How Graham Weaver Turns Recent Grads Into CEOs

Number one attribute is white-hot will to win. I'm gonna take this project or business or whatever and I'm going to put it on my shoulders and run it through this burning building.

How did you work it out? I was playing a very high-wire act, which I do not recommend.

What advice would you give people that hear that and they're like, "Yep, that's what I want to do"? What would you do if you knew you wouldn't fail?

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I think the place to begin would be to just understand what you are trying to build and why. We have three north stars at Alpine. Uh, one is to be the number one performing private equity fund in the world as measured by MOIC. Our specific goal is 5X on every fund. Number two is we want to be the best place to work for the top talent. So we want it to be a place where the very best people can come and have just an amazing career. And three is we want to use this platform as a force for good. And really everything that we do fits under one of those three and usually all three.

When you think about 5X, why do you care about that? Why that number? Where did that come from? We went through a really tough period in the recession, and uh, we didn't have a fund for a number of years. And so we had three years to kind of work on our business and really do some deep thinking. I hired some executive coaches. We can talk more about that. But part of that was kind of the questions you're asking, like why are you doing this? What's your goal? What what are you waking up every day to do? And I think we wanted to create something that was going to get us just jumping out of bed in the morning. And so we said, "Hey, we want to be the number one performing fund of all time." So we looked at all the data that was public um on some of the pension funds' websites and information and we said, "Hey, if we could deliver 3X consistently on every fund, you know, that would that would be, you know, put us in the conversation." We've been outperforming that. So, we increased our goal a little bit.

You're probably a person that could build a whole variety of different kinds of businesses.

Yeah. Why is high-performing private equity one that's interesting to you? I never knew what private equity was until I graduated from college. So, I didn't have this uh background or think that that this was never a goal of mine when I started. But, when I got recruited out of college to go into private equity, I just thought it was I I I had a real um burning interest in business. And I thought once I learned what private equity was, I I was thinking, "Wow, this is the best expression of just building businesses." Um, you know, we get to do it over and over and over across a bunch of businesses.

In terms of why try to be the best, I guess, ever since I was, you know, pretty young, I just I've never I've never thought about doing anything other than trying to be the best in the world at it. It's like I want to There's a great quote by Daniel Burnham who says, "Make no little plans, for they have no power to stir one's blood."

What's the earliest that you can remember having that sensation or feeling? So, I was 12 years old. My parents went through a really bitter, kind of ugly divorce. Um, we changed schools to a new school, so I didn't really have friends, so the ground beneath me was pretty unsettled. I I mo I was in I grew up in a small town in Ohio, like in the rust belt, uh, outside of Toledo, and I mowed lawns. And I mowed lawns about six hours a weekend to make money; that was the best-paying job. I had a Sony Walkman and I started to listen to books on tape and our for whatever reason our library had this self-help section. So I had these books like Think and Grow Rich by Napoleon Hill and Lead the Field by Earl Nightingale. Um, universal laws of success and achievement by Brian Tracy. So I there were only like three of them, three or four. So for the next years, I just would six hours a weekend walk back and forth. Literally brainwashed myself walking back and forth in the hot Ohio sun. And and these authors, thank God, just had incredible content that I really needed at that I was this young impressionable kid that was having a lot of trouble in my life and I had these frameworks to just hang my, you know, life on, for lack of a better word. And and and there were really kind of three big ones that came from that. Was, "Hey, you don't get to be a victim." Like, yes, you have things that have happened to you and they're not necessarily your fault, but you know, you walking around blaming people and thinking, "Woe is me." You know, that's not going to serve anyone. You know, you got to take control of your life. Now, that sounds probably really obvious to you and me right now, but back then, like that was a new concept for me. Um, and so kind of like grabbing control of your life. And then they were huge about deciding what you want and writing down your goals. And I got really into that. And I I would write my goals down three or four times a day um literally all through uh high school. And then the third one was you got to make some choices. So you can you can have kind of any goal you want, but you can't have 20. So you pick the one or two that you're really excited about. And then you have to kind of draw a bright line and give yourself permission to not do, you know, goals three through 30. Those are really the three concepts. I'm summarizing thousands of hours of lawn mowing. But that that that was when I just was

So then what happened to answer your question why I felt the first time I started feeling like this? I started applying this to really small things like getting an A on a test or uh running a faster mile or something like this. And and it just worked like exactly like all the authors said. And I I just kept pushing the boundaries of what I thought I could do. and and I never really ran into and I still probably have yet to run into boundaries uh that you could you couldn't blow through.

