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From Data Rails, this is FP&A.
Welcome to FP&A Today.
I'm your host, Glenn Hopper.
Today's guest is Peter Lynch, the founder of asimplemodelcom and the chief strategy officer at Stephen Gould Corporation.
Peter started his career in investment banking and private equity with roles at Rabobank, JP Morgan, Argenta Partners and Hilltop Holdings.
But he's perhaps best known for turning complex financial concepts into clear, accessible lessons through his platform, Asimple Model.
What began as a side project in 2013 has become a go-to resource for learning, financial modeling and understanding private equity from the inside out.
In this episode we'll talk about his career, how he teaches finance differently and what he's seeing at the intersection of modeling, education and real world investing.
Peter, welcome to the show.
Thank you, Glenn.
I have to say you have a great podcast voice.
I hope I can live up to it.
So weirdly, you said that.
You've got the nice baritone tones, whereas I've just got this southern sort of slow roll diphthongs, or whatever they call it, where your vowels sort of merge together.
Maybe we should.
I know they've cut funding, but maybe we should, with our podcast voices, see if we could get a show on NPR.
Yeah, we'll bring it back.
Yeah.
Well, man, I really appreciate you coming on the show.
I've really enjoyed our conversation ahead of it, too.
And I've got I was just telling you before we went live on air, I have way too many questions here.
So I'm just going to go rapid fire.
Not really.
I can't do anything rapid fire, but we're going to get through as many of them as I can.
And maybe we'll do a follow up episode or after hours episode to pick up the rest.
Absolutely.
I'm ready for the rapid fire.
All right, let's go.
So I love your background.
It's so interesting to me how many finance people I talk to who have taken that finance storytelling.
It's the same part of your brain that goes from finance storytelling to sharing your knowledge and the way you have a simple model.
And we're definitely going to get to a simple model.
But I think, just to set the foundation and the groundwork, can you kind of walk us through your career path, maybe going all the way back to What initially drew you into investment banking and then private equity?
Yeah, no, absolutely.
I'd love to.
It really started early.
So my father was an adjunct professor at Harvard while he was teaching, and he taught corporate asset management and conglomerates.
And he started giving me investor letters very early on, heavily focused on Seth Klarman, because that's a vehicle that came out of that school.
And I was trying to read it when I barely understood the content and just underlining, trying to understand vocabulary.
Seth Klarman is fortunately a phenomenal writer.
I would suggest to anyone go back, read his letters.
They're great.
And I went to college at UPenn and that campus really drives you towards financial services.
All my internships were in that space.
And I had an internship with Luther King Capital Management and we made an investment in Buenos Aires.
And the guy who came up had so much charisma and the business story was so good that I decided as a very young, dumb college kid I was just going to move to South America.
And I made.
This is pre-LinkedIn.
I made 200 phone calls to finally land final rounds with Lorraine Vial, which is an investment bank boutique down there, JP Morgan and the CFO of Mesisa, which is a large lumber importer.
And I finally took.
You know, and I just want to say for anyone listening like these 200 phone calls were wildly awkward, you know, calling someone and saying I'm in Texas.
I want a job in Santiago, Chile.
They're like okay, I don't care, i think it's important.
I think it's like, as it relates to private equity and getting a job, the jobs are similar like you really have to hound good investments, keep track of your network and build on it.
I went to work for jp morgan, first in santiago and then buenos aires, and it was a very cool experience.
I read monkey business before i got down there.
I thought the hours were going to be crazy.
South america is a very different profile.
It was nine to five, no weekends.
I was like wow, banking's great.
And then uh, i had, i had an offer to go work for a credit fund in buenos aires.
Um, after that, and when i showed up, i remember they were pulling the servers out and everyone looked a little unsettled and i asked if i still had a job.
I remember so well.
The guy told me he was like i was keen to hire you, but we were just on the wrong side of something you're going to hear about everywhere cds, credit default swaps.
He's like if you want to stay in this space, I suggest a one-way ticket to New York, because the financial services sector is about to shrink at the fastest pace you've ever seen.
And if I'd been smart, I would have done something with that information.
But instead, I was scared and just went to get my next job.
And I landed with Rabobank International.
And it was an amazing time to ride out the Great Recession because they were food and agribusiness focused.
So the sponsors swung out, but the strategics came in and we actually had a very busy couple of years while I was there.
And it was where I really built that Excel skillset.
And I was kind of the Excel guy on the team and really enjoyed it, really intricate models.
And they kind of preferred an A1 approach, as I call it, start from scratch and build it out.
And so I think that was kind of the foundation of my skillset that I then carried with me.
I guess I didn't realize this when we were talking yesterday.
But starting your career really getting going at the peak of the global financial crisis, what a wild time.
So you were at Rabobank then?
Yeah.
So to that point, banking felt so cool right up until the crisis.
And I remember i was across the street when lehman and bear stearns, when all of that was happening, and this was back when uh, blackberries had keys.
They had the actual keys.
And i remember walking home at like one or two am leaving the offices and like feeling the crunch of keys underneath my phone or underneath them, because people would spike their blackberries coming out of the office.
So many people were getting laid off.
It was.
It was just a wild thing to see and it taught me that there's really no certainty, regardless of the scale the company you're working for Yeah, just an incredible time.
And I guess there were opportunities there.
There just was so much uncertainty.
