Welcome to another episode of PE talks.
I'm Alice, and I'm the editor of the drawdown today.
We're thinking about Lessons Learned and I couldn't think of
a more perfect interviewee for this theme.
It's an honor and pleasure to welcome Steve Darrington, CFO
and partner at Phoenix Equity Partners.
Steve has been CFO Phoenix, since 2001 and as well as this
Civ tenure at the P firm. He's also held corporate roles
notably at The Economist. He's also known for his
dazzling. Poker career.
Something he's been active in since the tender age of 14.
Now, I have an easy job today, as I'll be handing over to Sam
Marsh managing director of alpha FX to do the interview Sam set
up our office, institutional division, back in 2018, a
specialist working with the alternative asset Market
covering risk management products and its alternative.
Banking Solutions. Welcome Sam and Steve.
Thank you very much, Alice and Steve.
Thank you very much for being a part of the conversation this
morning. Hello, sir, as Alice mentioned,
obviously majority people probably know you and a familiar
with you in your role as the CFO of Phoenix.
But as I found out of a her lunch before Christmas that your
your actual interest in in poker Pradesh or you're interesting in
private equity in many ways, whilst a lot of people might not
naturally, see where the Two Worlds meet.
It'd be really interesting too. The stand from your perspective,
how your experience and in poker has shaped your attitude to take
on the role of CFO in private Equity.
Gravel. Great opening question.
I'm happy to talk about my poker career, to the extent that could
be called a career in the knowledge that my wife won't be
listening to this particular podcast.
Not poker is about two things. It's about playing the cards and
reading the people and a role as a CFO.
And I also hold it. Title, Chief risk officer around
an investment committee table is very much less about playing the
cards, but definitely about reading the people, you know, as
a CFO and and definitely as a cro, you walk a difficult
tightrope within a private Equity business, you are
naturally your sort of job title, almost sort of tells you
got to think about the glass being half empty.
Whereas your full you're in a room full of people who
Definition of in a world where you're looking to take the
opportunity that is represented, potentially buy a glass half
full term. And so, yeah, there is, you
know, I think I would never on the basis that my colleagues
might listen to this say that I could read the room and see
their tells but it's very very important to when you're making
some sort of intervention or comment or bringing the room
back to understanding some of the risk issues that you can
pick the time to Speak and sort of recognize the, the Dynamics
going on within the room. Hmm, and I suppose that's almost
kind of the negatives. Always shape.
Your your attitude in many ways, in regards to kind of how you
learn from your mistakes. And so on in your perspective,
then looking back, career-wise, corporate prior to private
Equity poker-playing, Etc. Could you pick a most important
or most significant lesson that you've learned?
Yeah, and it's important to stretch.
I mean, I Personally, an optimist, but professionally.
I have a kind of have to my job is whooping.
Yeah, kind of says pessimist. And so yeah, you have to balance
that but I've got to be very clear things that I think about
in terms of things, things that events that have happened over
the years have taught me one is the famous phrase that Reagan
use in his negotiations before Gorbachev, which is trust.
But verify, I won't attempt the do VA.
No crappie is the Russian for it.
And I think the whole concept of due diligence, and everything
goes with it. Is that process of taking
something on face value, but then very much making sure that
the little stacked up. And I so I think that's a
fundamental plank of what goes on in my to imagine every
Venture and private Equity Firm in the world, but I think the
other thing that I've taught through some some really painful
Since is, you've got to think the unthinkable, you got to be
willing and possibly, you will be the only one in the room that
from a sort of professional critical path analysis.
So make sure you take the think the unthinkable box.
And I've had a bunch of bunch of experiences through my corporate
life, but I guess it's sort of one that was a sort of a
combination of corporate and personal.
I lost a colleague in the 7/7 bombings, and I always take the
opportunity to talk about Helen Jonesy.
Is an absolutely outstanding human being had the office next
to me. She's a brilliant kid and she
died on one of the tube attacks and when the person in the
office next to you gets killed in a terrorist attack, you
realize that anything can happen and during the course of that
day, when she didn't show up for work.
