchanges and venues pop up.

And these some of these electronic tools I talked about were brand new around that time, almost brand new. So my boss at teachers was pretty progressive in the in the sense, and she had been buy side sell side for a couple decades. And and she was open to the new tools So we’re lucky to have a, you know, that kind of toolkit and ability to bob and weave and let the new technology help us out a lot. And and it certainly it certainly did.

Dark pools were new and dark pools would be basically a way to transact without a pre trade information leakage where, you know, we could have a there could be a buyer of fifty thousand shares and buy, pardon me, a sale of a hundred thousand shares, and we could meet within electronic network without the information leakage that sometimes comes with transacting through humans. And those tools were picking up and steam, you know, pretty aggressively there. And being at kind of the forefront of that was made my job easier for sure. It’s an exciting too.

I’m sure. You mentioned your your boss at teachers and it got me thinking, I’m a big believer in mentorship as a means of kind of improving people’s professional outcomes and and personal ones. I know I asked for a lot of coffees and and had some great bosses along my career too. I’m curious.

Did you have any mentors along the way that that really helped you in your career journey? Yeah. So my boss teacher’s name, Sally her name is Sally Fulton. She was big for me, and she retired actually, midway through two thousand eight, right right before the proverbial, you know, poop hit the fan.

So she was always around for me to chat. And then I had another important mentor who was on on the sell side who, you know, you know, I still talked to regularly, and he was helpful. Like, when you’re when you’re in this new role, I didn’t I didn’t find that I was comfortable in it because of the nature of the job for probably two, three, four years. Where you’ve seen enough iterations of the same thing over and over.

With trading early on, you it it can be very stressful when you’re you’re unsure what to do. Then after time you kind of develop a your own decision tree and and it becomes a little more automatic, but early on, you know, this is amount of stress when you’re saying, do I do a or b or c or d or e or f? And and, you know, once you can get past that, I think you make better decisions and and you’re a little more mindful of what you’re doing. Keen to hear your advice.

A lot of listeners are gonna be in the sort of front half of their careers. Are there any authors, maybe a specific book, a thought leader, other resources that that you recommend to folks interested in capital markets or sales and trading?

The first book I would recommend is not finance related, but it’s it’s related to your place within an organization and it’s called, power. Why some have it and others don’t And the guy’s name is escaping me right now, but he’s I think he’s a professor still at Stanford.

And for anyone who thinks that if they get into our organization and they’re gonna put their head down and work really hard and just kinda sit in the corner, and they’ll be really successful. That may not be true. You know, an organization is composed of people, and you you are always selling yourself as well internally.

So that is a must read if co op asked me for a book here. That’s the first one I see. Okay. There’s lots of finance books to find. The best one for anyone interested interested in trading I found recently is, it’s called alpha trader by a guy named Brent Donnelly, actually a Canadian guy who’s had a number of mostly sell side roles.

He aggregated the research in the best way I’ve seen where, you know, you’ve heard of Annie Duke thinking in bets. There’s another guy he cites in there, John Wolf, which who’s done research on, pardon me, John Coats, he’s done research on the biology of risk taking. You know, if you’re familiar with, how hormones like cortisol can suddenly kick up. You know, that that’s, you know, as important for for people trading as, you know, macroeconomic analysis.

And he he consolidated in in a way I’ve never seen. So, you know, maybe it’s it might be a four or five hundred page to read, but it’s the most dense book I’ve seen for anyone, you know, aspiring to do this. And Brent also has a I believe he’s got a free email list for for students and new people getting into this to to help them along. Beyond that, you know, those would be the two big ones for me.

Thanks for that. We’re gonna put those in the show notes listeners that are interested in checking that out. Rob, this has been really, really insightful. If if people wanna learn more about about you or about Warata, Where should they go?

Sure. We have a a website, War Todd Advisors.

That’s awesome. I wanna be respectful of your time. One more question if I may. I’d like to ask all of our guests, this. If if you weren’t a traitor, what would you be doing?

Oh, my wife would laugh at this I was seventeen, I joined the army reserve and thought I might have a career in the military.

And, maybe maybe I would have stuck with that bit in different lifestyle for sure, but, you know, some of us are drawn to it, so I probably would have done that. Would’ve, demanded a similar level of rigor and discipline, I suspect, to what you’re doing currently. So that’s sort of an interesting parallel Rob, thanks for sharing. Again, really, really appreciate your time all the best. Thank you, Kyle. Thanks very much for having me, and I hope everyone gets some some use out of this.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow Net Learning’s listen to your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next time.

In this episode of Net Learnings we share a thought-provoking conversation with guest Kristi Miller; Managing Partner at Krystal Growth Partners (KGP), a boutique private equity firm in Western Canada.

Kristi shares a ton of wisdom by opening the book on her illustrious 25+ years of financial services experience. They discuss a wide range of topics, including entrepreneurship; KGP’s unique value proposition(s); what good governance looks like in the private, middle market; how Kristi thinks about mentorship; and a step-by-step walk down the entire capital stack.

This episode is a must-listen for people that provide financial services to small and middle market operators, as well as anyone interested in private equity, entrepreneurship, and/or making better capital allocation decisions!

Kristi discusses how important it is that management and senior leaders within their portfolio companies “think like owners.” Options and/or equity, in her view, are among the best ways to align incentives and to ensure that decisions are made from a place of consensus. In Kristi’s view, consensus is a more powerful tool than voting control, which requires careful and deliberate consideration when negotiating the nuts and bolts of a shareholder’s agreement. This insight further reinforces KGP’s view that a robust governance function is critical for these operating companies.

How the KGP Team Thinks About Investment Opportunities

Kristi kindly shares some feedback about what the KGP team is looking for when they’re considering prospective investments. It’s an extensive list that includes characteristics like a great team, an ability to generate solid (and consistent) cash flow, a sustainable competitive advantage, and a universe of logical buyers at the end of their hold period. KGP looks to add value on top of these critical pieces by supporting both organic and non-organic growth, improving governance, and tightening up internal controls, among others. This insight highlights how important it is for Private Equity firms to identify good targets and to understand where they’re able to add unique value to maximize growth and upside.

The Value of Peer Mentorship and Networking

Kristi shares her thoughts on the importance of mentorship and learning collaboratively from peers. She highlights several people that helped her along her journey and also cites YPO (the Young Presidents Organization) as having been a big contributor to her growth over the years. Support systems are critical when building and growing a business; so much so that Kristi and the KGP team have sought to replicate the YPO model within their portfolio, encouraging the CFOs of their partner companies to come together and share best practices and challenges.

Episode Highlights

Characteristics of a Good Investment (& Spouse?!)

We felt it was important to try and understand what some of the characteristics Kristi and her team look for when considering prospective portfolio companies, which she was kindly willing to share. It was a robust list, but somewhat surprisingly, it was highly qualitative (and with a touch of humor).

“Really what we’re looking for is, first and foremost, good people… Are they smart? Are they aligned? Are they motivated? Are they fun? You know, no jerks. We don’t wanna deal with people that we don’t like because investments are like marriages!”

Middle School Money Manager

Host Kyle Peterdy introduces a game called “Middle School Money Manager.” The aim is for our guest to explain/define finance-related terms, but as if they were talking to a middle schooler. It soon became clear that Kristi is very good at defining things as she expertly explained what a covenant is.

“A covenant is a promise to the bank to behave in certain ways (to only take on so much leverage, to maintain a certain amount of cash in the business); to be able to demonstrate that you’re making enough money to afford the different types of loans that you take on.”

Entrepreneurship as a Social Good

Earlier in her career Kristi worked with an organization that was trying to define what it meant to be a socially responsible allocator of capital, and it came at a time post-financial crisis when capital was hard enough to come by for operators. But Kristi’s strongly held view is that entrepreneurship itself is a social good.

“This actually gets back to my development economics roots… I believe entrepreneurship is a force for social good. I believe it’s social good in and of itself to create high-quality employment, to innovate, to engage in R&D, and to generate export activity.”

Board Representation & Control in Private Equity

Kristi discusses the role of boards in private equity investments. She explains that when investing for a control position, they want representation on the board, but not necessarily control. The key lies in the shareholders’ agreement, which specifies certain decision-making rights. She also mentions that decisions are almost always consensus-based, and the hardest thing to negotiate is not the number of board seats but the shareholders’ agreement around key decisions.

“Every time we make an investment, we have a shareholders agreement, and the shareholders’ agreement specifies certain decision-making rights, irrespective of ownership position. There are some decisions that we insist on being involved in, regardless of what percentage we buy.”

The Importance of Good Governance

Kristi dives into some of the ways that the nature of governance has changed over the years, including more focus on diversity, equity, and inclusion as well as greater discipline around skills matrices and Director selection. She highlights the importance of good governance in private enterprise and how it inspires better behavior and corporate systems, not to mention its impact on valuation.

“Krystal has always been a fan of good governance and for a very self-serving reason. Companies that are well-governed are more valuable. They sell for more money, and that’s a good thing from where we sit now.”

Investments are like marriages. There are ups and downs and what gets you through the downs is the ability to communicate in a very transparent, candid, open, safe way. So you have to fundamentally be working with people ideally that you like, but you have to trust them and respect them.

This is Net Earnings.

The podcast that keeps finance and making professional ahead of the curve. In each episode, we focus on career growth and practical advice, while mixing in the occasional war story. Join us as we into the minds of leaders and experts at some of the world’s most notable financial services firms and enterprises.

Let’s get started.

Hello, and welcome to another episode of Net Learning. I’m your host, Kyle Petity. I’m thrilled to introduce our guest today, Christy Miller, managing partner at Crystal Growth Partners, a boutique private equity firm based in Vancouver, Canada.

Christie brings twenty five years of finance and entrepreneurship experience across private equity, venture debt, subordinated debt, and commercial banking just to name a few. Not to mention multiple board appointments over her illustrious career. Christie is highly respected by both financial services professionals as well as Crystal’s operating partners in the business community all across Western Canada. And it’s my pleasure to welcome her.

Christy, thank you for joining us. Thank you for having me, Kyle. This is going to be fun. Christy, there are a lot of directions we can take.

Of the stuff I wanna cover today include I wanna I wanna talk about your firm. I wanna talk a little bit about private equity more generally. But I really wanna spend some time discussing your career in more and to try to tap into some of your wisdom for our listeners. But maybe first, tell us a bit about Crystal Growth Partners, please, KGP.

Absolutely. So Crystal Growth Partners, as you mentioned, is a boutique Vancouver based private equity firm. We really do two things. Eighty percent of our time is spent doing traditional private equity by which we mean, you know, we’re investing in Western Canadian companies that have two to seven million dollars of EBITDA, generally enterprise value of less than fifty million dollars.