It had to be, talk about cutting your teeth at a tough time with all the uncertainty there.
I bet those models got pretty wild and intricate in that time, right?
It was interesting.
We were selling sugar refining capacity to Coca-Cola, or we helped Del Monte buy a large banana and pineapple plantation in Costa Rica.
So that was my first and only actual data room that I saw.
Everyone sees data rooms as these digital things.
Working in Latin America was so interesting because I went down there.
They're like, go get the data.
Come back.
I was scheduled for a one day trip.
And I walked in and it was just boxes of files.
And they extended it for two weeks.
And I 10 key data for two consecutive weeks before coming home.
I was like, I hope I never see this again.
Oh, that's so funny.
So this I'm dating myself here.
But my first data room was when I was in telecom the data room for me.
I remember when data rooms were a room, we were in the executive area of the company that I was working for.
And it was these two SWAT teams from the two companies that were going to merge.
And it was just stacks of boxes, and the idea of a digital data room back then was like, what?
That's the worst.
Okay, so you move on from there, and then you're at Argenta and Hilltop.
So walk us through, what were some of the most formative experiences from those roles?
Yeah, I think what was so where I felt so fortunate my father never tried to guide.
I have three siblings.
Never tried to guide any of us on decision.
One's in computer science, the other's in movies, and one's in fashion.
And he approached me at this point about potentially joining him.
So Argenta was a holdco strategy that he ran for 30 years.
And the idea was buy anywhere between five to eight companies and then grow through add-ons.
And he really said that there were only two reasons to ever sell.
It was an unsolicited offer at a fantastic valuation or your management team got tired.
And at the conclusion of his career he'd managed a 27 IRR.
That was kind of guided by these two principles.
And it was really the importance of investment time horizon and great people.
So if you're solving for long term cash flow, you have to take care of stakeholders and shareholders.
You kind of have to take care of everyone.
You know, you can invest in education programs.
You really have to take care of your customer, et cetera.
If you're solving for short term cash flow, that can have really unfortunate consequences.
And I think, if you look at it, it's the compounding in the latter half of any company's lifecycle where you really create that tremendous equity value.
Once you buy something great and you have a great team, you just let compounding do its work, and i really think great people are kind of the secret to work-life balance and financial success.
I really enjoy this one story.
So circuit city under alan wurzel outperformed the market by 185 times and at that time they would they're.
So all their competitors ran banners on like this discount or you know this product, and they only ran banners that said always looking for great people, And they would let the great people do the work.
And I just thought that was awesome.
I spent time there until he retired.
We sold most of the portfolio.
And I joined a longtime friend of mine who had established sort of an investment role at Hilltop.
So Hilltop is a phenomenal firm.
They're here in Dallas.
They're a bank acquirer.
They had about $15 billion in assets when I joined.
We became their non-control, non-bank investing arm.
And that was sort of a lesson for me in kind of what it takes to build out a sourcing and third-party network from scratch.
We had a phenomenal financial backer, so we didn't have to worry about raising capital.
But kind of reestablishing relationships across all of the various disciplines required for private equity.
That was a tremendous amount of work.
I actually met my former partner, longtime friend at the airport on day one, just to get started.
And we were on planes a lot, but it was awesome.
And I really learned the value of minority investing.
You can really amend an operating agreement for just the right amount of control.
And we were doing preferred with warrants attached before it became the most massive market before private credit exploded.
So we got to have some great early success and it was just a phenomenal place to be.
Let me know if I'm skipping anything here that we need to cover.
But going from that to now, the Chief Strategy Officer at Stephen Gould, I guess maybe a little bit of background on what Stephen Gould does and your role as CSO and how that ties into your experience in finance.
Sure.
I only left my story for another day, but my father got ill and I really wanted to help my family.
And that was really the only reason I left Hilltop.
When I started out in the industry, I was like, if I ever get an opportunity to be a founding member of a PE vehicle, I made it.
I'm stoked.
And so I took a sabbatical.
I took some time off to help my family.
And in that time, I got asked to join the Stephen Gold board.
In a fantastic full round story, Stephen Gould was my first internship ever.
I stayed in touch with him afterwards and it was just a cool opportunity to revisit what they were doing with my background.
I kept seeing opportunities for capital allocation, So eventually they asked would I want to come inside and help with that role?
So I really view it as this focus on capital allocation strategy and talent acquisition.
It feels like the private equity playbook applied internally over a very long term time horizon.
And I think people are just so curious about private equity and there are plenty of good and bad examples of firms out there.
But I think what's powerful about it is you work very decisively on strict timelines.
When you sign an LOI, you have a few months to make a lot of decisions and then put capital on the line.
And I think that is, you then hire the best team and you iterate towards success.
And it's great discipline when done correctly by talented operators.
If you can work towards that culture of a line changed, I think...
What people fear is change if they don't understand the principles that guide it.
Creating a culture of aligned change allows you to really make people comfortable with why you're moving forward.
So I think that's how I view the role.
And then I've started to find examples that I find really interesting of what I call platform-backed innovation.
We talked previously like Slate Auto, I thought it was a startup.
This is a company that has created a 25000 electric vehicle and is making headlines for making such a low-cost electric vehicle.
I learned at a conference that it wasn't a startup, it's a company called Rebuild.
