July 17, 2025 • 35 mins
Shiv interviews Andrew Weinberg, Founder, CEO & Co-Chair at Brightstar Capital Partners.
On this episode, Andrew talks about transforming traditional private equity through an “invest and operate” or ”us and us” model. Learn how AI is becoming an integral value creation lever alongside traditional strategies and about practical examples of applying this technology to industries like auto auctions and roofing. Hear about the importance of preserving institutional memory, empowering teams, and balancing growth with operational discipline.
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Episode Transcript
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(00:00):
But I'll tell you in the moment,we're definitely taking a fresh
look at where we're investing because of AI.
So companies that might have been less attractive a decade
ago or 20 years ago because of the opportunity to deploy AI may
actually be better. Is there a heavy spend on sales
and marketing? Is there a heavy back office
(00:21):
spend? Is there a heavy spend on
software development? Things that are fundamentally
changing by the day. We believe that 40 to 45% of all
jobs will be changed or different within five years from
now. Welcome to the Private Equity
Value Creation Podcast where we interview leading investors,
operators, bankers, and advisorsto help you answer one question.
(00:45):
How do we increase the enterprise value of our
companies? My name is Shiva Narayanan and
each episode I will dive deep with a guest to help you become
a better value creator and capital allocator.
So with that said, let's jump right in and let's get started
with today's episode. My guest today is Andrew
Weinberg of Brightstar Capital Partners.
(01:06):
And what I really liked about this episode with Andrew is he
talks about how they're leveraging AI to optimize their
investments and their portfolio companies to create more
enterprise value for those companies.
And this is a hot button topic. Almost every private equity
event that I attend or get to bea part of, I see multiple panels
on AI. We've also done panels ourselves
(01:27):
on how marketing and I can be leveraged together.
And a lot of PE investors are kind of thinking about this, but
they're not exactly sure where they should focus or what the
first few levers should be. And Andrew actually talks a lot
about this because they've already been mobilizing this
inside their firm. And his partner actually is has
been the head of AI for Harvard's research institutes.
So there's a ton of background that their firm has in this area
(01:49):
and they're actually also implementing that for their
portfolio companies. So there's a lot of interesting
takeaways in that and I hope youlearn a bunch of things that you
can bring back to your portfolioas well.
So with that said, I'll leave you to it.
Enjoy the episode. All right, Andrew, welcome to
the show. How's it going?
(02:09):
Good ship doing well today. How you doing?
Good, good. Excited to have you on.
So why don't we start with your background and Bright Star
Capital, and then let's go from there.
Great. So I started Bright Star Capital
just over a decade ago, So we'recelebrating our 10th
anniversary. I've been in the industry for
nearly 30 years, pretty traditional background, worked
(02:32):
in investment banking at Morgan Stanley, private equity at
Goldman Sachs, spent time at Stanford Business School.
So I think some of the audience will resonate with some of that
background. Although I think I realized
during my time there it wasn't ready to be an entrepreneur and
so I went back east. Although my roommate did drop
out and start stuff up in our off campus apartment.
(02:53):
So I got a taste of the entrepreneur life.
I worked at another private equity firm and really kind of
think owned my skills and and knowledge of the sector.
And in 2008, I had a fork in theroad because I had an investment
that was heading into the GFC. And the founder of that company
(03:14):
asked me not only to stay as thelead partner director on that
company, but to also become the CEO of that business.
And I started commuting from NewYork every Monday morning at
LaGuardia at 6:00 AM. It was the sort of usual
suspects. I knew exactly what seed
everyone would be in that morning, because it was the same
thing every week. I'd come back Friday night.
(03:34):
Sometimes I travel the weekend, but during that experience and
reshaping that business in the crisis and actually taking an
operating role, it opened my eyes that private equity should
be more than just investing. It should be investing and
operating what we call the US and US model.
Fast forward, we end up monetizing that investment to
(03:56):
SoftBank. My partner in that company is
now my partner today. Although we took a few years
off, he took time, Marcelo Clarato be CEO of Sprint global, CEO
of SoftBank, chair of Harvard's AI Institute, board member of
T-Mobile and now he's my partnerand Co chair of Brightstar
(04:18):
Capital Partners. So I'm here today because of
that experience with Marcello. I'm just a late bloomer as an
entrepreneur. That, that's a fantastic
background. So talk about this specific idea
that you mentioned about investing in operating as a
vision for private equity. How's that different or how does
that run counter to how a lot ofother firms are perceiving the
(04:40):
companies that they're investingin?
So you know, I think our industry has gone through waves
of evolution whether you call uson 3.0, four, .0 or 5.0, I'm not
sure. But if I look at the early days
of private equity, a lot of it was marked by high levels of
leverage and then morphed into financial engineering.
(05:00):
Maybe then it morphed into sort of buy and build.
I think the last wave has sort of been the operational know
how. And when I started this a decade
ago, I thought, Gee, there's $105 trillion wealth transfer.
At that time, it was less than half of that of one generation
to another of these great businesses in the US that
(05:24):
according to our research, 60% of them don't have a succession
plan, whether that's because theparents don't want the children
to work for them or the childrendon't want to work for the
parents. So there are these great
businesses out there that are private businesses and they
generally need or want more thancapital.
So a large group of them we think benefits from the know
(05:47):
how, making enough mistakes in other places that we can bring
that know how. It's the table and hopefully a
few things that we've learned todo well.
We don't want to be sea levels or operators again, but we're
bringing that know how to these companies to help them
fundamentally change their rate of growth in a positive way.
When we married those two up andsaid to someone, there's a lot
(06:08):
of private equity capital out there, but if you think that two
bites of the apple, not one is worth something, we'll happily
put our time in our resources into help you with your business.
And that's been our journey so far.
We're about 70 investments into that journey.
(06:28):
And I'll leave you with something here that hopefully
will will keep talking about a bit, which is the next leg of
our revolution has cracked wherethe world is going, which is we
think we've developed a pretty strong team to deploy AI use
cases in our companies. So taking traditional private
(06:48):
equity investments, getting the returns that we'd expect and
supplementing them with the use of AI.
And we're doing it today and we've made a number of hires
there today. And having Marcello again lead
Director at T-Mobile on AI, Chair of Harvard's AI Institute,
one of the thought leaders in the world on AI.
(07:10):
In my opinion, helping lead thateffort for us has been
transformational. Yeah, so many, so many threads
to kind of open up there. I wanna start with just the the
focus or the types of companies that you're investing in and
then let's expand into how you're adding value there.
So you mentioned this idea of the wealth transfer that's about
to happen. A lot of these companies are
(07:32):
family owned businesses that arekind of passed down generation
or are about to be, but they're run very differently than let's
say a professionalized institution or or organization
would be. So how do you vet those types of
companies and and then talk about the sector focus as well
because you're in more of these traditional industries that
(07:52):
maybe not as many PE folks are looking at?
