The Home Service Expert Podcast - The Accountability System That Makes Poor Performance Impossible to Hide

Episode Date: July 2, 2026

🚀 FREEDOM 2026 Get your Tickets Today! https://homeservicefreedom.com/ More than half of private equity–backed CEOs don't make it through the hold period. Samantha Allison and Taavo Godtfersen studied the ones who 5X'd their companies instead — and wrote The 5X CEO. Tommy digs into the five disciplines behind those outcomes, the talent audit that finds the 8–20 roles creating 80% of your value, equity-for-all, what the first 90 days under PE actually demand, and the shift from chief problem-solver to chief system designer. Whether you ever plan to sell or just want to run your company like the ones that do — this is the playbook. 🕐 TIMESTAMPS 00:00 Intro 06:24 Founder CEO vs Hired CEO: Why Private Equity Replaces Owners 11:32 CEO Talent Audit: The 8 to 20 Roles That Create 80% of Value 19:10 The 5X CEO Model: Five Disciplines of Top Performers 27:39 First Year With Private Equity: The 90-Day Playbook 35:42 Blank Sheet Exercise: How Top CEOs Disrupt Themselves 43:02 Nine Box Talent Review and Leading Indicators 50:21 Is Private Equity Good or Bad for Business? 59:33 How Much Debt Should a Business Take On? 1:05:22 CEO Time Audit and Decision Audit Explained 🚀 FREEDOM 2026 Get your Tickets Today! https://homeservicefreedom.com/ Check Out My Social Media: Tiktok ⟶ https://www.tiktok.com/@officialtommymello Instagram ⟶ https://www.instagram.com/officialtommymello/ Facebook ⟶ https://www.facebook.com/thomasmello/

A private equity company yells out hooray when they two and a half X the business. So 5X the money. Not easy to do. 5X CEOs, they behave much less like chief problem solvers and much more like chief system designers or architects. Okay, there's five things in the 5X model. If you can only have one, it's talent. Having the right talent can help you figure out the other four. Today is an amazing day because this is my new favorite book, the 5X, C.E.

learn the strategies and tactics of private equity CEOs. Samantha Allison is joining us and Taavo Godrinson. Did I say that right? Godfredson. Godfretton. Yeah. Close enough. You got it.

So Samantha is the co-founder of Advantage CEO and the founder of leverage advisors where she coaches and advises CEOs and leadership teams to accelerate performance and maximize enterprise value. A former senior executive at GE, she brings 24, years of experience across health care, financial service, and industrials. Tavo is the co-founder of Avanus CEO and a certified executive coach who helps private equity-backed CEOs unlock performance and drive results. A former business owner with a successful exit, Taavo brings firsthand experience navigating high-growth, high-stake environments. I appreciate you guys

jumping on. Thank you so much for having us. We're excited to be here. So you two co-founder of Avanished CEO together. You specialize in coaching private equity portfolio companies, and specifically CEOs, private equity firm, firm leaders to optimize leadership performance and maximize value creation. Can you tell us a little bit about the background of each of you and what really pushed you into doing what you're doing today? Sure. I'll start and then I'll pass to Tavo.

So I started my professional career with GE. So I'm your Jack Welch poster child for all GE initiatives. Went through the financial training program. lot of staff where you travel around the world working on different business initiatives, settled back into GE healthcare and had an opportunity to do mergers and acquisitions, ran the women's health care business, eventually shifted over to GE Capital in a Six Sigma job. So I'm a certified Six Sigma black belt and change acceleration process leader and quality leader. And then had the opportunity to go back into a P&L leadership role and run an acquisition,

which after doing the M&A side, some would say is poetic justice. to then have to integrate an acquisition, where you sometimes curse the deal guys for what they handed you. But it was a great opportunity to have that P&L position again and be back. I like to be back on the front lines with customers. But after moving 10 times and 14 years with GE, they asked me to move again, and I politely declined and started consulting. And that's really when I started to get into the private equity world of taking all of those skills and strengths that I had learned with GE and translating them into portfolio companies. So I like to tease the private app with you guys that I like to work with CEOs and leadership

teams to help them figure out how to actually create the value that's at the PowerPoint slides. And through that, I met Tavo. We were both working together in a portfolio company. I was doing strategy work and integration and he came in coaching the CEO. And we were professional soul-made from the start. So I'll pass to Tavo and he can share his background. Thank you, Sam. Tommy, I'll start with business school. I went to Bapsin College. If you know Bafson, it's known for entrepreneurship. And I only start there because I felt like I was the least likely entrepreneur of my class. And so the irony is I ended up becoming a business owner. My business partner and I ended up selling our company to a public company. And you can think of our business almost if you're familiar with LinkedIn learning. We were almost similar to kind of LinkedIn learning where we worked with CEOs, bestselling business authors, luminaries, getting their wisdom on film and selling it as a subscription model to Fortune 500.

And so just as a result of kind of building that product, the business, I had worked with over 300 CEOs and business authors. And so it was almost like getting multiple PhDs and kind of business and leadership just being exposed to them. And from there, after selling the company, actually ended up transitioning into executive coaching and specializing in private equity. And so what I do today, I coach on the investor side, which CEOs are private equity firms and also partners of private equity firms as well as portfolio company CEOs. And about five years ago, Sam and I got inspired not to write the book, but to do the research for the book, the 5X CEO. And what we discovered at that time was when you looked at all these studies that more than 50% of CEOs don't make it through the whole period, we were both really scratching our heads around that because private equity firms you know, they go through such an exhaustive betting process for all of these CEO candidates

to make sure there are a great match for the investment. And then yet 50% of more than 50% of them still don't make it through the hold period. And so we wanted to write a book to help both sides, right, to help more CEOs, you know, thrive and more investments deliberate. Let me ask a follow question, and either of you feel free to take it. You think about founder-based CEOs versus hired guns. What's the difference? And what is the biggest reason out of all your studies that they fail?