Rebuild took a 10 million design challenge And then, once they were done, within 18 to 24 months of developing the prototype, spun it out into its own entity and raised 700 million.
And it's just this incredibly accelerated value creation playbook.
And so I try to think about how do we apply that in a different industry at Stephen Gould?
How do we become something that can look at VC and look at PE and kind of innovate on that?
Super interesting.
And that, so that company, that's the one that's Amazon or Bezos is an investor in as well.
And they've got.
It's a modular.
You put it together and they've got their baseline, but then everything is just a bolt on to the vehicle that you can build up.
That's right.
One of the brilliant things I got to talk to the CEO after the conference and one of the brilliant things about it that they realize in retrospect is because all of the customization takes place in the customer's control.
You don't have to have a lot with every model and every trim and every color.
You need to have a few models on every lot and that's it.
And you know they had racked up 140000 pre-orders when I was at the conference, before starting production.
So they just have a fantastic PR and marketing effort behind this as well.
I was just very impressed by the whole thing.
Yeah.
What an incredible model.
So, going back to Stephen Gould, so you're not the typical uh PE.
You know four to six year time you're looking at, you said you're looking at a longer horizon.
So like, what would a typical hold period be for you guys?
I mean, so this entity, there's no hold period.
They have scaled, the current chairman is such an impressive individual.
He scaled the business from 7 million to 11 billion over his time there, without any capital and without any acquisitions.
And what I see is the opportunity to have kind of a capital allocation strategy, but internally, and it's more, how do we build moats around some of the like really great businesses that we have internally?
But it's there's no exit, there's no.
You know, this is a very tightly controlled family entity.
And i would say one thing that i found so unusual founders who build businesses like this don't often invite outside perspective and they have invited an entire board of outsiders.
They are building teams of people that are just trying to trying to build kind of very talented teams.
You don't have to do that if you built a billion dollar company, you know, and they do.
So it's just it's cool.
Yeah, that's incredible because I've been on the other side of the companies where PE was invested and you've got the pressures and it can be a really tough place to work when you have those horizons and timelines you're trying to work toward, especially if you're in a turnaround situation and all that.
So it very much changes.
And then I've also been in companies where I've come in and they say we want to bring in outside investment, a minority investor, here to be a partner in this, so that we can grow more quickly.
And then it turns out they kind of like their lifestyle business and don't want anybody else coming in and having a seat at the table.
So being able to have an organization like that, that is adding the value and it's not it's for long term build.
That's a that's a really unique opportunity.
So very cool.
It is fun.
It's fun.
So in the midst of all this, and this is over a decade now, going back to 2013.
So at some point in your career you thought hey, let me start a website that helps, or maybe I'm not going to even try to put words in your mouth.
Tell me, like the original idea around a simple model and what what you're thinking was when you started publishing around it and sort of what got that off the ground?
Yeah, it actually, it started with no intention to publish.
I really hated what it took me to get into investment banking.
And then I went through these boot camps and I just thought there was all this unnecessary complexity.
And when I got on the other side of the wall, I realized this is all arithmetic and vocabulary.
It's just not as complex.
And I think it was that realization that and a fascination with understanding it myself.
And I really like, wrote this when I was at Robobank in the evenings, you know, sitting in my cubicle, the first few case studies, but they were for me.
And in one conversation with my father, who was a teacher, he was like, you should share this.
And so I went to Best Buy and I remember it was a 27 microphone and tried to learn how to record videos.
The first few were awful. and just started posting them.
I thought it would have this great reaction.
For two years, I was the only website traffic.
It was just me checking Google Analytics and seeing my own graphic on the site.
Someone wrote about it on a Reddit thread and it started to take off.
And then I wrote an article that got published in, I think it was Inc or Fortune, I can't quite recall.
And it just started to snowball slowly.
And so it's been a very gradual, we now have a very small team that helps with the site.
But it was sort of accidental case study turned accidental blog turned accidental tiny business.
So actually, I kind of jumped the gun.
I'm just assuming that all of our listeners know what a simple model is.
So I should have led with tell us about a simple model.
So the first content I put on there was really it's the.
The idea was make financial modeling really accessible.
The boot camps for me were expensive.
So we've always charged what it takes to manage the team.
We started free, and then my hobby was becoming expensive.
So I remember my first paywall was 3, and we've now worked up to between 14 and 30, based on which curriculum you're taking.
So the website will now take you from never having read a balance sheet all the way through the financial statements, the three-statement model a DCF, an LBO.
And then, when I took some time off of work, I partnered with a law firm, Katten who are.
I love working with them, they're phenomenal and basically begged them to help me write the entire curriculum on what it takes to buy a business.
So how you source it?
Going through the IOI, the LOI credit agreements, the stock purchase agreement.
There are actually very few Excel models in this curriculum.
It just explains the process beginning to end.
I think.
In total it's about four hours of video and the PDF notes for each video are somewhere between 10 and 20 pages, so you can get pretty deep if you want to.
But that's the part I'm most proud of.
I really like the private equity training curriculum.
And while you're building this, I mean you know about how to build businesses and create value is, and you could have leaned all into this, but you referenced it as a hobby.
But as you built it out, did you have you had a long term strategy with it, or is it just been?
This is an outlet.
I know this is good information for people to have.
This is how I want to put it out.
How is the growth?
Because you've scaled up with with quite a few users now as well.
