The Exchanges

Q Well, why don't we start with your respective backgrounds? And Chad, I know there's a path before investing for you. Why don't we dive right into that?

A I definitely have taken a non-traditional route. I started my career after the Naval Academy in submarines in the back of an engine room. I had a wonderful time and experience in the service. Climbed out a hatch and found myself at Procter & Gamble. I was really a formative state to understand the consumer at such a great company and the maker of big brands and spent most of my time in baby care, their biggest division around the globe, marketing baby diapers. Funny enough, I have a family of four, so it was very apropos. Ended up on a smaller brand that we were taking digital and really became enamored with the tech space and digital solutions that were helping brands grow and jumped into one of our partners coupons.com and had a wonderful eight year experience helping that company grow from a variety of different positions, running sales, ultimately becoming their chief operating officer, chief strategy officer. And serving both CPG space and retail. Started out digitizing promotions and went into digital media and being pioneers of what today is one of the fastest spaces in all digital media, which is retail media. So we launched some of the first media platforms for big retailers like Albertson Safeway and Dollar General and others. And it was just a really fun space to be pioneering and setting the course forward. Which then brought me to eGateway in 2020. Mike and I and s…

AI assessment note: “I definitely have taken a non-traditional route. I started my career after the Naval Academy”

Q What other themes are you seeing around your investment thesis?

A There's two themes that we're thinking a lot about. We believe that every company in the world has put a new lens on their supply chain visibility, but also resiliency. And we think we're just in the super early innings of thinking about this because these aren't yearly changes. They're decades long to move their supply chains in an environment that's going to be a little more resilient. I don't know if I'm allowed to say there were The blessings that came out of COVID, but I do think that every C-suite is still in the assess the landscape to what changes are really going to be made over the next decade when it comes to maybe near shoring or looking at the entire algorithm that took their supply chain in one direction and making sure that every variable in that algorithm is one still true and two how important. So that's something we really are interested in. We're spending a lot of time thinking about on both the front end of supply chain, but also the back. The other area that we believe in is this whole pendulum shift between retail and CPG that's occurred over the last 30 years as the power pendulum has swung so dramatically over to retail into the intermediaries of distribution that have now become data powerhouses. This is a relatively new phenomena. I always use the analogy of P&G size to Walmart in the 19 eighties versus today. It's quite different. P&G makes up maybe o…

AI assessment note: “There's two themes that we're thinking a lot about.”

Q What's the target company that you're looking for?

A We've really, for all the reasons we've talked about, we want to engage differently. We want to be operator-led and bring this expertise. That's all let us down, Ted, to go beyond venture. We call it growth capital. So what's that mean? Growth capital to us is finding a company that has a validated product, that has an established commercial market fit, that's going upstream of, call it north of ten million in reoccurring revenue. And has demonstrated an enormous TAM around solving a problem of, our thesis is the future of commerce, technology that's enabling that future of commerce. So we think everything from early supply chain, how things are sourced and produced. We think how things are marketed, where I've spent most of my career, how things are sold and transacted. So much is happening with omni-channel commerce, and we're very interested in all the fixes and axes that have to be true to make that world effective and efficient. And then last, our pillar, we, how things are distributed and delivered. So I've just described to you this value chain of commerce. It's pretty linear, pretty intuitive.

AI assessment note: “finding a company that has a validated product... north of ten million in reoccurring revenue”

Q So Chad, before we turn this over to Mike, I gotta have you bring me through some of these three big steps along the way. Five years in a submarine. What do you learn most from that experience that's carried you through today?

A Oh my gosh. I always say close the hatch for six months and you can get a lot done. I've tried to bring that experience into my civilian life. I was a young person and the most formidable experience of any person that's ever served is a higher order call and mission, which I really respect to this day. And it was such a gift to serve our nation. The submarine community, it's a small tight knit community. So there's a lot of high stakes environments that give you places to really learn leadership early on. In high pressure situations as a 22 year old, 23 year old walking on a submarine and suggesting that you have a division that's quote unquote reporting to you. They've lost more knowledge than you'll ever have. So that line and understanding of how to lead others is just ingrained to you from day one.

AI assessment note: “understanding of how to lead others is just ingrained to you from day one.”

Q As you were trying to drive profitability of a brand, really curious how much of that is some form of science and how much of it is some form of art?