So you said it worked like what specifically worked just writing it down and working hard or something more tactical? The very very first major thing that I ever tried to do was right after the summer when I started listening to these tapes and it was to this day the hardest thing I ever did. So, I I wrestled um I I was on the varsity team my sophomore year and the I I wrestled at 155. The captain dropped down to my I had a starting position. The captain dropped down to my weight class. I looked up and down the lineup and the only guy I could beat was at 125. So, I'm 6 feet tall and I dropped 30 lbs and I wrestled 125. I was eating 900 calories a day. I was going on runs in the morning. It's like 9 degrees outside and I just powered through that and all of a sudden I was like, "Wow, if I could do that, you know, at least other goals I set, I got to I was able to eat." And so, uh, but but I got I just got to feel this like um this incredible power of being really change the trajectory of your life by just deciding you wanted to. It was really cool. I just got done reading uh the story. Is it Dan Gable? Is that the guy's name? The great wrestler. He's incredible. What What is it about wrestling? like it seems um we'll talk about rowing too which I know you did you did a lot of as well. What is it about maybe those two are similar this like the extreme nature of those sports. It seems like uh can teach you it has a lot to teach maybe even more so than other sports.

Dan Gable is one of my favorites. He has a great quote. He says, "Once you've wrestled, everything in life is easy." I think that's dead on. It's dead on. Um so I think that wrestling is just the most primal sport. It's the first sport you're sitting in our in our high school. Wrestling was a big sport in the Midwest in Ohio. They would turn a mat light on. The gym would be packed. People are yelling and screaming. There's a mat light on. The lights are off in the whole uh arena and it's just you and one other person and you're trying to, you know, defeat the other person. I mean, it's a it's crazy. I mean, it it's a it's a pretty intense sport. And then the weight loss and the training and everything. I mean, it it was just it was the hardest thing hardest thing I ever did. And um yeah and so and and so I think I think it's something about just the kind of primal nature of that.

Can you say maybe one degree more about this idea that you can just choose like you sort of just choose? Yeah. It sounds so simple. Uh but I've experienced that that same thing and every time I do it I'm amazed how powerful it can be but I want to understand the contours of it from your perspective. Like what is what does that mean? What does it feel like to choose? What what did you choose? What was the process? whatever whatever else you can say about this.

If you watch most people, they're kind of asleep or unconscious, you know, and and I am too sometimes. So, it's like, you know, imagine you get up, you whatever your routine is, you brush your teeth, you get ready for work, you commute to work, you have a tough commute, you get to work, you have a couple meetings, uh, you know, some Zoom calls, then you eat, you know, then you return some emails, you have a few more meetings, you get home, return some emails, watch some Netflix, go to bed, right? That's kind of like, you know, there's all this busyness and all this just you're just kind of doing today what you did yesterday, you're doing tomorrow what you did today and you're stringing together that and calling it sort of a life like and so there's this real level of like unconsciousness about it. So the first part is step back and just make space. Um and I do this with an executive coach, you can do this with a journal, you can do it with a friend. Um, but just step back and just make space and then ask really powerful questions in that time, you know. And so my favorite question of all time is what would you do if you knew you wouldn't fail? Um, and this is one of the uh there I actually build it up a little bit better on one of the audio tapes I I heard. This guy said, "Okay, imagine there's this genie that comes out of this magic lamp and he says to you, 'Hey, Patrick, you know, I um I I've only been in here like a thousand years, so I can't give you the traditional three wishes. But what I can give you is that whatever you throw yourself into with your career, your life, vocation, like it's going to work out amazingly well. And you'll have ups and downs. It'll take a long time, but I'll I'll be here to bless you with that. you know, what would you wish for?' And and then and then and then the punchline is go do that thing. You know, that's your life path because that's that's what your soul really wants to do and that's what you would do if you get out of your head and get out of your fear of failure. So, that's one great question. Um, another one would be like if you didn't have to worry about the how. So, relax the how you're going to do it. You know, the the coaching quote is the how is the killer of all great dreams. So, kind of get make space, ask these really provocative questions. And it's not like you're going to answer them right away, but you might two days later in the shower, you might answer that question, and then you'll really know and it's going to, you know, you're going to feel it when you when you really know it. And then, and then it's really really tough to go do it. You know, it you it takes a lot of courage. Um, and and sometimes the path isn't clear. But I think that's where the real fun of life is is really trying to get in touch with what your answer is to some of those questions.

