The Exchanges

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

A First and foremost, without question, is my father. And to be fair, you know, the unit is one. So by extension, it's my father and my mother. My parents went to school later in life to get their degrees. I was the first person in my family to go away to college. So it wasn't that we sat at the dinner table talking about finance and going to Wall Street where I ended up and those things. He taught me so much in terms of disciplines. In work ethic. In value. And I realized over the course of my career how those were the most important lessons in terms of being effective. The hard skills I could learn in various ways, including some of the stuff in the classroom, but those character traits have to be instilled and built over time. And most importantly, they have to be modeled. The second person I would say who had a tremendous impact on my career, and I, and I've been blessed to have some great mentors and sponsors, so it's hard to pick one. But I would say Bill Osborne, who was the CEO at Northern Trust when I joined the firm, I, I had the privilege of working, uh, and reporting to him, uh, towards the end of his tenure. He gave me a tremendous opportunity to lead corporate strategy, but working with him close up, it wasn't just about the kind of opportunity that he provided to me. And that was significant, but it was about who he was in a person and a leader. You know, sometimes…

AI assessment note: “First and foremost, without question, is my father... The second person I would say... Bill Osborne”

Q So once you've laid that foundation, I'd love to walk through some of the aspects of what you're seeing so far in the investment process, and maybe start at the top of the funnel. You talked about some of the metrics about the types of companies you're looking at. How are you going about narrowing the filter on the companies that you want to work with?

A So the first thing you do is like, say, for instance, if you looked at the lower middle market, broadly speaking, Companies with revenue from five million to a hundred million in the US are about 95,000 companies. So you start here. One of the ways that we narrow the funnel, are they scalable businesses? Because the reality is a lot of small to medium sized businesses, they may be really good businesses for the entrepreneur, but some percentage of them are what we might refer to as lifestyle businesses. It's great business. You can generate a nice return. It's not a business which either inherently by the nature of its Product or service offering or the nature of the strategy that's being executed that lends itself to scaling. And again, because you're in the business of investing, investing is not that complicated. Whether you're looking for an equity return or even a debt return, you need the company to grow. And sometimes people say with debt, well, you don't really need the company to grow because they just have to pay back. And I challenge that a little bit because what happens is the business landscape is so dynamic. Usually when you're in the business Over time, some part of your business is going to change and contract. So the part that you're evolving or growing by definition is offsetting that, right? And so we start by ruling out any business that's not scalable. Sec…

AI assessment note: “One of the ways that we narrow the funnel, are they scalable businesses?”

Q You've seen so many different products across public and private markets. You're bringing to that your mission and purpose, this set of values. You mentioned lower middle market. You mentioned to focus on social. What did you decide of this wide world of asset management, what you wanted to focus on at Copia?

A We're investing in privately held companies. So the first thing you got to decide is, well, where are you going to fish? Because there is a wide range of privately held companies. So one of the observations from a business standpoint we had is just that there is increasingly a significant part of the market that is underserved. So when we refer to the lower middle market, we're not talking about startups. We're not in the province, at least today, a venture capital startup. We're talking about established firms with growing scalable businesses. Think of them as having Maybe 10 to a hundred million in revenue. Positive EBITDA, but maybe the sweet spot is two to twenty million. The middle market is a huge segment. But the middle market, the capital solutions were principally provided by banks. They were usually too small on a relative basis to access in an efficient way the public markets. And then you had relationships with banks. Now, over time, that has shifted dramatically for a variety of reasons, including regulatory. And so the private markets have stepped in. You think about the growth of private equity firms. You think about people who Providing solutions from equity all the way through credit. But here's what's also happened, Ted. If you look at the private markets, most of that focus is on the upper end of the middle market. And so you have these incredible businesses,…

AI assessment note: “We're investing in privately held companies. So the first thing you got to decide”

Q At what point in time did you transition from being effectively a producer to a manager and leader of people?

A I was fortunate to have a managerial experience fairly early on my career. So when I came out and I worked for Morgan Stanley, was an analyst there, had an opportunity to move and be promoted into associate role. I knew I wanted to go to business school. So I went to the, to business school at the University of Chicago. And when I came out, I went to work for Goldman Sachs. And there I was working in the equities division, working in an institutional sales capacity. And my role was actually advising institutional investors. So whether you think large public pension funds, you think large asset managers, alternative managers like hedge fund managers, those would have been my clients. And a couple of years into that, as our business was growing, I had the opportunity to then move from where I was part of a team to co-managing one of our territories. And so again, it's fairly early on having an opportunity to be at that time a player coach. And that's different, right? Because you go beyond just what you have to do in a very demanding Performance oriented business from thinking about what you have to do specifically in your capacity to thinking about how a team works together, how you encourage the development of people working with you and around you, those sorts of things. So that was my first opportunity to have managerial responsibility.