So I would say I'm not sure if they're run differently than the
great businesses. In other words, the great public
companies and great private companies and those that are
closely held, I think each of them share a common DNA, which
is a great culture, a meritocracy and opportunity to
really move up. I think in closely held her
(08:14):
family owned businesses there occasionally challenges with how
do we deal with ownership overtime, how do we deal with
incentives and and alignment there.
But I do think a lot of these businesses that have proven to
thrive through cycles or make their way through cycles and
have something in them that maybe other companies don't.
(08:34):
The you know, there may not be as quick a transition of
leadership. And so the leadership has lived
through cycles and that pattern recognition is worth a lot.
We try to find the companies that are good companies that are
strong companies that might benefit from having a partner,
maybe introducing things like M&A as a supplement to the
traditional value creation to grow the business where maybe
(08:57):
the family or the the ownership didn't want to risk all their
capital or meaningful part of it.
In that growth. We've really focused on a few
sectors today that's really beenindustrials, business services,
government services and technology.
We've generally focused on businesses that are outgrowing
GDP, have inherent operating leverage.
(09:19):
But I'll tell you in the moment,we're definitely taking a fresh
look at where we're investing because of AI.
So companies that might have been less attractive a decade
ago or 20 years ago because of the opportunity to deploy AI may
actually be better. Is there a heavy spend on sales
and marketing? Is there a heavy back office
(09:40):
spend? Is there a heavy spend on
software development? Things that are fundamentally
changing by the day. We believe that 40 to 45% of all
jobs will be changed or different within five years from
now. So, so talk about that piece a
little bit more because you've opened the AI thread a couple
times. So just as you're looking at
these companies, how are you underwriting that?
(10:03):
Because a lot of these traditional businesses, there's
a lot of offline or like supply chain work that goes along with
owning that type of a business, different types of complexity.
So how do you underwrite as you're looking at the company,
the work or benefit that I can bring to a particular
investment? So look, we're largely
benefiting from the 300 to $350 billion a year being spent on
(10:28):
the AI factory by others, the data centres, the
semiconductors, the large language models, the power
generation. And we're taking that learning
in those use cases and the ecosystem that our team has
built around AI. And so we've been talking to our
portfolio companies and our investors for the better part of
(10:49):
a year and a half about deploying AI.
And I think the key for us is truly it's a line item by line
item focus on the workflow and where do we want to prioritize
our time and effort with our ecosystem and obviously the
outsourced partners out there who are developing, we're in
that AI factory, the market leaders and where can we
(11:12):
actually do something that generates a Better Business,
could be a better experience forour customers.
It could be a better pricing model, it could be better
operating leverage on the business, but it's really a
ground up business. So again, we're going back to
our traditional value creation tools which have played out.
We exited three of our businesses through full sale
(11:35):
processes in 2024, all of which had stories of fundamental value
creation. One of them had done no M&A and
had grown quite a bit. Now with this additional lens,
we think this is supplementary thing I'll say though is we have
to look at where we think that business will be in a few years
(11:55):
and where is that industry goingto be and how will that be
evaluated because we don't want to invest in a business where
someone will look back and say, oh, that business is less
relevant today. So we've changed our own
business practices at Bright Star in terms of how we
underwrite our underwriting process or our use of all the AI
tools, deep research, etcetera. And it's really become part of
(12:19):
our DNA on an hour by hour basis.
If you think about the value creation, you mentioned
traditional value creation levers.
If you think about it as almost like a pie chart where you look
at more of the traditional levers versus things that are
more revenue growth driven or AIdriven, what percentage of your
value creation thesis is around the AI side?
(12:39):
Yeah. So traditionally it was 0 before
a year ago because it really didn't exist on our ecosystem.
When I say we we kind of got there the hard way.
Now that we've done it, I'd probably put a split of
something like 75% or so is traditional and about 25% AI.
(13:00):
And I think we have the same conversation in six months, it's
probably going to look more like5050.
So the large companies in the AIsector are clearly developing
use cases that we think, again are not a commodity because it
boils down to the ability to actually use them at the company
level and fundamentally change how many of us spend our day and
(13:22):
how we allocate our time. Sales and marketing efforts,
especially B2B, are changing overnight.
It's arguable though, we might be on this discussion in five or
ten years and it could be 90% AI.
Yeah. So can you, can you bring that
to life a little bit? Because I get the sales and
marketing side. I understand certain things can
(13:43):
be automated, but like how do you see it accelerating that
quickly? Because it's obviously AI is a
hot button topic. A lot of people are talking
about it every session on private equity seems to have
some type of an AI element to it.
But bring it to life for us withthe types of investments you're
making beyond just like the the standard areas like sales and
(14:04):
marketing where people are usingworkflows to maybe make things
faster or automate outbound or something like that.
Like how are you seeing that play out in the types of
businesses that you're investingin, where their supply chain
involved and other complexities?Sure.
So I'll borrow first from Marcello's experience.
Again, he's the former CEO of Sprint and the largest
individual shareholder at T-Mobile.
(14:24):
That'll boil down to a couple ofour portfolio companies.
In that particular case, what's been publicly disclosed is, you
know, a goal to reduce inbound call volume by 90%.
So it doesn't start with a 90% reduction in staffing, it starts
with putting in digital twins, putting in models that are able
(14:47):
to understand the customer incredibly well and address the
customer needs and therefore theneed to actually use that call
centre drops by 90%. Well, a derivative of that also
is the store count, right? So the interface is not only a
call centre in that business model, it's a storefront.
And that storefront is not only there to sell a new device, but
(15:09):
it's there to help triage issueswith your current device or your
current plan. Well, if you don't again have a
service issue because it's been addressed already, the store
account meaningfully comes down,It's a significant reduction in
real estate cost, it's a reduction in commissions.
So that's a very publicly disclosed use case that's
happening in real time at a quite large scale.
(15:31):
I'm going to boil it back to what we do.
So we have the second largest business to business auto
auction business in the country.It's called America's Group or
America's Auto Auction. It's #2 to Mannheim.
Mannheim is owned by The Cox Family.
They've been a great steward of Mannheim for a long time.
We've generally been the the growing business of choice,
(15:52):
aggregating a lot of mom and popor family owned businesses into
our into our company, adding geographies for effectively what
is a business that auctions a vehicle every 10 to 15 seconds,
once a week in a geography physically, but with a huge
digital element to it. In that particular business, the
(16:14):
ability to use technology and AIfor a quality control process as
that vehicle is coming in or being inspected.
The AI can actually identify both the perfection or
imperfection of a vehicle on a better basis than a human can.
That business can understand, you know, taking logistics, cost
(16:36):
of moving a vehicle, the demand because of use of digital twins
for our customers, which number a couple 100,000 customers.
And then being able to tell thatcustomer if you like this
vehicle today, here 60 miles away tomorrow, we're actually
auctioning a similar, similar vehicle.
And here's the price. Well, that allows us to address
(16:57):
growing demand for that generating demand, but also
understand our pricing model to make sure that we're heading the
right price point for our customer.
We're just a marketplace. We don't own anything.