So maybe pick another thing in your high school or or early years and something you wanted and then like the steps you I want to make sure these t just picture you walking around with this lawn mower like I want to make sure we drive home the I go I go to college I I was because I thank thankfully turned on to these tapes early. I I did really well in high school and I got I got to go to Princeton. So I I was I think the first kid in my school to ever even apply there let alone go. So, I go to Princeton and then all of a sudden I felt like I literally felt like Forest Gump in that scene where his braces come off and he's running because I didn't have to be like at this, you know, my mom's house from this time and my dad's here and, you know, in high school at this time and all this. I had like all this space. And so, I literally was like, "Oh, wow. Now I can really like let go with these goals." So, I I set three goals going into Princeton. I was going to be the valedictorian. I was going to be the number one rower in the United States, even though I'd never rode before. or I didn't even know that the boats went backwards. And uh and third, I was going to start a business to pay for school. Uh to skip the end of the story, I didn't actually achieve any of those goals, but I came really close on all three. And uh and so rowing is probably got the simplest one to explain. So I show up. I'm a I'm a novice. I'm 130 pounds from the wrestling. You know, I got my my ass kicked because there's kids who'd rode for six years and you know, they knew how it worked and everything. And I was so I got cut my freshman year, but they didn't cut anyone. Instead, they said, "Okay, if you don't make a boat, you're going to be a land warrior and you can use the rowing machines." I still remember when they when they kind of posted the boats and my name wasn't on there. I did the math and I said, "Okay, women's, heavyweight, light, I was a lightweight, lightweight, and I did the math on how many people got cut and how many rowing machines there were." And so I was like, "Okay, I got to get here really early because all these people are going to be using the rowing machines." I show up the next morning. I did I worked all the way back. I talked myself into getting there at like 5:30 in the morning. You know the punch line. I get there, there's nobody there. There was no one there at 5:36 77. No one ever showed up because because Land Warrior was a euphemism for you just got cut. Yeah, you got cut. But I I stayed and and rode and I met this guy who was training for the national team, uh Mike Taty, and he were he and I were the only two guys in the morning at the Princeton Boat House. And he ignored me. He's a legend. He coached the US Olympic team. He went on to coach the US Olympic team to a gold. And I didn't know any of this at the time. I just saw this tall, skinny guy just hammering this urg. And eventually he kind of took me under the wing a little bit and was just, you know, a after I showed up at 5:30 in the morning for like three weeks in a row, he's like, "Okay, this kid's, you know, really means he really is going to do this." And he taught me a little bit. So anyway, progress forward, I get better a little bit better my freshman year, better my sophomore year. By by my junior year, I had um one of the top times or maybe the top time on or on the 2K rowing machine on the team. And then by senior year, I I was captain. We won nationals. And so it was just like it was kind of everything kind of came together. But it was just a really linear expression of like if I put in a certain number of hours like this is what Mike Taty said. He said here's the formula. It's really simple. Sit on this machine and row as long as you can slightly below your aerobic threshold and you will you know and basically you'll hit your goals. I was like that's it? He's like yeah that that's it. He was a very simple and and I just did that and it and it worked. Um it just required a lot of hours.

Is there anything else between ages 12 and 22 without which you would be a wildly different person? I'll just say a couple things about about my dad real quick. Um so my dad started a um veterinary practice about the time I was born and he he and his father went his my grandfather was a veterinarian too. They started this practice called Weaver Animal Hospital in our hometown and uh they they had a falling out of some kind. I don't know what happened. And I never heard the whole story, but my dad like stormed out. Well, he has a mortgage and three kids and we have no money. And so he uh the only money we had coming in was he would take emergency calls at like 2 in the morning. So his little beeper would go off and he would get up, drive to the office, fix a dog's leg, and go back. And he did that for 25 years. And I think the the the you know, the bad news was he was really never around. And I didn't really have a great, you know, we didn't have a great um a really close relationship at when I was growing up. But I think that ended up having a big impression on me because it took, if you were to ask him about his practice, he ended up building this really, really successful veterinary practice, but he just did it one emergency call at a time over a long period of time. And I think that really stuck with me. I don't I don't think I realized that at the time, but that that was a lot of what Alpine looks like, you I was like it took if you he would say it took way longer than he thought and he built something much bigger than he thought and I would say almost the exact same thing about my business. I never really put that together until you know many many years later that I was watching that as a kid.