We look at companies in almost any industry. We don’t love extractive industries or highly cyclical industries, but we’ll invest in just about anything else. And we typically take control positions So fifty percent or more of a business. What we’re trying to do effectively is you know, buy a business at a reasonable valuation, build value over time help the platform company make subsequent acquisitions.

We call them tuck in acquisitions so that they grow both organically and through acquisition And then after anywhere from five to twelve years, we resell the business for more than we paid for it. So that’s eighty percent of what we do and we refer to that as traditional private equity targeting the lower mid market. The other twenty percent of what we do is really focusing on what we call series a investments.

So these are companies that tend to be smaller, earlier stage. The geography is a little bit more focused. We’re really focused on b c based investments.

And teams where we know the key executives to be people of really unquestioned character and integrity and there’s good evidence of traction. And those investments we tend to make on our own whereas the traditional private equity investments will often partner with other co investors on transactions. So eighty percent traditional private equity in the lower end of the mid market and twenty percent of what we do is what we call series a investments.

And so series a, that sort of creeps over the line into, I guess, venture. Right? Is that is that kind of venture investments?

Yeah. That would be venture stage and typically I think they say there are four or five tees of venture, you know, traction technology, team, time, I think there’s one more that I’m forgetting. But they’re earlier stage businesses and there are different drivers of value at that stage. So we’re looking for different things.

You know, on the traditional private equity side, these are established relatively mature businesses with attractive growth prospects. But they’re already profitable, they’re already cash flow positive. On the series a side of the business, they are almost certainly if we invest in revenue, but they may not be profitable yet. There’s some big tech investment or some big some big investment designed to fuel growth, but they’re not going to be at that same level of profitability yet.

So the risk profile is higher. It is more of a venture portfolio or venture profile.

Okay. Interesting. I guess it’s maybe the business enthusiast in me, but I always wanna try to unpack competitive advantage and strategy. So in terms of portfolio construction, what’s the rationale in working with companies in that sort of size bracket or that snack bracket?

Is it market dynamics? Is it local competition? Is it return profile? Like, the the two to seven million in EBITDA range, what what sort of drives that You know, on it, I I would love to say that it’s, you know, very strategic, but really it’s a function of experience and familiarity and where we feel we have some superpowers.

My business partner, Terry Holland and I, this is where we’ve spent our careers working with companies at this stage, helping them scale up. Ultimately, portfolio companies tend to be acquired by either a strategic player in that industry or by a larger private equity fund and so we’re moving companies up through the food chain. We know this size and stage of business very well and we’re well experienced at helping them grow. We really lean in and help them, you know, negotiate, find structure diligence acquisitions.

We help them from a governance and oversight perspective as they integrate those acquisitions.

And we just we know how these companies operate where, you know, we’ve seen lots of industries, lots of management teams, but we know this size and stage well. So We continue to invest there because we know what we’re doing. We’ve got experience. We have established referral channels But we’ve also got a great reputation in the marketplace because companies at this stage here from other companies at the same stage that we’ve added real value.

And our approach is different. You know, we’re not a fund in a typical sense because what we’ll do is we’ll be the lead investor on any given platform investment. And then we assemble a really bespoke group of co investment partners. Ideally, many of whom will bring superpowers specific domain expertise that’s relevant to a particular business.

We put together you know, a special purpose vehicle through which we invest. We hold that investment for as long as it makes sense for both the investors and the management team, but it’s not a fund. And fund structures are different. Right?

Funds invest in a basket of investments all with the same partners and typically have a ten year fund life. And so what that means is if you’re at your seven or your eight of a fund, you might be forced to start thinking about selling a business because you need to wind up the fund and go raise the next fund. Right. Whereas the way we do things We only sell a business when it’s the right time to sell the business.

The right time in the market, the right time for the management team, the right time for the investors. And so that means that our returns tend to be stronger and we don’t end up with any ruffled feathers because we’re selling a business before the management team is ready. So that was a really long winded answer. I’m not sure if it kinda gets you where you need to go.

But we invest in this space because we know it and we have a great reputation.

And our competitive advantage flows both from that experience and reputation but also from the way we structure deals. It has real advantages over traditional fund structure.

That’s a great answer. Very detailed and and I appreciate it. Can I ask kind of a a silly question? Because you mentioned larger firms and which we would think of as sort of, like, traditional firm like a KKR or a Blackstone.

If KGP is a boutique firm, is boutique just another way of saying small? What does it mean to be a boutique firm? Maybe you could help us unpack that a bit. Yep.

Fair enough. So lots of larger private equity funds have raised huge amounts of money. I had coffee with a friend three weeks ago in Toronto. He’s with Birch Hill.

Birch Hill currently has one point eight billion dollars in funds under management. They have to write minimum ten million dollar checks but more like forty fifty, eighty million dollar checks in order to be able to deploy the assets that they have raised from their limited partners. So they’re doing bigger deals in bigger companies which is great and lots of firms operate like that. There are many, many large private equity firms and, you know, some of the ones that you mentioned are larger still than Birchhill.

Right. There are lots of companies that play at that end of the market.

We don’t write eighty million dollar checks. Right? And we will write checks of between five and ten million dollars we will raise co investment. You know, we did a deal last year, for example, approximately forty five million dollar enterprise value, half finance through debt, half through, you know, a network of co investment partners, we wrote the largest check and we brought in a dozen or so investors to write smaller checks, which in aggregate got us to the equity requirement on the deal.

So we don’t have as much in terms of investable assets. As a birch hill. We’re targeting a much smaller end market so fewer dollars, smaller companies, but there also aren’t as many players. At that end of the market.

So if you know that space, private company dynamics, private company sort of markets, how management teams work at that stage, And in this place in b c, almost all companies are mid market companies.

You know, when you move into larger jurisdictions, larger markets, you get bigger companies. But in b c, I would argue that there might be ten or twenty really, really big companies that aren’t publicly traded. Most of the activity happens in the mid market and the lower end of the mid market. And so we play in the mid market because that’s what we know.

It’s where we live. It’s where the volume is. But you’re right. It’s also you know where we can have influence with the number of dollars that we have to deploy.

Another yeah. Really good answer. Thank you. So obviously, we don’t want your secret sauce. That’s proprietary.

And and you mentioned, you know, really, really top shelf management teams is something you look for. Are there any other kind of metrics that you’re particularly fond of when you’re assessing these companies like thinking, you know, lifetime customer value divided by customer acquisition cost, churn, like, Is there one metric that’s just signals and screams winner to you? Like, they they you’re fond of?

Well, you know, when you talk about sort of some of the metrics you refer to are very tech specific and our portfolio isn’t tech heavy. We’ll look at tech and in fact we’re doing more and more tech as as the world develops because eventually everything will be tech. But really what we’re looking for is First and foremost, good people. Are they smart? Are they aligned? Are they motivated?

Are they fun? No jerk? We don’t wanna deal with people that we don’t like because investments are like marriages. There are ups and downs and what gets you through the downs is the ability communicate in a very transparent candid open safe way.

So you have to fundamentally be working with people ideally that you like. But you have to trust them and respect them. So no jerks. That’s what we’re looking for first and foremost in the management team.

Alignment is also really, really important. Do they have options? Do they have equity? Are they incented to grow the business?

Are they incented to think like owners? So there’s a huge qualitative piece and structural alignment piece that we look for. But what we’re looking for, you know, above and beyond that is a business’s ability to generate positive cash flow. Right?

So we’re not necessarily investing in cash burning early stage tech businesses in the hope of a strategic acquisition inside eighteen months. That’s really not how we play. There are investors in the marketplace who do invest with that kind of philosophy.

But our approach is really looking for great teams with a proven ability to generate cash flow, sustainable competitive advantage a logical buyer at the end of the day, and we work with those teams. We lean in, we support them to grow organically. So build a better mouse trap, better production flow, better premises choices, stronger teams, better governance, better internal systems, better ERP, better financial reporting. We also work with them to identify diligence, structure, and integrate acquisition targets.

So that at the end of the day they’ve grown both organically by building a more solid foundation but also they’re acquiring suppliers, customers, competitors expanding geographically through M and A activity. And we put those two things together and when the time is right, we market our businesses, but we’re really looking for good people who can generate cash flow through both organic and inorganic growth. Brilliant. Okay.

Wanna move on to some career stuff, but maybe we could pause and play a little game. What do you think? That sounds fun. Okay.

So we’re workshopping the name, tried this few times. I’m tentatively calling it middle school money manager. And the theme is I’m gonna give you a term, a finance related term, and you need to explain it as though you were explaining to a middle schooler. Right?

So the rules are the rules are relatively easy. I’ll give you an example. So I’ll use private equity, and you’ve just described it very nicely, but I’ll try to describe it for a much younger audience. If I were explaining that to a kid, I might say something like assume you run a lemonade stand.

Maybe it’s going really well. You’re able to expand it to five stands. But at five stands, you realize it’s getting really hard to manage. I can’t keep riding my bike around town.

My classmates are stealing from me. You know, this is really hard. Well, what if I told you there was a way to take on a partner that could help you grow that lemonade empire to maybe ten or fifteen stands and help you with the management and the strategy? Well, that’s private equity.

The only catch is in exchange for the cash and support today, you have to share future profit from the lemonade sales.

How was that? That’s pretty good. Okay. Thank you. I was a middle school teacher at one point in my career, but that’s another There you go.

You’ve got a leg up and on this? Maybe an unfair advantage. Okay. So I have a I have a couple of words for you.

First one, LBO, Well, it stands for a leveraged buyout.

Basically, what a what an LBO is is when you go in to buy a business, and you wanna put as little of your own money into it as possible. And so you go to the bank and you borrow as much as you can from the bank. To finance the purchase so that you don’t have to put in as much of your own cash.

Sounds risky.

It is risky. Leverage can be very risky.

Amplify returns and losses. Totally. It’s a gamble. Right? You know, if things go well, you’ll make off like a bandit. If things go well, your reputation will be trashed and your tail will be between your legs.

Got it. Very well. Yeah. And all those lemonade stands out to pasture. Okay. That was good.

That was really good actually. Let’s try another one. Covenant.

Covenant is an interesting word and it means promise. Right? A covenant is a promise.

And it’s most often used in finance circles to talk about the types of promises that a bank wants you to make in order to know that their loan is being well taken care of. So a covenant is a promise to the bank to behave in certain ways to only take on so much leverage to maintain a certain amount of cash in the business to be able to demonstrate that you’re making enough money to afford the different types of loans that you take on.