A It's a combination of two. I mean, Procter's really good on the machine of efficiencies of driving out cost out. You have just an incredible access to scaling operations, which is something also is a gift to be exposed to early in your career of just doing things on a big amount of scale. But really the art comes in just having an appreciation for talking and engaging with consumers and really building a relationship I shared that I spent most of my career on the baby care brands, and that's a unique dynamic. It's Procter's biggest brand. I jokingly say, Ted, there's probably a handful of brands that translate every language in the world called McDonald's and Budweiser and Coca-Cola and Pampers is one of them. So just to get a grasp to do that at such level across so many cultures and ethnicities, it's just remarkable that you have such a tight knit understanding of what moms care about. And to see that across such massive scales of country and language barriers was quite remarkable. So to your question, it really is an art and a science. You're only as good of what you were yesterday. You have to build that relationship with every new mom on a day-to-day basis, and you can't rest on your laurels.

AI assessment note: “It's a combination of two. I mean, Procter's really good on the machine”

Q One last question, and then we'll turn it over to Mike's perspective, which is, how did you end up deciding to leave joining up with Mike and others and forming a gateway?

A The opportunity presented itself actually during COVID. You could call us COVID babies, because that's when we decided to come together and build a firm. Really, it all came together somewhat providentially. Never having worked together, we formed a unique team, blending a wide range of both operator experience and investment experience. Well, all of our team brought super diverse expertise. It just was all in different arenas. We weren't your traditional emerging manager profile at all, meaning we didn't specifically have a track record of running past funds or the return profiles that accompany them. We did though, however, share a common vision to build a firm and not simply a fund. We often say that in the words growth capital, too much emphasis has been put on capital. It's become somewhat of a commodity. Our interest on the other hand was to focus on the word growth. We thought there was a lack of operator expertise and true knowledge around growth, and our desire was to help these companies in an impactful way reach their revenue goals. So Mike and I, along with three other partners in early 21, formed eGateway Capital, and with Mike and I both being from Cincinnati, we shared a strong desire to raise the profile of our region. We were both united from the beginning in the belief that capital will play The most important role in seizing its future growth opportunities.

AI assessment note: “The opportunity presented itself actually during COVID. You could call us COVID babies”

Q How do you engage with companies once they're in your portfolio?

A Post-investment, we really focus on organic growth of helping at the go-to-market side, whether that be walking them into bigger customers. Often we do that motion prior to investing. We also take our network of human capital around the go-to-market. We've had great success putting chief revenue officers and VP of sales and revenue ops experts into our companies to help with the motions that we think are really important at that growth stage of scaling. And then last is M&A. One of our partners is a longtime investment banker in this space, and we have a boutique M&A shop that's under the eGateway banner, and if we can help with non-organic growth, we're really excited to do so. That's manifested itself well with one of our portfolio companies recently where we were able to identify their first acquisition and run the process and close on really a non-organic growth opportunity for them. So these are the ways that we think every day. How can we serve them? How can we be Differentiate it with our backgrounds and expertise that we're bringing in the market, and that's how it's manifesting itself today.

AI assessment note: “Post-investment, we really focus on organic growth of helping at the go-to-market side”

Q In a business like that, you mentioned based in Austin. How do you think about where Cincinnati fits into your investable universe?

A I'm glad you asked that, Ted. It's a good clarification. We're not geographically bound on any of our investments, so nobody should take that away. We're our excitement about building a firm that happens to be headquartered here. Our thesis of investing around the future of commerce happens to align well with the historical and natural strengths of the region. And being undercapitalized both as a region and then A smaller city within that region. We're excited where eGateway can play a positive role progressing our future forward over the next two decades. We think this is a great, attractive place to both scale. I had that experience in my former company. We built Cincinnati as a Mountain View based company into our largest global office. It's a great place to scale a company. And so we're excited about that. And that brings us to your question. We really think we're intersecting with growth stage companies. They're all at this S curve of scaling up. And usually that's the same playbook of going up the food chain with bigger customers, but also scaling their operations and scaling people. And we love to bring the story of the region to these companies where and when it makes sense. It's not a requirement, of course, but we have great alignment working with them every day to help them With everything they're trying to achieve and just build awareness around the middle of the co…

AI assessment note: “We're not geographically bound on any of our investments”

Q At that early age, how did you think about what it was you were bringing to the others?