AI assessment note: “a couple of years into that... move from where I was part of a team to co-managing”

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

A The things that stick with me the most from them are always deducing to their teachings on humility and service. So in a two-part thing I would tell you, my dad would always say, everyone has something to teach you if you're willing to listen. And my mom, driven by how she works, she worked in social work as far as her career. She went back to school, got her degree, and then went into social work. I told you they also founded a church, and so she would always say, whatever you do, you do it as unto the Lord, and that was her belief in her faith, but it was also, regardless of what your professed faith is, this belief in a transcendent purpose, and that there was a service orientation, that part of our goal was to pour our life out for others. So those are the two things from them. I can wake up in my sleep, My parents aren't gone, so I can wake up in my sleep and literally hear them talking to me, but those things dominate a lot of lessons in life they taught me.

AI assessment note: “The things that stick with me the most from them are always deducing to their teachings”

Q Why did you decide to focus on the private markets instead of the public markets?

A I've spent a good deal of my career and a good deal of my focus on the public markets. Frankly, there were two things. One, the private markets have increasingly become a more and more significant influence in our economy, particularly as it pertains to entrepreneurship and access to capital. And the thing about access to capital is so relevant to me because of One, I think that we can unlock so much economic vitality if we do it more effectively. I'll give you an example. If you think about women-owned firms, women start firms at a significantly faster rate than their male counterparts. Women now make up nearly 60% of the college graduates in our country. So we don't have a problem with business formation with women. We don't have a problem with entrepreneurship, but we do have a problem with access to capital, and I want to be clear that capital is both financial and social or relational capital, and so I said to myself, well, think about the unlock that you have there if we did that more effectively, and Ted, I think the opportunity set for that in the private markets as I see it in terms of really wanting to have that impact is bigger today Than things that I might've focused on in the public market. So it was, it was like, what's the biggest lever we can pull? And so, so that was a big part of the motivation.

AI assessment note: “the private markets have increasingly become a more and more significant influence in our economy”

Q How do you go about assessing management teams?

A There's no surrogate for investing in time. A lot of the upfront diligence for us, once you have determined that there's enough there to really take a hard look at a prospective deal, for us, it's all about starting with the management team. And here's the kind of things that you're looking for. People talk about experience, but I think when they say experience, they think about it too narrowly. So we're looking at the experience that people may have related to the specific Business that they may be running at that particular point in time, but we're looking at their experience over time, the kind of hard and soft skills that they've acquired that will contribute to moving the enterprise that they have forward. So it's a very holistic view of thinking about experience. And quite frankly, we prefer to really use more of the term their expertise. So we have a more of a mosaic of how we think about that. Second thing that we look for is how transparent are they? When you're making an investment, right, no matter how much due diligence you have, there's a certain amount of information asymmetry. But if you're dealing with people that are very forthright, that are transparent, that are very balanced on talking about their business, that really know the business, where the strengths and the weaknesses of the business model are, that's something that we look for. We look for people wh…

AI assessment note: “And here's the kind of things that you're looking for.”

Q Was there a catalytic moment that created the timing of your decision of when to do it?

A So there wasn't a catalytic moment. What I would describe it as it was, you just got to a tipping point. I was in the role, my last role, where I had joined the management group and I was leading the asset management business at Northern Trust for five years. So first of all, just from a career standpoint, there's kind of a cycle you go through. You know, as you move through about five years or so, you're usually looking at directionally some sort of change, whether it's an evolution of your role and things like that. So I think for all of us, there's sort of a natural clock where you're thinking about how do you continue to grow and evolve? All of us had experienced a number of things that were pretty unique. Over the previous years, if you think about what we'd experienced during the pandemic, that just was a remarkable and unique period. And I think one of the things I try to be reflective, but I'd like to say all of us were reflecting more, not just on career and life. You had seminal moments like what happened with George Floyd and, and all those points for me, it was stretching me growing my personal and professional development, my leadership capacity. Also, I Thinking about how can I do more with respect to the things that are really important to me? How can I have the most significant impact? I think, you know, being nearly 30 years into my career, you do start thinkin…

AI assessment note: “So there wasn't a catalytic moment. What I would describe it as it was”

Q How did you approach strategically thinking about what you were going to offer on the investor side?