That was really good. You’re really good at this. Awesome. We got you. Alright. Let’s do one more because this one’s hard.

And to be honest, I’ve sort of added to the list for my own benefit. Can you please explain to me what a warrant is?

A warrant is a piece of paper that they issued in the wild west for someone’s arrest.

You know, a warrant is maybe there are some similarities with that kinda wild west reference, but a warrant is basically an option that you get to do something in the future at a certain price but you negotiate it today. So a warrant gives you the right to acquire a piece of the business a little bit more than you currently have at a rate or a price that you negotiate in advance. So it’s a it’s what we would call a sweetener. Right?

It makes the deal sweeter because The intent would be for the investor to get more of the company at a very favorable price, at a good price. So it’s a sweeter. It enhances returns for the investor if it’s in the money, but we that’s maybe getting too complicated. That’s getting a little bit.

Okay. No. That you know what? That was really good. I’m impressed. That was three really good explanations.

I thought the covenant one was the winner. That was the that was the clear. It was really good. Yeah.

That was really good. I might I might actually watch this recording after and circle back to some of our courses to make sure I’m explaining it appropriately to everyone Alright. Let’s move on to some career stuff. You didn’t start in private equity and and actually you’ve had a a very interesting career path.

So I I’ve cherry picked a few financial services specific roles that I’d like to discuss.

Let’s wind back the clock a bit and start with your role at CIBC.

This is a large Canadian bank for all of our non Canadian non North American listeners. They have operations both in Canada and the US, and this one’s close to my heart because I was a commercial banker for many years, you worked in commercial banking. What was that like?

It was boring, to be honest. It it was. So I found it a very good education and there’s some backstory to this. I had been working overseas and fell into finance by accident — Okay.

— after a rather unconventional undergraduate degree in history and Russian studies. So I spent a few years working for the European Bank for reconstruction and development in one of their funds in Saint Petersburg, Russia.

And it was wonderful and that’s a whole adventure. Actually, I I call those my adventure capital days. But when I made the decision to come back to Canada, I was looking for something in my field, but I was still pretty early in my career and had no domestic experience. So I landed in a general management training program with CIBC.

And it’s a big organization and the training program was solid. And initially I was placed in a private banking role.

And I’m gonna be super candid and cheeky in this chat given your audience I was on the job for a couple of months and I went to my boss at the time and I said, okay. Here I in private banking focusing on wealth management and I said, correct me if I’m wrong but it feels like sucking up to rich people.

And my boss laughed and he said, yep, that’s it. We’re providing sophisticated wealth management advice to high net worth clients.

And I said, you know, my heart and soul is really on the commercial side. I wanna be working with entrepreneurs. That’s why I got into finance. That’s what I enjoy. I like the can do attitude of entrepreneurs there. Yes, we can attitude their ability to innovate and over come, there were grit and there resilience.

And so I said I wanna be working in in the trenches in a really grotty commercial branch, And my boss said are are you sure? You realize you’ve got a super plum posting here. Are you sure? I’m like, yeah, I’m sure.

And so I went to work at a CIBC branch at Granville and Dunsmear in Vancouver, which is now a shopper’s drug mart. At the time, it was the easternmost branch for CIBC in the downtown core of Vancouver before hitting Chinatown. It was super sketch. It was super marginal.

We had homeless people sleeping in our ATM vestibule every night. But I was paired. I mentored with a woman who is just an institution in terms of commercial lending. And I cranked through a bunch of volume.

I did everything from learning how to finance commercial fishing licenses to how to finance a software business. So I saw tons of volume across a very wide range of industries, and I worked with a woman who put me through my paces.

I learned so much so fast from the best, and it’s an experience that’s unmatched in my career in terms of the range and volume that I saw. That said, what struck me after the end of a couple of years is that so much of commercial lending is very formulaic.

It’s a high volume low margin environment and I decided that I wanna to develop closer working relationships with entrepreneurs to be able to provide more creative structures. I wanted to get away from senior cured lending to do things that were more more creative and more bespoke.

And so I left CIBC after a relatively short period of time. I was only there for two years. I learned tons and made friends that I have to this day. In fact, the woman who mentored me just retired three weeks ago after I think she spent fifty six years with CIBC.

Incredible. So it was totally incredible, but it’s not where I wanted to spend my career. Because at the end of the day, it was too formulaic. Yeah.

Fair enough. A really good answer. And I think a lot of people find that So after then you moved over to Van City Capital. Right?

And — Yep. — and for our listeners that aren’t familiar with it, Van City is a a fairly large credit union in Western Canada. And Van City Capital I think is probably best characterized as like a growth in transition arm, I think. Right?

Is that sort of like that was venture debt and subordinated debt? It was at the time. So At the time Dave Moat had actually been brought over from the business development bank to start up this operation, it was initially called the regional development corporation.

The name evolved over time and it was very much a subordinated debt shop. And we took a fund, you know, I think I was employee number three.

And we took it from, you know, a loss making operation with a very very small book to one that was you know a nice Tidy portfolio generating a meaningful return for the credit union.

Van City Capital doesn’t really exist today, it’s been repurposed. The team turned over significantly in two thousand and nine and two thousand and ten.

And Van City Capital morphed into more of a fund of fund strategy. So some of this there are some people there who focus on this on more, I would say, alternative asset classes, but they’re not doing direct deals. They’re really investing in funds. So the strategy has changed quite a bit since the two thousands. So I would say that our heyday was really between two thousand and twenty ten.

Okay. I feel like I cross paths with a lot of sub debt providers and and other sort of private non bank lenders during my time in banking.

What in your view are, like, skills that are an absolute must if you wanna be successful in the sub debt game? Like, is being good at senior lending, a really clear path, or are there are there really different and unique skills that set people apart in that in that area?

Yeah. It’s a really interesting question. So I think that good credit chops are useful to pretty much any industry, anybody who’s an entrepreneur, anybody who’s involved in finance. I don’t think you need to spend a ton of time there to learn the basics.

But I think good credit chops really help in terms of learning to structure deals.

And I now have the dubious distinct of being able to say that I have worked in every layer of the capital stack. And — It’s true. — it is kind of true. And I do find that some perspective and some respect.

Some real appreciation comes from knowing the fundamentals of how each level operates.

So good deal structuring comes from experience and creativity but also technical skills. Right? You just need reps and the good thing about banking is you get the reps in. In terms of your question, what does it take to be, you know, an effective sub debt or, you know, its first cousin Mez lender?

I think it’s a thick skin. Right? I think it’s the toughest asset class to sell. You know, if you’re a senior lender, you have the stick of collateral and covenants.

If you’re an equity investor, you have the stick so to speak of influence, you can vote at board meetings.

If you’re a subordinated debt or mezzanine lender or investor, you have neither. And so you’re really relying on relationships, disclosure, moral suasion, trust respect and that trust has to really, really, really be earned. You have to create value every step of the way because you just don’t have hammers.

And so I think to be effective in the role, you need some of the technical skills you need some real salesmanship because you really have to think through what the value proposition of subordinated debt or mezz debt is. And you need to have the relationship skills and the capacity to be able to continue to stay close to your portfolio companies and add value. When you don’t have a hammer.

Yeah, great perspective.

Well, you clearly had those skills and many more because after Van City Capital, you went on something of an entrepreneurial adventure and you founded your own sub debt fund, First West Capital, very well known in Canada. Can you tell us a little bit about that?

Yeah. So when I left Van City, it was in the middle of the twenty ten recession. Well, I guess it started in two thousand and eight, but twenty ten was a pretty bleak time. You know, there wasn’t a lot of capital flowing in the marketplace there were lots of hemorrhaging companies. It was a full on recession.

Van City specifically, you know, during that period of time, there was an executive change and a change in emphasis and a real focus on socially responsible investing.

And Van City, I would say during those years, had not quite put a pin in what it meant by ESG or socially responsible investing. It’s now very very clear, you know what it means. That organization, but it was very introspective during those years. There was this crazy sort of macro environment going on. And this micro process of reflection in terms of defining ESG.

And so, where I found myself professionally was, you know, even if there’s and this actually gets back to my sort of development economics roots having worked in Russia.

I believe entrepreneurship is a force for social good. I believe it’s social good in and of itself to create high quality employment, to innovate, to engage in r and d, to generate export activity. We all know how expensive it is to live in a place like Vancouver or Canada.

So keeping our kids engaged, employed, productive, and at home, and contributing to, you know, our country’s success To me, that’s social good. Then Citi had an evolving and more ESG focused definition of impact. And so I found myself in twenty ten thinking, you know, these companies deserve financing.

They might not be ESG focused They might just be innovating, creating employment, exporting, but I believe in my heart of hearts that that too is social good. And so I wanted to find a way to get out there and support these great entrepreneurs.

Banking can be great, but very formulaic.

Equity is highly selective and there’s a space in between that calls for a little bit more creativity but with a debt product. And I really felt that there was an addressable market there. There was an opportunity to do it better. You know, there weren’t a lot of providers at the time.

And I really felt that there was an opportunity. So but, you know, I’d been an employee in my whole life. So I went out and talked to a few people, interestingly talked to Terry Holland, who’s now my business partner at Crystal. And I said, look, Terry, I’ve got this idea.

He’s like, It’s a great idea. We can make that happen. And then I went out and I talked to First West Credit Union and I said, look, I’ve got this idea. And First West in particular was just super keen on this, like, we love this idea.

Credit unions in general are heavily concentrated in cyclical low margin residential real estate and they needed yield. They needed diversification.

And so they were super excited and they said, will write you a big check. You could start tomorrow, let’s go. And so I went back to Terry and I said, you know, they’re gonna write a bigger check. We’re gonna move faster.

So we’re I’m gonna take this other route and he said, absolutely the logical choice. No harm, no foul. And off we went and started with no portfolio, no employees, no phone number, no desk, we literally, you know, we couch surfed for a number of months. We were profitable by month seven.

We did our first deal probably five, four, five months in. And we’re committed to best in class processes. Right? We built everything from the ground up.

We didn’t inherit at legacy systems. We didn’t inherit like its legacy team members.

Every brand choice communication choice, portfolio choice, adjudication choice, underwriting choice, business process, CRM, everything was had selected. Blank slate and we were committed to excellence. So we built a great portfolio, but we also built a great business. One that really focused on rightsizing processes.

You know, I would say this seed of an idea fell on fertile ground. Inside First West Credit Union First West Credit Union was very, very supportive. And after about, you know, the the initial commitment was Sub debt only, b c only, a sixty million dollar commitment.

