The Exchanges

Q Well, why don't you go through a quick description of what PAR was and is?

A So PAR is a really amazing American entrepreneurial story. The company was founded over 50 years ago in the mid or late 19 sixties as a defense contractor. PAR stands for Pattern Analysis Recognition. PAR was Palantir for Palantir. It had this idea that you could use data to predict the future. And so for the first 10 years of its life, PAR was a bunch of PhDs in a room studying government reports, tracking data, and giving that intel back to the DoD. And then in 1968, one of the mothers of the founders of PAR licensed a McDonald's store. And she went out and said, Hey, I want a better cash register, and a better way to run this, because back then, McDonald's would have a cash register, and then you'd write orders on the back of the bag, so Ted would come in and say, I want a burger and a milkshake, and the cashier would write on the back of the bag, and she had this thought that we were losing orders, because in her words, kids can't do math anymore, but also the flow of the kitchen, and so she kept bugging her kids, and so to convince her, her son at the time to build a better machine, she stood at the end of the counter and collected every single bag, which was the order ticket, And then over a week's time, then compare that to the money that was collected and to the inventory to say, hey, this is how much money we lose every week. And that convinced her son to go to Radio S…

AI assessment note: “The company was founded over 50 years ago in the mid or late 19 sixties”

Q Where does that put you in the ecosystem?

A We're right in the center of it. And that's sort of the lucky part of what I fell into, which is the point of sale system, which is the device that when you go into a quick service restaurant or a fast casual restaurant, that device that the cashier is typing on, that's the point of sale terminal. And that system is the system of record. It is when the order is placed, it's the payment information, it's the food information, and it sort of pings everywhere. And so for the vast majority of applications that run in a restaurant, your online ordering app, your loyalty app, your back office, your kitchen supply chain, it all ends up pulling data from that point of sale system. And so you are that foundational layer. You are that ERP system. And so the idea that we have at par is today we are that ERP system. We are literally that, but over time we want to be the platform that you use. And our dream is to be something not to say, Hey, we have a bunch of products, you know, here's a bundle, take them together and say, Hey Ted, here's this platform and you can build your restaurant on top of this platform. You can use our loyalty app, but you can go buy your own loyalty app and put it on there and give you this platform as opposed to a collection of applications. And the reason why I like that model is I have this belief that We've gone from the world of software being license mainten…

AI assessment note: “We're right in the center of it.”

Q So before we go into that, what was that baseball card business like?

A When eBay came out, my brother had found it and he had bought a card on eBay. And I remember we all came home. We're like, wait, you just bought something online. It was this whole e-commerce thing was still very new. And so my brother and I had these big baseball card collections and basketball card collections. And we said, well, what if we could sell stuff online? And so I remember we went on there and we sold our collections and we got like, 500 bucks. And we were like, oh man, that was like, not, that's actually not a lot of money for all these years of collecting. And so We started going to the local card store in the mall, buying cards there, selling on eBay. We're making a little bit of money. And then my brother had this idea, which is, you know, the problem with baseball cards and basketball cards is that you never know what you're going to get. And people are, I'll use this term now. I'm sure we didn't use this term then. We're like, they're pretty risk averse. So if we went and made our own packs of baseball cards, but gave a floor value because baseball cards are unique in that there's a book value that might say a card is worth five dollars, but I'd only pay 25 cents for that card. And so that's not actually the real value in the market, but some book values are five bucks. And so it's kind of like if the Kelly blue book said your car's a 100,000 bucks, but you ca…

AI assessment note: “we started going to the local card store in the mall, buying cards there, selling on eBay”

Q What teaching from your parents has most stayed with you?

