How I Invest with David Weisburd - E348: Why “Boring” Businesses Beat Venture Capital

Episode Date: April 15, 2026

Is private equity alpha really about picking great deals—or about executing the same playbook better than everyone else? In this episode, I discuss with Monty Yort, Managing Partner at GenNx360 Capital Partners, about how disciplined execution and consistency drive long-term outperformance in private equity. We break down how GenNx360 approaches proactive sourcing, why lower middle market investing creates structural advantages, and how operational improvement and buy-and-build strategies compound value over time. Monty also shares lessons on leadership, mentorship, and why the best firms continuously refine their process rather than chase new strategies.

One of the theories they have been coming up with is asymmetry in finance, specifically, in private equity and venture capital. And venture capital is a little bit more pronounced, you know, about this power lock, where if you get enough shots on goal, one of them will be the next Uber, the next SpaceX, the next anthropic. But I also think that that happens in private equity, perhaps not with 100x returns, where if you stay in business, you do the right blocking and tackling, you get the shots on goal and you'll have one of these tags where it might go 20x. Have you found that to be the case? I do believe in private equity and venture capital are very different. Our goal is to have a loss ratio of zero. And the way we set up that opportunity is by being consistent in the types of investments that we make, that proactive sourcing strategy, identifying sectors that have the appropriate characteristics, partnering with the right leadership. Those are critical, you know, building blocks to what we're going to execute on. And then executing on that strategy. We've now done 33 different platform investments at Gen X, over 100 ad on acquisitions. Our loss ratio is very low because of the consistency. Now it's evolved over time. We've gotten much better at what we do. So if you think about our more recent funds are performing better than our more historical funds, because we've just gotten better and better at it. And I think private equity enables you to do that.

You enhance the strategy, you evolve your processes, and you continue to execute with a great team. Double-click on proactive sourcing. What does that mean? And how do you implement that on day-day basis? If you step back in time for us as an organization, we had some rough learnings early on around selecting sectors that didn't have the right characteristics. So we learned from those. This is really going back to our first fund and the Great Recession.

We learned that we weren't targeting the right area. And specifically, we were in industrial manufacturing, lumpy businesses. cyclical businesses. We stayed focused on industrial service, industrial in particular, but we shifted to industrial services. Industrial services are generally larger industries, high fragmentation, attractive growth dynamics, recurring revenue streams. Those are the critical components. So in essence, that was a core part of the thesis. Okay, so those are the sectors we want to invest in. So instead of just sitting and waiting for opportunities to come to us in our through investment banks, we developed the proactive process. And that proactive process,

in essence, entails identifying those subsectors within industrial services, have those characteristics, oftentimes going and finding sector executives that have been there and done it in the space, databases in the industry, developing intelligence, getting a broad-based perspective, identified opportunities, practically reaching out to opportunities, and then ultimately finding the right opportunity and closing on that opportunity. You go back to PAG, we identified the sector in 2015. We didn't close on the investment until 2018 because it took us that long to find the right investment opportunity in the space. That discipline is really important because it then enables us to drive the successful investments over time.

Perhaps this is a dumb question, but what does second order effects of proactive sourcing? What does that help you do and what does that help you avoid? You focus on sectors that you know have the attributes that you're looking for that increases the likelihood of success of the investment. If we do this properly, we're databasing an industry, we're getting really smart. We're confirming that it's a fragmented industry with lots of ad-on acquisition opportunity. So that's important.

So that bind and build strategy is critical. So you fragment an industry confirming that it is through your proactive sourcing. Oftentimes we're even identifying specific ad-on acquisitions that we're going to close on once we find the platform. But we find the platform on occasion, we identify and proactively identified and proprietary acquired. So you can even get a more attractive valuation. But even in the cases where you don't, we get really smart about the space. Oftentimes, I have a sector executive we partner with that knows the space well. So we have greater conviction on the assets that we ultimately acquire. Then we're able to move quickly because we've already databaseed

the industry for the ad on acquisitions. Oftentimes we're closing on our first add-on within the three months of when we close on the platform acquisition. Today, you have AI seemingly improving every single day, maybe every single hour. How are you using AI in order to improve your sourcing and what have been some of your latest developments? We think about AI in really two different ways, really three different ways. One, we think about AI on the investments that we make. It's critical to understand, you know, is AI a risk for the investments that we're going to consider? Secondly, on the investments that we make, how can we utilize AI to support these businesses, whether it's on a commercial side, operational side, back office side. But from the sourcing perspective,