Within a year and a half, the credit union came to us and they said we love what you’re doing. How big can you get and how fast can you do it. And he said okay, we can grow but we have to expand beyond BC’s borders in order to do what we need the geographic expansion and thus began a journey to Calgary, Edmonton, Winnipeg, Toronto. We did a transaction in Quebec as well. So we expanded geographically and we built a strong foundation and scaled that business.

So that’s really the entrepreneurship experiences took a, you know, professionally sort of experience and developed eye, identifying great companies. And then built our own great company around financing those businesses.

I love the analogy of the seed falling on on fertile ground. It sounds like it was great timing. I’m sure we have members and listeners that are feeling that entrepreneurial edge too. Right? I mean, what what advice do you have generally for for people that are thinking about going it alone?

Yeah.

Ment and ownership, I guess. You know, I walked away from First West Capital. At the end of the day, you know, it was we had a difference in strategic view and I had shadow equity but, you know, not the real thing. And so when you don’t actually have ownership when your strategic visions start to part ways, you’d ultimately you don’t have decision making control.

So ownership is really important. But I think going it alone is tough too. Right? I I like to collaborate, you know.

There are some types of work that I like to do alone, but when it comes to really interesting brain food types of challenges, I like to spar with people. I like to whiteboard. I like to brain storm. And you can get that by engaging a team, but no team is ever going to be as engaged as an owner.

So I think partnerships can be really really challenging. I’ve had a couple in my life that were real energy vampires.

Mhmm. At the same time, I think maybe getting into a position where you have the controlling block of shares, but incenting your key management team through ownership in, you know, putting together a great board and giving them some options or you know a small equity stakes that they’re equally aligned is really really important because It’s lonely and hard, hard work to build a business on your own. You need to create those supports around you and the support are more effective if they’re aligned through ownership.

Really terrific insight. And we’re actually we are gonna circle back to governance a bit, I think later on. But let’s fast forward now to the present. So managing director at KGP, congratulations.

Obviously, you mentioned that’s a shift. You’ve now seen every layer of the capital stock, how do you like being in the equity game?

Well, this is, you know, where I want to spend the rest of my career. Right? This is kind of the pinnacle as far as I’m concerned.

The work with entrepreneurs is no different than what I’ve been doing for the twenty years. So it still relies on relationships. Equity is easier to sell in some ways because, yeah, the value proposition is is so compelling. So I’m loving being in the private equity world.

I work with a small agile ninja super, super smart team. So it’s you know, the benefits of some level of scale but also all of the family feel and intimacy that comes from a small small ninja team. So I’m enjoying the people that I work with. I’m enjoying the book.

I enjoy working with entrepreneurs.

And I’m really excited, you know, as we bring new companies into the fold to watch the full cycle growth, you know, in my old life. Eventually alone would get paid out and often sell a few years later and you get no upside from it even though you’ve been part of building that value. I’m really looking forward to that sort of full cycle experience where you get involved, you lean in, you help to create value. But then you monetize and you get to participate in that value that you helped to create. So this is absolutely where I’ll be spending the rest of my career.

Very cool. You’ve mentioned a couple times around around boards, governance. You’ve served as a director on multiple boards. I I can see why, like, firms would be lucky to have an expert advisor like you in their corner. But maybe you can explain just for the folks, for whom it’s a little bit new. Like, how do you think about the role of the board versus the role of the c suite or management. Can you just give us sort of the hundred foot view?

Yeah. Well, you know, that A board’s fiduciary responsibility is to the company itself and that’s different in Canada than in the US. In the US, aboard’s fiduciary responsibility is to the shareholders. So it’s a little bit different in Canada. And so there’s always this of, you know, which hat are you wearing when you sit at the boardroom table and ultimately you have to be your responsibility is to do things that are in the long term best interests of the company of the business.

And so, you know, the board’s responsibility is to number one recruit and manage the CEO. So the CEO reports into the chair of the board. That’s an important reporting relationship.

And the board’s role is oversight, not doing, but really providing that strategic oversight, that accountability, asking good questions, getting to know the business well enough that they can address the agency issue that can come up with management. Right? Management, they’re in the business. They try to be strategic, but at the same time they’re worried about protecting their jobs. They’re worried about protecting their influence and power base. And their actions hopefully are consistent with the best interest of a company, but at times they may not be. So boards always have to think about the CEO reporting relationship, making sure they’ve got the right person leading the charge.

Making sure that their critical but in a constructive way of the information that management presents, you know, recognizing that there are these agency issues and potentially different biases. And then really trying to ask very high level strategic questions that make management think that add some value that bring in perspectives from outside industries or jurisdictions and the benefit of experience. Right? Management teams often are younger than directors, directors see an awful lot or they have diverse industry experience. And so it’s really the role of the director to bring in that diverse experience and perspective and share them with management in a way that is is relevant.

Yeah. That that’s wonderful insight. I was going to ask what makes a good director, but you’ve you’ve more than than the employee responded. Thank you. So sort of a like a question around PE and governance.

So my understanding around private equity firms, when they make an investment in an operating company, they reserve the right to appoint board members. So It’s kind of a two part question. One, is representation on the board usually proportional to ownership stake? So let’s say you make a sixty percent investment and there’s five board seats, would you would the negotiating starting point just be three seats? And then the second part of that question, How often does ultimate voting control and board seats become a big point of contention in negotiations?

So I think there there’s a lot there.

Yeah. So we if we’re investing for a control position, we will want representation on the board. Do we need to control the board, not necessarily?

Every time we make an investment, we have a shareholders agreement, and the shareholders agreement specifies certain decision making rights irrespective of ownership position. There are some decisions that we insist on being involved in regardless of what percentage we buy. So It doesn’t necessarily come down to the number of board seats. It can. We wanna be on the board. We want that level of influence disclosure and conversation.

But it’s also maybe more importantly a function of what’s in the shareholders agreement including those key decision making rights.

So does the number of board seats become contentious?

No, not in my experience. And I think and I know Terry would say in his experience on boards that rarely does it come down to a question of who out votes whom?

Decisions are almost always consensus based. Getting to consensus can be challenging. But if you don’t get to consensus, you have bigger problems. I think that’s not necessarily the case in public company boards. And who knows? Perhaps not even on larger private company boards. But in the mid market, our experience is that effectively decisions are made by consensus.

And the hardest thing to negotiate going into a deal is not the number of board seats, but the nuts and bolts of the shareholders agreement around key decisions. Okay? You you brought up public companies and, you know, the G and ESG stands for governance. I know you work with private companies and smaller companies, but just given how widespread ESG has become.

Are you or your counterparts thinking about the governance function differently today than, say, five or ten years ago? Is anything changed in the private market? Yes. I think things have changed.

One further point is that the focus on ESG like the e and the s so the g is shifting a little bit but has always been important. There’s more emphasis on e and s going forward, and it’s as much about employee engagement and retention as it is about making the world a better place. These things matter to the millennials in our workforce. And if it matters to them, it matters to us.

Yeah. Human capital management metrics are something that we that we teach actually. It’s become increasingly important both for operators and for the analyst community to understand what they mean. So that’s great perspective.

Are there any any books, authors, thought leaders, podcasts, things that you’re into that that you recommend our listeners check out? Oh, you’re gonna hate my answer to this. I even through business school, I could not read business books I just find them so so so dry. So I escape into fiction.

Oh, that’s great. No. I love that answer. Oh, actually Actually, you know what I do.

So actually, this is nonfiction, but it reads like fiction. Red notice. If you’ve — Okay. — not read red notice.

So red notice is about an American hedge fund manager who went and lived in Moscow during the crazy era of privatization and it’s where the magnitsky laws come from. So It’s a great read, but it is the closest thing to a business book that I can recommend to your listeners. You’re not the first person to recommend it either, by the way. We chat with a lot of folks.

That’s that’s really interesting.

Okay. So kind of another random question, what’s your best networking tip for our listeners?

Yeah. Peer mentoring. So, you know, I’ve been involved with a few different organizations over the years that offer peer mentorship. The first was Nancy McKay. It was great. I’ve been a member of YPO, which is the young president’s organization now for several years. It’s become a huge part of my life.

And both groups, both organizations basically function on the idea of getting anywhere from seven to fourteen non competing CEOs together in a room with a structured format to talk about challenges that they face. Sometimes it’s business, sometimes it’s personal, but it’s a way to unload and share your experiences with others. But it’s a super efficient way. It sounds like a life hack.

Right? If you’re facing a challenge whether it’s HR software or regulatory issues or you know, manufacturing real estate costs in the lower mainland. You can get others perspectives quickly efficiently with great data So that would be absolutely my my my life hack for yeah. Yeah.

That’s what I would recommend to folks. And in fact, we’re trying to do it in our portfolio. We’re convening all the CFOs, for example, across our portfolio companies to share best practices, challenges, because these CFOs work in one company and they could get siloed in an industrial park in Delta, for example. Right.

Right. Bringing them together allows them cross pollinate and learn much much more quickly. And so I think this whole idea of peer mentorship is really, really valuable and can be applied in a bunch of different ways. I love that in an organization of of learning and training and development.

That whole idea of cross pollinating and just getting exposures, it really resonates with me. And I hope with our listeners too. We’re coming up on time. You’ve been incredibly generous with yours.

I really appreciate it. There there is one question I try to ask all of our guests If you weren’t MD at Crystal right now, what would you be doing?

In my imagination or practically speaking. What it the floor is yours.

Practically speaking, I would probably write fiction.

In my imagination, I would be a Jackson pollock style painter of large canvas is.

Incredible.

And what a great hobby? Where can people go to learn more about about you or about KGP? Are you are you active on social media?

LinkedIn is the only social well, two. I do two social media. So I do LinkedIn and you can find me at Christy Miller through Linkedin. I’m also on Strava because I like to bike. So those are the only social media that I do. I’m old school and relatively private, so you won’t find me on Facebook or Twitter or Instagram. And what was the other question?

Just if people could, you know, find you or information about the firm as well. I mean, we can we can put the link to the website, the company website, and the show notes if you’re okay with that. Absolutely. So it’s Crystal Growth Partners is the name of the firm.

And it’s Crystal with a k, so k r y s t a l, and the URL is crystal g p dot com. That’s wonderful, Christy. This has been Absolutely awesome. Thank you so much for your time and insight.

Let’s keep in touch. Thank you so much, Kyle. You’ve been super generous.

Thanks for listening to this episode of net learnings. This podcast is powered by CFI, an organization on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow net learnings wherever you listen to your favorite podcast. Or visit us online at corporate finances to dot com slash podcast. See you next time.