So, for a website focused on business models, we have we have a really bad business model.
Um, it's really been like focused on creative outlet and trying to make this information available.
So we've now hired a few marketing firms and the first thing they say is just make your price the market price.
And i really want something where i can, like share information and share knowledge.
And since uh, it's not my primary occupation, i don't take anything out of it, i just really love doing it and it was the most humbling experience i.
What i find fascinating in private equity is you'll go in, you'll do due diligence on a business and you'll say wow this, this marketing department, really sucks, you know, or something like that.
And then you try and go build a customer base and you're like i'm terrible at this, like you know.
It's like i don't know what a marketing funnel is.
I don't you know, and in that way it's it's like really helped me understand the entrepreneur better, trying to be one.
And I think that is the most humbling experience.
The first time there is any kind of transaction of monetary value for something you've built is truly like a phenomenal moment.
And anyone who's done it, I think deserves so much credit just for that first step.
Yeah.
And I think there's something about just you're not putting out the one page cheat sheets that people throw out on LinkedIn to try to get more followers or whatever, but you're actually genuinely interested in the content and in explaining the content and being this resource.
And I think that's influenced the nature of the content and what the site is and the community you have around it.
What would you say about the community around ASM?
I mean, is there a lot of interaction?
I would say I get a lot of emails and I try to respond to all of the technical questions and more of the detail.
We have someone who helps with email and they forward everything to me that's kind of more material.
And I really enjoy that aspect of it.
I have not been able to put myself in a position where I can go to speaking events or anything like that.
So the community is sort of all digital.
But I really enjoy the few occasions where I've gone to speak to it.
I've gone to a few universities.
I've gone to a couple like private equity businesses and talked about it when my schedule permits.
And I love that aspect.
I love getting to engage with everyone.
And what's very entertaining is so I'm six foot six.
And when they are accustomed to me being very tiny on the screen And so that first introduction is always kind of hilarious.
Yeah, that is funny, especially after COVID and everybody went remote.
It's always amazing meeting people firsthand.
Where you know people, you think that person must be five to turns out to be.
And a lot of it is placement of where the camera is, too.
I figured out people just assume that that camera line is their eyeline when they're looking at you.
Yeah. right yeah that's a great point i love that i hadn't thought about that but that's right it's like yeah i would be looking down on this tiny human yeah yeah so i think that where your camera line is that's like kevin durant's view i guess would be so your courses i mean you obviously the nature of the courses uh would be set up well to be presented to firms and go in to the teams and maybe junior analysts and and all that but you're it seems like you're really focused on on the individuals and learning so just going through a simple model i i know the three statement model which huge obviously everybody on fpna today knows what that is and the dcf and lbo models and it seems like those are really the the core of the curriculum would you say that's the case and if so why the focus on those three I would say the private equity training content aside, as it relates to the financial modeling, we really prioritize the three statement model.
So the introduction to financial statements course is one of my favorites because it introduces the financial statements as they relate to each other.
And it very quickly starts demonstrating how they plug into models.
So by the time you're building the three segment model, you kind of have this framework in your head.
And I think that's the most important.
The most important process is having that foundational knowledge.
You can build complexity off foundational knowledge.
The reverse is very difficult.
And so when I see a curriculum that starts with a take private of a publicly traded company, I'm like that's more focused on mechanical sequence than sort of knowledge base.
So that's, I would say, the three segment models.
The big focus is, i think a dcf really trains you on time value of money.
I have not used dcfs very much um in in my personal work.
I know that they get used a lot in valuation.
But what i find entertaining is the dcf and lbo are the same math, just reversed, and it's so you got to understand the math.
The dcf helps you with that.
And then, once you get to the lbo, if you really break it down, it's just a three statement model adjusted for a transaction and and your return profile.
It's it's the same thing.
You just got to record a transaction.
I think they're all really helpful.
But if you get the three statement model and you understand the three financial statements, the rest just comes very easy.
That's the muscle memory.
This is the core.
Looking at even the financial statements, looking at them separately, if you haven't had to go through and build that three statement model and put your plugs in and really tie everything together.
Honestly, it's doing the plumbing and linking everything together that you really start to understand the value of each of the models and then, to your point, rolls into the valuation of the business and understanding that full picture.
I think that's stated perfectly.
The very tedious, frustrating process of doing this the first few times is what's cementing that framework and it sucks the first few times.
Yeah.
Especially trying to figure out that plug to get to make it.
Exactly.
Why doesn't it balance know with those and with the with the other courses there is?
You've spent your career in this space but i would imagine that a lot of people it could be straight out of an mba program or school or maybe junior analysts as they're coming in, or maybe even further along in their career where they want like a refresher or a better understanding, especially if they came from a different industry.
So It's got to be difficult to balance that technical death that you have but also still make it accessible for those people early in their careers or at a different place.
So how do you balance that?
And I guess specifically for people who haven't worked in investment banking before.
You know, it's hard.
I think once you get good at something, it's hard to remember how you got good at it.
And I go back to kind of what I started writing out the first few times.
And I was like, if I want to understand this, what does that look like?
I really think that's what helps most, especially with financial models.
If you understand the core relationships, the additional complexity is more arithmetic and more rows, but you still just need to make things linked properly to your point.
How does it balance?
You know, if you really understand how one change on any financial statement impacts cash, you can make a model balance, and so we really.
