How To Work With An Operating Partner
A checklist for teaming up with your friendly neighborhood PE Ops person
My Appearance on the Cloud Ratings Podcast
(who puts out some outstanding data on the software world over at SaaSletter) invited me onto his podcast last week for a wide-ranging conversation about the types of companies I invest in, my path to private equity, and how I think about the operating partner job.Here’s one of the highlights from the podcast, where Matt and I talk about the kinds of companies we look for and the unlocks we’re trying to create. It’s a slightly different take on the age-old question: “What do you invest in?”
You can find the whole episode here. Thanks again to Matt for having me on.
How to Work With Me
Jon asked a great question during our recording (thanks Jon!) that we didn’t have time to touch on. So I thought I’d answer it here.
This one doesn’t get asked or talked about nearly enough. There isn’t much written out there about what PE operating partners do, much less how to work with one. Time to fix that.
Here’s a checklist to get you started.
Get dinner together early on. It's fun, allows you to see each other as human beings, and makes all the hard stuff that pops up later just a little easier. You gotta eat. So do I. Let’s do it together and get to know each other while we’re at it. Make it a priority.
Write a guide to working with you and ask for one in return. This won’t be appropriate in every situation, so read the room on this one. Your mileage may vary. But writing and sharing a personal scouting report just might be the best method for getting on the same page as someone else you’re just starting to work with. It gets your strengths, triggers and preferences out there early. It helps you avoid talking past each other. And it makes it a lot easier to talk about the uncomfortable stuff later on - more on that below.
(The link above gives you start-to-finish instructions for how to summarize what you’re all about at work - and includes my actual scouting report as an example.)
Ask about "what seems to work" elsewhere in the portfolio. We don't have all the answers, but we do have perspective on what higher-performing teams have in common (and insight into the "must-do's" that can save you cycles in board meetings, preparing for an exit, hiring, etc.). Ask us about that stuff. We like talking about it. And we probably have some connections, templates, or earned secrets you can steal.
Share what's working for you and (more importantly) what you're struggling with. Operating Partners all end up in this weird gig because we love finding and solving problems. I love working with people who are confident enough to be open about what's broken, what they haven't gotten to yet, and where they suspect things are a little wobbly. As I like to say, "You can't fix a secret." Help us spot the stuff we can help you fix. It makes it way easier to, you know, help fix it.
Think about your operating cadence. Decide when you’ll meet and what you’ll talk about in advance. I talk to my sales leaders once a week and ask them for a simple weekly report so I can stay in the loop on how things are going. Others use a different rhythm and reporting structure. But work together to co-create an operating cadence - how, when, and why you get together - that works for you. Put it on the calendar as a recurring meeting. It prevents surprises, creates momentum, and builds a stronger, more trusting relationship.
Agree on a few key metrics (and set some targets). Even before you fully have a sense of things, work together to decide on the most important KPIs you’ll report on (for the CEO and for the board), and then set a target for each metric. Again - it’s ok to do this before you fully have a grip on the business. Set a target, reach for it, take stock of how you did, and assess. You learn a lot from focusing in on a handful of numbers and just getting a sense of things over the course of a month or two. Executives who are resistant to owning (or even tracking) a number is the surest way to get the spotlight shined on you in a not-so-good way. People who can break down their part of the business by saying “Yeah, there’s a lot going on - but I’m focused HERE” gain immediate credibility with busy operating partners who need simplifying frameworks to help them take stock of how multiple companies are performing at once. Be a simplifier, not a complicator. We’ll thank you for it.
Try to align on the most important thing once a quarter. Warning: The most important thing can, will, and probably should change a little more often than that. But diagnosing the challenge that matters the most and getting your investors to agree to it makes the job far less noisy. It’ll buy you air cover, clarify how you should be spending your time, and help you avoid trying to chase two rabbits at once.