In this episode of Net Learnings, we sit down with Koert VandenEnden, CFO at Kardium – a medical device company based in Vancouver, Canada. Koert has over 20 years of accounting and finance experience, ranging from public practice at KPMG to a variety of roles in technology and life sciences.

Koert talks at length about his career and he kindly shares insights on financial stewardship, what it’s like to work on large transactions (like capital raises and mergers), how he thinks about mentorship, and some great career advice for folks earlier in their journeys.

Join us for a wide-ranging conversation, rich with wisdom from a seasoned finance pro with an impressive track record of success at every stop.

Key Insights

Finance as a Business Partner: Beyond the Buzzwords

Koert highlights the evolving role of the finance function in business. He suggests that instead of operating in a silo, finance professionals should strive to understand the industry better, engage with other business units, and add value through their insights. This approach leads to better financial planning & analysis, budgeting, and forecasting. The insight underscores the importance of cross-functional collaboration and the role of finance in driving business strategy (and vice versa).

Technology’s Role in Shaping the Future of Finance

The podcast touches on the impact of technology, particularly AI, on finance roles. Koert agrees with the host’s view that technology has changed finance professionals’ work, freeing them up to do more creative things and providing value in different ways. He also highlights the importance of data literacy across the organization, suggesting that understanding and using data is now a fundamental skill in finance (and beyond). This insight offers a glimpse into the future of the finance function in the era of big data and digital transformation.

What Makes a Good Team Member Within the Finance Function?

Koert discusses what he looks for in a new hire, and how he recommends people position themselves. He covers a variety of technical skills, like accounting and financial reporting (if possible); modeling and strong Excel skills are also a great way to add value early. Perhaps most importantly, however, Koert highlights how critical a willingness to learn is – encouraging people to get their hands dirty and to try new things.

(By the way, Koert and his team are hiring: Careers)

Episode Highlights

Becoming CFO: The Perfect Career Match?

When asked about his early career aspirations Koert shared a personal anecdote about his childhood. And while he acknowledged that he didn’t know exactly what a CFO did, the writing may have nevertheless been on the wall from an early age!

“Even before high school career day, when I was in elementary school, I used to have a ledger book where I’d keep track of the money I earned cutting grass. It had, you know, debits on one side, credits on the other.”

The CFO Role: Beyond the Playbook

Koert discusses his initial expectations about becoming a CFO (vs. reality when once he did). As with many roles, we often expect them to be relatively formulaic, but every day has proven to be very different and the level of engagement required between business units and other members of the executive initially surprised him.

“I thought that there would be a right way to carry out the role and sort of a playbook for CFOs that you just had to be exposed to and learn. And it’s been very different.”

Public Practice: A Tremendous Window of Exposure

In discussing his career journey, Koert couldn’t say enough positive things about his time in assurance. While he estimates that fewer than 10% of CPAs actually stay in public practice over the course of their entire career, Koert insisted that any time spent there is valuable.

“Say you work with 20 different clients, you’ll go through 20 year end cycles in one single year… You get to talk to different business units, leaders in those client companies, and really figure out how these different companies work.”

Cross-Functional Collaboration: Finance as a Business Partner

Koert and Kyle discuss how important it is for people on finance teams at a corporation to be finance experts first, but to also really seek to understand the business itself and the nuances of the industry.

“I do expect as a finance team that we are inquisitive and learn about the business and take the time to figure out what makes our business tick and what makes our business different from our competitors and what makes it stronger than our competitors. And thereby just be more effective business partners.”

Advice for his Younger Self: Never Stop Learning

When asked if he had any advice for his younger self, Koert stopped short of saying he had any regrets. But he did acknowledge how difficult it can be, when you’re in the heat of a busy tax season, to realize how valuable the audit & assurance work was going to be throughout the rest of his career.

“It’s hard to do if you’re already kind of past max capacity. But in a general sense, I would go back and (try to) appreciate the opportunity of being exposed to so many different things and learning so many things, and simply trying to learn even more!”

Link: CFI’s Career Map

Another thing that’s maybe not so much changed, but but I’ve definitely seen it progress is instead of people in accounting and finance, you know, acting as a silo, I think the buzzword is is being business partners and and really understand the business, but I think that the concept is absolutely more than a buzzword, which is to get into the business, understand, you know, what the the business is trying to do in order to be a better service provider within the business. Then that probably holds for more than just accounting functions. You know, you see the same mode of IT or or HR or any of the sort of standard G and A functions. The better you understand the business, the more useful you can be, and the more time you can kind of spend engaging with other business units and understanding how they do things the more value you can add.

This is net learnings.

The podcast that keeps finance of baking professionals ahead of the curve. In each episode, we focus on career growth and practical advice. While make in the occasional war story. Join us as we tap into the minds of leaders and experts at some of the world’s most notable financial services firms and boxes.

Let’s get started.

Hello, and welcome to Net Learning. I’m your host, Kyle Peuty, and I’m really excited about today’s discussion. Our guest is Kurt Vanandanendon, c f o at cardium, a medical device company headquartered in beautiful Vancouver, Canada. Court has over twenty years of finance experience, starting out an audit and assurance with KPMG before transitioning into the tech sector and ultimately the life sciences industry where he now boasts extensive experience having held c level positions with Ostara Nutrient Recovery Technologies and Arbutus Biopharma to name a few.

We’re thrilled to be able to pick his brain a bit today, and to try and download even just a fraction of his financial wisdom. Thank you so much for joining me today. Great call. Thank you for hosting me.

Oh, when we chatted, that you’re super passionate about Cardium and the work that’s getting done over there. Can we maybe start with that? Tell us about the company a bit. Sure cow.

So Cardium is a medical device company, and as you mentioned, we’re based in beautiful Vancouver, British Columbia.

We have developed an extremely advanced system for the treatment of atrial fibrillation, and it’s called the globe post field mapping and ablation system. Atrial fibrillation is something that affects about sixty million people globally. So it’s an important medical condition to address with an extremely large target market for medical device company. Our globe system is in the late stages of a long development path. And I’m really excited to share that earlier this month, we started treating patients in our IDE study, which is a global clinical study of our device. And we expect to use a data from that study to seek approval from the FDA in the US and regulators in other markets.

Wow. That’s awesome. That’s incredible news. Congratulations to you and the team. Thank you. I I wanna talk about the finance function a bit, but before we go down that road, maybe you can tell me just in your own words, what does a CFO do? Like, how would you explain it to maybe a non finance person or a a young child?

I do have three young children of my own, so they often ask what I do. That’s a good question. I mean, had a high level as CFO is responsible for the financial steward chip in the financial health of a business. And while that sounds, you know, easy and and good in reality, it means a lot of different things.

On a day to day business level, I would say I’m responsible for ensuring the financial health of the business. So in a a growth company like Cardium, that means making sure we have enough cash to carry out our growth objectives and also making sure that once we have that cash that we we spend it responsibly and efficiently in pursuing our mandates, I’m most responsible for what what I like to call the bread and butter of finance. So that’s things like high quality financial records, financial compliance, tax compliance, and other things needed to be, you know, compliance and and operational within the many rules that exist for for a company like ours.

You’re in health tech now, medical devices specifically, but you’ve also worked in biopharma. So we’ll we’ll sort of call it life sciences broadly.

And I have to imagine there are obviously nuances around working on a finance team in that sector that make it much different from say like a manufacturing or logistics company, even just the compliance side that you alluded to. So what I’m wondering is how important is it to be technically well versed in the industry or sector that you work in versus, you know, just having really strong general financial acumen and sort of learning the business and the KPIs and how it all fits together as you go.

I’ve always prided myself on on being more than than just a finance person or more than just an accountant.

And I like to build teams that really engage in the business and understand our business.

That said, you know, a finance team is intended to be experts in in certain things, and that expertise is not you know, on the medical side. So whether it’s medical devices or biotech, you know, I don’t expect our our finance team to go out and get a medical degree order to be able to understand what we’re doing on the science side or on the engineering side. But I do expect, you know, as a finance team that we, you know, are inquisitive and learn about the business and and take the time to figure out what makes our business tick and what makes our, you know, business different from our competitors and what makes stronger than our competitors and thereby just be be more effective business partners if you wanna use some kind of, you know, cliche terminology.

Some some business school terminology?

That’s right. Okay. So so we’ll maybe sort of change directions a little bit. Joining the c suite of our organization is obviously a very big deal, and clearly, you know, a long journey because CFO’s certainly not an entry level role. Let’s wind back the clock a bit. I wanna know on career day in middle school or high school, was young court presenting to his class, how he just couldn’t wait to be a CFO one day? Like, how did that how did that happen?

It’s funny and I laugh because it’s actually a little bit like that. And even before high school career day, when I was in elementary school, I used to have a ledger book where I’d keep track of the money that I I earned cutting grass. Really? And it had, you know, debits on one side, credits on the other side. And and I enjoyed that. I kind of enjoyed keeping this financial record, and and I I enjoyed that from a very very early age.

So, you know, although at the time, I probably didn’t imagine being a CFO largely because I really didn’t know what a CFO did or or that it even was a role that existed.

I definitely always thought that I would have a career in in some sort of financial field.

And so so I’ll tell you a joke about it. I I I do think I was always destined to be a CFO or or something like that in my position. It it sounds like you were purpose built for this. That’s wonderful.

So when you got into the CFO chair for the first time, was there anything really sort of surprising or unexpected about it? Like, Did you go with some preconceived notions that that maybe proved to be completely false, or that proved out exactly how you expected?

Parts of it proved out exactly as I expected and and parts of it were very different. So I’d I’d say the the parts that were expected was that you know, I needed to have expertise in certain areas. And another part as expected is that I certainly didn’t didn’t have the expertise in all the areas that I was exposed to. The part that was unexpected was I I thought that there would be a right way to carry out the role in sort of a playbook for CFOs that you just had to be exposed to and learn, and it’s really been very different. You know, every day is different. You really gotta think on your feet, it’s really important to engage with, you know, the other members on the executive team and and try to figure out the best way to to carry your business forward and make it a success, and there’s no true playbook for that. So I think past experiences come into play, but but you know, being diligent and thinking through it all the time is is really important.

That’s interesting. We often always look for that sort of app to follow. And and it turns out that in so many areas, you actually need to really kinda chart your own course and and learn quite a lot as you go. So that’s very interesting feedback.

So help us understand maybe your professional journey a bit if you would. Like, you came out of post secondary, joined a big four accounting firm. And I get the sense that this is a a fairly logical path for someone that has, you know, executive level finance aspirations. Is that is that accurate?

I think it’s a fairly logical path. If you look at many CFOs, they either come from a background like mine, which is starting with an accounting designation, spending some time in public practice, and then going out and getting corporate level experience.