And then there was a lot of chasing around seeing where she
was, you know, towards the end of that day.
We started to think the unthinkable.
Now, that's a very extreme example, but I think in any
scenario, Whether you're doing a deal, whether you're assessing,
whether a deal is going well, and you should put more money
into it. It's very, very important to
sort of establish that Baseline. Thought it doesn't mean to say,
you have to go there and you've got to be very careful, not to
be the one that goes there first every time.
But it's really, really important.
So, I think think the unthinkable and trust but
verify, and I suppose that's a, that's a balance through
experience as well. I think in any Walk of Life,
like negative outcomes can Shapers in the in a way that can
almost Guide our thoughts and and stop us from me.
I've see, potentially the more positive side of it.
Do you think that is an area of skill?
You've got better at overtime. At you able to kind of put a
park, the emotional scars. When going into a deal or into a
scenario. Look, I think you absolutely
have to, you know, I'm a big fan.
Basically, if I don't use sporting analogies or film
analogies, you just have long periods of silence for me.
So I'm definitely going to use a Geoffrey Rush in the film
Shakespeare. In Love.
You played a theater on. Foreigner and he famously, great
quote said that the natural condition is one of
insurmountable objects on the way to imminent disaster.
And I think that's a really good way of characterizing
Entrepreneurship. You know, it's something that
people do it in spite of the obvious reasons why they
shouldn't because the reason it, it has significant financial
benefits for those that get it, right?
It's because everyone else looked at it and sort of said,
well, they're crazy. There's no way they can do that,
but, ultimately, Urban areas that have this sort of inner
belief that I'm going to do it. Yeah, and I'm going to be
successful and I said there's a fantastic.
But Alex mentioned in a previous life.
I was at the economist. There's a brilliant, there was a
brilliant survey they did where they asked 100 Fortune, 500
senior managers and 100 members of the Inc, 500, which is a sort
of badge of honor in America Inc.
Magazine list, the 500, fastest growing companies in America,
and I'm to say at one stage, we actually managed to make 20.
But they ask them 100 questions and then they ask them to go
back and rank how sure they were.
They got the answers right? And the Fortune 500 sort of
management in big corporate. They got 76 percent of the
questions, right? But they were 46 percent sure
that they got them, right. The entrepreneurs on the other
hand got 46 percent of the questions, right?
But with 96 percent sure that they got them, right.
So yeah, the accompany entrepreneurs new less, but But
believes more and I think that's fundamental and the job we do
our job, you know, is to back, entrepreneurs definition of
entrepreneur is taking a risk risk taker and it is our job to
deploy Capital. We can't sit there for 5 years,
with our funding and sort of suck our teeth every time.
You see an opportunity and decide on the balance of
probability. We're not going to do it.
Our job is to deploy capital. And so what I absolutely would
not last 10 minutes if I were to sit there and try and say no to
everything. My colleagues would have
followed me long long time ago. So you have to, you have to
begin, its reading the room. You have to be willing to assess
the in the manageable risks, the known names and etc.
Etc. And you do have to be part of
the team. Yeah, ultimately apartment on
else. You know, I invest my own.
I own money alongside my colleagues in all of our deals
and, you know, you have to be comfortable.
We have, I like to think of Phoenix, incredibly open.
And Collegiate approach, you know, there is we also have a,
you also have an investment committee process that is
designed to flush out concerns as early as we possibly can.
But there is no deal we've ever done where it was done over the
head of any any partner. We know we really do but it's
important, you know, our job is to do deals.
Our job is to take risks, so you can't be afraid of risk, but,
you know, you are backing on tuners and and, to some degree,
your team within a private. The other certainly, the deal
facing team. They will be of that.
It As well, they're looking for opportunities, looking for
people to back. So, yeah, it's a balance and I
think, you know, fortunately, I have significant ballast
physically, so I can sometimes sit on the on this, you know, on
one side of the scales, but it's not my job to stay there
permanently. I have, you know, you gotta be
flexible. I think that's in this
important. Well, the reality is not every
entrepreneur successful, but the mindset and the attitude can can
be there. And I think anyone is willing to
try, then always need to have that as a basic core.