A So I can frame it this way. In the private markets, when you're offering private placements, the reality is you can't talk about the products until you've closed fundraisers. But here's what I can tell you. So one, we said we want to focus on the lower middle market. We said, two, we want to be able to provide debt and equity solutions. But if I tell you our bias in terms of our investment strategy, I think it'll point to certain things that will make sense. One, we like the opportunity to be able to provide what we would call tailored or bespoke financial solutions. And therefore, very strategic reasons to accelerate growth. And they can include Organic growth, acquisitions, recapitalizations, and so we want to be partnership capital. Very important, our investment strategies are tilted towards solutions that come in forms that limit dilution to existing equity owners. So think about things like credit. So that would be a natural one, because there is potentially no dilution to existing equity owners there. But you can think along the way of variety of things, whether it be for equity, minority equity interest, Hybrid credit equity solutions. So you can think about over the arc of time, that's where we would want to focus. Our view is there's nothing inherently wrong, for example, with someone who is focusing on providing a middle market buyout equity, but that's not our focus…

AI assessment note: “we said we want to focus on the lower middle market... provide debt and equity solutions”

Q you look at the asset management industry as a whole, it's such a performance outcome driven industry that you wonder sometimes will people across the food chain of capital, do they really care? They care about performance. They care about returns. Maybe they are completely colorblind and gender blind. All they care about is their performance. How have you seen the benefits of engendering that diversity flow through to performance?

A Well, first of all, it's interesting because you see it in a couple of different ways. The first thing I would say is with respect to performance, we have to perform on a lot of different levels. We have to have investment performance, but we also serve clients. So we have to excel in terms of the client experience or the relationship. We have to perform in terms of how we work with other vendors and suppliers. We're often part of the ecosystem and we alone don't determine solely our success. We have to perform in terms of our ability to raise capital. We have to perform in terms of our representation of the firm in the marketplace, in the building, the brand through media. So I can, first of all, there are a lot of important elements of performance. Many of those elements involve solving oftentimes complex problems, and it's proven, and I can give you 20 different formidable branches of research that will show that Diverse teams are particularly well adept at solving more complex problems, and it's kind of a simple reason. It actually makes sense intuitive. Like, if you and I, like, once you get a certain level of IQ, everything above that is just limited incremental benefit. So you gotta have the requisite amount of intellectual capital. But after that, it's like, if you're trying to solve a complex problem, you want as many like tools or tool sets as you can get to put towar…

AI assessment note: “Diverse teams are particularly well adept at solving more complex problems”

Q So I did that. And what were some of those practices?

A So one of the things that we did is both in terms of gender diversity and ethnic diversity, we set explicit expectations in terms of minimum representation on our interview panels. We also set new processes in place for the HR teams or the recruiting teams that were working with us in terms of their expectations on delivering diverse pools of candidates to our managers and then our managers' commitments to working in line with them. You know something else we did that we didn't do on the first pass. So first we looked at our, who we were interviewing. Then we said, we also have to look at who's doing the interviewing. And it occurred to me to do that. I asked the HR folks to pull from me over a period of time, like who that we actually had on the interview slates for the candidates who were coming in. And in two particular instances I found, and there was no ill intent on this, but to give you an example, I found two instances where we had extraordinarily talented Female candidates come in interviewing our firm, and we have a reasonable amount of gender diversity. Not one single person on their interview schedule was a woman. I mean, Ted, you could almost throw a rock in our building and, like, not get that, that accident on purpose. You have to change the practices, and we would have needed to do that either way, but you understand how setting an established foundation of shar…

AI assessment note: “we set explicit expectations in terms of minimum representation on our interview panels.”

Q You've built a lot of teams. When you're starting from scratch, how have you framed out who you want to have on the team, how you're making sure that's all going to come together?

A One of the great things is you get to start from a blank sheet. So what do we frame out? There are the buckets that you want to touch. You're thinking about the technical expertise that people have. That's table stakes. If I think about Anthony, who's a partner, he has 30 years of experience in financial service in The investment management space. He spent. 20 plus years now in the private investing space, focusing principally on private credit. So deep experience there. And it's comparable to some of the skills I have. You know, when he joined the business as a principal investor, you had to source the deals. You had to do the underwriting and you had to manage the portfolio today. It's much more, you know, segregated. I had an advantage when I grew up in the business where I just got a lot of A unique experience early on. You know, I started out mostly doing high yield research, so I got to understand and learn credit training, but at the same time, you were doing lots of deals, so you got to understand how to do deals and work in that context. What we find, but Anthony and I talk about this all the time, values and culture are so important. One of the things I would say I learned early on when I first became a manager, I focused very intently on the hard skills, and you realize that How important those softer skills are. Most importantly, leadership capacity, because it's sc…

AI assessment note: “So what do we frame out? There are the buckets that you want to touch.”