same situation. We're using AI to identify and really dig into the sectors that have the characteristics that we're looking for. So we use AI to help us source the sectors of interest. We use AI to then help us diligence those sectors of interest. And then you can utilize AI to even go and identify the potential add-on acquisitions. So it's pretty robust. We're still in the early stages. We've got a team dedicated to how to utilize AI, but so far it's proving out to be a great resource for us. Expert calls have always been one of the most powerful ways to build conviction. But today, investors are asked to cover more companies, move faster, and do it with leaner teams. With Alpha Sense AI-led expert calls, their Tegis call service team sources experts based on your research criteria and lets the AI interviewer get to work.

The magic is in the AI interviewer, purpose-built and knowledgeable-based information to conduct high-quality context-stretched conversations on your behalf, acting as a trusted extension of your team. Then they take it one step further. Your call transcripts flow natively into your Alpha-Sense experience and become queryable, searchable, and comparable. so your primary insights plug directly into earnings preps, digital work streams, and pitchbooks with zero tool switching. And with Alpha Sense expert call services, the AI-led expert calls are just one option because we know the importance of a hybrid expert research approach. AI for coverage and efficiency, humans for complexity and conviction. It's the institutional edge that scales research without scaling headcount. For hedge funds, that means validating thesis assumptions across

dozens of experts before earnings instead of a handful. For private equity, it means faster pre-IOI scans and deeper commercial diligence. For investment banks and asset managers, it means pulling real operator perspectives straight into models and sector positioning without disconnected tools or manual handoffs. All of it lives inside the Alpha Sense platform, trusted by 75% of the world's top hedge funds alongside filings, broker research, news, and more than 240,000 expert call transcripts, turning raw conversations into comparable, auditable insight. Take advantage of Alpha Sense AI-led expert calls now.

The first to see wins. The rest follow. Learn more at Alpha-sense.com slash how I invest. There's an AI researcher, Dr. Alexander Gross, and he says, in regards to AI, if you're not at the table, you're on the menu, meaning if you're not the one that's disrupting the industry, you will be disrupted. To what extent is that true in the industries that you're working with? And to what extent are you looking for managers that are proactively using AI? So we made an investment in a company by the name of IT-Savvy.

hit your point. IT savvy had a tremendous CEO that understood the benefit of AI. And we invested in IT savvy probably three years ago, sold it about a year ago. This individual helped us to recognize that his view was, if you're not utilizing AI, your competitor is, and you're going to lose your competitor. So similar mindset. So he opened our eyes up to AI early on. We use it as a tool. When we invest in businesses, we invest in a lot of founder, family owned businesses. So the reality is a lot of those executives, those family owners, family and founder owners, don't have a full appreciation for AI. I think they're fearful of it. So they are looking for a partner that can grasp it, help them to understand it, and leverage it. So it is a tool that we use. Oftentimes,

we introduce it to the portfolio companies that we're working with. Taking a step back, talk to me about GenX, talking about the firm's history, AUM, and how the firm has evolved since inception. Take a lot of pride in the organization that I've been a part of. It's a really been a tremendous experience. The firm came together in 2006. Four individuals partnered. One individual Ron Blaylock, partner came from the investing side, three individuals that came from the operating side, all XGE individuals with the mindset of building a business focused on the lower middle market that had operational excellence, really bringing operational excellence to these lower middle market companies. So that strategy has been the hallmark of the organization from day one and

one of the three pillars of value creation. So how we've evolved over time, I mentioned early on we invested in manufacturing and had some challenges with the great recession. As we shifted to fund two, recognized we need to shift our focus, stay in industrial, but focus on services. So that was the first evolution was really focused on services. Next, we introduced the proactive sourcing, saying, if we're going to target a sector that we know of, let's be thoughtful around how we identify opportunities and let's develop the proactive sourcing. At the same time, we shifted our strategy in terms of value creation, bringing in with the operational excellence, bringing in a focus of growth versus just driving efficiencies on the business. Then the final point was the buy-build