So I'm happy to start, Sam, if you want to add, I've coached many founder CEOs. And so I could just tell you from experience, the founders. Under CEOs who may struggle are the ones, there are a couple categories. One is around talent. So they can be incredibly loyal to the people who got them there. And so they need to continue to scale the business. The business, you know, you need people in the business who know what great looks like at exit. And so if you're a hundred million dollar company, do you get to $500 million?

dollars, who's played at that level and you have those people on your team to help you scale and get to where you need to go? And so I think talent is one of them. I think another one is, especially with founders, CEOs, they can chase the shiny object. And so they like to do a lot of different things. And one of the keys to success is around focusing on the vital few to drive value creation. And then finally, what I would say from a founder perspective as well, which is every CEO, whether it's founder or hired gun, has an Achilles heel. And there's things that you have gaps in, capability gaps, and you have to make sure that as you look at your leadership team, that you have that covered on your team. So, for example, if you're a very market kind of facing

type of CEO, you're more externally focused, you need a rock star COO and CFO in particular. So just a couple of examples. And Sam, I'll let you continue. Yeah, I'll add on to that. I think I've worked with a lot of founder, CEOs, and one of the big struggles that I see for them is being able to make that transition from working in the business to working on the business and sort of shifting from tactical to more strategic. and that is somewhat reflected in a need for control, right?

So typically your founder-entrepreneur started it out and used to understand and be involved in everything. And in order to grow and scale effectively, you have to be willing to relinquish control of some things to your team and let them be empowered and take responsibility to do it as appreciate as that sounds. And so that can be a struggle point for some founders who feel like I have to be involved to make sure it's done really well in the way I want it to be done. And so being willing to take that step back and pass the torch to the team is really important.

I think the other area that I've seen with a struggle is the willingness to invest. I don't know if you've talked to your listeners before about the J-curve, but the notion that as you continue to grow in scale, you need to make some investments, which will impact your profitability for a period. and that position to help going to far more than recover from that and see the upside. And again, some founders can struggle with, you know, wait, I'm going to have to lay out that amount of investment in order to see the scaling of the business. And that can be a struggle sometimes too. You know, it's interesting because I just did a podcast this week with Mark C. Winters, which wrote a new book called Visionary.

But original book was Rocket Fuel with Gino Wickman and Mark Winters. and I said, dude, you have no idea. Like, I am the epitome of a visionary. I do not want to jump in and do the detailed work. I'm the dreamer. I'll break the business. But I got to have a really good integrator, just like Walt Disney.

He flew over Orlando. He saw Marshland. And Roy Disney said, I know exactly what to do and how to do it. And the integrator doesn't get a whole lot of accolades. And it could be a lonely job, but they don't want to really, they don't really want to have the vision.

They just want to go execute the day to day. And I'm like, good, because that's me in a nutshell. Like, I miss some day going and doing the work and running projects, but I'm not good at it. I got to be really, I got to look in the mirror and say, I'm not a good executor. I definitely have a lot of ideas. Some of them are bad ideas, but most of them, a good portion turn into home runs if they're executed properly. And I think that integrator visionary relationship. and here's what's interesting too

is the visionary could outgrow the integrator and I think that's what you were talking about Tavo is sometimes loyalty overcomes that top grading and if you studied under Jack Welch you could respect the top grading atmosphere because I think he topgraded 10%

of the company every year to bring in new blood and actually invoke change in the business and change is a good thing. Yeah, no, absolutely. And just kind of on that talent side of it. So kind of two things. One is, the CEOs who are listening to this,

I think one valuable exercise that you could do just to get more self-awareness that I'll maybe also get a little bit of an understanding of things that maybe slowing your leadership down is in your next upcoming leadership meeting, kick yourself out and nominate someone, maybe it's your HR leader, just to collect feedback on your leadership and act and that person can aggregate that

feedback on potential leadership shifts you need to make things that you could stop or start doing things that you could really be improving in the business that maybe you're not focused on and so you know I think that's a great place to start and secondarily I think another exercise that I would recommend is depending on your company size there'll be anywhere from you know eight to maybe 20 roles that really create about 80% of the value. And so think about the roles that enable or create the most value. And so, like in a services business, for example, we wrote about it in the book, but

the number six role in terms of importance was approximately, or maybe it was seven, but was the VP of talent acquisition. That was an enabling role because there was so much talent they needed to bring into the business to scale. But think about those top individuals that either create value or enable value and think about it from these few perspectives. One is, you know, are they an A, B, or C player? Number two, what's their ability to scale with the business? Would you rehire them for the next two years? And so I would be thinking about it, just do a quick sketch around that talent to help educate you on potential talent moves to make.

I'll let Sam add anything to that. I think the one piece that I would add to Tavo's comment about understanding those critical roles, actually two thoughts. One is those critical roles aren't necessarily your senior leaders. So you've got to be willing to go deeper in the organization to his example of the talent acquisition leader. that role was rated as more important than the head of HR. So your leadership team needs to have the humility to acknowledge that some of their team or people even below that are really going to be the ones who are either creating or enabling the value. So that's one piece. I think the other thing, too, is when you figure out what those critical roles are, in addition to striving for a player talent, is making sure they're well compensated.

Right. So those, if you've got a player talent in those roles and it's really driving your value creation, make sure that you're compensating them fairly. And, you know, in our research, we found that some of the CEOs really approached it as they went a little heavy on comp because they wanted to make sure that those people were all in, that they weren't tempted by other offers, that they were fully committed to driving the value creation for that business and wouldn't be stolen away by a competitor or somebody else in the market. Yeah, I got two comments. Number one, mid-level and small PE companies, you know, sometimes they get too involved. And they're the ones that stop a CEO from making those decisions to invest in talent, which is a huge mistake. The next thing is, obviously, a nine box works well for this. And the last thing I'd say is I find some of the top talent, a six-month agreement to come in as a consultant works the best. Because we'll make sure you like me, I like you, we work along, we got camaraderie. We both do what we say we're going to do.