Another path that will follow to get into the CFO spot is through investment banking, and they really understand, you know, the public market’s piece of it more. And then they, you know, sort of back their way into that accounting knowledge and financial reporting knowledge through the role itself as opposed to through their background. So there’s a couple of different ways of getting getting into the CFO role. For me, you know, as you say, I I started I went the the accounting route So after getting my undergrad in Commerce and Finance, I worked for KPMG and got my Charter mountain designation, which is now the the CPA designation in Canada.

And for me, that was a great path to follow, and and it is a a natural way of of getting into the role and getting exposed to a lot of that background that you need to be successful in the CFO role. And I guess as an accountant, you see a lot of a lot of businesses and you get to peek under the hood and and you see good management teams and bad management teams and good businesses and businesses that have areas for improvement. So I have to imagine that that’s an interesting just window of exposure if nothing else, but also, of course, technical skills, technical accounting skills, and understanding tax and assurance.

Right?

What what percentage of people would you say that go the accounting route? And if you become a CPA, I think it’s the c fee Cfe exam.

How many of them actually stay in accounting do you think versus go a corporate route like you did?

Who wouldn’t have an exact number, but I would say less than ten percent. I think many people — Really? — you know, at at some point or another leave public practice and go into corporate accounting.

Some people leave earlier, and some people have, you know, more of a passion to stay in public practice for a longer period of time. Like you say, The interesting thing about public practice is you get exposed to so many different opportunities in a really rapid fashion.

So you go through, you know, say you work with twenty different clients, you’ll go through twenty year end cycles in one single year. And sort of observe in twenty different ways, you know, some teams that that do things differently, and maybe, you know, some things that are best practices and some things that are perhaps far from best practices, but you can learn from all of those things. And, yeah, you do get to peek under the hood. You get to talk to you know, different business units, leaders in in those client companies and and really figure out sort of how these different companies work. And that’s the the real appeal, I think, of starting your career in public practice like that is you just get exposed to so much more than if you’re working for a single company early on.

Yeah. That make that makes a lot of sense. You mentioned investment banking as a potential route, and and so for folks that that don’t go that direction or or accounting, but they they still wanna work in the finance function within a within a corporation as opposed to at a financial services firm. Like, what kind of skills do you recommend that people seek out?

It’s a good question. I think there’s many skills that you learn on the job depending on your role But when you’re first starting out, it’s important, I think, to bring, you know, some technical skills to the table. So as you’re learning other skills on the job, you you come in with adding something to the team. And that something might be, you know, financial reporting experience if you come out of public practice.

It might be modeling and, you know, being very good with Excel, for example, and and being able to build great models that’s that help a business sort of in forecasting and in FP and A, or it might be, you know, a very strong skill set on the the systems side. So, you know, thinking of an analyst type of role who understands the system and would be a business analyst to help your department and you’ll better utilize an ERP system or, you know, some kind of technical tool. But regardless of what that kind of core skill set is, that you’re bringing something to the team that’s that’s new and different and differentiated.

And then in the role, you can learn other other experiences. So I think technical skills is one element of it. The other part that that is really important to bring is just a willingness to learn and a willingness to try. I think that’s probably the the most important thing when looking at new people for a team is, you know, the willingness to to really get in there and and learn something new and and put in the effort to to develop your skill set?

That was one of the things I I actually wanted to ask you about getting into kind of the leadership mindset was know, what are you what are you looking for when you’re looking to promote internally, but an attitude that’s open to learning and trying new things and willing to fail sounds like one of them is there are there any other things that you’re generally looking for either in a new hire or a promotion?

Yeah. Abs absolutely.

The, you know, the willingness to learn, the willingness to fail, the willingness to be coachable, you know, to take to take feedback, to seek out feedback, and then respond to it positively.

That’s you know, it’s an important quality. So I think many of the things that that you mentioned that we’re talking about here are our qualities more so than skill sets.

So it’s it’s important to develop skill sets because it’s it’s technical ability to to carry out your role in a very positive way. But it’s also really important to to come to your role with with an attitude of of learning and wanting to advance and being open to known not knowing everything, and learning new things to fill those gaps. And those gaps, that’s that’s an attitude. And some of those gaps might be technical, but some of those gaps might also be you know, attitude driven as well and just being able to remain positive in you know, at times of of great change or or great effort and, you know, the willingness to to put in the effort when when needed sometimes.

This concept of coachability comes up a lot when we’re speaking with, you know, prospective business to business clients like financial services firms and things It was sometimes a bit of a generational divide around the ability to be coached up and and and accept feedback and also to deliver feedback. Big part of leadership is being able to provide effective, constructive feedback for people, and it’s it doesn’t always come naturally to people. Sort of on that on that note a little bit. Again, talking about leadership, what are your thoughts around mentorship?

And and maybe there are a few perspectives you could take here. Like, how did you sort of tackle mentorship when you were more junior in your career? And now later, later on, that you’re in one of the big chairs here, like, how do how’s that informed how you approach mentorship today? Yeah.

It absolutely has. And I think when you talk to people, you’ll get different answers about what mentorship means to them. And I think at different stages in your career, you need different things from a mentor and and from people that support you. Early on in my career, I had you know, I worked in in public practice.

I worked for KPMG.

Great organization filled with a lot of great people. And it it puts a real focus on their people and, you know, facilitating mentorship at all different levels. And so I I got a lot just out of my professional environment that I worked in and and to the programs that the firm had in place. As I started to to look towards the next step in my career, I actually started working with a professional coach, Montana Hemingsley.

And what we focused on was she was independent, so independent of, you know, the firm I worked for. And what we started to focus on was was how I showed up as a leader, and her approach was was authentic leadership.

And so what we spent time on was trying to figure out, you know, the things that were important to me and my personal values and how those translated into showing up as a leader and making me successful both as a person and as a leader. And so while that you know, that was a coaching relationship, not so much a mentorship relationship. I ended up working with Tana for about ten years. I found it to be hugely helpful in my progression going to this next step in my career.

Another and then as I as I left public practice, and I started to have the opportunity to work with different executives who I worked for. And as an example, you know, the first CFO to take me around New York into different investment banking boardrooms to meet with bankers and analysts. I was Dave Hastings.

Hugely helpful. We had the opportunity to work together. I learned a lot from him.

The last three CEOs I’ve worked for, including Kevin, who I currently work for, I’ve always had a very strong relationship with with the CEOs and able to learn a lot from those relationships as well. So those are you know, part of that is is actual experiences, you know, the willingness for them to bring you along to to things that you haven’t been exposed to previously, and that’s been helpful to me. But also, you know, learning to become confident as a leader and and be effective in a role was was what I have taken away from a lot of those relationships.

And for me, as a mentor, when I look towards people I work with, and team members that that I have, I try to develop open relationships where they’re willing to share, you know, what their goals and aspirations are. And I try to listen to those and and together with them, identify situations and things they can work on and projects. That helped them move forward and and get some experience in those aspirations.

So instead of, you know, mentorship being a passive thing, I think from both the mentor and the mentee having some dedicated attention or you know, dedicated thoughts about how you go about that is is helpful, and you can really get a lot out of mentorship both as a mentor and a mentee. It’s really rewarding to work with somebody and see them want to and then successfully progress in their career. And having been on the mentee side as well. It’s it’s really helpful to have someone willing to expose, you know, their experiences.

And help bring you along by utilizing those experiences on your behalf. So I think mentorship is hugely important, and that the time spent in in crafting those relationships is is time very well invested.

It’s so interesting to hear you say that because so often we think about finance as being a very quantitative and very technical field, but you’re you’re sort of seeing some really interesting things here about relationships and and mentorship and and soft skills and leadership, especially if you’re gonna ascend to the top of a department where the top of a function and and into the executive level chair, it it’s clear that there are a lot of qualitative skills that are required too. And that’s that’s super interesting. Appreciate that insight. I’d like to ask an evolution question and and you can kind of sort of take this in a couple of directions Over last ten or fifteen years, how if at all has the nature of work changed within the finance function corporate or if you prefer how is sort of the role of a CFO changed over that time?

I think technology is playing a large part in how the role is changing and how, you know, the function of a fine or the responsibility of a finance function is changing a little bit. In the past, I would say an accounting department spent a lot of time generating information.

And I think that’s transitioning to spending less time on creating that information because, you know, the systems and processes are becoming more automated.

And I say this in a way where it’s kind of already taken place. This is definitely something that’s a continual evolution. You know, the companies I’ve worked in, you have a combination of newer and older systems, and so it’s definitely an evolution to try and take advantage of the automation and everything else that’s available to to make things easier. But but the general concept still holds true, which is, as a finance function, we’ll spend less time on creating the information, more time on analyzing the information.

And less time in, you know, creating information in the past and more time in applying that data and and using it to project into the future. And and try and make, you know, better and more informed strategic decisions because there’s, you know, more data available.

I think that evolution is is gonna continue to take place and will continue to change. There’s a very interesting development going on in in AI that that will apply into the finance function as well. I wanted to touch on that, actually.

And and hopefully, my hope is that, you know, that that starts to take some of the the tedious work that can be part of accounting. And compliance and, again, help automate some of that tedium so that other people and their brains can be more focused on on the value added work, like actually analyzing it, trying to apply, you know, information to to make better business decisions and things like that.

Yeah. That’s interesting. I think there’s a fair bit of sort of fear going on right now about the unknown and just how how much, you know, white collar work is gonna be changed because of generative AI. And I sort of think of the analogy of Excel, you know, many, many years ago, analysts and finance professionals spent a lot of time making calculations.

And actually, like, arriving at numbers. Now that’s done for them. And they spend more time analyzing that data to your point and that information and deriving actionable insights. And, you know, I don’t think anyone would would trade in their spreadsheet, I think.

Would be completely ludicrous today. So, yes, there’s always been fear about technology and just sort of changing the way that we do things. But in general, it it seems to have just changed the the the type of work that we do and and sort of how we do it and and freed people up to do more creative things and then to provide value in different ways. So I’m hopeful it’ll be something similar here with with AI.

Yeah. I agree with that, Kyle. And one one other thing to add maybe to what we were just talking about Another thing that’s that’s maybe not so much changed, but but I’ve definitely seen it progress is instead of people in accounting and finance, you know, acting in a silo, really yeah. I think the buzz word is is being business partners and and really understand the business.

But I think that the concept is is absolutely more than a buzzword, which is to get into the business, understand, you know, what the the business is trying to do in order to be, you know, a better service provider within the business. Then that probably holds true for more than just accounting functions. You know, you see the same out of IT or HR or any of the sort of standard G and A functions, the better you understand the business, the more useful you can beat, and the more time you can kind of spend engaging with other business units and understanding how they do things, the more value you can add.