strategy. That's really the element that we brought in towards the end of fund too. So every transaction today now has a proactive sourcing strategy around it, a growth strategy around the operational influence and then the growth strategy and the bind bill. So that's consistent across all of investments. As a result, we've gone from a firm that had some challenges of fund one to fund three, in essence, top quartile, top desktop performance. And you've consciously decided to keep the fund size consistent. Talking about the trade-off and conversations with LPs and how did that develop as a strategy. Our view was shifting our scope, would not enable us to maintain that attractive returns that we've been able to drive. So our LPs are very supportive of us staying within that size

range. What we have done is we've in essence grown the organization. We've evolved our capabilities. So our fund sizes are getting bigger and bigger, but all within a controlled situation so that we don't shift our scope and we don't get outside of really what our core expertise is. Having hundreds of these conversations with GVs, but also LPs, it's becoming obvious that capital markets are changing from purely a blindpool fund to blindpool and co-invest and continuation vehicles and all these things. There's this interesting industry practice of taking a business, growing it three to five X, and then selling it to your competitor and flipping it to your competitor because of these fun lives and because some of these

dynamics. Have you talked to LPs or thought about doubling down on your assets and doing things such as co-invest, continuation vehicles or growth vehicles? You're absolutely right. If you go back 10 years ago, it was a sin to sell or to purchase a business from a private equity firm. Today, it's pretty common practice. One of the things we've gotten very good at is his buying-built strategy. So we used to be able to build businesses from $5 to $15,000 to $20,000. 30 million in EBTA. But today we can take that same business five to 15 million. If we're better at selecting the sector and the industry, greater fragmentation, greater scale, greater potential to really build that business and expand into different geographies, different products.

So we've gotten great at building businesses that are not 15 million in EBTA going to 20, but now we're going to 40 or 60, or in the case of PAG 140 million in EBTA. So that's requiring us to think a little bit differently about how we fund those transactions. So we are bringing in co-investors earlier, recognizing those co-investors will support our buy and build strategy. We're also doing continuation funds. So we've done two continuation funds to date, single asset. In all those cases, we're taking really good businesses with great teams and great sectors. And now we're able to support them.

I'll give PAG as one example, right? We grew PAG from $12 million to $62 million in EBTA. Did the continuation fund because it was not a path to grow to $200 million. So now, in the case, PAG, we've now grown it as we did the continuation fund. We took it to $140 million. Of course, Bergen Scott's similar situation, Witsons and other situation, where we see this path to grow beyond what the fund enabled. us to do because we ran out of capital in the fund. So we bring in this third party capital,

so to be continuation fund or co-investors. In that case, you're giving LPs the ability to cash out or roll into the new investor. Exactly, exactly. And I think that's critical. First of all, I don't think the continuation fund strategy works if you're just fixing a broken asset or a broken fund. For us, it's really driving accelerated growth in those companies that are performing and giving the opportunity to those investors. So PAG was out of fund too. Okay, so PAG grown it to $62 million. we went out and raised the Continuation Fund brought in some great partners, but we had to go to our existing investors

and give them the opportunity to invest. And the ones that chose to reinvest, I think have done exceptionally well, but those that didn't reinvest, they took over four times money off the table. So it was a win-win for everybody. And technically a secondary, so you get to print that DPI,

so then when you go out and raise your next fund, you could show DPI. I love continuation vehicles. A lot of LPs are ambivalent about it, mostly because they don't have the team and the capacity internally to look at one-off deals. They also have this weird cognitive dissonance

between having to ride along the D.P. that they've already underwritten. So you are the expert in the space and now we have to decide whether we agree or disagree with you. Again, it's almost like a second underwriting. But ultimately, I do think it's a better outcome than the other outcomes, which is just selling the asset early, which is probably the worst thing. And two is these elongated DPI cycles where it was supposed to be a 10-year fund. Now it's a 12, 13, 14-year fund, venture capital. It is really interesting because I've had this debate before with people about the benefits of the continuation fund. And there's a lot of different types of continuation funds. vehicles, right, that people are doing. For us, it's very simple. It's single asset. It's