And I could give you another 20 use cases just that one
portfolio company alone. We have, we have a, a roofing
business that largely works withthe warranty on, on, on, on
(17:22):
roofs of of customer homes in the Southeast.
The ability in that business to remove the person from climbing
up a ladder standing on a roof to assess it through flying
drones, AI again, quality control, looking for
imperfections and being able to address it.
It helps both on the front end on the sales cycle and it helps
(17:42):
in the triage and the project management, which is effectively
what we are to manage that process to get that that roof
repaired. So each one of these has a huge
AI opportunity. And for us, I'd say the hardest
part is being able to package that in a way that is easier to
(18:03):
implement and does not disrupt the business.
Yeah, how especially since you're buying these family owned
companies or getting involved with the almost generational, a
generational operational structure, I guess, um, how do
you manage that? And I would imagine inside these
companies there's often a bloating of expenses or a lot of
(18:26):
personal and professional thingskind of are interlaced in
between. So like and, and then meanwhile
you're coming in with like AI recommendations or opportunities
to, to streamline the business and make it more efficient.
So how do you navigate that? And I guess there would be a big
opportunity there is, especiallybecause there is more
inefficiency. Yeah.
(18:46):
So I don't know if I agree that there's a bloating of expenses
just because I want to say there's a reason these
businesses are still thriving, which is as an with an owner
mentality, I actually think they're generally more cost
discipline than maybe some of their public peers.
I promise you, when you own the business, and I think you
probably, you know, own your business here versus the, you
(19:08):
know, I work for someone or there's someone else that I work
for, it's it's a the owners mentality is actually quite
important. But what we do is we've
developed a set of materials andplaybooks and we have kind of a
walkthrough process. And what we like to do is share
our findings before we invest. So there's no mystery or no
(19:28):
surprise. I think part of the attraction
to work with Bright Star and ouryou know, 65 person team is the
ability to lean on those playbooks, lean on that, know
how and be able to talk to the ecosystem of our partners.
We have a, you know, 30,000 employees across our base.
We're generally control investors, but we don't try to
(19:51):
do everything at once. But as we do with our
traditional value creation, we prioritize the lowest hanging
fruit where we can make the biggest difference.
With AI, it really relies upon astrong financial foundation, a
strong base of data. So the early days are generally
more about data cleanup, puttingthe right systems in place.
(20:12):
Once that's in place, the empowerment that the management
team and ownership can get from having this generally in
industries where their peers arenot using it creates what we
think a great advantage that that we look to, you know, we
look to use in our business. Yeah.
(20:33):
That that, that makes that makesa ton of sense.
What are some of the other areas, especially with the types
of companies you're investing inbeyond the AI side, that you're
investing into to drive more value creation inside these
companies? I'll give you a few generalities
here and across. And I would say many of the
companies we work with, again have a great culture and many
(20:56):
have an ethos. And I'm talking about, look, we
see hundreds of companies every year.
I say there's probably an ethos of a little bit of wanting to
please the customer. And of course, we don't want
unhappy customers. But I'd also say that generally
80% of the noise from the customer base and mostly
(21:17):
business to business environments probably comes from
1 to 2% of the revenue of the customer base.
And oftentimes it's important toempower our management teams
that it's OK to educate the customer on what our value
proposition is. If we think that that good or
service has been underpriced or we're bringing something extra
(21:40):
to the table that's not being valued, we want to make sure to
communicate that. And if you can't make a customer
happy, no matter you know what you do, sometimes it's time to
have a discussion. Should we really be partners?
Should we be working together? And giving the management team
that freedom to move on from a customer where it doesn't make
sense generally tends to be liberating for that management
(22:02):
team. Again, they might be doing it
already, but I'd say that's a commonality on on the sort of
pricing side of our business, investment in the business and
investment in the company and growth.
Again, most closely held businesses are going to be a
little conservative relative to us on capital structure.
We're not generally aggressive, but they'll be a little more
(22:25):
conservative. We'll look for opportunities
where we can make an investment,like can think about an
investment we had in a nutritional products
manufacturing business in Utah where you know the day we close
that deal, we held a board meeting within one hour and
approved $10 million of CapEx ina business doing about a similar
(22:46):
amount of profit. But the payback was like a year,
a year and a half. And the opportunity to
communicate to the customer thatwe're we're willing to invest in
the business. Do you want to invest with us?
Will you give us some more business if we prove that we're
doing that? We've generally invested a lot
in training. So we had a fleet maintenance
(23:06):
business that we publicly sold amajority to New Mountain last
year for. We shifted that business from
having no electric vehicle OEM contracts to more than 10 and
having to retrain some of our workforce from being a
traditional mechanic to effectively being a hybrid with
a software engineer. I mean I saw some of the
(23:26):
results. I can't say if they were a
customer, but you know, I was ina Waymo in San Francisco and Los
Angeles and you know, the personthat's doing the work on that
vehicle is a a different person that than doing a traditional,
traditional combustion engine. So again, I could go on and on,
but the use cases are significant.
(23:47):
Hmm. Yeah, that's fantastic.
What about on the people side? How are you adjusting these
organizations, especially with the AI side and some of these
other value creation levers as you're coming in?
Are you trying to keep the as is?
Are you trying to find efficiencies so that one person
can do the job of three? Like what's your perspective on
(24:08):
that? We've generally been net growers
and so the homework of our strategies actually been a
growth strategy, which is, you know, call it just under 20
platform investments, 50 add-on acquisitions.
So we're generally actually adding quite a bit in terms of
headcount over time and hopefully that's doing something
good for the economy. At the same time, we're
(24:30):
investing in significantly, I'd say high grading over time,
which is investing back in our team and our people in training
and resources. And a company at a certain scale
of a double, triple, quadruple can all of a sudden afford to
bring in some talent that may not have wanted to join that
company on day one. And with that talent comes no.
(24:52):
How so? If we're lucky enough to have
management teams that are lifelong learners that want to
want to adapt to the environment, which I think we
do, we're bringing them tools that they might not have had
already. At the same time, we're bringing
those tools and pushing in and driving it through the
workforce. Now, it might mean that
(25:12):
someone's job, and I think this is going to happen with or
without us. There's a job today that will
change four to five years from now.
Do we think we have the right athlete, the right person that
can move and adapt with us? Well, clearly we did it a merit
because we took the person that was a traditional mechanic and
they became a software engineer with part of their time for the
(25:32):
same reason that, you know, we occasionally complain that that
isn't my car work and it it's a chip issue.
It's not a, you know, an oil issue.
But I think, you know, in terms of opportunity, I think for
those that choose to work with Bright start reforms like ours,
I think it's going to be a pretty a pretty exciting run
that will be a little bit different than maybe some of the
(25:55):
public companies out there whereyou see these waves of hiring
and firing. I think we tend to be a lot more
stable environment. Yeah, I'm, I'm a big believer in
that where you want to have a steady increase over time
because institutional memory is so important.
And when you hire and fire, it becomes a lot harder.