Ball. Thinking about that and the
ability in the conviction in your, in your opinion, or your
view, must be similar to that of the deal team and they must be
circumstances where in the similar way, you need to bring
someone back from their own level of conviction, because not
every business is successful. And therefore, not every deal
that is presented, is accurate. How do you balance that?
How do you between being and that as you say between a
naysayer, but being able to have like strong governance, strong
strong risk risk Hat on at the same time?
Yeah. I mean kind of James car.
Works of sculpting Clinton's campaign in 1992 coin, the
famous phrase, It's the economy, stupid, and, and in private
Equity. It's risk stupid effectively.
Our job is to assess and price risk, you know, we have a feel
for what the risk of any particular deal is and, and we
measure that versus the economic upside, you know, moderate risk,
2x high-risk 10x is scenario, and you try and calibrate and
Stand that. I think, you know, one of the
one of the lessons I learned was our former chairman David
Gregson who's a fantastic Chaffin and has the brilliant
capability of sort of delivering quite a harsh statement, but
you're not realizing that it's a harsh statement as it's been
delivered and one of things he was he would always say is you
will of course of thought about and I have shamelessly nicked
that one. And so if you do find yourself
in a situation where There is a sort of elephant in the room and
it's obviously, but it's not being addressed.
I think it was a relatively good tool is to be you will of course
thought about this and you can go back to poker but you can
tell immediately by their face. Whether indeed they have thought
about that or not. And if they if they haven't been
that's a way of introducing that into into the into the
conversation. I say, you know, it's still
teams job to to assess the upside and downside.
It's just to some degree. Are you know, and I think you
always as a finance director CFO cro doesn't matter.
In private actor on you often, end up being slightly the
corporate conscience that sort of slightly nagging on the
shoulder. So.
Well, they could just make sure we thought about this and that
can be all sorts of risk management, you know, whether it
can be, yeah, the coherence of the team, the health of the
team, the other markets, political risk, you know, their
risk has become. So, I personally believe risk
risk risk is the New Black. It really is a fundamental to
And we do and I say we there's lots and lots and lots of things
that we could talk about. Yes, G is a massive thing at the
moment. But again that is a that is
another way of managing it. It's a way of doing the right
thing. That is also a way of managing
risk. Yeah, and and looking into then
it's ESG is obviously very much the the Hot Topic at the moment
is driving a lot of decision-making obviously
without going into like huge detail because that could lead
to a conversation its own right but how Until now is that to
your kind of own adding that to another spoke in the wheel of
risk for you as the chief risk officer, how significant is that
now as a key principle within the deal process for you.
Yeah. It's a great and really timely
question. I think.
I've broadly speaking quarterback been Loosely
responsible for ESG since about 2005.
And, you know, I probably from 2005 to 2015.
I was able to craft, you know, relatively robust narrative, you
know, we we are responsible investors.
We always have been and we always will but you know, we're
signatures of un PRI and but we weren't sort of, we didn't wear
it on our sleeve, nor did it when I was at a fundamental and
nor was there from footed thing and kind of, we did it anyway,
because that was in our DNA and I think you know with ESG
environmental and social governance.
The governance bit, is what private Equity do is what we've
done. Years and years and years.
I mean, we particularly in the Venture and the sort of the
mid-market world. We're taking businesses that
have, you know, the entrepreneurs have been fighting
their growth battle for many sometimes many years.
Sometimes, it can happen quite quickly, but their focus is on.
Growth is proof of concept. Turning into Revenue, building a
business, and then turning profit.
Yes, to cash flow. All those sort of key Milestones
that any growing entrepreneurial businesses required.
They then reach a face. I'd say we're institutional
capital is involved and with institutional Capital comes,
institutional expectations and requirements and we happen to be
relatively good at that and we know what to do.
We know governance is is kind of what we did for, how we add
value, we can take businesses sort of tidy up the governance
profile and then that makes them more attractive to the next size
that next phase or indeed, a corporate buyer.
So, you know, we've always done G.
And we're pretty good at G, the environmental and social.