I think the best way to treat financial modeling is to strip it down to its core of those relationships and then explain that complexity.
It's kind of this illusion of complexity.
You're just adding arithmetic and adding line items.
So that's what's helped me the most.
That's how we teach it.
And then we have examples of more complex models.
But I don't really do the like hyper detailed instruction on more complex models.
I just make them available so people can understand them.
With the exception of an, there's one advanced LBO case study that I wrote for.
There was basically at Hilltop the thought was create a case study where, if they can ace it, I would hire them on the spot.
And so there's a live modeling exercise that I do of like, here's how I would do it.
That's cool.
Yeah, I love that.
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So, because you've been in the education space for so long with this and you're going to be preaching to the choir here on FPA today, but from your vantage point, what's a common mistake that you've seen people make when they're learning or building financial models, whether it's a hurdle to overcome or something that is just difficult to grasp, or something that people maybe blow by too quickly without giving it thought?
Yeah, I would say the first one is you got to treat this like you're learning a new language.
It all sounds like English, but the vocab is so different.
So most of the emails I get are like, I don't know how to project this line item.
And I'm like, it's because you don't know what it is.
You project things generally only a handful of ways.
And so I think, if you really pay attention to vocabulary early, this stuff just starts to accelerate.
And then the other is really people focus on the case study to get the interview, and those vary in level of complexity.
And I, again, just think you have to start with that foundational knowledge and build up.
I would generally find that I felt this way.
I don't know if you felt this way, but I always thought that the best modeler probably wasn't given a three-day case study to get the job.
You can kind of tell in the interview how good they are.
I feel like you lose candidates if you put out too great a hurdle.
So I understand the case study approach.
I just think there's problems to it on both sides, both hiring and on the learning side.
I'm with you.
I see how someone could make an argument for it, but maybe it's right or maybe it's wrong.
But I know coders get coding challenges all the time and that's how they're selected.
It just seems like I don't know, not to knock what coders do.
Obviously that's a very difficult word, but it just seems like a different engineering versus what you're doing, especially in investment banking.
Obviously, modeling is huge, but there's other components to it, too.
And laying down that hurdle like that, I don't know, I'm sort of with you on it.
And having had to have gone through a couple of those especially, I think you've already lost me here.
I feel like I'm doing work for you for free.
I don't know.
Another funny thing I found about the case study method is the first thing I would do is look at the file and look at who created it, because all of these files have the creator and it was frequently not the person emailing it to me.
It's like, God, change who created the file.
Good, good pro tip.
So no, I'm totally with you on the fundamentals of modeling, but also what I love about the program is you go beyond just the models and you've got the sort of the beyond the LBO covering sourcing, structuring and closing deals.
And I love that.
So could you walk me through that kind of content that's beyond just the modeling that you offer?
Yeah, absolutely.
So the private equity training material is really focused on private equity.
What makes it difficult to understand is there's so many steps from the time you identify a company to the time you close it.
Individually they're not that complicated, but looking at an entire process and trying to understand it is super challenging.
So this really breaks it down into like, how do you make a bid?
When do you get serious about that bid?
How do you validate that what you're about to buy is the value you think you're about to receive?
What does that due diligence process look like?
What third parties are you working with to confirm all of this?
When do you bring in lenders?
And then once you transact, now the work starts.
So it works through that process.
And what I find really interesting in private equity is you can get pretty far along in your career without understanding the documentation process.
And I think if you understand how a stock purchase agreement works, how the credit agreements work, the operating agreement, certificate of incorporation, if you understand how those things relate to each other, you really have an edge in the space.
And so I try and encourage that.
We have a mini course on the stock purchase agreement, where we create a skeleton stock purchase agreement and just highlight here's the language you actually need to look at.
We don't really talk much about the boilerplate language, but here's what's going to move the needle.
I like to tell people if you're early in your career in PE, try and find a way in.
It's really protected.
But find a partner and ask if they'll just copy you on redline turns and just read the redlines.
Try and understand the logic behind them and then eventually try and position yourself where you are the negotiating party, because I think it's a phenomenal skillset and I think it translates to other spaces.
That's how equity incentive is created.
You basically get to define a currency in some sense and all the pieces and how it works.
So it's a really fantastic principle to understand the framework that guides how the business is held.
I want to get to the negotiating piece in a minute, but you actually keyed into one of my biases.
I've been on the sell side a lot more frequently than I've been on the buy side of transactions.
And have you created any content for the sell side?
And I'm thinking actually, if I were wanting to learn more and i were on the sell side, taking the buy side course would probably be enough.
But if you have you targeted any content towards sell side, we haven't as much, and my thought has been sort of that that you can kind of see it from both sides, you know if you, if you take the course, but we haven't gotten specific to the sell side.
I think what's fascinating to me about the sell side is like how many games are played between the parties, and there's one story that i really love.
There's a guy who found out entrepreneur had built a really amazing business, But the investment banker told him that only one party was interested.
And this guy looked at the buyer list and he started flying to all the cities where these potential buyers were.
He'd sit in a hotel room.
He had nothing to do there because no one else was interested.
And he'd sit in a hotel room and he'd wait for them to call his cell and he'd call them back from the hotel room so that they would see the area code.