performing businesses. Opportunity to continue to support that business. And here's the benefit for us. We are now taking businesses from $60 million to $140 million. As PAG is an example. Arguably, it's a little bit outside of our size range, what we're used to doing. But we know the management team well. We know the industry exceptionally well. We've database industry. We know the add-on opportunities are. We know the fragmentation. So the beta in our minds is lower because we figured out all those challenges. New investments for us are different. You know, we're getting to know the industry. We're getting to know the management team. We're still identifying the add-on opportunity. So there's lower risk our minds in the continuation vehicles that we're pursuing because these are

really good businesses with great trajectory. There's inherent trade-off, which I think should be made explicit, which on one side, you're getting to deploy the Stanley Drug and Miller invest, investigate. You know this team. You know their strengths. You also know their weaknesses. It's kind of like the devil you know. You de-risk a lot of the management team. You know the industry because you've done a deep dive. You've really consciously thought about it. The downside or the trade-off is You're operating lower middle market. This is maybe middle middle market. And do you know how to grow a 140 million EBITDA business

into a $500 million dollar EBITDA business? That's what an LPS to underwrite. If you've been considering futures trading, now might be the time to take a closer look. The futures markets have seen increased activity recently and plus 500 futures offers a straightforward entry point. The platform provides access to major instruments, including the SP 500, NASDAQ, Bitcoin, natural gas,

and other key markets across equity indices, energy, metals, Forex, and crypto. Their interface is designed for accessibility. You can monitor and execute trades from your phone with a $100 minimum deposit. Once your account is open, potential trades can be executed in two clicks. For those who prefer to practice first,

Plus 500 offers an unlimited demo account with full charting and analytical tools, no risk involved while you familiarize yourself with the platform. The company has been operating in a trading space for over 20 years. Download the Plus 500 app. Trading and futures involves the risk of loss is not suitable for everyone. Not all applicants will qualify.

Support for today's episode comes from Square. The all-in-one way for business owners to take payments, book appointments, manned staff, and keep everything running in one place. Whether you're selling lattes, cutting hair, running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. I was actually thinking about this the other day when I stopped by a local cafe here. They used Square, and everything just works.

Check out as fast, receipts are instant. And sometimes I even get loyalty rewards automatically. There's something about businesses that use Square. They just feel more put together. The experience is smoother for them, and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are in store, online, on your phone, or even at pop-ups, and everything stays synced in real-time. You could track sales, manage inventory, book appointments, and see reports instantly

whether you're in your shop or on the go. And when you make a sell, you don't have to wait days to get paid. where it gives you fast access to your earnings through Square checking. They also have built-in tools like loyalty and marketing. Your best customers keep coming back. And right now, you can get up to $200 off Square hardware when you sign up at Square.com slash go slash how I invest. That's SQ-U-A-R-E.com slash go slash how I invest.

With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today. Support for today's episode comes from Square. The all-in-one way for business owners to take payments, book appointments, manage staff, and keep everything running in one place. Whether you're selling lattes, cutting hair,

running a boutique, or managing a service business, Square helps you run your business without running yourself into the ground. It's actually thinking about this the other day when I stopped by a local cafe here. They use Square and everything just works. Check out is fast, receipts are instant, and sometimes I even get loyalty rewards automatically. There's something about businesses that use Square.

They just feel more put together. The experience is smoother for them, and it's smoother for me as a customer. Square makes it easy to sell wherever your customers are in store, online, on your phone, or even at pop-ups, and everything stays synced in real time. You could track sales, manage inventory, book appointments, and see reports instantly whether you're in your shop or on the go. And when you make a sell, you don't have to wait days to get paid. It gives you fast access to your earnings through Square checking. They also have built-in tools like loyalty and marketing. Your best customers keep coming back.

And right now, you can get up to $200. off square hardware when you sign up at square.com slash go slash how I invest. That's SQU-A-R-E dot com slash go slash how I invest. With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today.