I think to a large extent, most of the businesses.
We invest in a have always done. If it's fundamental to their
business. They've always done it and we've
never met a management team. We've identified a key issue for
them and the CEOs who are really old.
Never thought of that. You know, usually they'll kind
of look and I say, yeah, we're on that.
Yeah, however, because it's been Now using institutional Capital
institutional Capital has the same pressure.
So if you're investing Eating, you know, and I think this comes
back to one of my, you know, my wife allowed me to have a
tattoo. It will be a, you know, it's
other people's money. It's thing.
I remember every genuinely remember, every single day of my
working life. We invest other people's money.
And with other people's money comes other, people's
expectations, and and a lot of those now relate to fairness,
equality balance, the environment, which is is it is
it isn't. Stupid.
It's definitely the environment. Yeah, and so those trustees can
bring that to the the the board table of the large,
institutional investors, whose capital we deploy.
They can then turn to to the general Partners ourselves and
then we in turn turn to our portfolio companies.
I think, you know, we there's a sort of, there's a phrase that,
you know, something rolls downhill.
That's not the way to look at it.
The way to look at it is we're building a Eco system.
Whereby we all have. An incentive to do the right
thing and turn to maximize our profile.
The regards to environmental social governance and
increasingly, you know, The Regulators have you know, very
kind Regulators have helped us by providing regulation around
and environmentally sustainable Finance disclosure.
You know, we've got in Europe, there's article 98 where you've
got some enhanced ESG credentials increasingly that
may well be an allocation model where the Just don't think will
be one that the proportion of our money in article 9 compliant
after a compliant. So increasingly busy.
It's in businesses interest. There will be a demand.
There's a very good. I think the price of Virgin
plastic is about the third of recycled plastic now, because
the demand for recycled plastic is gone hugely up as the big
corporate. So, you know, by 2030 will have
50%, like, you know, I don't think there's that much recycle
plastic in the world. Yeah, therefore, the demand and
Supply is forced up the prices recycled plastic.
I think the same May well, Happen for really highly
attributed. ESG related businesses,
institutional investors will want them in their portfolio in
order to demonstrate their, you know, they're not just saying
but they're doing. I think that's the interesting
part as well as that ESG in its evolution is as you say, it's
kind of dictating almost. It's being kind of forced down
through regulation, but actually there's as many people who this
is a primary concern of theirs and that might be seen as a kind
of a junk Young. Generation where it's just
innate in their, in their thinking.
How do you think that's well thinking about from now
concurrent portfolio companies about how they make one that
from the capital that's deployed into them and kind of assessing
you as a source of funding, how you're doing to ESG.
Do you think they're kind of awareness of Apollo portfolio
companies? Awareness of what they want from
a partner from investment private Equity.
Company has changed from when you first start to prep Phoenix
today and Yeah. No, there's absolutely no doubt.
I mean, I think late 90's, early, 2000's, the simple
reality. There were quite a lot of Club
deals where either two or three private Equity firms are get
together, put some money in the pot and then, you know, would go
and open the briefcase and there it all was and the mounting to
say, aww. Thank you very much.
Not that those days are gone, you know, we're in a competitive
industry. We've got fantastically
innovative. Peers in our industry and we are
we are competing. We know we call it winning
hearts and Minds. You go into a management team
and there is absolutely no guarantee that they're going to
take your money because your money needs to come with other
attributes and you're right whether we know whether it's be
a clear commitment to to to ESG and all that goes with that but
it also has to come with the ability to work as a team, the
ability to provide them something that other people
don't the fundamental ability to you.
If you dare go to a management meeting and I think you're going
to learn learn the business during the meeting.
Don't bother, you've lost, you need to be absolutely all over
their business model. Understand their drivers
understand what their objectives are understand the 10 Targets in
their industry, they should acquire.
And so, you know, we know we are absolutely selling ourselves to
a you know, it's the, it's a buyers Market.