And we get offboarded that relationship at any time. And I think that that works really well with some of the individuals I think you're talking about. Absolutely. Yeah. For sure. And just tell me, the point you made there around like the PE firm, they say, look, let's hold off on hiring for this role this year. For the CEO, I think the most important thing that you can explain to your PE sponsor is, look, let's take a step back. let's think about the value creation that this role will create.

And so if we estimate kind of back to the envelope, this role can add $200 million of equity value over the next three years, like, what are we waiting for? Like, let's, you know, we can get an ROI on this, on this person right away, and it's vital for our value creation effort. So I think framing it in that way, I think makes a big difference in being able to to kind of unlock kind of that decision. The shitty part is if you're not going public and you're in the eighth inning and you're

getting ready to start a Q of E and the Parthinan on study and all that good stuff, obviously the private equity company tightens up and they say don't change it if it's not broken. And the hard thing is you've got to be able to combat the PE company and step up and say, I'm going to run this business because I'm going to be here when you're gone. So let me make the right moves because literally part of your legacy of this business is that it does well after you transact. And I think they understand that. Well, and building on that, Tommy, I think it's also the next buyer is looking to understand what is the opportunity for them.

And so if that role is great for creating or enabling value, all the more reason to get an A player level talent. in there as quickly as possible because you can then sell that to the next buyer. And depending on how quickly you get the person on board and how much traction they can gain, they may be able to start to prove some things out that can help increase the amount that you're bringing in if you can get credit for some of the initiatives that they're driving. But it's your next buyer needs to see what's the potential runway look like here for this business over the next three to five years. And even beyond that, who am I then going to sell to? And, you know, and so, so that I can find my way out as well.

So keeping that longer term perspective is really important, you know, recognizing the reality of wanting to strive for the best exit possible, but not losing sight of what best positions the business for the longer term. I was with a pretty large private equity having dinner the other night. And they said based on the TAM

and how much you control of that, we find that the right businesses could go from 100 million to 500 million of EBITDA faster than they went from 20 to 100, which sounds counterintuitive. But if they got the flywheel and they understand greenfield growth, and I know there's a lot of talk about M&A, but I'd rather own Greenfield over M&A. That way you get to call your shots. It's a machine. It's a longer investment, but I think there's more fruit at the end.

What are you guys' thoughts on that? So I'll start and then, Todd, where you can chime in. And so to your first point about, you know, is growing from 100 to 500 easier than 20 to 100? In some ways, yes, in some ways no. A lot of it depends on the foundation that you're putting in place in those early days. If you're addressing the fundamentals, then yes, I agree. I think all of a sudden you can find your momentum and really kickstart the organization and move it forward. If you're lacking those, and I think that's, you know, what our research showed from a

in terms of the output is this model that we created, right, that has these five components. And so what we saw that the best CEOs do really well, regardless of size, is, you know, strategic clarity. So they make sure everybody is aligned and understands where the business is going and how to get there. Scalable talent, we've had a lot of conversation about that already, but are they making sure they've got A players in their critical roles? Relentless focus. So do they understand the handful of things that are really going to create value for the? the business and can they stay focused on those? Disciplined execution. So do they have their right operating system in place to be able to keep pace with the business and track and understand

whether they're on track or off track? And then energized culture. So have they articulated the behaviors that they're expecting in the organization and are they holding people accountable for both results and behavior so that the culture becomes an enabler of the strategy and helps engage all of the employees and where the business is headed? So if you're getting those fundamentals, yes, you can then scale faster. I think the other piece to your question about M&A versus Greenfield, to me it depends. I've seen both be wildly successful. I worked with a CEO who blew the doors off of the investment thesis.

She came in. There was a three-year plan that the private equity sponsor had, and she was able to hit that in six months by doing an amazing job of rolling up M&A opportunities. and understanding to your point that there's integration work that's expected around that and that has to come, but really great at the diligence side to make sure the business was a good fit, and then really great at managing the integration to capture the value and retain the value from those opportunities. The flip side, you know, on Greenfield or de novo growth, I've also seen that from a board perspective, worked with a business, that we looked at a lot of M&A opportunities, but continually came back and said,

no, de novo builds for us make more sense here for a whole lot of reasons. And to your point, sometimes it's just easier, faster, better to be able to build exactly what you want, where you want it, and then leverage that to continue to grow and expand in a market. So I think it varies. Tavo, I'll pass to you to chime in. Yeah, I just want to just emphasize just one thing that you shared. You talked about really kind of the crux of our research around the 5X model, around strategy, talent, focus, execution, and culture. And I think for those listening, you may say, you know, yeah, that's obvious, right? Of course those things matter. What I would tell you what we found from our research was it was the degree of mastery that these CEOs had around how they excelled

at each of those five disciplines. And so what we see is kind of this knowing doing gap with CEOs and leadership teams. They may know this is important around creating strategic clarity, but the strategy, when you actually go inside the organization, you learn that the strategy is trapped at the top and you go down one level and they have no idea kind of what the vision or kind of the strategy of what the business is. And so really important to take a step back to say, how well are we executing on each one of these disciplines and what do we need to do to get to the next level? And if I can build on that comment as well, Tavo, any, Tommy, for your audience, you know, obviously there's some who understand the PE game, but I'm sure there's others

who don't. And I think the model, while it came out of our research with private equity backed companies, it really applies to any business. And, you know, I handed it to the leader of a nonprofit that I work with and said, you know, here, please read this and let's talk about it. And we start at the beginning of, okay, how do we create strategic clarity for the organization? Just as important in a nonprofit as it is in a founder-led business, as it is in a private equity backed company, you know, it's all about making sure that the organization understands the vision for the business and how to get there. And then for the employees, what role do they play in that? And so that's where I think the opportunity is, you know, across the business spectrum,

is to take advantage of those tools and that structure. You know, when we formed an equity incentive program, the business was worth $540 million and people earned, I didn't give, but 100 million went to the people that made the most impact. And we went from 12 million to 27 and a half million in 19 months. And I think asking yourself as a founder and a CEO is what's in it for them, how do they run just as quick and go home to their significant other, their family, say, mom or dad's going to be working more, but we have ownership in this company. And I really like the ownership works model.org.