For us, the greatest challenge with any one of our opportunities is leadership, getting the right leadership in place, because that leadership is going to derive the success of the business. And as I mentioned, we're investing in $5 to $15 million dollar EBIT businesses, founder of family owns, over 60%. These individuals did a great job taking the company to where it is at that point in time. And the question is whether or not they are the right team to take it to the next level. Nine times out of ten, we are working with that existing team, identifying the gaps,

trying to figure out where the opportunity is to really enhance leadership. So we'll add a CFO, oftentimes they don't have one. We'll add a CCO, oftentimes they don't have one. These are businesses that rarely are focused on growth the way we are. Oftentimes we're assessing the CFO to make sure it's the right CFO that can bring the right information of the team. So all that's critical and then continually over time assessing the leadership to make sure it's the right team and they're in the right place. David Mass is a great example at PAG. Here's an individual who literally founded the business, grew it to 12 million with us in partnership,

grew it to 62 million when we did our continuation fund and now it's 140 million dollars. Unique characteristics with an individual like that. That has the leadership skill, has the willingness to not micromanage, as the recognition of putting the right infrastructure in place in terms of information to be able to make the right decisions. Those are the types of things that an individual, when he starts a business, has to think about it if he wants to grow to that scale. You use the word leadership twice because a lot of people couple management and leadership as one person or one function. The leadership is essentially the spiritual leader of the business. Management, sure, you could bring in a COO that's scaled from 140 to 500.

Maybe they don't have that skill set. But you do need this leadership, which is extremely hard to find. It's very hard to insource leadership, especially when it's not the founder. And two is the management is something that you could actually, it's a solvable problem. It's a predictable problem. How do you know somebody has scaled from 140 to 500? They've done it three other times. It reminds me of the Charlie Munger quote,

which somebody was asking how they choose managers. And he said, well, we find somebody that's done it a bunch of times. And then we hire that person. And they said, but what about somebody that's coming in that could develop in that scale? He's like, we don't do that. We are actually investing in businesses, right, where you've got an individual that's taken the company to where it is. And we have to make an assessment over time.

Is that the right person to take it at the next level? And what we've learned is one of the best ways to, you know, to help him together is to surround him with, people. Get that CEO in place. Get that CCO in place. Upgrade, you know, the finance team to the extent you need to get in the FPNA analyst. Get all that right information and provide that CEO with guidance. Sometimes we'll even provide them with coaching to enable them to succeed because you're hitting on an important point, leadership and building a culture. And sometimes that founder, family owner, they have built that culture to where it is today and you don't want to break, you know,

the culture by building the business. So that's the balance. It's making sure you've got the right leadership that is supported by the right management. You have a really interesting vantage point in that you've done this probably dozens of times in this this exercise of sitting with the CEO essentially doing a SWAT analysis on them figuring out where their strengths and their weaknesses are double click on that let's send the CEO of a company it's grown i founded it it's now grown to 50 million iba da you believe my leadership is there but my hard skills are not there a how would you approach that conversation be what would the exercise be in order to upscale my team there's an art involved in this i mean that's i think where private equity can um succeed or fail

is your ability to really interact, develop a relationship with that leadership team, that individual. Help them to understand the challenges of taking that business to the next level and hopefully get him to the point where you realize we're partners. Our goal is to succeed as a partnership and for this company to win.

That's really the ultimate goal. And getting them to recognize that sometimes they're stepping back is the better answer for the overall organization. And sometimes it's them stepping in in order for that business to succeed. And it is an art. There's no tool that you can specifically use

that's going to enable you to do that. It's an art to understand the team. in your testing and retesting, probably the most important thing as an organization, though, is to recognize that you have to continue to test it. And when in your gut you feel that it's probably time to change, it's probably the right thing to do and not to wait. And that's one of the things we've evolved very well at is,

historically, we'd leave the same leadership in place and kind of a hope and pray that they're going to get there. We don't have the patience to do that. But then it's a process of how do you... And oftentimes the team around them, it's very obvious to them what needs to change. Sometimes it's hard to face your own limitations, but everybody around you and such you do with 46.

Yeah, I totally agree with that. continuing on with this idea of keeping your best assets and doubling down on them, I had Sam Zell's longtime partner, Mark Sotter, they worked together for many decades. And one of the things that he said that I think is very underrated is the friction of investing and selling the business. You essentially have two lost years. You have the year when you're getting up to speed and then you have the last year where you're basically dressing up the assets to sell. And as a family office, he figured out, well, that's a lot of friction. There's obviously tax friction as well for a taxable investor. How can we roll this and avoid these

