00:05:57 · Mikk, James Andersen
[00:05:57] S0: When you're having those conversations with folks like younger folks, do you think folks really understand how much effort it requires to really build a firm like this? [00:06:08] S1: Well, the answer is probably no, and that makes sense. I didn't know either. And I think most entrepreneurs just put their heads down, and if they, if, look, we did a whole bunch of business playing before we started this business, and, you know, we were two weeks in and we threw it out because we were absolutely clueless. But I think if you really understood, as an entrepreneur, what can go wrong and how hard it will be, most people wouldn't do it. Because, the, you know, the chance of success, if you really lay out what all the risks and challenges are gonna be, is pretty low. But you can't think about it that way, and I didn't. I just put my head down, and you just do it, and you look back and say, Wow, that was really hard. But okay, lots of things in life are hard. Nothing in life is easy. Nothing comes without effort and risk and failure, quite honestly. And the question is, what do you do with that? Do you keep going, or do you give up? I just chose to keep going. [00:07:05] S0: Could you talk about your years in having this engineering job in Egypt? Because this is something you've been writing about as well, failure makes strength.
00:07:16 · James Andersen
[00:07:16] S1: Yeah, so when I graduated from college, I took a job with Schlumberger, which at the time, I think still is the largest oilfield service company in the world, and you have to remember, it was 1984. So I was sent to Egypt to a place called Ras Shukeir, which is a small oil town on the Gulf Of Suez. It's a six hour drive from Cairo through the desert to get there, and when I was there, again, before cell phones, before the internet, the only way we could communicate was by shortwave radio. So imagine this kid, like I grew up in New Jersey. I went to an Ivy League school. I mean, had it pretty easy, you I wanna be objective about it, and I was put into this situation, which was really kind of sink or swim. I had to figure it out, and it was lonely, because, you know, a letter was a six week effort, meaning if I sent a letter to somebody, it'd take three weeks to get there, and to get one back took another three weeks, and that worked about eighty percent of the time, because about 20% of the letters were lost. So I was really disconnected from everything that I had known, and I told myself, I hate this. I don't want to do this. But I said to myself, I can't quit until I get my first promotion, because I have to prove to myself and to everyone else that I can do this. And it, you know, I was there eight months before I got through your apprenticeship period, and I got promoted, but by that point, I had adapted. Again, they said, put your head down, create an objective, and keep going until you reach the objective. And by that point, I realized, wow, this is really an incredible experience. Nobody else I knew had an experience anything like the one that I did, and it was a formative experience for me, because it made, I proved to myself I can do basically anything. That's the lesson I took from it. So for me, it was incredible. I spent three years there, and, you know, it was a touchy thing about should I keep going, or should I go and do something else? And I just decided that I didn't wanna live the expat life my whole life, and decided to go to come back to The US. But it was absolutely incredible experience.
00:09:38 · Mikk, James Andersen
[00:09:38] S0: Okay. On the pre call as well, you said before co founding Clearview, you worked three and a half years at another PE firm. Was the time there? And maybe you can elaborate on how you went from there to coming up with an idea and the plan to go found Clearview. [00:09:59] S1: Well, think it's worth going back one more step, actually. [00:10:02] S0: Okay.
00:10:02 · James Andersen
[00:10:02] S1: So when I graduated from business school, I went to work for a strategy consulting firm called Mars and Co, which is a Boston Consulting Group spin off. And I spent about six years there working on primarily Fortune, the smaller divisions of Fortune two fifty companies. And, you know, I learned a whole bunch of things about my about business there. It was kind of a boot camp for business. And the interesting thing about that company was, because we only consulted to one client per industry, we couldn't just bring the gray haired guys in and say, We understand your problem. We can fix this. We had to do it 100% by building a fact base, and from a fact base, decide what should happen next, which ended up being great for being a generalist private equity firm, where we go into new situations all the time and have to get up to speed very quickly. But I did that, but for a lot of reasons, wasn't very happy there. It was not a partnership, so I was chafing a little bit at the idea of not ever having an opportunity to own something. And it's frustrating to do a whole bunch of work, and then hand your recommendations over, and then either they don't pay any attention to them, or you don't really know how it turns out. So intellectually, it was interesting, but it was a real challenge for me, personally, because I just, I was frustrated by the whole situation. But the problem is, when I was working seventy or eighty hours a week, like, do you get perspective to figure out what to do next? So I quit. I mean, I gave lots of notice, but I just thought I don't wanna do this anymore, And I got home from that, and my wife says, I'm so glad, you know, you did that. We discussed it, obviously. So glad you did that. Oh, and by the way, I'm pregnant. So that was interesting. So now I'm out of a job, and my wife is But it was okay, because I knew I needed to spend some time to figure out what I wanted to do next. So I talked to a whole bunch of people. I just called people up and said, I'm not asking for a job. I just wanna understand what your career journey has been. Because I was trying to figure out what I really wanted to do, and that was an interesting experience. It took me about eight months. In fact, I didn't start at the private equity firm I ended up joining until a couple weeks after my son was born.
