“There are also times that the board plays a mentoring role to the CEO. We run into this frequently at Serent, given its lower middle market focus. The insight and coaching that board members can provide can be particularly helpful in supporting a founder or first-time CEO through the inevitable transitions while enabling the CEO to build on his/her established strengths.”
You have deep experience in the education space. What drew you to build your career in that area?
I would say my career evolved towards education. My mother is a children's librarian and is passionate about mission, and my father is a CPA, passionate about helping people make money. I sit at the intersection of the two. I began working in retail, moved towards services while at Disney, then had the opportunity to move to Kaplan, followed by the Learning Care Group—the common theme being multi-site consumer services.
And, if you think about services companies, what you're really trying to do is get the box economics right. What level of service can you deliver? What's your profitability at the unit level? When scaled, do you have the processes and management structure in place to be able to deliver that same quality level and profitability?
With such a wide range of companies and roles, can you walk us through some of your career highlights?
I've alternated between strategy and operating roles and I really love the intersection of the two. You answer questions like “how do you define or package the value you're delivering to a customer segment?” and then “how do you build a team that can actually deliver on that consistently and profitably?” I started off in classic department store retail. After business school, I jumped to the strategy side and went to A.T. Kearney to do consulting on service businesses, manufacturing operations, and operations driven businesses. This helped narrow down what I wanted to do which helped me find my way to Spirit Cruises, a great example of a consumer-based service business. Once that boat leaves the dock, you can have 600 people with you or you can have 1, so the goal is to fill that box, deliver a great experience, and then fill that same box over and over again.
After that, I was recruited to the Walt Disney Company and shifted from management back to strategy as the Vice President of Business Development for Walt Disney Imagineering the division focused on building the theme parks. We were at the intersection of strategy and designing and building a theme park, but I missed the operating side at that point, and had the opportunity to move to Kaplan, which was my first dive into education.
Kaplan was doing lots of interesting things and it was both business- and mission-driven. I held a series of roles there, running the Medical Licensing and then the English language division, leading to my position as president of all of Kaplan Test Prep. From there, I found my way to private equity through Kaplan’s former CEO who had started a fund with KKR and was looking to invest in service businesses.
I spent a year with him as an operating partner before taking my first operating role in a private equity company at Learning Care Group with Morgan Stanley Capital Partners. I helped to strengthen the business, leading to an exit three years later, and followed by my CEO position at ReachOut Healthcare. Then I transitioned to work on boards and in interim CEO roles in a range of private equity settings, which led to my current board positions with Serent.
You’ve worked in a number of strategic and operational roles in various companies—big, small, private-equity backed. How did you get started as a board member?
When I was at Learning Care Group, I asked, "What do I need to be doing now to continue taking on new challenges?" and realized that board work was a natural next step. I brought it up with Morgan Stanley, and within a week they came back with an opportunity. They were seeking a portfolio company board’s first independent board member and wanted someone with operational expertise and the ability to provide guidance to the CEO’s value creation efforts.
We often hear one of the biggest changes for first-time CEOs and founders working with a private equity company is the addition of the board. Can you speak to the role of the board and your experience working with company leaders as a board member?
When I think of the role of a board member, I would divide it into two buckets: governance and situational expertise. I think of governance as the management of risk and the protection of shareholder interest. What I mean by situational expertise is the ability to apply experience and expertise to whatever situation the company is facing. It depends on strengths and weaknesses—sometimes of the CEO—the goals of the private equity firm, and how they define success. From a situational standpoint, the role of any individual board member can vary greatly from functional expertise to leveraging industry contacts to maximizing value in an exit.
There are also times that the board plays a mentoring role to the CEO. We run into this frequently at Serent given its lower middle market focus. The insight and coaching that board members can provide can be particularly helpful in supporting a founder or first-time CEO through the inevitable transitions while enabling the CEO to build on his/her established strengths.
Is there basic advice you’d give to a CEO working with a board for the first time?
My advice is to keep the communication very tight, to use your board, and to avoid surprises. Hopefully, they've learned that by the time they become a CEO, but nobody wants to be surprised. If it's bad news, the board should hear it fast and quickly.
What types of levers do services companies have that you found can expedite growth?
For the two boards that I'm sitting on now, C2 Education, which does tutoring through bricks and mortar schools, and United Allergy Services, which offers immunotherapy to allergy-afflicted patients in doctor's offices, the key levers are utilization of capacity and of course the quality of the experience. Going back to my original example of the boat that leaves the dock, you only have so many hours in a day and you have to figure out how to move as many customers while delivering a fantastic experience, because they are both word-of-mouth businesses. You're going to hear if a tutor got you into the college of your dreams or didn’t, and you're going to hear if your allergies went away or they didn't.
Once you get those box economics right, it really is about putting the support structure in place to manage multiple units and figure out how to get from 10 to 100, 100 to 1,000, while delivering the same quality and profitability you would at a single unit. Every lever in a consumer service-based business relates to the service experience first and foremost—who you’re serving, how you are serving them--and then how you’re doing it profitably.
To switch gears, there's been a global discussion around the importance of diversity and inclusion on boards. There are recent studies that show it can actually be a competitive advantage to have that diversity of thought. What's your perspective on the importance of diversity and inclusion?
I think we often use diversity as shorthand for gender or race, but it doesn't have to be limited to demographic diversity. Diversity of perspective, in general, is so important it can be geographic (e.g. an international vs domestic perspective) or functional (e.g. a marketing skew in a finance driven company). I think the more diversity of thought that you have against specific problems, the better the solutions you can come up with, certainly.
Regarding gender specifically, it's surprising to me to see how slow the transition to diversity still is. We know that saying you're committed to something and actually acting on it are very different things. Serent has made good efforts in the last year to actually deliver on their strongly held belief of gender diversity on boards and teams.
Yes, putting words to action. Speaking of, do you have any words of wisdom or words that you live by that have guided or grounded you, personally or professionally?
Oh yes. For long as I can recall, my phrase has been “make it happen.” If you ask anyone who's worked for me, for any length of time, they would probably agree. I’ve always said, "There are millions of reasons why things don't work; your role is to bring me a solution." It’s something I've always challenged myself to do personally as well. At any given time, there are one, two, three things that you can do to improve the situation. I firmly believe that. It's easy, even as a CEO, to think “how are we ever going to solve this?" But guess what? You’re the CEO and you have the power to create impact and change things. So absolutely, make it happen.
“Once you get those box economics right, it really is about putting the support structure in place to manage multiple units and figure out how to get from 10 to 100, 100 to 1,000, while delivering the same quality and profitability you would at a single unit.”
“We have seen success deploying this framework within our portfolio.”
Serent Capital invests in profitable, growing service companies. We typically invest in founder-led companies and often represent the first institutional capital in the company. We are highly selective, choosing to invest in only a handful of businesses each year. Our selectivity ensures that all our companies receive the attention and expertise that they need. Learn more about our portfolio companies.