two out of five years are lost years. Have you found that in that where you're, we have a fixed timeline with an asset, you have these kind of two lost years? I think it's a really good point. And we as an organization, it took us a while to recognize the first year. And one of the things that this proactive sourcing enables us to do, and I should have mentioned it earlier, we eliminate some of the risk of the first year because we've got to know the industry so well. By the time we close on that investment, we already have an action plan as a how to drive value creation, oftentimes identifying the positions that we need to fill in the leadership role, identifying the add-on. So we try to take that first year and concentrate it into a three to six-month time period

with an action plan to do that. Then you're right, you've got the exit side as well, and the friction associated with that. It's absolutely friction that's impossible to avoid. Can you concentrate that as well? The continuation fund does enable you in some respects to miss that second or at least push it out until the next exit. We as investors have to return capital to our LPs. So you're balancing what's the right time to exit? What's the friction associated with that exit to minimize that as much as possible. There's several themes that smart LPs invest into. One consistent theme is lower mill market P.E. Maybe you could explain why is lower mill market a smart alpha trade and also talk about the competitive environment. I've been in lower middle market all my career, so I might be biased

here. But when I think about the opportunities, the levers that I can pull on to create value in the lower market, they're pretty significant. First of all, you're investing in a company that's this family founder-owned business. There's an opportunity to really optimize and professionalize the business. That enables you to drive efficiencies from a cost perspective. It enables you to accelerate growth from a revenue perspective. Oftentimes, the companies who we invest in haven't even built out a sales organization, our true go-to-market strategy.

So there's a huge opportunity to really professionalize and drive that growth. So that's on the operational side. Coupled that with on the bind build front, lower in the market, typically greater fragmentation, smaller opportunities that you can acquire to create value. So if you think about these different levers, and we've assessed this, driving that organic growth has been our greatest attributive to value for us because of the focus on that organic growth. But when we do the buy and build,

strategy, you're able to, with every add-on acquisition you do, be able to drive down your purchase multiple for the overall business. And on average, our add-ons are about two and a half EBTA turns below the platform. So just to put some numbers on that, you might be buying the main asset for 8x, EBITDA, and then you're buying the bolt-ons for 6x, and then they basically blend into the 8-X, so you're getting that premium. Exactly. And couple that then with also the synergies that you're going to get. So that eight to six times differential, you're then driving synergies that you'll get. So you accelerate your growth on that. You drive efficiencies from that. Then the third component is really what did you pay for the platform originally in terms of a

multiple and what do you exit it for? So what we're seeing oftentimes is that company that we're buying for $5 to $15 million in a fee to $8. It may trade at a multiple of, call it eight to 12 times. But the premium that you're able to get when you take that business, professionalize it, professionalize the management team, expand the tam that it's servicing. I expand the overall business. We're exiting at 12 to 15 times. And we can give lots of examples of doing exactly that. And the key for us is to do it on a consistent basis. And I think that's the whole level. of an organization, you get better and better at your processes to increase the likelihood of that consistent outcome. Most smart investors understand that size is the enemy of returns in basically

every asset class. There's almost, there's very few asset classes that actually have economies of scale and investment management. How have you resisted the urge to get bigger? The way we're able to put more capital to work is, I think, by increasing the success of the buy and build strategy. So once again, where we take companies for $5 to $15 million to $20 to $30 million in EPA, we're now taking the $40 to $60 million in EBTA. So we're able to actually get bigger and put more capital to work without really changing our strategy. We're still focused on low-middle market. We're still focused on the buy and build, professionalizing and optimizing. But that's how we've been able to do it.

So our fund sizes are getting bigger, but our scope hasn't changed. Private equity is evolving at a blistering space, almost as fast as AI. Where do you think Gen X will be in 2030? And what's going to fundamentally change? We as an organization are going to continue to grow. We're going to continue to identify new sectors for investment. focused on that same proactive buy and build strategy. I could envision us potentially acquiring or providing different capital solutions. Maybe we step into some different types of credit

alternatives to provide to our investors. I think those are all areas of uncertainty in frankness. Right now, our focus is to just keep doing what we do now is do it better and better. Sometimes the hardest thing and the most boring thing is to do something continuously doing it better. I had Jackson Craig from HIG and he's been doing credit for 27 years. I think they've grown from 52 million to I think 25 or 27 billion. Somebody could fact check me. It's so incredibly difficult to do the same thing over and over and just get better every day.