A So I'll have to break it between mom and dad because they're, my parents were remarkably different human beings. My dad, that Teddy Roosevelt quote of being the man in the arena is like the definition of my father. If you're not the guy that asked the girl out, you're never going to get the date. If you're not the person that tries to become the professional tennis player and drop out of school, you're not going to happen. And so it took me a long time. I was a shy kid. I wasn't the person sort of screaming for that attention. But when the big tough decisions at par came, when I had to make removing the founding company, these things are really hard. I always look to that as like, you know, if I didn't have my dad in my ear because that wasn't necessarily my natural personality, I don't think I would do that. And so throwing my hat in the ring or my turban in the ring was something that I think my dad just really put in me early on and that obsession of resilience. My mom was a complete opposite. I could have been a social worker and my mom would have been completely fine provided that I took care of my family and my community. And so anyone who knows me knows that I spend a disordered amount of time in community causes everywhere I go because Probably because of her instilled this idea that it's not me that's successful. You were a product of this environment that made you suc…

AI assessment note: “So I'll have to break it between mom and dad because they're, my parents”

Q So at that point in time, how did you decide what to do next?

A It was a crazy time in my life. I, I just lost my mother. I had gotten really sick and I lost my job and it was all pride, right? It was this idea that, man, I was the hot stuff. I was models of bottles living this amazing New York state life. And then all of a sudden I was, you know, living, sitting in my little apartment, like, what do I do next? And I remember one of my friends who actually, I guess now is relatively one on Jesse Puget through his podcast had come to my apartment and he saw that I had a GMAT book sitting on the ground and he picked up this book and he's like, you're going to take the F and GMATs. He's like, are you kidding me? I remember it just hit me. I was like, yeah, what am I doing? And so I got very lucky and ended up starting a business with a couple of folks that he had known. And, you know, it was very much geared on this idea that I had this entrepreneurial bent that I wanted to be self-reliant and self-resilient, and I wanted to build something. And so I ended up in 2000, I believe, 2009, starting a company with this idea that we wanted to, at the time, democratize hard assets, create the ability to buy hard assets, baseball cards, diamonds, gold, silver, and we ended up focusing on gold and silver. And it was a pretty cool experience for some of that time because FinTech wasn't really a thing. I don't even think that the term had been coined. And…

AI assessment note: “he saw that I had a GMAT book... I was like, yeah, what am I doing?”

Q Were there particular questions or tips you learned along the way of how to question people so that you can tease out whether they are great?

A Of course. I don't know if you can tease out if they're great. I think you can tease out if they're the right fit. And so a lot of the questions I ask are about not so much what you do in your resume. I think there's a great sense of, I can read your resume and tell you if you're checked the boxes. What I ask for is more about how do people define you? Ted, how do they describe you? If we went to dinner with your last two bosses, They'd say, Ted is X, Y, or Z. And that perception to me is really important because it's got to match up to the story you just told me. And you'll be surprised how many times people will say, oh, I'm the hardest working person, hardest working, hardest working person, you know. And then I say, okay, cool. How does your boss define you? And you'd say, I'm a lot of fun. You know, like, and you say, okay, like, that's interesting. And then the second question I usually ask after that is, how do your colleagues define you? And make sure that they're connected. You know, I never love when they're sort of, you get two different answers and say, hey, People should know who you are. The other part of the interview that I, I tend to think a lot more about is how do they look at the role? Because I think sometimes you get excited about the person, but forget that again, in an operating business, you're going to a very specific role. And so I tend to ask if Ted,…

AI assessment note: “What I ask for is more about how do people define you?”

Q So I want to circle up to PAR. There's a bit of a gap here in between where we were and where we're going to go. So why don't you walk through quickly what happened with your hard asset business?

A So we built it up, and I left, I think, end of 2016, beginning of 2017. And for me, you know, as I mentioned, I always wanted, had this sort of idea that I wanted to do something that's next. To me, it was my expression of my entrepreneurial desire. And in building that, I developed a love of software. I started to realize that, you know, I used to tell all my friends, this is years ago now, that if Warren Buffett was 30 years old, he'd just be buying software businesses, because they have every aspect of a great business that he talks about. They've got massive moats. You can raise price every year. Customers are happy. It's this beautiful flywheel of a business. And so I started thinking a lot about how do you make a business around that? And so like everybody else, I discovered Constellation Software. I discovered Vista. And I said, there isn't a model yet for that, of doing that within growth-ish software businesses. You know, Constellation buys slow growth businesses. Vista buys these gigantic turn-offs. But what about like doing that in a growth engine? Because what I learned is we're really good at operating software businesses. I think we're sort of best in class there. We have a good view of like the right place products to buy. How do you put that together? And so I went out on this journey and Said, Hey, I want to go build the modern version of a holding company into…

AI assessment note: “we built it up, and I left, I think, end of 2016”

Q dance around a little bit with the company, and one of the things I'm most curious about is we have this Andreessen Software is Eating the World aphorism, and we see it everywhere, maybe even a little bit late in asset management itself. Your, this point of sale terminals start in the restaurant industry. Where do you see this trajectory of software in businesses today, and where is it going?