It's kind of was born out of KKR, but a lot of people are adopting it. What are your guys' thoughts about strategic clarity around the, whether it's P units, equity incentive programs, phantom shares, and bonuses, basically? Yeah, I'm happy to start, Sam, just because I've got a client who has moved forward with the Equity for All model. And they're soon all going to benefit and learned a ton from him around how to launch that. and he wanted everyone in the organization to think like owners, and he wanted everyone to feel like they're winning. And he was inspired also by the KKR model, and he was fortunate to get his private equity firm aligned with him on launching this.

And so now he's got an entire workforce that's thinking in a different way, in a powerful way. and one of the hardest obstacles he had to overcome just as part of the process was, you know, people just didn't believe it. They were given, they were given, you know, the equity. And so they had to do a ton of work to get them really kind of bought in. So they went through an entire communication process instead of calling their all-hands meeting, the monthly all-hands meeting. They called it a shareholder meeting. So they really changed the language inside the company.

And they even went to the level of putting their ownership level on their checks that they would get. Just to constantly reinforce to them that this is something that they have and that they're all going to benefit from. And I'll add, so I am also a fan of Equity for All. it just does such a great job of aligning everyone's incentives to move the business forward and grow and can help incent some of the changes that are needed. It doesn't mean you can't be successful without it, right? Not every private equity sponsor is willing to engage in that. And so if they're not, I think it comes back to how do you think about the business objectives

and how are you incentivizing the workforce to go there with? you. So and you can do that, you know, across the manufacturing floor, you know, in your customer service areas. Any area, you know, can think through what are the, what does success look like? What are the metrics that follow that? And then how can I put an incentive compensation structure in here so that people benefit as we move forward and make the changes that we need to? I've heard private equity say this hundreds of times is the frontline workers don't even understand it. They want to get paid today. They want the bonus this month. And I think that's just what they tell themselves, because it does take an explanation. It takes a learning. It brings in the

family. And a lot of companies now, they issue real stock that they can take home and put on their table. And then they've got this, now they've got software that actually shows where the stock is added in the present day value. And I think to say, well, people don't understand that stuff. I think that's just a cop out personally. But I've got another question. What do you, What do most first time PE CEOs get wrong in their first six to 12 months? Great, great question. I think maybe all start for a new private equity CEO, because we've worked with many of them. And just first, it's important to share up front how important the first year is.

Sandy Og who is known for creating this great concept called Talent to Value, was an operating partner at Blackstone. And one of the things that they discovered, Sandy looked at 80 of their investments. And when they were on the investment case at the end of the first 12 months, they had a success rate of 80%. And so we love it when a private equity firm

works with us early on in the investment because we're there to help ensure that they get the momentum they need in the first year to realize the returns that they want to get. And in terms of first time kind of P.E. CEOs, I think when they first come in, I think one of the most important things they need to get adjusted to is the pace and speed within private equity. And the speed of decision making, the speed at which they need to move. And what we found in our research was, you know, three months into the job, you need to have, you know, a semblance of a three to five. year plan already baked you're already knowing kind of the talent moves that you need to make so your talent choices follow your strategic choices so you're moving very quickly and what you see too with

kind of private equity CEOs is they can be hesitant with their private equity sponsor to kind of share maybe some of the challenges within the organization so it's so important to have full transparency because you know, even though they do great due diligence in advance, you know, there's going to be some kind of hair on the asset that you weren't aware of that, you know, problems or issues that need to be addressed. You know, maybe the foundation isn't as, is in place as much as you believe. And so, you know, you were thinking you could really start to bend the growth curve within five months. Maybe it's going to be 12 months because the ERP system just isn't there yet. And so having that kind of honest dialogue with your PE sponsor around foundationally what needs to, to go into business in order to get scale.

Those are just some initial thoughts and I'll let Sam add to that. It's good stuff. I'm gonna dive into the, I'm gonna ask three questions I ask on every podcast. And then I'm gonna dive into the book, just so you know. So, Tavo, I agree with all of that.

I think the other, you know, when you think about a first, whether it's a first time CEO or just a CEO coming into a new role, Tommy, we always encourage for the first 30 days or so to do a lot of listening, right, both internally and externally. And so one of the things that came out of our research was the amount of time that the high-performing CEOs were spending to really listen and learn and understand how the business was working

when they came in and then formulating that viewpoint of where they were heading. So it starts out with making sure you really understand the investment thesis from your PE sponsor, you know, to the M&A conversation we were having. earlier, what kind of M&A are they wanting to do? Because if you're thinking you want to make big deals, you know, bringing a lot of revenue and they're thinking, no, this is about small tuckins that are going to gain X, Y, and Z, that's a very big disconnect. So you want to align on that.

And then spending time in the business, you know, talking to customers and with your leadership team to understand what's happening, thinking through what the priorities are, what are those value creation drivers, what are the roles associated with those, how do you start to assess the talent in those positions? You know, Tabu mentioned some of that. And then really coming away with that early read on a strategy so that you know where you're going and you can start communicating that both to your board, your leadership team, all of your employees, and get everybody on the same page, I think is a really important

piece as well. And then really looking for a couple quick wins. So how do you come in and, you know, gain some credibility quick. both with your employee base and with your investors to make them say, hey, all right, like these are starting to move in the right direction. It's great advice from both of you. I'm going to just jump in and I'm going to ask a couple of questions that I always ask. So for each of you, what's one piece of game changing advice that you wish you knew in your 20s?

I would have gotten into private equity earlier. Yeah. Great question. I think, you know, in your 20s, I think just to take more risks. I mean, I know it's ironic that, you know, I ended up there, but I think taking more risk and focus less on how much you're making and more about how much you're learning. Both are great advice. What's your largest or biggest professional dream at the moment?

I think for all answer to that. I think my greatest dream kind of connects to. to why we also kind of wrote this book, the kind of the 5X CEO, just around, you know, there are for a CEO, right, there are so many stakeholders in an organization, right? And so there's so much on a CEO's shoulders around performing for customers, employees,

also for shareholders. And so if CEOs can be more successful, that means everyone wins, including the families of all these employees. And so we get inspired around just a bigger impact around kind of everyone winning. And we talked about the equity for all. Like that is fantastic, right?