So talk about that piece, especially as you're buying
these family owned companies. Like how are you working on
(26:18):
retaining that institutional memory and and preserving a lot
of the culture that's been builtby a founder that's the company
over many years? So I think, I think for a lot of
the founders, it's actually great bringing in, you know,
more of an institutional partnerlike a bright star because we
have the experience of, you know, really creating I think
alignment tools that are long term in nature.
(26:40):
They tend to go beyond let's saycash bonus plans, 123 year
retention plans or bonus plans. We really try to align.
If we do well, we want our investors to do well the the
endowments, the foundation, the insurance companies, the
individual investor, etcetera. We've generally grown that
(27:01):
ownership base quite a bit and the knock on effect of that is
it has a direct positive impact on the communities they're in.
Last year we we exited our Bobcat dealerships.
We own roughly one out of every 8 Bobcat dealers.
For those not familiar, it gets to your loaders, Mini
excavators. The parent company started as a
(27:23):
clerk equipment company in Minnesota and migrated to the
Dakotas, but but a national business and art footprint
spanned from the Carolinas to the Midwest to California.
Well, we had really 3 principal owners and businesses that we
combined and we had more than 50owners when we monetized that.
So 5050 people, 50 families got distributions that were
(27:44):
meaningful from that event had an opportunity to roll over with
the family that acquired the business and are out there
growth continuing to grow that Business Today.
So we think we had a fundamentalimpact and positive change on
three great businesses that wereintegrated by growing that.
And if that culture continues, we think that ownership
(28:06):
mentality, that entrepreneurshipmentality is something that's
quite positive for our ecosystem.
Yeah, I think, I think some of that is just so important
because you buy these companies and the founder has kind of laid
the foundation. And I think more PE firms should
consider retaining some of that institutional memory.
Because sometimes you kind of come in and fully do a full
(28:29):
reset of the management team in the 1st 90 days or whatever.
And, and the new group doesn't have that knowledge that I
should be able to take the company into the Internet into
the next level or or the next phase of that business.
And you kind of have to recover whatever you've lost in terms of
human capital. I think the great balance is,
(28:50):
can you retain all that knowledge and yet bring
something fresh to the table that the current owners were
asking us for, right? So generally the need is for
more than capital. It's I want to do this, or I'm
thinking about doing this, or I think the next generation is
ready for this. Can you help me train them?
So again, I think going back to AI for a second, no one has the
(29:15):
playbook on AI right now. It's continuing to evolve by the
day. I'm happy to bet that I think
we're going to be a decent solution to solve that gap in
this $105 trillion wealth transfer.
And I, I'll tell you in meetings, we probably get more
follow up to say I'd love a chance to work with you.
(29:35):
I want to spend more time on AI.Like tell me what I don't know.
And that also applies to our investor base.
And we get a lot of questions about how are we using AI in our
own investment process. Yeah.
Do you think some of it is, um, it's almost like people are over
indexing on the AI side and maybe passing by some of the
(29:55):
core value creation levers? Like how do you balance that
because the fundamentals are still very important.
By assumption will be and I don't I can't prove this in a
moment is to the extent that youweren't a traditional value
creator. In other words, you approached
this from more of a venture or growth background and it's just
(30:16):
all about AI. There wasn't the muscle memory
of how to actually do the fundamental value creation for
us. It's truly that fundamental
value creation and now supplementing it with AI.
And then we, we basically rank and say, where do we think we're
going to get the most value creation from?
(30:37):
And we're pretty dispassionate. It could actually be that AI is
like #6 out of 10 or #6 through 10 and #1 through 5 is
traditional or could be vice versa.
But we're just passionate about it.
And I think depending on one's orientation and what the
proposition has been, it could overweight I I do think there's
(30:59):
a huge amount of capital being deployed.
We don't play in the venture world.
My assumption is that anything with AI in the venture world
gets funding these days. Again, I go back to my Stanford
roots. There's a lot going on in
Silicon Valley and I think it says AI, you have a better shot
of getting funded. For our base of partners and
what we do, I think we're more dispassionate.
Yeah, I definitely think that that's the that's the right
(31:21):
approach because I almost see itas like order of operations,
right? There's the fundamental things
that a lot of these businesses don't have in place.
And as you start to look into those fundamental areas, then AI
becomes a way to either supplement or amplify or find
efficiencies within those levers.
And that might be the first place that you go before you go
(31:43):
the route of like fully AI as a value creation lever in and of
itself. Yes, I liked your order of
operations or PEMDAS reference there.
There's probably going to be an AI version of, you know,
continuing order of operations. Look, I think take it to the
extreme, the extreme headlines of the ones that grab people in
(32:03):
terms of reductions to people oryou know, AI taking over.
You know what I like about our industry in particular is a
person today decides in a private business to buy or sell
in between the value creation. I'm not sure what's going to be
overweight, but I think it's tilting towards AI.
(32:24):
And at the end of that journey, a person decides to buy or sell
very different than the public markets, which can be fully
automated. So again, we, we have to
basically, well, we put our money where our mouth is, but we
also have to be able to articulate a plan.
But, but you know, I'm a huge user of AI constantly.
(32:45):
I'm not using it on our conversation right now, but if
I'm in a diligence meeting, I want to know as much as I can,
want to be as responsive as I can, and the ability to pull
information together on a short basis is unbelievable.
That's super important. Yeah, that's that's a great note
to kind of close this off because we're coming up on time.
But before we do, Andrew, if there is a family business
(33:05):
listening or other investors that want to get in touch,
what's the best way that they can get ahold of you?
Yes, if you go to our website, www.brightstarcp.com, there's a
link right there. We'd love to hear from you.
You can click through with an e-mail and we'd love to talk to
you. And I'd say we're really in the
business of building relationships.
(33:25):
It's not about investing in a deal or a company out of
building that relationship. It might come, but we might just
be a great sounding board for you.
And I'd say part of what we do is continually free advice with
all the caveats. From a legal perspective, we're
happy to give advice because oftentimes we're not the right
solution, but we probably know someone that is and we want to
(33:48):
be a great partner. I think if you pay it forward in
life, it ends up being a pretty fun journey and and we'd love to
pay it forward. That's awesome.
And, and, and with that, thanks for coming on and, and sharing
your wisdom. We'll definitely be sure to
include all of that in the show notes.
And I think even just for a lot of PE investors that are
listening as they think about how to layer in AI into their
(34:08):
value creation efforts, I think there was a lot of great
insights. So appreciate you doing this.
Thanks for the opportunity, Shiv.
I really appreciate it. Have a great day.
Thanks for listening to today's episode.
Before you take off, just a few requests from our side #1 if you
haven't done so already, please subscribe to the podcast on
iTunes or Spotify or YouTube or wherever you go to listen to
(34:29):
your podcast #2 if you're in themarket for due diligence
services, strategy consulting, or fractional CMO services,
please get in touch with us at www.hassas.com.
And 3rd, please buy a copy of mynew book, Exit Ready Marketing.