And so they thought he was doing a road show and this guy was just sitting in hotel rooms and he used that as leverage to bid up the price. and you know it's like it's just so many games are played on that front it's it's pretty wild well that is that's brilliant i love that so there are going beyond in that the case study model and all there are the soft skills side of things too and i love that you hit those as well can you walk us through how you teach kind of the i don't know the strategic and interpersonal aspects like negotiation that you mentioned or management alignment and i don't know do you Does any of your content focus on the integration post-merger, post-acquisition?
We have no post-acquisition work.
I think about that a lot, and I think about it a lot more now being in an operating business and kind of executing on that private equity long long, long-term private equity playbook internally.
But we haven't broached that yet.
To be fair, it is it's more of an operator's dilemma than on the PE side.
It's hard to say this is how it works in every industry.
You know there's different timelines, different perspectives, different perspectives on risk and leverage.
There's just a lot of ways that could go.
And it's also not as much of a criteria for the job.
And so we try and stay focused on that bottleneck of like we're helping people enter the space.
Yeah.
And it's just interesting, having gone through I'm sure you've done way more deals on it than I have.
But having gone through a number of deals, you understand how and I don't know what the current stats are, but it's more than half of all acquisitions end up destroying value.
And spinoffs have a better chance of success than an acquisition a lot of times.
And it comes down to, we modeled out all these synergies that never happen.
And there's all these complexities, that when you actually where the rubber meets the road on the integration, it's a that's an interesting time to be and that's where it gets to.
I guess the the investor side too helping sort of drive that that integration, absolutely i think.
I think that's right and i think we're seeing a massive amount of it right now this 2022 interest rate hike, which was the most aggressive we've ever seen.
I think you have a lot of good businesses with great operating cash flow that just have broken expectations.
Uh, you know, like equity incentives that profile everything else, And I think it'll take some time to unwrap that.
Yeah.
Getting back to the soft skills, can you walk us through a little bit of that side of what you cover in the going back to the negotiation and management alignment and all that in your training?
So it walks you through, like the indication of interest is sort of a range evaluation, you know, and then it'll talk you through the letter of intent which then gets to a more specific value.
And you start to outline the things that will be very important in the stock purchase agreement.
So one of the things we'll say, for example, is whatever your must haves are for a close, make sure you get them in the LOI.
Just set that expectation early because closing is a roller coaster of emotion.
We've had plenty of deals die in the final hour.
So it's managing expectations through that process at the right time.
You wouldn't want to put it in the indication of interest when they have the most people to choose from.
Once you get to the LOI, you're a little further along and it just sort of guides you through when to introduce these variables.
And I always like to say that when you get to the stock purchase agreement, have the things you're willing to give on and the things you must have, and present them both equally and just trade.
People always want to feel that they're receiving something if you're getting something.
It's so much posturing.
As I mentioned, people are looking for every detail when a transaction is closing, down to the area code you're calling from.
So it's like anything can set off a process.
Yeah, that's great.
You know, and i i think a lot about your platform, and i think you really are in a unique space and that i could.
I could ask you differentiators in the marketplace between the the million other uh learning platforms that are out there specifically targeting fpna, but it comes through when talking to you that this is a, this is a passion project for you, and i know you'd like to grow the user base and all that, but it's.
I don't want to put words in your mouth.
Does it feel like though, that this is really?
You have a clear focus on what you want to get out there and how you're structuring it.
And I don't does that, even as you're thinking about what Corporate Finance Institute or what LinkedIn, Learning or whatever other platform is out there that people are learning on, or the consultants out there.
Are you trying to match that or do things with marketing with it?
Or is it just focus on the content and stay true?
And that's sort of the growth and strategy around it.
It's largely focused on the content, but I'm increasingly thinking about what is the strategy and how do we want to expand on this, because it's just continued to evolve.
And we now have some people who are working for the entity and providing content.
And so I do feel more increasingly responsible for that.
And at some point, I think I really would like it to succeed on another level.
I just haven't thought quite through.
I'm always torn between the immediate answer is just raise prices and then compete in the same way.
Is there a way to achieve both goals and be the really affordable solution?
So that's what I toy with a lot.
Yeah.
2013, tech has changed a lot.
All the different LMS platforms that are out there.
And there's so many YouTube videos out there.
I don't know if you know Chandu, the Excel guy.
He's huge.
Yeah, so he was on the show a month or so ago.
And I talked to a lot of people who are in this training space.
And I'm wondering just because... you're kind of an OG in this now being around since 2013.
Have you seen, and I know you started, you talked about getting the mic and doing the.
I mean, I'm guessing it was just screen share and talk over it and you know, present the topics.
But have you seen, from your perspective, the way that, the way people learn about finance?
Obviously there's school and the traditional routes, but so many people are leaning into these certificate programs and credential programs, but the technology that's out there.
Have you seen or changed the way that you create content and put it out there based on how it's changed?
I have.
I used to never put my face in anything, and the first time I did, it was really challenging.
But I do think people want to relate to someone.
I think the biggest challenge we have if we think about competition is in-person instruction is hard to beat.
I think we lost a lot in that COVID era.
I remember being in a cubicle and having a VP or associate or managing director looking over my shoulder and it just really accelerates learning.
I think the challenge is trying to figure out how to do that if you don't have the environment.
The online tutorials are great, but you have to force it on yourself.
There's just a lot of options out there.
We find that a lot of people are signed up for multiple platforms and going through the process to help.