All these, to be able to come home to your spouse and say, look, here's some game changing money for us, whatever that looks like we're game changing, just to make life better for everyone involved. So I think that's part of what inspires me. Yeah, and there's a reason to have when I work together. I jotted down as I was thinking about your question, giving back. And so it's to that point, I feel like I would not be this successful,

were it not for the foundation that I had in my early career with GE. And then the many experiences I've had since, going through our research and writing this book really gave both of us, first gave us more tools to be even better coaches to our clients. but also gave us a really organized way to share a lot of what we've learned over the years and be able to share that with others. And so I agree with Tavo. I think it's sharing more, giving back, having an impact,

and trying to save some people from some of the mistakes that we've made or seen and share that knowledge as much as possible. So you guys wrote the book FiveX CEO and a lot of people don't understand what five times M-O-I-C, which is the multiple uninvested capital. And when the numbers get big, a hundred, a couple hundred million of EBIDA, if you're at a couple hundred million dollars of EBIT, that means you guys interviewed 50 to 70, whether it was private equity or CEOs, that five-x the money.

And that's not easy to do. I mean, a private equity company yells out, hooray, when they two and a half-x the business. So that's a double-ganger there. So, you know, it's really interesting that you guys wrote the book because this is like massive success stories. And I'm just curious you guys interviewed you this, all this research. And you guys, I know it's hard to pick a favorite, but there's stories you guys learn along the way. You were with a lot of different type of CEOs.

And some of it came from a financial background, marketing background, operational background. But give me your favorite, and maybe not the favorite CEO, but your favorite story that you each experience along the way of writing this book. I'll start and then top of you time in. So there's a lot. It's like you love all your children. We love all of the participants in our research and have so many stories. One of my favorites is a CEO who does a blank sheet exercise. And so as part of her annual strategy refresh process, she asks her team to say,

okay, if you were a competitor coming into our space, blank sheet of page, paper, what would you do? How would you beat us? How would you win? And they spend time and invest time and going through that exercise. And then they take what makes sense and apply it to their business. So they're always thinking about what could disrupt them and how can they disrupt themselves instead of waiting for someone else to do it. And I think that's just a great way to think about your business and what you might be able to take from that to grow faster and avoid some of that risk from others. How about you?

Yeah, I love the question. And I think I'll add the question to it and then I promise to answer it. So I'm going to connect the dots here. One question we get asked, which is like, okay, what's only one key insight from all the research you've done? I know you guys developed the 5x model and these five disciplines that are so important for CEOs and leadership teams to master. But if you only could pick one thing, and so that was explicit from our research. I can tell you what was implicit.

And I'll kind of get to the mindset of these 5X CEOs, which is they behave much less like chief problem solvers and much more like chief system designers or architects. And so what they really did is they created and instilled kind of an accountability kind of culture and organization, which made performance like impossible to ignore. You know, you had to perform. And so they were great at just creating the system that enabled the scale. And so they could be in the white space to be able to really bend the growth curve for the business. And so when you look at these, you know, these CEOs, I'll just give you one just practical example of what, you know, what this 5X CEO looks like. So one of the CEOs in our study, you know, so many CEOs talk about the importance of teamwork in collaboration and they can get frustrated with some team players on the executive team who may not be playing nice in the sandbox. And so a lot of CEOs will spend time doing one-on-one coaching with. with them talking about it, being a broken record about it. Well, this CEO in our study did something really simple.

And that's what you'll find with these five ex-CEOs. They simplify complexity extremely well. So what he did is he did a survey twice a year. And on this survey, he had the executive team force rank one another in terms of team play and collaboration. And so, and he would publicly show who's at the top of the list and who's at the bottom of the list. And so I can tell you from his experience,

like the ones who are the bottom of the list did something about it. And this is something the CEO learned from his CEO. He was one of those people at the bottom of the list that got himself off the bottom of the list. And so it's a really simple accountability mechanism, but you see that over and over again through our research. And so that's just a really simple example,

but I think highlights the point. Yeah, these five lessons, I, you know, I think they're absolutely phenomenal. Can you break down the most important levers a CEO can pull to multiply enterprise value? And I know that's a tough question because it has to do with all five of the five-X CEO. But I think you'd probably say talent, obviously. But are there any other things that are kind of between that we might not be talking about right now? I think so talent, absolutely. And we get asked a lot, okay, there's five things in the 5X model.

If you can only have one, what would it be? And Tavo and I both consistently agree it's talent, right? Because having the right talent in the organization can help you figure out the other four. I think the other concept that I would offer that we haven't talked about yet is a willingness to embrace failure. And you touched on it a little bit, Tommy, with the idea of piloting things. And so the best CEOs, there's two components of it. One is it's the attitude that they take towards failure, right, where it's more of a growth mindset, and we're going to try some things.

And if they fail, how do we understand that as quickly as possible and learn and adapt? And so whether you pivot to something else or you have to shut it down or you just have to tweak, whatever it means. but being willing to take some risks and try different things is going to move you much farther along than being super conservative and cautious and only incrementalizing your business. So I think that's one piece of it. And then with that spirit in mind is as you think about your top priorities and having an operating system in place, so this is part of disciplined execution, how are you tracking your progress and are you creating a culture that embraces people raising issues early? And so because in a

private equity arena specifically, but in all businesses, if you create a culture where people are afraid to tell you that something's wrong or something's not going well, it's just going to fester and get worse and be that much harder to solve down the road. And so by creating a culture where people can feel comfortable raising issues and where you recognize and praise them for bringing things forward early and quickly, and then having a culture that is kind of team solution focused and not blame focused. So what you do, right, say like, okay, so this, thank you for surfacing this. How do we work together to solve it as opposed to pointing the finger at someone and saying

that's your fault, you did it, go figure it out? So that I think is a big part of this that connects with those five components of the model. It reminds me of, Tawa, you could go, but it reminds me of bar rest. you, John Taffer says, I don't embrace problems. I embrace solutions. And I think you need to build the culture. If you're going to come to me and I say this all the time, if you got problems, I need you to think through and say what would need to happen specifically in the system that failed? Instead of blaming people, it's systematic. And we learned a lot of this from the e-mith of build a franchise model, even if you don't have a franchise that gets expected outcomes. Tava, what are your

thoughts? If you've got the right strategy, then typically like a talent or exceptional. execution problem that's not getting you there. So from a talent perspective, you just have to see you have to be so disciplined and around talent. And what we always suggest is do a quarterly nine box of, you know, those critical roles, right? It just color, you know, think about where they are. And it's an accountability mechanism for you as well. And you should also bring it to your board.