It covers a ton of concepts thatwe take our customers through
(34:50):
private equity investors, B company CEO's, operating
partners, and marketers. And there's a ton of great value
in there that expands on my previous book Post Acquisition
Marketing as well. So with that said, I hope you
enjoyed today's content and we'll see you on the next
episode.
But I'll tell you in the moment,we're definitely taking a fresh
look at where we're investing because of AI.
So companies that might have been less attractive a decade
ago or 20 years ago because of the opportunity to deploy AI may
actually be better. Is there a heavy spend on sales
and marketing? Is there a heavy back office
(00:21):
spend? Is there a heavy spend on
software development? Things that are fundamentally
changing by the day. We believe that 40 to 45% of all
jobs will be changed or different within five years from
now. Welcome to the Private Equity
Value Creation Podcast where we interview leading investors,
operators, bankers, and advisorsto help you answer one question.
(00:45):
How do we increase the enterprise value of our
companies? My name is Shiva Narayanan and
each episode I will dive deep with a guest to help you become
a better value creator and capital allocator.
So with that said, let's jump right in and let's get started
with today's episode. My guest today is Andrew
Weinberg of Brightstar Capital Partners.
(01:06):
And what I really liked about this episode with Andrew is he
talks about how they're leveraging AI to optimize their
investments and their portfolio companies to create more
enterprise value for those companies.
And this is a hot button topic. Almost every private equity
event that I attend or get to bea part of, I see multiple panels
on AI. We've also done panels ourselves
(01:27):
on how marketing and I can be leveraged together.
And a lot of PE investors are kind of thinking about this, but
they're not exactly sure where they should focus or what the
first few levers should be. And Andrew actually talks a lot
about this because they've already been mobilizing this
inside their firm. And his partner actually is has
been the head of AI for Harvard's research institutes.
So there's a ton of background that their firm has in this area
(01:49):
and they're actually also implementing that for their
portfolio companies. So there's a lot of interesting
takeaways in that and I hope youlearn a bunch of things that you
can bring back to your portfolioas well.
So with that said, I'll leave you to it.
Enjoy the episode. All right, Andrew, welcome to
the show. How's it going?
(02:09):
Good ship doing well today. How you doing?
Good, good. Excited to have you on.
So why don't we start with your background and Bright Star
Capital, and then let's go from there.
Great. So I started Bright Star Capital
just over a decade ago, So we'recelebrating our 10th
anniversary. I've been in the industry for
nearly 30 years, pretty traditional background, worked
(02:32):
in investment banking at Morgan Stanley, private equity at
Goldman Sachs, spent time at Stanford Business School.
So I think some of the audience will resonate with some of that
background. Although I think I realized
during my time there it wasn't ready to be an entrepreneur and
so I went back east. Although my roommate did drop
out and start stuff up in our off campus apartment.
(02:53):
So I got a taste of the entrepreneur life.
I worked at another private equity firm and really kind of
think owned my skills and and knowledge of the sector.
And in 2008, I had a fork in theroad because I had an investment
that was heading into the GFC. And the founder of that company
(03:14):
asked me not only to stay as thelead partner director on that
company, but to also become the CEO of that business.
And I started commuting from NewYork every Monday morning at
LaGuardia at 6:00 AM. It was the sort of usual
suspects. I knew exactly what seed
everyone would be in that morning, because it was the same
thing every week. I'd come back Friday night.
(03:34):
Sometimes I travel the weekend, but during that experience and
reshaping that business in the crisis and actually taking an
operating role, it opened my eyes that private equity should
be more than just investing. It should be investing and
operating what we call the US and US model.
Fast forward, we end up monetizing that investment to
(03:56):
SoftBank. My partner in that company is
now my partner today. Although we took a few years
off, he took time, Marcelo Clarato be CEO of Sprint global, CEO
of SoftBank, chair of Harvard's AI Institute, board member of
T-Mobile and now he's my partnerand Co chair of Brightstar
(04:18):
Capital Partners. So I'm here today because of
that experience with Marcello. I'm just a late bloomer as an
entrepreneur. That, that's a fantastic
background. So talk about this specific idea
that you mentioned about investing in operating as a
vision for private equity. How's that different or how does
that run counter to how a lot ofother firms are perceiving the
(04:40):
companies that they're investingin?
So you know, I think our industry has gone through waves
of evolution whether you call uson 3.0, four, .0 or 5.0, I'm not
sure. But if I look at the early days
of private equity, a lot of it was marked by high levels of
leverage and then morphed into financial engineering.
(05:00):
Maybe then it morphed into sort of buy and build.
I think the last wave has sort of been the operational know
how. And when I started this a decade
ago, I thought, Gee, there's $105 trillion wealth transfer.
At that time, it was less than half of that of one generation
to another of these great businesses in the US that
(05:24):
according to our research, 60% of them don't have a succession
plan, whether that's because theparents don't want the children
to work for them or the childrendon't want to work for the
parents. So there are these great
businesses out there that are private businesses and they
generally need or want more thancapital.
So a large group of them we think benefits from the know
(05:47):
how, making enough mistakes in other places that we can bring
that know how. It's the table and hopefully a
few things that we've learned todo well.
We don't want to be sea levels or operators again, but we're
bringing that know how to these companies to help them
fundamentally change their rate of growth in a positive way.
When we married those two up andsaid to someone, there's a lot
(06:08):
of private equity capital out there, but if you think that two
bites of the apple, not one is worth something, we'll happily
put our time in our resources into help you with your business.
And that's been our journey so far.
We're about 70 investments into that journey.
(06:28):
And I'll leave you with something here that hopefully
will will keep talking about a bit, which is the next leg of
our revolution has cracked wherethe world is going, which is we
think we've developed a pretty strong team to deploy AI use
cases in our companies. So taking traditional private
(06:48):
equity investments, getting the returns that we'd expect and
supplementing them with the use of AI.
And we're doing it today and we've made a number of hires
there today. And having Marcello again lead
Director at T-Mobile on AI, Chair of Harvard's AI Institute,
one of the thought leaders in the world on AI.
(07:10):
In my opinion, helping lead thateffort for us has been
transformational. Yeah, so many, so many threads
to kind of open up there. I wanna start with just the the
focus or the types of companies that you're investing in and
then let's expand into how you're adding value there.
So you mentioned this idea of the wealth transfer that's about
to happen. A lot of these companies are
(07:32):
family owned businesses that arekind of passed down generation
or are about to be, but they're run very differently than let's
say a professionalized institution or or organization
would be. So how do you vet those types of
companies and and then talk about the sector focus as well
because you're in more of these traditional industries that
(07:52):
maybe not as many PE folks are looking at?
So I would say I'm not sure if they're run differently than the
great businesses. In other words, the great public
companies and great private companies and those that are
closely held, I think each of them share a common DNA, which
is a great culture, a meritocracy and opportunity to
really move up. I think in closely held her
(08:14):
family owned businesses there occasionally challenges with how
do we deal with ownership overtime, how do we deal with
incentives and and alignment there.