A It's a really good question because in the military, it's a lot of specific knowledge around What you're leading. In our case, it was a nuclear reactor and an engine room and driving a ship. And so when you walk on, you don't have a lot of knowledge at all and you don't feel very well equipped. It's just start eating, start going in and learning very methodically, academically, and then in a practicum and going situation by situation. And over time you start to gain confidence. The military is a unique training ground because you become unconsciously competent. More so than any experience I've had to date. Through a tremendous amount of preparation, you can start acting without thinking, and those are the type of environments that we were living in every day.

AI assessment note: “you don't have a lot of knowledge at all and you don't feel very well equipped.”

Q So when you move from the big conglomerate to the faster paced digital ad tech business, what did you learn from being in that environment that was different from what you had seen at Procter?

A I think the biggest thing was I was wired for a little faster environment. I think Proctor was wonderful. On my last assignment there, I was working on a North American brand where we got to restage it completely. I actually, I think my biggest fame of Proctor was I put my daughter on pack. So she was on every size two loves diaper in America. She loves that, that we walked into Walmart and saw her on the wall. It was so fun. I think what I realized is I had an entrepreneurial appetite that I really didn't exercise much in the Navy. And in my first chapter at Proctor, and I exercised in my last assignment, and just as we were taking the brand digital, got to see the environment of tech out in Silicon Valley that was working so closely with all of our brands, just how everything was changing, the speed of movement and the opportunity for growth, which attracted me. So I think that was the first inkling that I would really desire to be in a faster growth environment, and it proved to be true. Jumping into my next chapter, I couldn't have written it up. It was just such a fun hyper growth experience in the eight years that I was blessed to be part of it. We took the company public. We changed our name from coupons.com to Quotient Technology, and we just kept on reinventing ourselves every six months. It just gave me such an appreciation for speed and changing environments and just…

AI assessment note: “gave me such an appreciation for speed and changing environments and just how fast”

Q What have been some of the biggest challenges in growing an emerging manager?

A It's a virtual cycle that's hard to break. So love your team, but no track record. We constantly suggest that there is a track record, but just not in the traditional sense, and you go around this, but it's something you really just have to embrace. Mike and I and the rest of the partners, this goes back to building a firm over a fund. We're on a journey. We're committed to build something lasting, and we're also committed to enroll folks on that journey whenever you're ready. So a lot of folks aren't ready at the emerging manager spot, and that's ok. I really think it's getting out this story of where are the advantages? I think a lot of time the connotation and the emphasis on emerging managers is negative, when data would suggest quite the contrary. Data would suggest that funds one through three outperform. We believe that's intuitive because we also believe very firmly in alignment, and we think there's a lot of alignments in fund ones and twos and threes that may depart And four fives and sixes. We also believe thesis, not just because eGateway is taken and yes, we're biased, but we do believe that we're bringing real differentiation. We believe we built this firm to be outside the bell curve intentionally. And a lot of that is through how we're investing with a thesis generated approach where we can be research led and fine, but also as an operator led. I said in the beg…

AI assessment note: “love your team, but no track record.”

Q So you both mentioned this idea of forming a firm and not a fund. What does that mean to you?

A I'll take a stab at that. That was one of the big onsets is we had an idea around the platform to build something to bring back these elements that we thought were missing in a lot of private capital and harkens back to its roots, which was to be a partner to our companies and to all of our stakeholders and be beyond the check. We also thought we'd form a firm of lasting significance around bringing a combination of operator led With investors, because we thought there's just been some expertise that's been missing in a lot of firms if they've scaled. And I think we have purposely, Ted, built a product outside the bell curve intentionally. And we've done it through positive diversification around our portfolio and our thesis that we're investing in. And we believe it has a lot of tailwinds for the next couple of decades with regards to our thesis. So to capsulate Another commonality is we often talk to be of service. Mike mentioned the Jesuit background. I was the youngest of a big family as well. But to be of service is something we put front and center to our entire stakeholder community. It's the how we do things. And I think when we think of a firm and not just a fund, it all starts with the same thing first on our scorecard when we look at companies to invest in. That is with people. Our team. And so we had brought together a group with diverse backgrounds and experience t…

AI assessment note: “to be a partner to our companies and to all of our stakeholders and be beyond the check”