00:26:26 · Miguel Armaza, Steve Stagner
[00:26:26] S1: And Steve, one of the things that people are talking about in technology is just the fact that some of these AI first companies are growing faster. You see a similar effect post implementation of your tech stack or is it too early to tell? [00:26:47] S0: Yeah, far too early for us to tell. I'm one hundred and fifty or sixty days in or so, and we're just getting started. I will say there is certainly some research out there that I think Harvard did a study or I think it was Bain or BCG did a study. And I mean, results were that the AI leaders, the AI people that were enabled with AI were 40% more efficient, did two to three times more productivity. Whether or not those facts are, I think that was from a book, The AI Driven Leader, but whether or not those facts are going to play out exactly that same way or not, what I can tell you is it's very, very clear that if you're not leveraging AI, you're going to get left behind. It would be the equivalent of not using the internet in 1990. And so I just, I think today we can laugh at that, but you know, there's just no way you could get by without it or, you know, I'm not gonna use email. This is not something that we can resist. So we need to adopt it. We need to enable it, and we need to get into it. [00:27:53] S1: Steve, why are roll ups cool again? Why is not just Thrive, but there are other large asset managers, right, implementing similar strategies to Crete, but in in different verticals.
00:28:10 · Steve Stagner
[00:28:10] S0: I think the the reason why if you zoom out on the industry, there's a talent shortage, and then there's this technology, the steep learning curve in this technology and the private equity has entered the space. So a lot of firms hit walls and I go across the mattress industry, the veterinarian clinic industry, the HVAC industry and the roofing industry. And what happens is an entrepreneur starts off and builds a company to a certain point. I was that entrepreneur, I built my company to a certain point. But for me to go from zero to 50 stores, it took me eight years. But to have access to the capital, the technology and the intelligence and the data the data driven decision making that comes with partnering with a private equity firm is a game changer. Accelerated not only my life, but my company at Mattress Firm to birth a national chain in a category that was very fragmented and there was no national chain. That would not have happened, not as fast and it would probably wouldn't have happened at all, because what happens is you Peter principle and you hit this scale where if you don't have the infrastructure, you really can't get there. So that's constant across all these industries. And I talked to these entrepreneurs that I relate to very well, that they've kind of hit a wall, They want to know how to get to the next level, but they just kind of their growth starts to slow over and it's just how do I get there? So the network effect is really important. So how do we come in and then we provide that network effect so that we can help them get over the pioneer tags of learning. Like we've already tested this technology and here we can give it to you. We have access to this data. We have like for example, take going to India. I've talked to a lot of firms that do offshore, but India is an extremely nuanced country. I just flew over there and spent ten days or roughly ten days. And we are putting boots on the ground leadership over there and investing heavy in partnerships, strategic partnerships over there and technology. Well, if you're a mid size or small firm, you want to access, you know, kind of having extra capacity, but doing it well and doing it right. Do you have the time or the knowledge to hop on a plane and fly for sixteen hours and then know where to go in a country you've never been in and do it really well.
00:30:33 · Steve Stagner
I'm not saying you can't do it. I'm just saying that to do it well and effectively it can be better. So what we provide being the Intel Inside is we provide access to all of those curated best practices, curated technologies, curated learning and development. We're launching a learning and development program that we're curating which will help the next generation leaders. And so the value proposition for a small to mid sized firm is, okay, I've hit a wall, so now for me to get over that wall, maybe it's time to partner with private equity. And then the choice that you should make is the best choice for you and there's lots of options out there and I'm not going to say that we're the best or whatever, I'm not going to talk about the other guys. What we do, which I think is unique and it's the most unique thing that I've seen and it's why I actually migrated from more traditional private equity to what I would call our partner equity is we do something that's nuance different in the sense that when we partner with you Miguel, your structure is in your firm. Your incentives are in your firm. So you get access to our platform, success, talent, tools and technology, and even access to kind of our value creation with a premium multiple, like later in life. So you get some liquidity, the events that you could never get without being a part of the platform, but you get to keep your local culture. And then what's different is not only do you get to keep it, but you're not put inside the whole platform so that you don't have this kind of drifting mindset that well, if you don't perform, then the other guys can perform. You basically, if you believe in your success, then we are gonna invest in your success and you get distributions on your own firm just like you do today and you get to realize the profit of your firm. So that's what's uniquely different is that you're not kind of nominalized inside a broader program. And what I have found is we deliver playbooks not rule books and in a traditional model they come in and they deliver kind of like, well here's how it's going to be.
00:32:41 · Steve Stagner, Miguel Armaza
And we deliver suggestions, you know playbooks that you can choose to with conscious capitalism you can choose to join and the data, the onus is on me to provide the data to you Miguel to say like this plan works and I've tested and I've proven it and that's what I think is gonna make, that's what's proven in this model. We've done this model on a couple other platforms, Jake and Frank have and they've done it super successfully. And I've seen it both ways and I just think it's probably the most freshly unique model. It's not for everyone, but if you care about your culture and your brand and the ethos of entrepreneurialism then we're probably a good fit. [00:33:22] S1: Something I like about your model and then this model in general is the fact that although this new AILM technologies are amazing, at an enterprise scale, it's not usually plug and play, Right? You need a team or CTO behind it to kind of customize and bring it back to your specific use case. Right? It sounds like that's very important to you.
00:33:22 · Miguel Armaza, Steve Stagner
[00:33:22] S1: Something I like about your model and then this model in general is the fact that although this new AILM technologies are amazing, at an enterprise scale, it's not usually plug and play, Right? You need a team or CTO behind it to kind of customize and bring it back to your specific use case. Right? It sounds like that's very important to you. [00:33:50] S0: Yeah, not only is it important, but I've invested in an integration team that is bespokely for integration. So I have full integration team. I call it my big plan. What do we do, Miguel? We buy firms, we integrate firms and we grow firms. So the BD team does the buying and then the baton is handed off to the integration team. So before we get involved in anything else, I have a dedicated integration team that can kind of be your Sherpa and help you through these integrations in a very methodical and bespoke way. So that we're focused on what your needs are because these firms have very different cultures and very different needs. But more importantly, they're on very different maturity curves of technology and of leadership and all of what needs to be integrated. So we're chasing a target operating model. And the goal is to come in and say, Hey, Miguel, you are here, but if you would look at these tools, maybe you could get to there. And then you do that. And then the grow phase, we have support for you to grow your firms with cross selling, with technology and other integrated tools. But we're making a huge investment in specifically integration.
00:33:50 · Steve Stagner, Miguel Armaza
[00:33:50] S0: Yeah, not only is it important, but I've invested in an integration team that is bespokely for integration. So I have full integration team. I call it my big plan. What do we do, Miguel? We buy firms, we integrate firms and we grow firms. So the BD team does the buying and then the baton is handed off to the integration team. So before we get involved in anything else, I have a dedicated integration team that can kind of be your Sherpa and help you through these integrations in a very methodical and bespoke way. So that we're focused on what your needs are because these firms have very different cultures and very different needs. But more importantly, they're on very different maturity curves of technology and of leadership and all of what needs to be integrated. So we're chasing a target operating model. And the goal is to come in and say, Hey, Miguel, you are here, but if you would look at these tools, maybe you could get to there. And then you do that. And then the grow phase, we have support for you to grow your firms with cross selling, with technology and other integrated tools. But we're making a huge investment in specifically integration. [00:34:58] S1: Phenomenal. Steve, one last question. I don't know if you're a big reader, but if you are, are there any books or a book that you find yourself recommending often?