But I do think a lot of these businesses that have proven to
thrive through cycles or make their way through cycles and
have something in them that maybe other companies don't.
(08:34):
The you know, there may not be as quick a transition of
leadership. And so the leadership has lived
through cycles and that pattern recognition is worth a lot.
We try to find the companies that are good companies that are
strong companies that might benefit from having a partner,
maybe introducing things like M&A as a supplement to the
traditional value creation to grow the business where maybe
(08:57):
the family or the the ownership didn't want to risk all their
capital or meaningful part of it.
In that growth. We've really focused on a few
sectors today that's really beenindustrials, business services,
government services and technology.
We've generally focused on businesses that are outgrowing
GDP, have inherent operating leverage.
(09:19):
But I'll tell you in the moment,we're definitely taking a fresh
look at where we're investing because of AI.
So companies that might have been less attractive a decade
ago or 20 years ago because of the opportunity to deploy AI may
actually be better. Is there a heavy spend on sales
and marketing? Is there a heavy back office
(09:40):
spend? Is there a heavy spend on
software development? Things that are fundamentally
changing by the day. We believe that 40 to 45% of all
jobs will be changed or different within five years from
now. So, so talk about that piece a
little bit more because you've opened the AI thread a couple
times. So just as you're looking at
these companies, how are you underwriting that?
(10:03):
Because a lot of these traditional businesses, there's
a lot of offline or like supply chain work that goes along with
owning that type of a business, different types of complexity.
So how do you underwrite as you're looking at the company,
the work or benefit that I can bring to a particular
investment? So look, we're largely
benefiting from the 300 to $350 billion a year being spent on
(10:28):
the AI factory by others, the data centres, the
semiconductors, the large language models, the power
generation. And we're taking that learning
in those use cases and the ecosystem that our team has
built around AI. And so we've been talking to our
portfolio companies and our investors for the better part of
(10:49):
a year and a half about deploying AI.
And I think the key for us is truly it's a line item by line
item focus on the workflow and where do we want to prioritize
our time and effort with our ecosystem and obviously the
outsourced partners out there who are developing, we're in
that AI factory, the market leaders and where can we
(11:12):
actually do something that generates a Better Business,
could be a better experience forour customers.
It could be a better pricing model, it could be better
operating leverage on the business, but it's really a
ground up business. So again, we're going back to
our traditional value creation tools which have played out.
We exited three of our businesses through full sale
(11:35):
processes in 2024, all of which had stories of fundamental value
creation. One of them had done no M&A and
had grown quite a bit. Now with this additional lens,
we think this is supplementary thing I'll say though is we have
to look at where we think that business will be in a few years
(11:55):
and where is that industry goingto be and how will that be
evaluated because we don't want to invest in a business where
someone will look back and say, oh, that business is less
relevant today. So we've changed our own
business practices at Bright Star in terms of how we
underwrite our underwriting process or our use of all the AI
tools, deep research, etcetera. And it's really become part of
(12:19):
our DNA on an hour by hour basis.
If you think about the value creation, you mentioned
traditional value creation levers.
If you think about it as almost like a pie chart where you look
at more of the traditional levers versus things that are
more revenue growth driven or AIdriven, what percentage of your
value creation thesis is around the AI side?
(12:39):
Yeah. So traditionally it was 0 before
a year ago because it really didn't exist on our ecosystem.
When I say we we kind of got there the hard way.
Now that we've done it, I'd probably put a split of
something like 75% or so is traditional and about 25% AI.
(13:00):
And I think we have the same conversation in six months, it's
probably going to look more like5050.
So the large companies in the AIsector are clearly developing
use cases that we think, again are not a commodity because it
boils down to the ability to actually use them at the company
level and fundamentally change how many of us spend our day and
(13:22):
how we allocate our time. Sales and marketing efforts,
especially B2B, are changing overnight.
It's arguable though, we might be on this discussion in five or
ten years and it could be 90% AI.
Yeah. So can you, can you bring that
to life a little bit? Because I get the sales and
marketing side. I understand certain things can
(13:43):
be automated, but like how do you see it accelerating that
quickly? Because it's obviously AI is a
hot button topic. A lot of people are talking
about it every session on private equity seems to have
some type of an AI element to it.
But bring it to life for us withthe types of investments you're
making beyond just like the the standard areas like sales and
(14:04):
marketing where people are usingworkflows to maybe make things
faster or automate outbound or something like that.
Like how are you seeing that play out in the types of
businesses that you're investingin, where their supply chain
involved and other complexities?Sure.
So I'll borrow first from Marcello's experience.
Again, he's the former CEO of Sprint and the largest
individual shareholder at T-Mobile.
(14:24):
That'll boil down to a couple ofour portfolio companies.
In that particular case, what's been publicly disclosed is, you
know, a goal to reduce inbound call volume by 90%.
So it doesn't start with a 90% reduction in staffing, it starts
with putting in digital twins, putting in models that are able
(14:47):
to understand the customer incredibly well and address the
customer needs and therefore theneed to actually use that call
centre drops by 90%. Well, a derivative of that also
is the store count, right? So the interface is not only a
call centre in that business model, it's a storefront.
And that storefront is not only there to sell a new device, but
(15:09):
it's there to help triage issueswith your current device or your
current plan. Well, if you don't again have a
service issue because it's been addressed already, the store
account meaningfully comes down,It's a significant reduction in
real estate cost, it's a reduction in commissions.
So that's a very publicly disclosed use case that's
happening in real time at a quite large scale.
(15:31):
I'm going to boil it back to what we do.
So we have the second largest business to business auto
auction business in the country.It's called America's Group or
America's Auto Auction. It's #2 to Mannheim.
Mannheim is owned by The Cox Family.
They've been a great steward of Mannheim for a long time.
We've generally been the the growing business of choice,
(15:52):
aggregating a lot of mom and popor family owned businesses into
our into our company, adding geographies for effectively what
is a business that auctions a vehicle every 10 to 15 seconds,
once a week in a geography physically, but with a huge
digital element to it. In that particular business, the
(16:14):
ability to use technology and AIfor a quality control process as
that vehicle is coming in or being inspected.
The AI can actually identify both the perfection or
imperfection of a vehicle on a better basis than a human can.
That business can understand, you know, taking logistics, cost
(16:36):
of moving a vehicle, the demand because of use of digital twins
for our customers, which number a couple 100,000 customers.
And then being able to tell thatcustomer if you like this
vehicle today, here 60 miles away tomorrow, we're actually
auctioning a similar, similar vehicle.
And here's the price. Well, that allows us to address
(16:57):
growing demand for that generating demand, but also
understand our pricing model to make sure that we're heading the
right price point for our customer.
We're just a marketplace. We don't own anything.
And I could give you another 20 use cases just that one
portfolio company alone. We have, we have a, a roofing
business that largely works withthe warranty on, on, on, on
(17:22):
roofs of of customer homes in the Southeast.
The ability in that business to remove the person from climbing
up a ladder standing on a roof to assess it through flying
drones, AI again, quality control, looking for
imperfections and being able to address it.