Yeah, because and then there's a lot of capital out there, which
means there's a lot of people that love, there's a lot of
frogs, they Yes, and we're the frogs nowadays is is you're
saying that smoked sausage from your career prior to Phoenix,
you work. Within, as you mentioned within
corporate corporate space. How much does your kind of Prior
corporate experience and it was quite a bit of time as well.
It wasn't kind of one or two years.
It was a lengthy period you have engaged in making those kind of
corporate decision making in an exec.
Oh, how much does that help you to influence or empathize with
the challenges of portfolio companies board or management
team? Yeah, that that's a very good
point. And, you know, this is something
I'm going to, I'm going to say that the risk of the, the my
portfolio Civics commenting on the other way, but I like, to
think in my experience has been, I've got a very open Open Door,
/ phone line, and I do have a lot of interaction with our
CFOs. They were the one thing, you
know, I joined Phoenix because I was the CFO of a business In
America, which It was an investor and got to know the
part of the founding Partners as a result of that.
And when they did that they did the deal, they asked me to join.
And so I, you know, I have, I have lived being a being a CFO
live being a private Equity CFO. I've lived premarket CFO.
So, you know, I got a reasonable amount of coverage that I I'm
and I'm also, you know, I'm always or happy to give my
opinion on something. So, you know, but the one thing
I absolutely remember is certainly first time, your
involve the private sector. You don't like to.
You're not terribly keen on phoning.
Up your large investor and tell them you don't understand
something. Yeah, you kind of feel that.
I'm a sea of those. Like it's my job to know all
this stuff and that was, you know, when I look back in my
salad years, blushing now, how much I didn't know.
So what I've always tried to do is to Make myself available to
to see if those. And in fact, we've enhanced that
over the years. We have a CFO conference over a
year where we get everyone in a room during the pandemic.
We had a weekly CFO calls on the basis, that it was very clear
that we all were facing. Something.
We hadn't dealt with before, getting everyone on the call.
Every week, we could talk about, you know, what you going to do
about this, what, you know, about that and unburdening and
making sure you are part of a group was incredibly valuable to
the except now we We've now reduced them to monthly but we
sort of had a refresh the other day and I'll see, you know, is
this useful? Who is it?
Worthwhile should carry on doing and got 100%.
Yes, please. And so that I know we are try
and be as Collegiate as I possibly can across the
portfolio that we're all. You know, we're all part of the
same team. Our objectives are are the same.
I think that's very that's fundamental to.
It's not we're not doing it to then into assembly ever did.
But we're certainly not now it, we are part of a wider team that
we're going. Objective of the same.
Yeah, we're trying to build successful businesses and help
them work what you're saying then as well about the
conviction in your own thoughts and stuff in terms of how you
grow up in an industry and you look back and you kind of as you
say you cringe a kind of how little you actually knew those
points in time, but there are also moments where you just have
that like shell-shocked. Okay.
We're now this is this is completely unforeseen from a
dimensional form personal level, like the shell shop with you're
losing. A colleague but professionally
like those big almost aren't IMA.
Get a moment's. They're kind of the wake up
moments. There anything that really
sticks out from your perspective.
Yeah. It is a couple of things that
sort of really, massive learning.
You know, I threw my career. I've been involved in two
lawsuits, you know, we came out of them relatively unscathed,
but it's definitely one thing I would, we were remarkable
learning opportunities, you know, I did an MBA and learned a
bunch of stuff, or I got super 100 million dollars and You have
a lot more than that, though. I ever did a big school.
Yeah, but, you know, we we and I we have won at Phoenix where,
you know, and, you know, we came out of the month skate, but the
process of a lawsuit is inevitably, there are two sides
and the other side there, we tend to refer to them as the bad
guys, but they're just the other side that have a different point
of view. And as part of it, they go
through a process of questioning your every decision.
And often quite publicly and and you know, if you, if you have
been through a discovery process, you know how rigorous
that questioning can be and it's it's quite sobering to, you
know, every decision. I can definitely say every
citizen I've ever made in corporate life is is one where
you know, remembering I get up every morning in our world and
it's other people's money and that characterizes the way I
think it just because you can doesn't mean to say, you should
keep asking yourself those questions.