Q As you've seen all these different approaches to investing in your time at Northern Trust, what best practices are you bringing across your investment process?

A We have a very intentional process that we lay out. And at every stage, um, because we're an impact investment firm, we have both the investment side of the equation and how that integrates with the impact assessment. And it's all about, you know, doing things consistently, repeatedly each and every time the right way. That's number one. The second thing is though, being a learning organization, because you start out with a thesis, And what any great manager or decision maker will tell you, you actually make many small decisions and a number of them won't be right. So people sort of pretend like they have these great answers, but that's not how it works. You're always course correcting. It's the ability to have an approach and a process that allows you to learn. Now, one of the things you have to do to do that is the interactions you create between the colleagues and the people that you work with. And so if people are not in an environment that they feel psychologically safe, that they can bring their whole selves, that they can truly give their feedback, You will be robbed of some of the most important inputs you need because a lot of times what you need to know to make great investment decisions is not what you're reading in the research and all those things. It's sitting in the heads and the hearts of the people around the table. It's not just the process that you put in pla…

AI assessment note: “We have a very intentional process that we lay out.”

Q How do you apply measurement to those five aspects of social impact?

A We have clear definitions for the framework, and then you have different objectives, and they are measurable objectives. So if you were thinking about something like diversity, equity, inclusion, you can look at representation. You can look at it on different levels. You could look at it within the context of the company. You can look at it at the management level, even at the governance level. You can look at things like Pay equity and workforce development. Again, these are measurable things you can do. You can look at the ability to create good paying jobs. You can look at it particularly as to the extent a company is doing it in targeted, underserved communities. You can look at creating, um, longevity or job security. You can look at things like investment in training and development. So these are all just indicators that are objective, that are measurable. What people sometimes get confused about is when they think about impact, they say, Well, are you just looking to invest in firms that are doing this great? And I say, first of all, it's a whole relative. We personally and collectively are all on journeys. So actually there's not a some necessarily a minimum proficiency that we say where a firm has to be when they start. What we're looking at is opportunities where they have, where they can drive significant contribution over time. And I think that's really important.

AI assessment note: “these are all just indicators that are objective, that are measurable.”

Q How do you define what some of those behavioral norms are for the company?

A So one of the behavioral norms of our culture is definitely the enterprise or in the team precedes the focus on the individual actor. And so you'll hear some people talk about, quote unquote, a star based culture. Well, we'd be the antithesis of that. Another thing is there is a strong emphasis in terms of being collaborative. And a lot of the decision making is consensus driven. That would be another element of the culture. People, because of that sort of Midwest ethic, I think that there is both a genuine concern and care about the welfare of your colleagues, but I also think that brings with it a certain level of, and people from the Midwest can definitely appreciate this, a certain level of politeness. And the point I would make here, it's a very important point, Ted. A lot of times when you talk about Cultures, and you talk about the qualities of cultures. Now, I'm biased. I've been there 16 plus years, so obviously I want to be there. I value the culture. But actually, when I make these observations, I don't make them as good or bad observations per se. I make them as observations about the qualities that distinguish this particular culture. Because every culture, it's like getting your performance review. There are things that you do well and are your strengths, and there, there are always the opportunities that you have of the things that you're trying to evolve. And im…

AI assessment note: “one of the behavioral norms of our culture is definitely the enterprise or in the team”

Q As you talk to your peers that are running other asset managers, and particularly more recently, started maybe with ESG a year ago, and now Black Lives Matter has certainly picked up. What are you hearing of interest in action in the industry?