It helps both on the front end on the sales cycle and it helps
(17:42):
in the triage and the project management, which is effectively
what we are to manage that process to get that that roof
repaired. So each one of these has a huge
AI opportunity. And for us, I'd say the hardest
part is being able to package that in a way that is easier to
(18:03):
implement and does not disrupt the business.
Yeah, how especially since you're buying these family owned
companies or getting involved with the almost generational, a
generational operational structure, I guess, um, how do
you manage that? And I would imagine inside these
companies there's often a bloating of expenses or a lot of
(18:26):
personal and professional thingskind of are interlaced in
between. So like and, and then meanwhile
you're coming in with like AI recommendations or opportunities
to, to streamline the business and make it more efficient.
So how do you navigate that? And I guess there would be a big
opportunity there is, especiallybecause there is more
inefficiency. Yeah.
(18:46):
So I don't know if I agree that there's a bloating of expenses
just because I want to say there's a reason these
businesses are still thriving, which is as an with an owner
mentality, I actually think they're generally more cost
discipline than maybe some of their public peers.
I promise you, when you own the business, and I think you
probably, you know, own your business here versus the, you
(19:08):
know, I work for someone or there's someone else that I work
for, it's it's a the owners mentality is actually quite
important. But what we do is we've
developed a set of materials andplaybooks and we have kind of a
walkthrough process. And what we like to do is share
our findings before we invest. So there's no mystery or no
(19:28):
surprise. I think part of the attraction
to work with Bright Star and ouryou know, 65 person team is the
ability to lean on those playbooks, lean on that, know
how and be able to talk to the ecosystem of our partners.
We have a, you know, 30,000 employees across our base.
We're generally control investors, but we don't try to
(19:51):
do everything at once. But as we do with our
traditional value creation, we prioritize the lowest hanging
fruit where we can make the biggest difference.
With AI, it really relies upon astrong financial foundation, a
strong base of data. So the early days are generally
more about data cleanup, puttingthe right systems in place.
(20:12):
Once that's in place, the empowerment that the management
team and ownership can get from having this generally in
industries where their peers arenot using it creates what we
think a great advantage that that we look to, you know, we
look to use in our business. Yeah.
(20:33):
That that, that makes that makesa ton of sense.
What are some of the other areas, especially with the types
of companies you're investing inbeyond the AI side, that you're
investing into to drive more value creation inside these
companies? I'll give you a few generalities
here and across. And I would say many of the
companies we work with, again have a great culture and many
(20:56):
have an ethos. And I'm talking about, look, we
see hundreds of companies every year.
I say there's probably an ethos of a little bit of wanting to
please the customer. And of course, we don't want
unhappy customers. But I'd also say that generally
80% of the noise from the customer base and mostly
(21:17):
business to business environments probably comes from
1 to 2% of the revenue of the customer base.
And oftentimes it's important toempower our management teams
that it's OK to educate the customer on what our value
proposition is. If we think that that good or
service has been underpriced or we're bringing something extra
(21:40):
to the table that's not being valued, we want to make sure to
communicate that. And if you can't make a customer
happy, no matter you know what you do, sometimes it's time to
have a discussion. Should we really be partners?
Should we be working together? And giving the management team
that freedom to move on from a customer where it doesn't make
sense generally tends to be liberating for that management
(22:02):
team. Again, they might be doing it
already, but I'd say that's a commonality on on the sort of
pricing side of our business, investment in the business and
investment in the company and growth.
Again, most closely held businesses are going to be a
little conservative relative to us on capital structure.
We're not generally aggressive, but they'll be a little more
(22:25):
conservative. We'll look for opportunities
where we can make an investment,like can think about an
investment we had in a nutritional products
manufacturing business in Utah where you know the day we close
that deal, we held a board meeting within one hour and
approved $10 million of CapEx ina business doing about a similar
(22:46):
amount of profit. But the payback was like a year,
a year and a half. And the opportunity to
communicate to the customer thatwe're we're willing to invest in
the business. Do you want to invest with us?
Will you give us some more business if we prove that we're
doing that? We've generally invested a lot
in training. So we had a fleet maintenance
(23:06):
business that we publicly sold amajority to New Mountain last
year for. We shifted that business from
having no electric vehicle OEM contracts to more than 10 and
having to retrain some of our workforce from being a
traditional mechanic to effectively being a hybrid with
a software engineer. I mean I saw some of the
(23:26):
results. I can't say if they were a
customer, but you know, I was ina Waymo in San Francisco and Los
Angeles and you know, the personthat's doing the work on that
vehicle is a a different person that than doing a traditional,
traditional combustion engine. So again, I could go on and on,
but the use cases are significant.
(23:47):
Hmm. Yeah, that's fantastic.
What about on the people side? How are you adjusting these
organizations, especially with the AI side and some of these
other value creation levers as you're coming in?
Are you trying to keep the as is?
Are you trying to find efficiencies so that one person
can do the job of three? Like what's your perspective on
(24:08):
that? We've generally been net growers
and so the homework of our strategies actually been a
growth strategy, which is, you know, call it just under 20
platform investments, 50 add-on acquisitions.
So we're generally actually adding quite a bit in terms of
headcount over time and hopefully that's doing something
good for the economy. At the same time, we're
(24:30):
investing in significantly, I'd say high grading over time,
which is investing back in our team and our people in training
and resources. And a company at a certain scale
of a double, triple, quadruple can all of a sudden afford to
bring in some talent that may not have wanted to join that
company on day one. And with that talent comes no.
(24:52):
How so? If we're lucky enough to have
management teams that are lifelong learners that want to
want to adapt to the environment, which I think we
do, we're bringing them tools that they might not have had
already. At the same time, we're bringing
those tools and pushing in and driving it through the
workforce. Now, it might mean that
(25:12):
someone's job, and I think this is going to happen with or
without us. There's a job today that will
change four to five years from now.
Do we think we have the right athlete, the right person that
can move and adapt with us? Well, clearly we did it a merit
because we took the person that was a traditional mechanic and
they became a software engineer with part of their time for the
(25:32):
same reason that, you know, we occasionally complain that that
isn't my car work and it it's a chip issue.
It's not a, you know, an oil issue.
But I think, you know, in terms of opportunity, I think for
those that choose to work with Bright start reforms like ours,
I think it's going to be a pretty a pretty exciting run
that will be a little bit different than maybe some of the
(25:55):
public companies out there whereyou see these waves of hiring
and firing. I think we tend to be a lot more
stable environment. Yeah, I'm, I'm a big believer in
that where you want to have a steady increase over time
because institutional memory is so important.
And when you hire and fire, it becomes a lot harder.
So talk about that piece, especially as you're buying
these family owned companies. Like how are you working on
(26:18):
retaining that institutional memory and and preserving a lot
of the culture that's been builtby a founder that's the company
over many years? So I think, I think for a lot of
the founders, it's actually great bringing in, you know,
more of an institutional partnerlike a bright star because we
have the experience of, you know, really creating I think
alignment tools that are long term in nature.