It's not very nice having quite high-powered, lawyers asking you
questions and characterizing your decisions in a way that
fundamentally wasn't true. But also got actually can
fundamentally cause you to question their decisions and go
through them. And and I think what I learned,
as a result of that was this ability.
Not all the time, but certainly at times where you think a
decision is and an important nature and might be one, you
know that has two sides to try and step out always have an out
of body experience and step and look back at yourself.
And you know, I remember having a conversation with somebody who
I knew that had gone through a very difficult corporate
situation and been held to account for a decision.
And I ask them the question, what?
Others. He gave me his version of events
and Arsenic and how would others describe?
And he sat there for a while and he said, classic?
Because I've never thought of that and it really brought home
to me that that ability to step out of the, why am I making the
decision? I know it's right because of
this decision is and you've been living it every day and every
hour often, 24 hours or many days.
Stop step out. So really, really could this be
looked at a different way. And I think by doing that, you
know, you to some degree, your Occasionally.
See, ya could actually. And I perhaps I ought to think
about that before we go ahead and do that.
So, yeah, I mean, I rule number one, don't get sued but but, you
know, it is, it is a learning experience.
And it definitely, I think it's one of those things.
You can't, you can't tell a child.
What hot is, children find out what hot is by touching
something hot. And to some degree.
It's made me. I think, you know, orders of
magnitude better understanding risk because sometimes the worst
Do happen. And, you know, so just that
break and the ability to step out and look back on yourself
and say, okay. Am I sure?
Yeah, does it probably the being sued twice in that same
Spectrum? Did you say, positive outcomes
on both but looking back at them and there any anything
similarities, any anything that you can draw upon that, made you
go actually in the later stage seeing similar warning signs as
led you down a to avoid? Such instant instances.
That's a great question. Yeah, I think I think it's that
moment of Asking the question. Typically, we are, our behavior
is governed by what's best for us.
What's best for us. Our firm, etc.
Etc. When you have multiple
stakeholders, you do have to go through those stakeholders and
say It might be best for us. But is it best for them or if
it's not best for them as long as it's not fundamentally debt?
Ramon detrimental to their interests?
And I think if you do something that potentially is detrimental
to someone and they're like that to somebody that's part of
competitive life, you know, and you know, The lawsuit in
America, you know, we were involved with a company that
subsequently became the largest bankruptcy in human history.
We're trying to compete with someone who wasn't competing
fairly. We were never going to win so
and but that came out in years. He is following that.
But yeah, so I think that's that's the, the lesson learned
on that one. It is, you know, as long as what
try and make sure because because that's what's best for
you and your company, and your shareholders and Investors isn't
fundamentally depth, Ramona of detrimental, and if it is be,
absolutely sure that you're doing it for the right reasons.
There's, you know, you got to characterize and understand
because that's lawsuits happen because two sides disagree about
fundamental, intentions of an action.
And so you've got to make sure that you consider the other
shareholders. Think that, you know, I think
one of them actually we absolutely did took advice, etc,
etc, but nevertheless, and because at the end of the day,
you've got the money in the intention, you can do any over.
And yeah, I suppose it goes back to that.
Same point is that in an environment where all the people
you've got a portfolio company that is up respectable photo
company that has great conviction in their, their
business and their Outlook and you've got a potentially a deal
to him. Also saying, this is brilliant,
dear whether everything works. Well, is that a and I think
we've touched on it briefly before but just to kind of go
into it's not a role which you've grown grown into the
ability to walk. The line between being too -
littering over 200. Be optimistic.
As you say, your natural demeanor is a positive person.
So it's begun to find that healthy balance.
I think it is interesting. Yeah, I look on the bottom line
is. I think it comes the fundamental
attribute. You need is respect from the
deal team. I was very lucky at Phoenix in
that. We think one of our first four
or five deals was actually my deal.
I had a relationship with somebody here and was it was
able to deliver a deal on the plate was a good deal for us.
We made money. So to some degree, my
colleagues. And and also, you know and I'm
seeing this across our industry bit.
Orange has grown to such a ridiculous extent.