I think it helps.
Like.
The more you can see different approaches, you have these abstract concepts and the more you can see it in a different context, the more it's going to cement itself.
And so I think having such a broad array of options actually helps if you take advantage of it.
Yeah, and that's true.
I mean, it's all...
It's not a zero sum game in the competition there.
If people are continuous learners, going to a different platform, getting a different insight, getting a slightly different feel.
It's the same thing we do when we're learning on the job and talking to other analysts and talking to other Excel geeks and all that.
It's funny when you were talking about putting your face out there the first time.
I think I mentioned we were talking before the show.
I was a journalist before I went to business school.
I felt from very early on that I had a face for radio, and a voice for print.
So I was a print journalist in my early days.
So I guess we'll call this the, the advice corner of the show.
If someone is just starting out in corporate finance or if we do have listeners in private equity.
If we have listeners in private equity, you guys speak up out there now because uh, you know we're we're, we are FPA today, but we we feel aligned with our uh analyst brethren in PE.
And the reason I guess I'm asking this question is I think back to business school a million years ago, when I was there and I wasn't really prepared for corporate finance because it was all case studies, case studies, case studies and then getting in and doing the actual work.
I would imagine it's the same whether you're coming into investment banking, PE or wherever you're starting out.
There is a knowledge gap of just maybe a little bit less time on case studies and more time on being able to maneuver Excel.
And I don't know, maybe that's not really where you would go, but for someone just starting out in PE or corporate finance today, what would one piece of advice you'd have for them be?
Yeah absolutely, i.
I think.
I think the most powerful thing you can do and the thing that will accelerate your career the most is the network you manage to build while you're building this technical skill set.
Like you, you really gotta hammer the technical skill set, but in terms of being able to move to new interesting firms or do uh, you know, if you're in private equity or in your in corporate finance corporate finance the opportunities will start to find you.
If your network is vast private equity you get hired based on your technical skill set and promoted based on your ability to create agency.
So I just think, find ways to network, find the ways that are comfortable for you.
I really like there's a story about the greatest car salesman ever sky, Joe Gerard.
What he would do is if you ever bought a car from him, you are on a permanent mailing list.
He would mail you a card and you'd open it every holiday.
Once a month, it would just say, I like you.
That's it.
And he got to the point where I can't remember the number, but he was sending hundreds of thousands of letters per month.
And he just, he sold an amazing number of cars per day.
I can't remember the number.
And it's funny how this works.
There's a study I read recently that they were trying to understand popularity and what makes someone popular in school.
And the number one correlating variable is the number of people that the individual likes.
The more people you like, the more popular you will become, but the more people like you back.
And so it's just, you know, I think building your network is really a fantastic thing to do.
If I'm reaching out to someone new without a warm introduction, I'll reach out five times and in each email provide a very cordial like.
I will stop if you don't want me to reach out again.
And I think it's important to remember that the most important email you draft on any given day is very likely to be the least important email in your recipient's inbox.
So just don't take it personally.
Don't take it personally.
And eventually you'll find people who admire persistence.
Love that.
Love that.
And here's a question I didn't have in the free show notes that I sent over to you, but it just occurred to me.
Obviously you're not just teaching this stuff, but I can tell just by the context and everything you talk about.
You're clearly one of those lifelong learners who's always curious and going after new things.
I'm wondering...
For you right now?
Is there anything that has your interest, some new area that you're studying or looking to improve in or expand your knowledge in?
Yeah, I would say the two are AI, of course, just like wild what's happening.
And then the psychology of leadership, I think, are the two I really think about a lot.
AI really has me absolutely fascinated and I'm trying to incorporate it into everything that I do.
I used to do something one way, ask myself if I can accelerate it with AI.
And then I'm also trying to be careful about the things I don't use it for.
So writing, which you were talking about being, I don't ever ask it to write something for me.
I will write the entire draft and then upload it and use it as an editor.
But I don't want to lose that skill set internally or my command of language.
So it's just an interesting thing to start absorbing as much as you can and then be aware of the pitfalls of it.
Obviously with anyone who follows my content, my show I'm clearly an evangelist on AI, but man, there are so many people out there just generating so much garbage content.
It's so obvious when something is written by AI.
It's, it's simultaneously excessively superlative, if that makes sense.
And then, but also anodyne at the same time, it's just so washed over.
And if you think about how it's created, I mean it is giving you the most statistically probable next word.
So of course it's going to just manufacture cliches, but there's so many things, the biggest one.
So em dashes obviously are a big thing in reading.
You know people using em dashes on every paragraph.
Uh, That's a tell for AI.
But the other one is it's not just X, it's Y, I don't know what it is.
Claude does it, Chad GPT does it, and I'm working on a new book right now and I would love it if I could outsource some of my writing to AI.
But it was no matter how you prompt it or what you tell it.
It's so cringey.
It is really good at organizing.
So if I have just rambling like a free write of thoughts and then getting AI to structure that into something that makes sense, just give me an outline.
I'll go write it myself.
But yeah, I think that's exactly right.
I think you're going to lose your voice entirely if you use it.
And I can read it.
I can tell entirely when I'm getting AI generated emails, AI generated text.
It is using statistical probability is you're going to work towards what everyone would write.
And I think you lose voice.
Yeah, and when you were talking about psychology of leadership, I immediately went to I wonder if that includes the psychology of leadership of bots.