A So I'll answer that from the restaurant lens, because that's the world I live in, because I think it's in every industry, you sort of have a different point of disruption where you are. In restaurants where we play, it is incredibly early. It's not a nine, it's, it's 2002 1001. And let me think about this very quick perspective. Imagine you were running a restaurant just a few years ago. You didn't have a loyalty app, because who would use a loyalty app to order food? You had people come in your store, you had people come to your drive through, and that was about it. And in the last three or four years, all of a sudden, you're like, wait, I've got to have a loyalty app. I've got to have an online ordering website. I've got to have a mobile ordering website. I've got to have Uber Eats. I got to have DoorDash. I got to have AI software to manage my delivery guys. I got offered delivery now. And so the restaurant has all of a sudden gone from having to have amazing in-store experiences to also having the amazon.com experience outside the restaurant. And this has happened so fast that the disruption is bound to happen because now your workflow is completely different. The kitchen of a restaurant is pretty much an Amazon warehouse now. They are no longer just serving people that come in the store, you say hello, you're getting food. Now you got orders all over the place, and you nee…

AI assessment note: “every single portion of that will be solved by software.”

Q So one more question. I want to turn to a couple of closing questions, which is what surprised you about the money managers you've interacted with as a CEO?

A That's a great question. I'll just say a positive note. I know everyone likes to trash money managers when they're on the operating side and they get this for them, but I actually had the opposite experience. I have been surprised how many allocators actually are long-term oriented. I have been surprised how many actually spend the time to coach me and give me perspectives and not treat me like I'm just one of their random stock investments. I, I actually have been pleasantly surprised at the care and time that managers have spent on us as a portfolio company. And we're not a private equity company. We're not a VC company, right? They can sell their shares tomorrow. So I actually pleasantly surprised. So that's, it was a total surprise. I thought everybody would be in a home. We're just in our meeting and we're another cog in their wheel. And I didn't feel that there are those that I just know that. Right. But there was way more that I was surprised by that. The other thing that I'm super surprised about is that we at par have not been anything close to something you could have written up. We're a company that when I think I stepped in as CEO, we had twelve million dollars of recurring revenue. Today we've got 75 or eighty million dollars of recurring revenue. Right. We did that in two and a half years. That's not normal because we we've done three convertible not offerings. We…

AI assessment note: “I have been surprised how many allocators actually are long-term oriented.”

Q So what are some of those things that you're super interested in?

A So the foundation of Coventry in many ways, and the way that I used to invest was this idea that if you miss the big platform, you don't invest in Airbnb, you don't invest in Shopify, was to sort of draft off of their success and finding ways to build or, or invest in businesses around them. And so I think I was probably literally the first person to have the idea of rolling up Amazon sellers, which has obviously become this enormous business. I literally think I was the first person to talk about that publicly. And so, you know, that's a space that we really deployed tons of capital in. This idea that as we move to a world that's more digital, right? This idea of the metaverse. The financial services products around that are going to need to be completely reinvented. And so I look at things like staking. How do you finance that? How do you finance gamers? How do you think about that? Right? So that world we're like, we haven't oriented our minds to understand no matter what the mode of business, whether it's human, human, e-commerce, or it's something in the metaverse, financial services are still needed. Like there's still products that we'll need to build, not because you can't live without them, but because they accelerate and we are Capitalistic by beings. And so we just try to accelerate faster. And so understanding where all the products are going to be needed to make th…

AI assessment note: “understanding where all the products are going to be needed to make that all work”

Q And then lastly, as you built up GBI, how about culture?