(26:40):
They tend to go beyond let's saycash bonus plans, 123 year
retention plans or bonus plans. We really try to align.
If we do well, we want our investors to do well the the
endowments, the foundation, the insurance companies, the
individual investor, etcetera. We've generally grown that
(27:01):
ownership base quite a bit and the knock on effect of that is
it has a direct positive impact on the communities they're in.
Last year we we exited our Bobcat dealerships.
We own roughly one out of every 8 Bobcat dealers.
For those not familiar, it gets to your loaders, Mini
excavators. The parent company started as a
(27:23):
clerk equipment company in Minnesota and migrated to the
Dakotas, but but a national business and art footprint
spanned from the Carolinas to the Midwest to California.
Well, we had really 3 principal owners and businesses that we
combined and we had more than 50owners when we monetized that.
So 5050 people, 50 families got distributions that were
(27:44):
meaningful from that event had an opportunity to roll over with
the family that acquired the business and are out there
growth continuing to grow that Business Today.
So we think we had a fundamentalimpact and positive change on
three great businesses that wereintegrated by growing that.
And if that culture continues, we think that ownership
(28:06):
mentality, that entrepreneurshipmentality is something that's
quite positive for our ecosystem.
Yeah, I think, I think some of that is just so important
because you buy these companies and the founder has kind of laid
the foundation. And I think more PE firms should
consider retaining some of that institutional memory.
Because sometimes you kind of come in and fully do a full
(28:29):
reset of the management team in the 1st 90 days or whatever.
And, and the new group doesn't have that knowledge that I
should be able to take the company into the Internet into
the next level or or the next phase of that business.
And you kind of have to recover whatever you've lost in terms of
human capital. I think the great balance is,
(28:50):
can you retain all that knowledge and yet bring
something fresh to the table that the current owners were
asking us for, right? So generally the need is for
more than capital. It's I want to do this, or I'm
thinking about doing this, or I think the next generation is
ready for this. Can you help me train them?
So again, I think going back to AI for a second, no one has the
(29:15):
playbook on AI right now. It's continuing to evolve by the
day. I'm happy to bet that I think
we're going to be a decent solution to solve that gap in
this $105 trillion wealth transfer.
And I, I'll tell you in meetings, we probably get more
follow up to say I'd love a chance to work with you.
(29:35):
I want to spend more time on AI.Like tell me what I don't know.
And that also applies to our investor base.
And we get a lot of questions about how are we using AI in our
own investment process. Yeah.
Do you think some of it is, um, it's almost like people are over
indexing on the AI side and maybe passing by some of the
(29:55):
core value creation levers? Like how do you balance that
because the fundamentals are still very important.
By assumption will be and I don't I can't prove this in a
moment is to the extent that youweren't a traditional value
creator. In other words, you approached
this from more of a venture or growth background and it's just
(30:16):
all about AI. There wasn't the muscle memory
of how to actually do the fundamental value creation for
us. It's truly that fundamental
value creation and now supplementing it with AI.
And then we, we basically rank and say, where do we think we're
going to get the most value creation from?
(30:37):
And we're pretty dispassionate. It could actually be that AI is
like #6 out of 10 or #6 through 10 and #1 through 5 is
traditional or could be vice versa.
But we're just passionate about it.
And I think depending on one's orientation and what the
proposition has been, it could overweight I I do think there's
(30:59):
a huge amount of capital being deployed.
We don't play in the venture world.
My assumption is that anything with AI in the venture world
gets funding these days. Again, I go back to my Stanford
roots. There's a lot going on in
Silicon Valley and I think it says AI, you have a better shot
of getting funded. For our base of partners and
what we do, I think we're more dispassionate.
Yeah, I definitely think that that's the that's the right
(31:21):
approach because I almost see itas like order of operations,
right? There's the fundamental things
that a lot of these businesses don't have in place.
And as you start to look into those fundamental areas, then AI
becomes a way to either supplement or amplify or find
efficiencies within those levers.
And that might be the first place that you go before you go
(31:43):
the route of like fully AI as a value creation lever in and of
itself. Yes, I liked your order of
operations or PEMDAS reference there.
There's probably going to be an AI version of, you know,
continuing order of operations. Look, I think take it to the
extreme, the extreme headlines of the ones that grab people in
(32:03):
terms of reductions to people oryou know, AI taking over.
You know what I like about our industry in particular is a
person today decides in a private business to buy or sell
in between the value creation. I'm not sure what's going to be
overweight, but I think it's tilting towards AI.
(32:24):
And at the end of that journey, a person decides to buy or sell
very different than the public markets, which can be fully
automated. So again, we, we have to
basically, well, we put our money where our mouth is, but we
also have to be able to articulate a plan.
But, but you know, I'm a huge user of AI constantly.
(32:45):
I'm not using it on our conversation right now, but if
I'm in a diligence meeting, I want to know as much as I can,
want to be as responsive as I can, and the ability to pull
information together on a short basis is unbelievable.
That's super important. Yeah, that's that's a great note
to kind of close this off because we're coming up on time.
But before we do, Andrew, if there is a family business
(33:05):
listening or other investors that want to get in touch,
what's the best way that they can get ahold of you?
Yes, if you go to our website, www.brightstarcp.com, there's a
link right there. We'd love to hear from you.
You can click through with an e-mail and we'd love to talk to
you. And I'd say we're really in the
business of building relationships.
(33:25):
It's not about investing in a deal or a company out of
building that relationship. It might come, but we might just
be a great sounding board for you.
And I'd say part of what we do is continually free advice with
all the caveats. From a legal perspective, we're
happy to give advice because oftentimes we're not the right
solution, but we probably know someone that is and we want to
(33:48):
be a great partner. I think if you pay it forward in
life, it ends up being a pretty fun journey and and we'd love to
pay it forward. That's awesome.
And, and, and with that, thanks for coming on and, and sharing
your wisdom. We'll definitely be sure to
include all of that in the show notes.
And I think even just for a lot of PE investors that are
listening as they think about how to layer in AI into their
(34:08):
value creation efforts, I think there was a lot of great
insights. So appreciate you doing this.
Thanks for the opportunity, Shiv.
I really appreciate it. Have a great day.
Thanks for listening to today's episode.
Before you take off, just a few requests from our side #1 if you
haven't done so already, please subscribe to the podcast on
iTunes or Spotify or YouTube or wherever you go to listen to
(34:29):
your podcast #2 if you're in themarket for due diligence
services, strategy consulting, or fractional CMO services,
please get in touch with us at www.hassas.com.
And 3rd, please buy a copy of mynew book, Exit Ready Marketing.
It covers a ton of concepts thatwe take our customers through
(34:50):
private equity investors, B company CEO's, operating
partners, and marketers. And there's a ton of great value
in there that expands on my previous book Post Acquisition
Marketing as well. So with that said, I hope you
enjoyed today's content and we'll see you on the next
episode.
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