So I think you need to bring talent to the board level and to your own level to say, look, this person's in this box. What do I need to do in the next quarter to move them, either into another box, whether it's coaching, or do I need to start looking because, or put them maybe in a different role, or maybe they're just not going to work out overall. So taking a very disciplined approach to talent

because it's your talent that's going to get you there, and it's not a one-time event. It's dynamic, and you're constantly evolving and potentially upgrading the team as the business scales. And then second, two, one thing that we find in almost every leadership team we work with is they try to do too much all at once. And so we try to think about what's the capacity to execute and to think about, you know, what do you need to stop doing versus what you need to continue to start doing. And just one other thing just going back to talent that I wanted to share also is sometimes it's not the person, sometimes it's the role. Sometimes roles can be designed the wrong way.

So roles sometimes are not set up for success. And we've seen this firsthand where a role, one of the most important roles for one of our clients, should have been two roles. And the company struggled. And so once they realized that and they split the role in two, because it was mission impossible for anybody that they would have hired. So just make sure the talent is set up,

is set up for success in those roles and those roles are designed the right way. And then just, you know, finally just around the execution piece, too many CEOs don't have enough leading indicators for the business. So I see a lot of leadership teams looking at the rear view mirror in terms of how they're running the business. And so I'll give you just a simple example, one of my clients, the most important lead indicator that he cares about. they're an industrial company is the number of conversations

their engineers have with customer engineers so they can get spec in. So that's what he cares about more than anything else. So as soon as he came in there, you have to say, not what we have for reporting, but what do we need to have? So that was one of the first things he did was to make sure that they could track that.

And all he cared about was just making that number go up. If that number goes up, the business is going to be fine. And so making sure you have that as well as you navigate the business. Yeah, it's funny. I was on my call this morning. And one of the things I'm interested in tracking, which sounds crazy, but we try to offer something on the way to every client.

So, hey, I'm stopping up at Starbucks. You got my profile. My name's Tommy. I'm excited to come solve your problem today. What would you like? And then they say, no, no, no, I'm good. And I said, listen, you come to my house. My fiance is going to cook for you.

are you a green tea or a cappuccino or a frappuccino and usually you can break them down and so now I'm starting to track did you even offer it and how did you offer it because we're really big in a reciprocity and these little things and the biggest thing is I told our C.O. I'm like, look, that's a KPI I'm going to track because I want to make the client experience, you know, focus on the client. It's Jeff Bezos 101 is just focus hard on the client. But I would say I love my clients, but I tend to focus probably more on my internal clients, which are the workers.

And thereby, I always call them coworkers. Yeah, no, Tommy, it's a great question, which is when we're working with the leadership team. Like, we even start with the basics. Like, who's your customer? Yeah, you're at the start. And you'd be amazed. Yeah. Who's your customer, right?

And what business are you really in? Like, if you're a CEO, just have put a blank sheet of paper on the table. and have your exec team write that response and then so they can't change their answer. So you'll find, you know, you can get some fascinating answers, but it's so important to get extreme alignment around who your customer is, right? What business you're in, what's, you know, getting super aligned on your value creation strategy. And so I think it's, you know, I think it's great. And your value proposition, that's the other thing that we've seen is, is there alignment on what,

is the value proposition that you're offering to your customer. And then how does that influence your priorities, your focus, your investments? That makes a big difference. And as Tabo shared, it's amazing sometimes when we have these conversations with our clients that you get inconsistent answers across the leadership team. So investing a little, it's not a ton of time, but investing a little bit of time upfront to make sure you've got clarity around that really can help make sure that sure that everybody's aiming for the same target. I think the problem that most executives have

have with value propositions, in my opinion, is when we talk about this internally, I say, what's something else that no one could be? We do background checks and drug tests. Well, we're open nights and weekends and holidays. And here's what you hear from a lot of other companies. We're the best. What does that even mean? Janie Smith wrote a book about competitive advantages. And usually that means, out of the last thousand jobs we did, 997 started on time. The other three were rectified. It's something else that nobody else could claim. And it's a delivering system to the client.

I'm a big fan of that. And look, I think these meetings need to be revisited often because the companies change over time. Even we just change our mission and vision. And I know it's not good to change those all the time. But the company morphs over time and building that culture of change, is so important because so many people are like, well, that's not who we are. That's not how we did it. And I'm like, yeah, but we live in a new world now with artificial intelligence and things

changing every day. And the key metrics we used to pay attention to are kind of fading. And there's all these new key metrics that we're looking at. I want to get into a little bit about working with private equity because most people don't like private equity. And they think these big guys are coming in and all they care about is profit. it and they get rid of culture and they cut their way to the top. And I'm like, yeah, but you can say that about anything.

There's good and bad in every industry. And yes, they have LPs. Sometimes they got pension funds. They got teachers and firemen relying on you making a good decision as a business owner. What is your take, the good, bad, and the ugly on private equity? All right. I'll start. And then Talvo can chime in.

And in terms of private equity, I think that, first of all, every firm has its own personality and how they choose to engage with companies that they invest in. Some can be very hands-off and others can be very prescriptive and controlling and really want to dictate how the business moves forward. So if you're thinking about engaging with private equity, I think it's important to start to understand, do your own diligence and understand what the different firm's profiles look like and how they interact with their portfolio companies. The next level there is it's your deal partner. So who in the private equity firm are you engaging with?