Now, we're a remarkably broad Church than from The Venture
will be through the lower. Mid-market the mid-market the
apartment. I'll get up to the to the to the
big guys and the role of CFO in in those businesses can be
hugely different. You know, I'm we have 28 people
in our team and you know six on the it.
Some pretty plus plus me with my responsibilities for offshore
boards. And therefore, you know, I'm
around in everything we ever do you know as our are other parts,
you know, we're involved in everything.
If you are in a much much bigger firm and you've got lots, lots
of slightly more defined and constrain responsibilities.
Then you will answer this question.
Very, very differently. But the one thing for me is to
be able to participate in investment committee discussions
and makes Norman CFO, type comments, commercial views, and
I've got some really good experience across different
Industries, but it's all done to gain gain the respect of your
colleagues. If you get the respect of your
colleagues, if you then do have to make a comment of it, you
know, look, you know, I don't like the look of this is, you
know, they stopped and listened to it.
They don't immediately. Roll their eyes and go.
Yeah, and, and I think fan outfit, I think for me doing a
deal early, putting getting runs on the board.
To speak made my colleagues. Okay.
Yeah, I know right? This is Scott.
He's not he's not being Captain. Yeah, because that.
Yeah, I had a discussion with my current chairman when I joined
the firm, I said if you want to be encounter, it ain't me.
Yeah, it's easier to talk about kind of Lessons Learned not at
any point. We kind of really thought about
or talk about the technical side of being a CFO is it seems to me
much more the human element where you personally see the
significance. Yeah, I do actually, because the
technical stuff is, you know, it's, you got to learn it and to
some degree you, you know, I think the, the thing in our
were, we're quite used to asking for professional advice, you
know, we very small team. We Outsource Financial legal,
potentially commercial due diligence.
We're used to using advisors. So it's perfectly fine
particular. Particularly when you've got a,
you know, we were a sector investor, but even within those
sectors error, Thousands and thousands of companies.
And so if you if you think you know it, you know it all then
that that's the first route to disaster.
You don't think I'm being absolutely guarantee.
Ya. So asking for advice and help is
you know, is a fundamental part of what we do.
And so you over the years you were asked for it, you know, you
get to know good advisors good business partners and work with
them and learn from them. So to some degree you there's a
technical end. We will go this.
Cool, and, you know, I did the usual route full of hoes.
And again, did an MBA, but, you know, that was of that sort of
that's table Stakes if back to a another reference and the, but
the, it's the experience and and applying the technical issues.
And again, it's the technical knowledge is knowing about is
knowing where your knowledge ends and where you need to get
specialist advice or, or knowing where your knowledge raises red
flags, because that's the point. You know, if a red flag is
raised in your mind, you need don't walk away from it.
You need to make sure you understand the potential
implications. Sometimes red flags are you
know, it's a warning but doesn't mean to say, you can't do it.
Sometimes a red flags are really, really don't do this and
you need to understand and characterize that I think there
is one area, which I think it. You know, it's really in the
last five years is fundamentally changing from a tactical
perspective. Back to film references.
There's an absolutely Apollo 13, brilliant film, Ed Harris, head
of head, of sort of Mission Control there.
It's all going. Terribly wrong.
Everyone's pulling their hair out and he sort of very calm.
He says, let's work. The problem.
People don't make it worse by guessing and that is kind of,
that's my last film quote. And that's where data comes in
in our world in the last five years data and the ability to
you. This data is now has now become
completely and utterly ubiquitous.
And my son did they drown list and he has a brilliant way of
describing the impact that data now has And this is kind of the
way kids, talk to their dad's. Dad.
You've got a lifetime experience.
And the way you deal with the decision tree points is to apply
your experience at each point. You look at a situation you say,
what about? What is my experience of that?
And that's the reason I'm going to choose.
So what we do with data is every time we get there.
We get as much data as we possibly can.
We crunch the data and the data tells us the questions.
We should ask in the direction we should go and that's what
they do now and the the people that can do it.