A One of the things that I'm seeing is the dialogue, and this is important, Does feel different this time. What I would say is some of the unfortunate things that have been brought to bear in the pandemic in terms of some of the gross inequities in our society. It's not like they're new, right? They have, in many respects, been laying there in plain sight. And you've had some people that are, I would say, on the forefront of many of these causes, so how they think about social responsibility, articulating that. And we certainly have had adopters, that's something that's important as part of our business, but not necessarily moving at the scale or scope that some of us would think that it might naturally do. And then when you think about, again, For all of my useful life and for decades preceding me, and honestly, for generations preceding me, we've had the issues of race and racial discrimination. And I think what I'm seeing now in the conversation is number one, Ted, an openness to have a conversation that people have been reluctant to have in a fulsome way for most of what I've seen in my professional career. So that's number one. Two, I'm also seeing a more comprehensive, in a sense, empirical or fact-based assessment of it, and the reason that's important is because it's easy when you're just talking about opinion sometimes to be dismissive of things, but I think people are r…

AI assessment note: “what I'm seeing now in the conversation is number one, Ted, an openness”

Q is, Probably less so of Northern Trust than a lot of organizations, but if we have an existing diversity issue within the hiring organization, and it therefore makes it that much harder at all different levels to have the woman in this case be part of that interviewing process if there aren't a proportionate number of women already in the organization. How do you think about solving for that issue?

A You have to actually Start from wherever you are. So here's, I think, something that we can comfortably say, Ted. I've spent roughly 26 years working in financial services. I am grateful for all of the firms I've worked for, and I think the reason I've been at Northern Trust for 16 years as accounting is because of what I think about the culture. And I can tell you for the industry and in every place I've worked, we've got meaningful work to do as it pertains to diversity. So there's no place that I've been a part of Where I've been on a continuum and I've said, gosh, we really nailed it. And we can fold up our tent and go home. So if that's the case, because your question is a very fair one, but to your point, there might be some companies At mass, or there might be certain parts of an enterprise or a company that there's just very little diversity as a starting point. That doesn't mean that you can't change the dialogue around diversity, that you can't train the partners and especially the leaders that are there to have not only a greater appreciation for diversity, but train them in areas like unconscious bias. That doesn't mean that if you don't have a lot of existing, say, gender diversity or ethnic diversity, that you still can't put into practice or policies that at least allow you to do things like to see more diverse candidates. Or it doesn't mean that you cannot, and …

AI assessment note: “train the partners and especially the leaders that are there... in areas like unconscious bias”

Q In this newly created partnership, what are the things you will seek to integrate to make sure that the partnership functions well over time?

A As the managing partner, you know, I have a significant responsibility, but it's not necessarily how people think about it, because people think that if that's the role of the title, it means like you're making all the decisions. And it's actually not that at all, right? My role in large part is to do a couple of things. One, it's to empower the incredibly talented people that we have. Empowering means that you've got to create the kind of, uh, environment. We talk about psychological safety. We talk about bringing their full perspectives and sharing those and engaging in ways. And I'm not afraid to say this. I like to coach hard, but people who want to be excellent and people that trust you and know you care about their wellbeing will allow you to coach hard. And by coaching hard, I'm not talking about some kind of rough persona. I'm saying pushing myself and our team every day to be our very best. Remember we talked about that value of excellence? Whether it's I did things academically or whether I played sports, I always benefited from good coaches, and I liked being coached hard. For people who could see in me sometimes a level of capacity that I didn't know I had, but could help me find that next level of achievement. And so, but you get there Not by being brusque or rough. You get there by building an atmosphere of trust. And so bringing those kinds of things. Other subtl…

AI assessment note: “My role in large part is to do a couple of things. One, it's to empower”

Q So before we get to sort of Northern Trust where you spent a lot of time, along the way, as a young African American professional working your way up those ranks, what were some of the challenges that you saw and faced specific to the racial differences?

A Well, there are a couple of things that you deal with as it pertains to race. And the first thing that you deal with is, one, in societies around the world, and I would say it's particularly acute in the US, race is a topic that just influences, like, every aspect of life. And what's interesting is so many people probably underappreciate even the inception of concepts around race and all those things. But it's a social construct that we all accept and buy into because that's what we know. If you're an African American, if you're a person from a racial standpoint that's characterized as black, there are so many things that you deal with in a sense, in a direct sense, but a lot of them are subtle, particularly in the workplace, because there are stereotypes or perceptions or things like that that precede you. And one of the things is your reality is you have to navigate a culture, and that has its own challenges for anyone. You have the instance of race and what that means in terms of everything from biases to stereotypes to preconceptions. But then you have this other element, which is race is a very uncomfortable topic. It's one of those proverbial third rails. So it's not something that's in a sense engaged on directly or talked about in polite company. So it's having to navigate something that presents its requisite challenges and At the same token at a time, or in most norma…

AI assessment note: “a lot of them are subtle, particularly in the workplace, because there are stereotypes”