Because again, they're all different. They all have their own style and approach. And so making sure that you understand where is that primary relationship for you within the organization and what does that look like. I understand the criticisms of private equity and why they are what they are. I can say that with the right partner, private equity can help businesses do things that, frankly, they just can't do on their own. It can bring a level of knowledge, expertise, resources, access, support, capital, right? That when it comes together and motivation and incentives are aligned, it really can have a significant impact in a phenomenally

positive way for the founder or the owner, for the employees, for the customers. So I have seen it work really, really well. So Tavo. The only thing I would have to which Sam share is all these private equity firms want to have a great reputation. So they're not going to sell a terrible asset to the next private equity firms. These private equity firms all buy from each other. And so the last thing they want to do is get a reputation for selling a company that wasn't where it should be. And so they want to make sure that the organization is set up for success. And so they typically do a great job of that.

I made a comment on my Facebook group. There's 16,000 people business owners. And it's a negative sediment in this group about private equity because it just is. They're like they don't care about the people they care about money. And I said, my take, private equity only changes companies if the owner or CEO suck. And I knew that was going to be controversial. but there was 121 comments. And I was debating whether to delete it,

but that's not always the case. Sometimes it's the private equity. You've got to do your research. You've got to talk to the ones that succeeded, the ones that failed. I'm not interested necessarily the ones that had a great outcome. What happens when things went wrong? What happens of a bad recession or a bad quarter?

And a lot of people got really defensive because they're exactly what you guys talk about. the CEO founder didn't make it through the transition. And it was very, I'm sure a lot of people listening commented, the people listening right now are the people that have commented on that, that had a negative sentiment. So what are your thoughts on that comment? So thoughts on that comment that the CEOs must have sucked?

Yeah. So I guess that would be, you know, obviously that's not always the case. I think if you're under $5 million of EBITA anyway, the founder usually needs to go because they're the bottleneck. But, I mean, once you get to a good size. I think that, again, I think there are different ways to interact with your private equity sponsor. And so finding a sponsor that's the right fit and understanding what is the plan for the business under new ownership. Because if this goes back to understanding the investment thesis,

And any CEO needs to understand this, whether it's the founder or a new CEO who's stepping into the business, is where does the investor see the business going? And is there alignment on that direction? Because that's often where the rub hits, right? It is, you know, typically they're expecting growth. And so that means that some things are going to have to change. You're going to have to inject some new people. we've talked a lot today about talent. You're going to need to bring some additional talent or new talent in who understands what good looks like at a different scale.

And so that's where some of that friction can come because it's change. And so to be successful in driving that change, you have to have somebody who's going to champion it and you have to help people understand the need behind it and then the vision for what success looks like with that change. And if you're missing those things, it can be very difficult for a CEO to navigate their way through. Yeah, I think Sam's spot on just around just aligning on expectations for the company itself and what's expected. And I think part of what can happen is the context can change. Well, you know, what do I mean by that, which is the private equity firm may buy, you know, The secret of private equity also is you know, you're buying the right company at the right price, right?

That makes it a lot easier for the leadership team. If they hadn't, there's a lot more pressure on the leadership team to create value. And so I think you just have to be honest about that with your, that's part of the expectations around, look, you know, for us to get, like, let's be honest about the return that we need to get here. I think having that understanding up front is really important. Also, things change in the marketplace. the game changes. Let me just look at what's happening with software company valuations with AI. Yeah, soft sales products taking a beating. Taking a beating, right? And so, you know, we're working, you know, we're working, I'm coaching the CEO of a software company and the valuations almost

cut in half. Well, that changes the whole game right now. And so on the other side of it is, too, if the market's really changed, maybe it requires a different kind of CEO. because so much has changed, new capabilities are needed that don't exist. And so that's, you just have to have an honest assessment of what's really needed to get to the best possible outcome. You know, it's very scary to think about a new CEO, very rarely because it's a culture change. You know, I just talked to Matt Malone, big company, Groundworks. I was telling you guys about him. And they hired a new CEO.

He goes, but I'm still doing all the same stuff. I'm the culture. I'm still flying around. I'm still involved. But, you know, the problem I had with a new CEO is you, is if I stepped down and became the chairman of the board, I got to be willing to accept the fact that there's a new vision. And I've not seen it work out as much as I've seen to succeed.

I'm not going to say that person, it should be planned on. It should not be, unless it's just constant negative, you're losing money every single month. But evaluations, marketplaces, macroeconomics change. I'd say you should have a protege that you're grooming so the culture does take the fit because if there's a culture shift and all of a sudden, some CEOs are like, what is the first thing they want to do?

Bring in the team they worked with for 20 years. They're going to go, I'm going to bring back in. Because the camaraderie is the most important thing. And I do say, look, I always say, listen, there's somebody that can come run this business faster to build enterprise value and let everybody make more money. I'm in. I will go wash dishes. I'll go mop the floors.

I don't really care. The fact is, I will be part of this company one way or another, whether it's chairman of the board, chief visionary officer. I'll help with Greenfield. It doesn't matter. I'll become the CMO. I don't really care. But then again, a lot of times it doesn't work out.

Yeah, things can get lost in translation. And there's, yeah, there's always a risk to the company and the culture with the new CEO. And so I think where it works is when the CEO comes in with a lot of humility around what's, you know, what's signature around this organization? How do we really protect the best elements of who this company is? And let's just be honest around where we need to pivot. And to bring, like, so these CEOs are phenomenal at change management, right? So they, like, how do you bring people with you?

So, you know, you come in, listen. asking a lot of questions and you're engaging people in the effort versus dictating what happens. It's like Bill to last to Jim Collins. I'm going to close us out with some closing questions. I got one more before the close out questions. So, you know, private equity talks about cash on cash returns. Typically, most businesses are uncomfortable with taking on debt. I don't know if they listen to too much Dave Ramsey or what. But, you know, in a business like mine, five, six times is no ordinary, it's normal. And it definitely, and then I talked to some private equity that won't take out any more than 3x. They don't want to financially engineer the outcome.