A Culture is this really hard word to define because I think it means a lot to a lot of people. And the thing that I like to say is that oftentimes Silicon Valley is a culture is about fun. It's about creativity. It's about free coffee. And I always say that early on, you have a great opportunity to also say, Hey, we're fun. We've got free coffee, but we're also a culture of rigor, or we're also a culture of intensity. I'll give you the par example. When I got to par, it was a broken company. It was really poorly managed. There was a sort of sense that we work for a family, not the team or a board. And so when I got there, I remember The first question I ever got on the town hall, I said, hey, I'm Sadneed, I'm this guy, it was, what do you think of our values and our culture? And I said, to me, values and culture would make for really fancy posters on the wall. I'll know your values and your culture when I interact and work with you. And so what we ended up doing at PAR is narrowing on, at the time, just three values. And we said, these values will define our culture. And everyone's like, just three values? Like, what about this and that and that? And I said, the problem was that when you define your culture with like 10 values, Everybody fits. If I gave Ted a list of 10 values, he'd be like, I'm pretty good at like eight of those, so like, I'm a fit. I always say the values need…

AI assessment note: “what we ended up doing at PAR is narrowing on, at the time, just three values.”

Q Which two people have had the biggest impact on your professional life?

A My dad's been the biggest influence in my life, second to none, primarily because my dad is not a normal dad, particularly not a normal Indian immigrant father. You know, my dad tried to convince me when I was 14 to drop out of high school and become a professional tennis player. You know, where most immigrant Asian parents in particular, like go to school, get straight grades, try to go to Harvard. My dad very early on gave me that belief that you live once. Well, he never really said it this way, but he sort of gave me that thing as, Hey, like you live once, you got to try to try to make the most of it. I suffered and got some, hopefully a little bit of stability for you To be stable, like makes no sense.

AI assessment note: “My dad's been the biggest influence in my life, second to none”

Q So I'm curious, you came into par not too long ago thinking it was a cleanup and sell exercise. Now it's a build. How do you think about your horizon and what you want to be doing with the company down the road?

A It's more exciting now than it's ever been. The first six months were just survival, right? It was renegotiating credit agreements, terminating 25% of the workforce while trying to keep them all motivated. Hey, you're not going to get fired. Now we're building, now we're growing, removing some of the founding family, which was a big overhang, getting the activist shareholders on board because they're our partners. They're not, we wanted to turn them from antagonists to supporters, getting the SEC and DOJ to say, hey, we're good guys. We didn't do anything wrong. All of this was intense work because it was about survival, right? And it's that rush of adrenaline. And then we got through it and it said, okay, now we got to build. And that was the hardest part because it said we went out, We were really smart about our capital allocation. I think we raised money through converts. I hated our equity price when I got there. And so we're always raising equity at higher prices through converts. And so that next year and a half was just about rebuilding the product. It was about rebuilding the product and bolting on a couple of pieces from M&A. And so today where we stand, it's interesting, right? We're, we're through that sort of like survival phase. We're through the phase of like, okay, now the product is kind of caught up. Now it's about what can we build? And so it's completely cha…

AI assessment note: “growth is indefinite. I can't say, okay, now we're done.”

Q So a couple things. You mentioned earlier that when you got there, it was sort of broken, the culture was broken, and you established these three values. What was that actually like coming into the company, figuring out those values, and then presumably having to change a workforce?

A So let me paint the picture of what we stepped into. So I joined the board of PAR in April of, I was an independent director at that time. Like I said, we had this terror thing, but I wasn't really thinking about running the company, but I think through ignorance and I said, Hey, like, I guess I'm on the board. I should really figure out what they do. And so I flew to the different offices to meet the managers, ask a lot of questions, understand. And I came back to the board and I said, Hey, here are like the very three simple observations I have that I think require some extreme action. The first was that the Brink product had Market fit. There was true product market fit here. And that is so hard to find in software. There are tons of software companies, lots of them make it, but few have true product market fit where you can scale something. I said, this product is winning and we have two hands tied behind our back. You've got to take advantage of it. And you're winning in a market that is just about to become tech enabled. You know, restaurants were in 1999 when it came to software. I like to say that most restaurant operators at the time were still, the analog is the people who'd say nobody ever buys shoes online. They were so far behind Where they need to go. And so you had the product market fit in a market that was ready to go. But unfortunately the other two observatio…

AI assessment note: “So let me paint the picture of what we stepped into.”