And it's so unremarkable that at the same time, so impressive to do it. And this is something that I changed my mind on recently is just being amazed by people that are able to go deeper and deeper in one sector for many years and for many decades. It's something that is so difficult because what they're also doing is saying no to so many other shining objects. Alex Formosy, has been on a podcast twice, calls it,

the woman in the red dress. If you could just put on blinders and focus on anything, you could get good at anything. It's said another way. The grass is always greener. Oh, let's do this. It doesn't have all these problems. Obviously, you're not in the business,

so you don't know all the problems, but every industry has problems, but just continue to be amazed by these people are able to continually innovate and go deeper in a sector. You say that, but at the same time, every day for me is a different day with different challenges.

I am doing the same strategy, implementing the same strategies as an organization we're doing the same thing but every day I'm meeting a different management team in a different

industry, learning about how that company competes in that industry. So for me, I love what I do. And it isn't difficult because there's just so much learning that we're doing

on a consistent basis implementing the same model but in different sub-sectors on a consistent basis and that does require discipline as a willingness to learn a new industry and understand how a company

competes in that and how a leadership team competes in that. No offense, but lower miller market It doesn't sound very sexy. And I always wonder what gets people up and what makes them excited. And I have a theory that different private equity professionals filter through different things.

Some people like the deal. Some people like the people like the people. Some people like the people. Some people like the investments. Some people just like the lifestyle. What are the different ways that private equity professionals, in your opinion, filter these opportunities. I love what I do is because pretty much every day I get to meet an individual that founded a company.

David Mass is a great example. From Zero took it to $12 million in EPA. And what a great country that you have the opportunity to do that, right? That's pretty amazing. I then get to figure out whether or not that's the right opportunity for us and whether or not that's the right leader for us. So to me, every single day is the same now. What do I like to do?

Within that, the leadership, meeting with the leadership, working with the leadership, figuring out the capital structure, the right capital structure, negotiating the business, diligence in the business. There's all these different functional areas that are required that make it fun. So every day is a different day for me. But it's a challenge because you've got to consistently do them all well and you've got to remember who you're ultimately speaking to, and that's your bestor.

And you've got the fiduciary duty to them to continue to execute. exceptionally well. And then it's really around building the team around you. We built a great organization, a lot of great people. And that team is what's going to ultimately enable us to continue to do what we do well. If you could go back to when you just graduated at UCLA, and you could give younger Monty one piece of timeless wisdom. What would that timeless wisdom be? I do like to speak with younger people all the time to try to give them advice. If I step back, I didn't build as broad a mentorship as I wish I had. That probably would help me along the way to maybe avoid some of the challenges that I head and give me the sounding board that would have helped me to maybe accelerate faster.

Could be happy with where I am today, but I envisioned the road could have been a little less bumpy if I had the right leadership and support along the way. Alex Hermosey calls this ignorance debt. We all start our career with ignorance debt. We just don't know about it. It's like the unknown unknowns. And how do you pay down that ignorance debt? You go to people that have gone that path for 10, 20 years.

And that doesn't mean you have to replicate what they did, but you take a little bit from everybody and then you get kind of just start to pressure test your thesis. I think about this advice of being around the best people. And in some ways it sounds trite. It's like who wouldn't want to be around the best people. But there is a tradeoff there, which it might not be the sexiest industry. It might not be the sexiest product at the time. You know, different asset classes go through different cycles.

But if you filter through the people and avoid the sexiness or the timeliness or the products, I think you're going to be much better off than if you do the opposite, which is you look at where the industry is going now and where the sexiest opportunities, but you may not be inspired by the people that people might not be willing to mentor. you might not develop you. That's a good point. What I do isn't the sexiest. And lower middle market, industrial services,

but to me, it's extremely fulfilling. The opportunities that I'm able to partner with an executive, build his business, help him create wealth, help him create wealth for his team, and do the same thing for our organization is huge. And having a mentor there probably would be a wonderful thing to have or the right mentorships to enable me to continue to do that more effectively. Monti, this has been an absolute masterclass.

Thanks so much for stopping by and looking forward to doing this again. Love it. opportunity. Thank you so much. If you found this conversation valuable, please click follow how I invest so that you don't miss the next episode with the world's top investors.