And it's a little more stable because, you know, you look at Renovo. They just got Black, Rock just closed down their debt, even though they were really positive EBITA. They couldn't keep up with the debt. What is your take on the debt that you're willing to take out from private equity on a business? So it is very business and industry specific, right, in terms of what level of debt burden can a business carry and, you know, what's the cash flow look like? I, in the past few years where you've seen, you know, they're starting to come down, but we were going through rising interest rates, it has really created a dilemma in the private equity environment where you have businesses that were purchased and built on an assessment. of these lower interest rates. And then as rates have risen, right, it has created some significant financial stress for the portfolio companies to be able to service the debt and hopefully

still have some money left over to continue to invest and grow the business. But that is very much a dynamic right now that's making it tricky. It's also impacting, you know, the willingness for some investors to make an investment. So they're looking at looking at some businesses and they're now significantly more expensive than they were, you know, a couple of years ago. And, you know, from both a buyer and a seller standpoint, you've got some sellers who are saying, I can't justify this valuation. It's not what I wanted. I'm not getting, you know, a two and a half, three X that I thought because of where rates are and what it's going to take for the next buyer. And so I'm going to, I'm going to let it ride.

I think both Tavo and I have been working with clients who took a shot at going to market and, you know, working their way to a transaction and pulled back and decided it needed to wait for a while. So it's there's so much that's in play there. And so this, I think as a CEO, having a strong financial partner, both in your CFO and in, if you're already owned by private equity and your sponsor to help weigh what the options are and how much is a reasonable level of debt for the business. business, but it won't create too much strain is really important. Yeah, that's the only other thing I would add, you know, the Wall Street Journal wrote a number of months ago that there are 29,000 companies owned by private equity. More than 50% have been held for five years or more, right? And so there is, and so, yeah, that's putting a lot of pressure on leadership teams in terms of, you know, with the debt load,

what they can and can't do. And so it's, it's, it's, It's a real issue. Yeah, it is. And, you know, that's where I go back to, you know, what's going to happen if the economy poops out is do you have a demand-generated business? So if you're doing, you know, no one really needs windows. I mean, unless they're like not working, like, you need to fix your air conditioning. You need to fix your hot water heater. There's a certain thing.

So demand, that's what doubles the multiple. He'll just ask me, what an issue would you go into? I'm like, whatever's driving the highest multiple with the highest tan, with big tickets. I'm like, that's what I would do if I had to retalk to myself from the beginning. So if somebody wants to get a hold of you, Sam or Tavo, what's the best way to do that? We have our website, AdvantageCEO.com. So you can feel free to reach us there or info at advantageceeo.com. Taavo and I are also both on LinkedIn.

So feel free to send us a note to connect and we can message there. but we're excited to hear from people and always interested in sharing more. And I'm going to give you guys a moment to kind of maybe talk about things that I should have asked and close us out. I would just say that I read the book. My brother-in-law was a CIO at GE. He works at the family office now, but he knew Sam from a previous life. So that's how this conversation was made possible. So thank you, Brian. The GE Health Care, baby. That's where it all started. Tavo, Samantha, feel free to give us a good close out that the audience needs to hear. So, all right, I'll go first and then Tavo, you can chime in.

For me, I think it's for your listeners who are out there, obviously very biased, but we recommend the book because we think it provides, and the feedback that we've had is that it provides a very simple framework for people to understand and follow. And so I think it gives some direction to help bring some stability and thought to what you're thinking about for your business and where you want to take it. And in the end, just keep it simple, right? Like, no need to overcomplicate it. Keep it simple. But be thoughtful with intention and proactive as opposed to leaving yourself to have to respond in a reactive way where you may not have the benefit of time and thought in terms of what you're not.

you're going to be doing. Tavo? Yeah, and I would just, I'm an uber pragmatist. And so your time is your most valuable asset. And so as a, as a, you know, CEO who may be listening to this, I would do a time assessment, right? Just be thinking about how much time you're spending on the top priorities of the business. What percentage of your time is scheduled versus unscheduled, right? So you need to have a lot of white space, especially with all these changes, especially with AI, around, you know, bending the growth curve for the business. And so if you're firefighting all day long or you're deep in the business, not working on the business, that is not going to serve you or the organization well. So you have to be, so I think you just have to take a step back and get a baseline of how you're spending your time today. How much of it should be internal versus external.

And then finally, I think I mentioned it, but do it this like you should also do a decision. it. So one of your key roles is around how you scale a company is how are you building capacity and capability with everyone around you. And so if you're making a lot of easy decisions, that's a problem, right? So you should be focused on the hard and difficult questions and be thinking about really pushing down decision-making empowerment to the people who are closest to the customer. That is another mechanism to free you up as well, which is Just kind of make sure people are set up for success so you can focus on bringing the outside in. I love it.

This was an amazing podcast. I don't think I've ever taken this many notes. And I'm going to send this to the entire team that wants to listen to it. I've got more notes than I've ever had. And obviously, they read the book. They've listened to a lot of your different podcast. So it's been amazing to spend time with you both. I think there will be a lot of listeners that want to connect.

And I can't tell you enough how much how much I'll thank you. I am. We are also, yeah, we're very grateful. And to all the listeners who wrote along with us for this conversation, thanks so much. It really is a pleasure. There's just tons of opportunity out there. You guys have a great weekend and much appreciate it. Last thing I want to say is my good buddy, Cameron Harold wrote a book, meetings suck. And I look at people's calendars, sometimes my own. And I'm like, 168 hours in a week, how much time do you have to work on the business as you guys stated. And meetings sometimes there's great things, but if you don't have somebody making

minutes prepared for a meeting, Elon Musk says, if you come into a meeting and you don't feel like you could add anything to it, you get to walk out. And I just agree with that. But you guys are absolutely phenomenal. I want to work with you in the future. So we're going to talk about that offline. But

thank you again.