So I think that particularly leads to better, you know, better financial planning and analysis and better budgeting and forecasting when you really do understand what’s going on in the business. So I’m not sure if that’s an evolution. I think that’s probably always been the case, but maybe being able to free up a little bit more of people’s time from you know, creating information and and, you know, training spreadsheets and and filling out, you know, compliance type of reports and things like that. Allows them to add more value in that way.

So something that I’m sort of hearing from that is this idea of data literacy not just within the finance function, but across the organization. If you’re gonna be a business partner, you need to know the language that other divisions are speaking. So whether it’s around setting and trying to achieve, you know, sales targets or or numbers, whatever sort of division it is within the organization, everyone needs to be speaking the same language what are your thoughts on on data literacy broadly? Yeah.

See, this goes back to what we’re just talking about, a finance people engaging with others in the business. That engagement goes both ways. So part of that engagement is learning about what the business is trying to do and how the different business units contribute to the business. But part of it as well needs to be feeding back, you know, financial knowledge back into the business.

And, you know, if you’ve done a great analysis on something, doesn’t do much good if it just sits on your desk or sits in a spreadsheet somewhere. Right. You have to communicate that back into the business. And I think that back and forth communication is really how you create that that data literacy and awareness of for for the finance folks of what the rest of the business is trying to do, but also for the rest of the business, you know, to learn from the finance folks who maybe look at things with a slightly different lens than what they’re used to looking at it with.

Would it be would it be helpful if more people in the organization had a baseline level of financial acumen, I get the sense that it that it probably would be. Yeah. It definitely wouldn’t hurt. And again, similar to, you know, finance people not needing to go out to get medical degrees to be able to be effective in a in a medical device or a biotech company, the flip side is also true.

You know, I wouldn’t expect people to go out and and take accounting courses or get an accounting degree by any stretch. But certainly, you know, some level of financial literacy just makes that conversation easier and going, you know, being able to go back and forth between the two. I will add, you know, currently working at Cardium. I work with a a lot of engineers.

We have, you know, two hundred and fifty people. And sometimes I joked that I was the first non engineer to to come on board, which isn’t quite true. But Maybe close though. Maybe close.

And, you know, as a as a general breathe, all the engineers I work with are are very numbers literate, and, you know, they’re very quantitative. Similar to accountants. So it isn’t an easy relationship that way.

If you were starting your career today, what advice would you give yourself? Knowing what you know now.

I probably wouldn’t change a whole lot. So in terms of advice, I wouldn’t go back and and do things differently. I think the the path I followed I’m really happy with, some advice I would I would have is to spend even more time learning about the businesses that I got a chance to be exposed to. Which is hard to do.

You know? I mean, when I was a junior accountant in public practice, there was times of the year where you’re just very busy. And it’s easy to look back and say, well, I wish I would spend more of that time sort of wandering around the businesses and maybe talking to the the business development executive about what he or she does in that part of the business and learning more. You know, that’s that’s hard to do if you’re if you’re already kind of a past max capacity.

But as a general sense, I would really sort of go back and and appreciates the opportunity of of being exposed to so many different things and and learning so many different things. And simply try to learn even more.

That’s a good advice. Never stop learning. Never stop learning. And it’s never too early to start what would you be doing if you weren’t a CFO?

I would love to say that I’d be playing the NHL Kyle, but to be honest truth would be at I’m very happy that I’ve been able to be successful in the CFO role, and certainly a hockey career wouldn’t have worked out. I do really enjoy sometimes doing things with with my hands, you know, part of working in in a somewhat virtual role. I, you know, I spend a lot of time in in spreadsheets and talking to people. And sometimes in my spare time, I do, you know, really enjoy getting out into the garden and doing something physical.

So sometimes I like to think that if I wasn’t in a in a financial role, I’d be doing something that’s much more physical and and maybe out in in nature. But the reality is I I really enjoy what I do. I really, you know, working at Cardium is an amazing experience. It’s a great company.

I get you know, I get a chance to work with with a lot of very bright individuals.

And I get to, you know, bring my financial experience and my accounting experience to the table and and feel like I’m really making a contribution to our team, and and that’s a great feeling. So I’m not sure if I would wants to do anything different than what I’m doing right now.

In a previous chat, you mentioned to me that you’ve been involved with a number of corporate transactions. I think you’d set the sale of a business, spin out, some partnerships, maybe certainly some financing rounds. And these are, I think, outside the normal course of day to day business. And and really, in some cases, probably pretty high profile, what’s it like to be involved in in a transaction like that?

I would say that transactions are always exciting because they’re different in the day to day business you’re normally in.

It’s never an individual that does it. So you work as a team, and each team member brings something different to the the transaction whether it’s in the planning or the execution stage, especially with the the larger transactions when it’s really impactful on the business. It’s important that you feel you’re you’re making the right decision for the business and then executing it in the right way without making any, you know, without making any mistakes along the way. And you’re also trying to business balance different stakeholders and and each of their motivations.

So I I really like all of these elements. And then since transactions are generally a tremendous amount of work, There’s also a real sense of accomplishment for the team when it goes well.

Many members of the CFI community are investing enthusiasts. And in fact many are also professional investors.

So broadly speaking, are you are you seeing any interesting or cool trends in the health tech, healthcare, bio pharma space? Like anything they might wanna be cognizant of when it comes to their own portfolios?

Absolutely. I mean, to to speak about Cardium here, in our particular space being atrial fibrillation, there’s currently a huge wave of new and changing technology that’s that’s taking place. And it’s really disrupting, you know, the the companies that currently hold the majority of the market share in the business.

And it’s also improving diagnosis and treatment for for patients, which is really important.

As I mentioned at the start of this, you know, Cardium has just started IDE study, and, you know, we’re potentially about a couple of years away from having regulatory approval for a commercial sale of our device. Which is super cool for us as a company, but it’s also really great for patient outcomes, which we anticipate will improve. And it’s also an excellent opportunity for investors to look at a company whether it’s a company like ours, which is a little bit smaller or whether it’s some of the more established players and seeing how they, you know, participate in that same wave of innovation in a in a space that’s quite large.

On the subject of investing, we went through an extended period of very, very low interest rates, and it sort of created an environment where a lot of companies were looking to grow at all costs and capital efficiency, completely out the window, profitability, etcetera. And so that’s changed, obviously. And I’m curious to hear how if at all that’s impacted Cardium. Like, are you you’re in an industry where there’s very long turnarounds. Right? A lot of research and development and a lot of testing. Like, has has this paradigm shift changed the way that that you’re thinking about the business?

I wouldn’t say it’s changed the way we’re thinking about the business. You mentioned you mentioned profitability, efficiency, quality, differentiation from competitors.

That stuff should always be matter should always matter and be a focus for for any business and the market got fairly over excited for a while, and now those fundamentals are really coming back into focus, which is great for cardio. We have an amazing technology and company that presents a great we think a great opportunity for our investors, both existing and new. And and I think those those fundamentals have always mattered, but I think people are just drawn back into focus with a tighter capital market. On on really understanding and focusing on those fundamentals and their investments. Right. They’ve always mattered. They just matter more again.

That’s right. Which is which is probably a healthy. So for our listeners on the other side of the negotiating table, those that are maybe in banking or or other fields within financial services, Is there anything you can tell us about what you are looking for when you meet with a prospective financial partner? Like, maybe it’s a commercial bank for cash management services or credit, maybe it’s a potential equity investor. Like, what are you wanting to see from a prospective partner?

Think from a service provider, So you mentioned, you know, banks or or cash management or any of those functions. It really is an interest in the business, a willingness to be a partner in the business. Which again sounds a little cliche, but what I mean by that is just willing to take the time to learn what we’re trying to do. And then think be thoughtful about how they can actually help us progress their progress our objectives as a business as opposed to just selling the service that that they are trying to bring to the table. You know, as an equity investor, the the the tables are turned a little bit. Obviously, there, we’re competing for their capital with potentially other investors or investments that are out there. So there we we try and you know, have that same philosophy, which is a transparency and an openness in terms of what we’re doing and being clear on our on our messaging.

So that they can make, you know, a good and thoughtful investment decision.

That’s interesting. Obviously, having worked in banking, I’ve I’ve tried to negotiate in in pitch an awful lot of, you know, business owners and finance teams and something that we generally teach here at CFI is to try to be more than just a facilitator of a transaction. Or a seller of a product, but to to really serve as an adviser and and care and be curious. So it’s it’s cool to hear you say that because I think it is important.

I mean, it means a lot. You’re not just there to close a deal and, you know, make your quarterly quote. You need to be there for your clients. You need to be willing to listen and and open to learn.

Yes. I think you hit the nail in the head. It’s you know, it’s not transactional. It’s a a relationship.

And and any important service or any important service provider is a a key relationship for a business, and it it’s something that sort of takes time to develop And I think the way you framed it there was was a good good approach.

Is there a book or like a speaker or a thought leader that you’ve found really insightful or really helpful over the course of your career that you’d maybe recommend to our listeners?

Yes. Definitely. There’s a couple things I really liked the work that was published on authentic leadership by Tana Hemingsley.

As I mentioned before, I found her approach to be really useful as I was crafting my career. And and really useful to me both as a professional and as a as a person. Also more recently, I really like the the playbook series on Netflix. That explores leadership sessions from some of the the greatest sports coaches in the world. They do think there’s a lot to be learned in sports that can carry over into a corporate career as well.

Yeah. I I completely agree.

Court, you’ve been very gracious with your time and, you know, I thank you Where can people go to learn more about you and and about Cardium if they’re interested? Well, we’re hiring for great people in a variety of different roles right now. They range from technical engineering roles right through to accounting as well. So I’d really encourage people to check out cardium at cardium dot com. Or follow us on LinkedIn, Facebook, or Twitter.

Okay. Wonderful. Thank you. We’ll be sure to include those in the show notes. And for our listeners that are interested in the finance function and some of the roles that exist out there, CFI has a ton of resources on this, including our career map, and we’ll be sure to provide a a link for that as well.

Court, thank you again. Really appreciate your time and to all of our listeners until next time. Never stop learning.

Thanks for listening to this episode of Net Learning. This podcast is powered by CFI, an Oregon on a mission to enhance the skills, knowledge, and productivity of finance and banking professionals. If you enjoyed what you heard in this episode, make sure to follow net learnings wherever you listen to your favorite podcast or visit us online at corporate finance institute dot com slash podcast. See you next time.

