Driving Cultural Change in Portfolio Companies with Jon Sonnenschein

Welcome back to The Private Equity Podcast, by Raw Selection! Today’s guest is Jon Sonnenschein, Private Equity Operating Partner and former SaaS and software CEO. Jon shares insights on driving cultural change in portfolio companies, blending his experience as a CEO and Operating Partner.

Breakdown:

[00:00] Jon Sonnenschein discusses his experience as a Private Equity Operating Partner and former SaaS CEO, focusing on cultural transformation in portfolio companies.

[00:30] From Chicago to Silicon Valley, with 20 years in startups, followed by joining private equity and leading growth at Earth Solutions.

[00:59] The "star player bias" in talent acquisition and the importance of aligning cultural dynamics.

[01:28] Addressing the balance between legacy culture and private equity-driven professionalization.

[03:21] Transitioning from founder-led to private equity-backed and retaining core cultural elements while driving professionalization and growth.

[05:18] Jon shares how he elevated long-term employees for cultural continuity while introducing professional FP&A expertise.

[06:15] Jon explains his approach to understanding a company’s culture by interviewing employees at all levels.

[07:44] The role of listening and valuing employee perspectives in identifying growth opportunities.

[09:11] Validating feedback through patterns, experiments, and data-driven approaches.

[10:57] Testing new markets through structured, accountable experiments to assess viability.

[11:56] Jon’s methods for influencing cultural change without alienating long-term employees.

[13:20] Professionalizing the product organization and using customer feedback to guide decisions.

[15:17] Transparency, one-on-ones, and open forums to drive cultural change and employee engagement.

[18:11] Creating psychological safety and fostering innovation through direct communication.

[19:38] Jon reflects on insights from being an operating partner and how they inform his executive approach.

[21:06] The importance of collaboration between operating partners, deal teams, and CEOs.

[22:28] Recommended readings include Thinking Fast and Slow by Daniel Kahneman and The Hard Thing About Hard Things by Ben Horowitz.

[24:48] Jon emphasizes the importance of tackling culture head-on and shares key takeaways for private equity professionals.

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