00:12:17 · James Andersen
So it was a six, seven, eight month period of discovery, of what is it that I really want to do in interviewing people. And private equity looked really interesting to me, because it combined this, what I was doing in consulting that I found intellectually interesting, like, you know, what are the facts, what's the challenge, what's a good solution, with, hey, we own this business, we're gonna make that solution actually happen. And so I was brought in 100% to work on the portfolio at this small firm I went to. And I like to joke, it was a target rich environment, because they had a whole bunch of bad companies. So I was sent in, and this story is actually quite a funny one, but I was brought into my boss's office, and he said, Okay, on my first Monday, he goes, The next Monday, we're gonna go down to this company. It was a private label snack nut company. So they made peanuts, cashews, mixed nuts. He said, We're gonna go down to this company together, so I can introduce you to the management team. The company has $70,000,000 of revenue, dollars 500,000 operating loss, and $10,000,000 of debt. So not in a particularly good position. He said, And you know, one of the reasons I brought you here is because, you know, the work that you did before helps you prove to me, basically, you can really understand where a company makes money, where it doesn't, and why. Because I had really learned deeply activity based costing, and how to use it to really understand what's going on. He said, Oh, and by the way, the CEO of this company is my brother. So can you imagine that being your first assignment? The company's failing. The CEO is your boss's brother. Go figure it out. But I did, and I applied what I'd learned in consulting, and we were able to take that company from $70,000,000 in revenue down to $60,000,000 in revenue, but up to $5,000,000 operating profit. Really and it wasn't particularly hard, because they were doing a lot of things that weren't very smart. But managed to do that oh, and by the way, paid off $8,500,000 of the debt in eighteen months, just by doing things like collecting receivables, reducing inventory. Anyway, then we were able to sell that business, but that's how I got into private equity. But I did learn a bunch of things there that I really agreed with, and there were a handful of things that I didn't particularly like.
00:14:34 · James Andersen
I think that company, in particular, got into the situation of having a whole bunch of not very good businesses, because they'd buy them and they wouldn't do anything with them. They just kind of say, Oh, it's a good business, we'll leave it alone. And I thought being a little more active made more sense. And it was also a company that there was no plan at that time to raise another fund, so there wasn't a long term future for me there. So I started looking around, was offered to join another PE firm as partner, which was great. You know, that was kind of the sure thing. But boy, was at the point, like ten years in, I realized a couple things. One, I'm not a very good employee. Like, I don't want to do what you want to tell me to do. I want to do what I want to do. And I recognize that it's a conflict, right? I knew very well that that's not a great thing for the person who's trying to manage you. I understood that. And I just thought, look, I'm either going to do something on my own now, or I'm never going to do it. I was 37. I had three kids. Like, it's now or never. And so look, it was a much, as I like to say, a lower expected value to start my own thing, but autonomy was the thing I really wanted. It wasn't so much about how much money am I gonna make, but how much freedom and how much control over my own life am I gonna have. So that was what really mattered to me. And that's why I started this with one other guy, Cal Nider, one of the greatest partners you could ever have, in 1999. And like our first few years were touch and go, I'll tell you that. I mean, but we didn't think too much about next week, we thought about today, because we didn't have the luxury of thinking about next week or next year. We just had to try to find a way to get some deals done and make those companies be successful, which is hard when you don't have a fund, and you, quite honestly, I didn't have any money of my own, but we managed to make it work. Again, it was just putting our heads down and playing through it, and not getting all tangled up in all the things that could go wrong, and a lot of things did. But if you worry about those things, like I say, you never get started.