In this episode of Net Learnings, host Kyle Peterdy engages in a deep-dive conversation with David Gens, the founder and CEO of multiple FinTech businesses.

David shares his expert perspective on everything from entrepreneurship and venture capital, to private credit fund mechanics, to a rising rate environment and portfolio construction. Kyle and David also explore what makes a good capital partner, what makes a good leader, and the importance of networking and mentorship more broadly.

This episode is a must-listen for anyone interested in FinTech and financial services or who’s thinking about scratching their entrepreneurial itch!

Key Insights

Embracing Fear: The Entrepreneurial Journey

David shares his journey into entrepreneurship, coming from a family of entrepreneurs. He discusses the volatility compared to a regular job and the different types of challenges it brings. For example, in a corporate environment, a bad day usually involves mostly frustration, while in entrepreneurship, the negative emotion is often fear. It’s a candid look at the realities of entrepreneurship and the emotional resilience required to be successful.

Leveraging Past Experiences: How Time in Private Equity Contributed to Future Success

David shares that one of his favorite parts about his private equity experience was how close he could get to the entrepreneur. As opposed to something where you’re trading public securities and far removed from management, for example, PE is an interesting place to start a career because it offers the opportunity to participate in board meetings and to see strategy and M&A up close.

Risk & Return: Navigating the Changing Landscape of a Rising Rate Environment

David discusses the significant changes brought about by rising interest rates, both in the realms of traditional lending and non-bank credit. He points out that this shift has both pros and cons. Rising rates dampen demand in the economy, broadly. But on the positive side, as rates go up, banks are typically the first to tighten their underwriting, which can present opportunities for non-bank platforms as more borrowers are driven there.

The Power of Networking: Building Connections for Business Success

David emphasizes the importance of networking in business. He suggests every interaction is like a free call option (as you never know what might happen). He also notes that different types of businesses require different levels of connection. For example, some heavily rely on business development and sales or involve a lot of capital raising, while others are simpler and don’t require as much. But he reiterates that the value of building relationships and connections in the business world is paramount.

Episode Highlights

FinTech: Bridging the gap Between Regulation and Consumer Convenience

In this segment, David discusses the potential for FinTech to reduce friction in banking without compromising safety and security. He highlights how important it is that we continue to make advances in open banking in order to facilitate partnerships between FinTechs and legacy financial services providers.

“…the bank, as a result of its bank charter, can take deposits; and it will always have the lowest cost of capital because of that. And then that can kind of be married with a FinTech offering that really provides that front-end layer that drives convenience.”

CFI’s Introduction to Fintech course

Career Advice: The Shift from Employee to Entrepreneur

In this segment, David relays some of the wisdom he received early in his career about when and how to start the entrepreneurial journey.

“The earlier you get started as an entrepreneur, the better… At the end of the day, it takes a long time to build a business; the earlier you start, the more time you have.”

Portfolio Construction: Venture Capital vs. Private Equity

David highlights how, in venture, a few big winners can make a fund successful; while the PE model targets a much narrower band of potential outcomes.

“… (in PE) You end up spending a lot of time trying to mitigate your losses, which is a little different than venture capital where you just kind of move on… You’re in there trying to figure out how, what, and why did something go wrong… (it can) have a big effect on your fund return.”

Learning from Mistakes: a Fresh Perspective on Concentration Risk

In this segment David opens up about lessons learned during his early days with Merchant Growth; lessons about both underwriting and portfolio concentration.

“It was one of those, am I going to make it to the other side of this? sort of moments… You know, there’s a certain loss rate we expect in the business, but it’s certainly not 20% of the book in a single week.”

Capital Providers: What Makes a Good Financial Partner?

David highlights that intelligence, experience, and an openness to make connections is really only ‘table stakes’.

“It’s extremely important that you align yourself with people that have shared values and genuinely have a relationship with you… everyone’s a good partner when things are going well; you really learn about who the good partners are when times get a little choppier.”

In this episode, we dive into the world of emerging and frontier market investing with Asha Mehta, founder and CIO at Global Delta Capital. Asha breaks down some of the unique characteristics of investing in these markets, as well as how she and her firm leverage data to more effectively time the entries and exits of positions that typically trade much less efficiently than securities in more traditional markets.

Key Insights

The Importance of Cognitive Diversity

Asha underscores the importance of cognitive diversity on investment teams. By having multiple views in the room, teams can navigate complex financial landscapes more effectively. However, a delicate balance needs to be struck between diverse thought and alignment around approach and mission. Asha’s story of missing an investment opportunity due to a breakdown in team communication emphasizes the need to strike this balance.

Data Science in Investing

While a strong foundation of what moves companies and what drives valuation are important, Asha underscores how critical coding and data science skills have become in investing. Asha coaches many young professionals and regularly touts data literacy as being paramount to a successful investing career today.

The Evolution of Impact Investing

Asha provides an insightful overview of the evolution of impact investing. It’s a field that has grown significantly over the past decade, with many investors realizing they can generate positive returns while contributing to the broader social good. Asha’s approach to impact investing, which she expands on in her new book, is that a proactive pursuit of positive outcomes should never be concessionary in nature, and that returns and impact are not mutually exclusive.

Episode Highlights

Boots on the Ground [Timestamp: 02:24]

In discussing her book and what it means to be an Adventure Capitalist, Asha sheds some light on her sources of insight and investment theses while traveling the globe.

“(Investment strategies are)… really helped by having those boots on the ground and talking to everybody I can get access to, from heads of state and ministers of finance, ministers of economy, to shopkeepers and my absolute best source of insight when I’m traveling is always the taxi cab drivers.” This observation speaks to how powerful it is to see an economy through the eyes of the locals that live and work there.

Link to Asha’s book: https://powerofcapital.com

Emerging Markets as an Asset Class [Timestamp: 04:15]

Asha shares her strong belief that emerging and frontier markets are an incredible place to allocate capital and even refers to them as the asset class of tomorrow.

“My view is that emerging markets as an asset class are mainstream in every way except investor allocations. They dominate the globe In terms of global GDP and contributions to growth, contributions to the Globe’s footprint, contributions to productivity; and yet from an investment perspective, it remains a small portion of institutional investors’ asset allocations.”

Free CFI Capital Markets & Asset Management resources from CFI.

ESG vs. Impact Investing [Timestamp: 13:01]

Asha provides a really nuanced perspective around how she thinks about ESG investing vs. impact investing.

In speaking about ESG factors, Asha asks: “Do you believe they are material? If you believe they’re material drivers of return and they will positively impact your portfolio, then you’re an ESG investor. Impact is almost the other side of it. Will your portfolio positively impact the companies you’re investing in or the communities you’re investing in?”

Asha insists that asset managers can generate positive returns while contributing to broader social good without conceding returns for investors.

Free Environmental, Social & Governance (ESG) resources from CFI.

The Role of Judgment in Investing [Timestamp: 30:40]

A crucial part of the investment process involves deciding when to trust statistical data and when to rely on personal judgment.

“One really, really challenging part of the work we do is finding that line between when is this a judgment call and when is this, you know, a call where you, where you trust the statistics.” This discussion illuminates the delicate balance that investment professionals must strike to make effective capital allocation decisions.

Free CFI Data Science resources.

Yashar Farmanara discusses key challenges and successes he’s encountered during his career, as well as the critical role of an M&A advisor in orchestrating deals and providing invaluable guidance to clients.

Key Insights

M&A Challenges and the Importance of Relationships

Yashar Farmanara discusses the complexities of mergers and acquisitions (M&A) and emphasizes the significance of building strong relationships with clients. As an M&A advisor, he explains how deals can be dynamic and require professionals to think multiple steps ahead. Farmanara highlights that becoming a trusted advisor and an integral part of the client’s team is essential for success. By providing valuable insights and support throughout the process, M&A professionals can help clients navigate challenges and achieve desired outcomes.

The Role of Financial Modeling in M&A

Financial modeling is a critical tool for M&A professionals in evaluating and executing transactions. Yashar Farmanara explains how building comprehensive financial models helps assess a company’s value, uncover potential risks, and make informed decisions. Farmanara also touches on how these models can be tailored to the unique characteristics of a deal or industry, ensuring accuracy and relevance. By mastering financial modeling, M&A advisors can provide valuable insights to their clients and help them navigate complex transactions.

Balancing Work and Personal Life in the M&A World

Yashar Farmanara shares his thoughts on striking a balance between work and personal life while working in the demanding field of M&A. He acknowledges that the nature of the job often requires professionals to bring their work home and always think about deals and client needs. However, Farmanara emphasizes the importance of managing one’s mindset and finding ways to maintain balance between work, family, friends, and other personal interests to prevent burnout and maintain a healthy lifestyle.

Episode Highlights

Why Vendors Should Use an Advisor

Timestamp: [00:08:00]

Yashar talks about why business owners and management teams sometimes consider leading a divestiture themselves, without the support of an advisory team, before explaining why that’s generally not a prudent approach.

“I’ve really never been a part of a divestiture process where the uptick in actual value from running a process and having an advisor doesn’t more than cover what the advisory fees are; whether it’s through negotiation of working capital targets… Or even just creating competitive tension.”

The Importance of Communication in M&A

Timestamp: [00:41:05]

Yashar Farmanara highlights the critical role of effective communication in M&A transactions. He emphasizes the need for advisors to be proactive, transparent, and informative in their interactions with clients, and how this fosters trust and collaboration throughout the deal process.

“One of the things that really differentiates the successful advisor from someone who maybe struggles is the ability to communicate effectively and work with their clients and understand their needs and their concerns.”

Preparing for a Career in M&A

Timestamp: [00:50:45]

In this part of the conversation, Yashar Farmanara offers advice for those considering a career in Corporate Finance. He suggests obtaining relevant education and certifications, gaining practical experience, and networking with professionals in the field to build a strong foundation for success.

“I think the key is really just trying to get as much experience as you can, whether it’s, you know, taking some courses, getting a designation like the CFA or CBV, or, or just talking to people who are in the space.”

Check out CFI’s career map.

The Role of Advisors in Navigating M&A Complexity

Timestamp: [00:56:51]

Yashar Farmanara elaborates on the crucial role M&A advisors play in navigating the complexities of deals. He shares his perspective on how a good M&A professional is always thinking multiple steps ahead, preparing for potential changes, and ensuring they support their clients throughout the process.

“The deals that we work on are very dynamic and things can change at all times. And so we’re always like, if you’re a good advisor, a good M&A professional, like you’re always trying to think 6, 7, 8, 9, 10 steps ahead.”

Check out some of MNP’s advisory offerings.