So once we get agentic AI, you need to know how to wrangle the bots and keep them in line.
What motivates them?
You're way ahead of me.
I've not gotten there.
I hadn't even thought about it until you just said it.
So, I mean, I guess beyond that, what's next for you?
Anything exciting coming up with either the platform or Stephen Gold.
You know i'm really excited about the role.
I think it's my first time in a true leadership role and really dealing with the the day-to-day of a much larger organization.
I'm really used to working with lean teams and i think there is something really fascinating about it.
Like this group is doing such a good job with it.
They've brought in a kind of team of exec, of executive coaches.
I meet with someone every two weeks.
They go through strengths, weaknesses.
They bring us together to find better ways to work together.
And we talk about kind of the organization and what the future looks like.
And so it's just been for me, it's just been a fun new role.
I've been in it for two and a half years now and find myself really enjoying it.
It's very different from private equity, but the knowledge base transfers very well.
So that's probably what I've been really focused on is how do I excel in this role and really influence change where it matters?
That's great.
And that's a big part of leadership.
And I used to think that this went hand in hand with being an analyst.
You move up in your career and you get further and further away from the spreadsheet.
But I feel like inherently you want to hang on to, I just want to build something.
It's the same thing like with engineers too.
But hearing you, the fact that you're teaching on the fundamentals and the basics and sort of, whether it's the Excel or just how the model works in general, but also the soft skills.
But now at this point in your career, also leaning into the management style and everything, it feels like it's almost two different skill sets and it draws from a different place.
But I will say I talk to a lot of people who are like, no, you're just a curmudgeon.
You need to get used to get better at talking to people.
But that is I don't know.
Is that a hard shift from you going from doing those from early career doing the modeling?
I mean, was that a happy place for you, or were you always thinking that same network and more about people and all that?
No, massively.
These were huge shifts, like huge shifts.
I would say that today, you know, there was a point where I was so accustomed to.
If we can't make a decision on something, the answer is more analysis.
And you just keep kind of recutting the data you're looking at.
And you realize, like, the best data comes after execution.
You don't really know.
The model's static.
You're going to influence change.
You're going to see that change.
And then you have to be able to adapt very quickly to whether or not you were right or wrong.
And so I really think more about, like, what is the psychology of hesitation?
What biases do we have and how do you get the team to kind of raise those so you can address that and get out of this sort of over-analysis, paralysis problem?
They're very different.
They're very different skills.
And they're both equally powerful.
But you've got to know when to push the accelerator, on which one, or you're going to get stuck in one of those two spots and you won't be able to move forward.
Yeah.
And I'll put you on the spot here, too.
On your digging into leadership psychology.
Are there any authors or sources or books that you'd recommend for our listeners?
Yeah, let me think.
So actually, I love Good to Great.
It's a phenomenal book.
I think everyone should read it.
A lesser known book is Necessary Endings.
It really talks about how pruning allows organizations to thrive.
It's like kind of building that team.
It talks about a few case study examples of how business is scaled by having a consistent approach to always be focused on the right talent and then be focused.
The right people are with you.
I'd have to think more about the rest of the list on the leadership front.
I'll get back to you on that.
Yeah.
All right.
Yeah.
We got, I mean, we got two good recommendations there, so that's great.
Yeah.
So, um all right well, now we're going to bring it home with our standard questions that we ask everyone.
So the first is what is something that not many people know about you?
Something we couldn't learn from a simple model or your LinkedIn profile or whatever.
Yeah, it's a fun question.
It's like very easily how difficult it is for me to post.
I struggle with it immensely.
Just to get comfortable with it, I would walk around just talking into my iPhone on random topics.
Talking to someone versus a camera is just weird.
And then thinking that you have some authority that people should listen to you is just more odd so it's like i used to post and go to the gym or like go on a run i had to get away from it i like couldn't see the likes or dislikes or comments i've certainly moved past that some but i still carry that it's it's difficult what i have learned is that trolls should be ignored or entertained so people will post brutal comments sometimes and now i entertain them i'm like go on what else So, well, I have to say, I wish more people had your apprehension around posting because I think we're seeing, especially with AI-generated content, we're seeing Dunning-Kruger in full effect every day with all the... I agree.
All right, and I'm looking forward to this one as well because, as someone who's done as much modeling as you have, it's always fun to see, especially because you've been in it for so long.
But what is your favorite Excel function and why?
Yeah, I like this question.
It changes randomly based on what I'm doing, but right now I would say it's the combination of the sort and filter function attached to a table.
I don't really love pivot tables.
I like the ability to create kind of any aesthetic you want or any style or any layout you want.
And that combination of sort and filter can look at a data table and you can kind of recreate anything you want.
And so it's just a powerful way to display data as a communication tool.
Like if you're trying to impress upon anyone something, I think people like just good looking data.
It's more convincing, bizarrely.
Yeah, those two right now, I really enjoy using together.
So embedded filter and a sort function.
Well, Peter, this has been great.
I really appreciate you coming on the show and sharing your insights.
And we'll link to a simple model dot com and everything in the show notes.
But that URL is pretty easy to remember.
So I bet you get some traffic over to you.
So I appreciate it.
I came up with the name before I understood anything about SEO.
But fortunately, we do OK on SEO now.
All right, man.
Well, thanks again.