Well increasingly just have an absolutely fundamental advantage
over people that don't. And I think for us, and I'm
about to do a course in data analytics at Columbia University
partly. So I can stop being beat up on a
son but Partly? Because I want to show that a 58
year old get can Embrace this stuff from fully understand it.
I could turn around to my colleagues and say look, don't
be afraid. And now we've got people within
our businesses. Are absolutely outstanding of
this, but then we, you know, our generation less.
So we have been really come across it to some degree.
It's a bit of a bit of a closed system, but a bit of a box that
we then looking at, but I think fundamentally Mentally, the last
five years has been the sort of Advent of real of data, becoming
data and data management, becoming ubiquitous.
The next five years is when it's really going to be used in Anger
for competitive Advantage. Yeah, and you think that's just
going comfortable with what you're saying that as well as I
suppose. She's recognizing limitations
and recognizing wave. Actually those there's experts
that can support you and help the.
It does part of that being able to say actually no, I'm that's
not where I'm strong at. Does that come from experience
and confidence and Evolving in the role or do you think it's
just something that's the best people do for quite naturally?
Look, I think it's I think it's something.
If you do it, it's funny how you end up kind of being better at
it. Yeah, so it's whether it's the
best people do it. I don't know if it's, you know,
it's cause or effect, you can an egg, but if you don't do it,
look I think one of the most important things in any one is
the ability to to be honest about what you don't know
because if you if you don't do that, you're very unlikely to
learn. So Limit the boundaries of your
development. And I, you know, I absolutely
believe it and took notes and I personally have learned that
lesson over the years. I mean, certainly was a time
where you felt, I would like I'm supposed to know this early
dancer do, but I think as you get older and a little bit more
confident. And as you realize that, you
know, what, you know, is actually a tiny fraction of what
you don't know. Oh, yeah.
The ability to be honest and, and seek out experts or even
just other opinions, you know, I think it's It's a you know, my
father had a phrase, Lisa remind me that I had two ears and one
mouth in that proportion for a reason.
And you know, I think it is, you know, you learn by listening.
Not so much. Bye.
Yeah, but what you believe, you know, yeah, and I think we've
got time for one more question. One thing.
I was always struck me from from the park Capital industry is how
strangely collaborative it is for, what is actually extremely
competitive in many circumstances as someone who I
know is very open to to working with people and speaking to
people giving advice and Senior at conferences, where you're
kind of people are cheering around medication.
Do you think as an industry and cfo's or even see Reason do
another to collaborate with one another and understand what
could be quite an isolating role.
How there are others connecting to others who are going through
the same challenges. Yeah, I think I'm pretty good at
it actually. And I think there's a bunch of
reasons. I think this is a shout out acts
of attract these 3 CF a PC Farm school might winning, who's
retired some years ago? Super guy who kind of pulled
together. Well, one thing I always thought
it was the pulling people together, What's called the vfd
group. So, fantastic idea for
collaboration, not great at marketing FD group.
Not, The most exciting but we used to get together every
quarter and to some degree of the code has been slightly weird
for that. But somebody we still do is a
closed group. We can you know, Chatham House
Rules talk about stuff that we got various Splinter groups.
We've got one of the, mid-market were seven of us get together,
quarterly and share, not commercial Secrets, but
practical, you know, our jobs are remarkably similar.
We just don't four different firms.
And so, and we share and You know, tonight, I'm going to
actually going to a CFO clo drinks at the BBC.
A so they played a great role in bringing in taking a
recognizing. The role is a slightly,
different one, and bringing us together an opportunity and
sparing blushes. The drawdown has done a
fantastic job. It really identifying, that sort
of you can that that, you know, to some degree.
Sometimes. It can't be a bit of a lonely
job. What we do.
There's, you know, there might be sort of 10 deal Partners, but
one of us and This kind of usually only one of us in any
firm, so it's nice to have some, some friends to talk to and I
think they'll download on a fantastic job of that.
Sort of highlighting with we know with the magazine and
things like this highlighting those issues that we that we
share and providing a platform for us to sort of talk about
them and share opportunities and problems and experiences.
Perfect. Well, thank you very much for
your conversation. Thank you, Sam.
It's been a pleasure.