What was the story for between graduation and you know kind of starting to tell the story that leads to Alpine like why did you get interested in in this field? What was it about investing or business that called called you? I um graduate from college. I never once thought about my job. I never had an internship because I was always rowing during the summers. And um I got recruited from um Morgan Stanley, which had an in in-house investment bank. And to my knowledge, they were the only ones that recruited in 1994 directly into private equity. Um I I I the the the guy who recruited me was um this guy, David Ramsey, and he kind of explained to me what private equity was. And the way he described it, he couldn't see any reason to do anything else ever. You know, he thought it was the greatest business. and he had a pretty compelling case. So, um, I I was really just fascinated by how you could buy these companies and and build them and be a part of so many businesses. I just thought it was the I thought it was the the coolest job I'd ever heard. I couldn't believe that you got like a blank piece of paper from investors to to go buy things. So, I was fascinated. However, you know, I come out of college and I'm just ready to run through walls, Patrick. you know, I've just had this incredible experience in college and I show up, I get this job on Wall Street. You know, I've seen the movies and everything and I think it's going to be this incredible experience and then, you know, I I learn how to build a financial model in the first three weeks and then I do that for two years. That was all I did. And that's

All that anyone at undergrad ever did. But I just remember thinking, and and then we did it, by the way, 80 to 100 hours a week. The culture wasn't great. Um, and I just remember thinking like, is this what work is like? Like, is this what you do when you graduate? Like it was, you know, I've been in school 16 years and this is my big moment, and it was just uh, it was incredibly disappointing. Um, and and that would end up being a really, really foundational part of Alpine was just like that that kind of feeling of like, wow, I have so much more to give to this place. Um, you know, why why am I only doing like using like 3% of my capacity? It seems like there's my friend Jeremy Gifon has this really funny idea for two models of success that he dubs like the Peter Teal model and the Arnold Schwarzenegger model.

The Peter Teal model being like a lot of maybe public and market investors that I know who kind of sit around and think and then make infrequent decisions on the back of like a special insight that leads to great returns. And then the Schwarzenegger model is just like brute force, like more reps, more push. Um, I have I have I have an early guess as to which camp you might fall into. Um, but maybe react to that. Like how do you think of private equity as like the ultimate like open tapestry to just for performance like for its almost for its own sake, like like the ability to push and drive outcomes versus have insights that lead to good returns which might be the other paradigm?

I mean, I think you can have investors in private equity that have the Peter Teal model; you know, they make few large investments and they sit around and think, and it looks like that. Um, that's not really us. That's not how how we're wired. I like to think about the world in like kind of endogenous winnable games and and then ones that might be a little less ex a little more exogenous and/or unwinable or hard to win. And and so I don't want to just go full-on brute force in a non-winnable game. Um, so so for example, um, in private equity today, you know, it wasn't like this in 1984, but today if you have a big business, you're going to hire an investment bank, you get the game, you're going to show it to, you know, 55 private equity funds. You know that for me to just go brute force in that um, you know, red ocean as as as um there's a great book called blue ocean strategy, so they would call that a red ocean, for me to go brute force in that I think is um isn't a good exercise. If I have 100 units of energy, I want to use 25 of those units to go try to find a winnable game to play, and then the other 75 would be like the, you know, brute force endogenous path. So maybe using that frame, I like that framework.

If we think about today's private equity landscape where there are many, many funds that command huge sums of assets, my understanding, it's not the style of investing I'm in, but my understanding is if there's a good high-quality asset, like it's an auction process in many cases, like it's it's a bidding war, and there are lots of great, highly, highly professional, super talented investors and firms that can buy a private business. Maybe describe like the state of the market and and what the characteristics might be of like winnable games within that broader market.

I mean, I think there's 5,500 private equity funds, you know, at any any given great high-quality business like you're describing. Um, particularly like take take just extreme high-quality business ERP subscription software business. I mean, it doesn't get any higher quality than that. There's a lot of people that can buy that. Um, there's a lot of people that can see what that's worth and do some calculation and come up with a value for that. And by the way, it doesn't necessarily go to the smartest person. It goes to the highest bidder, you know. So it's a little bit different where it it you know, it's not that doesn't mean that they were the smartest person necessarily. So that's a really it's just a really, really tough game. Um, and the conversely like the winnable game that we're engaged in is and we and we learned this over the first, you know, 10 years of Alpine when we were really hands-on with these businesses is we're going and finding a $20 million revenue plumbing company in Ball, Louisiana that uh where the owner's retiring and they need a new management team. So, like there's just not a lot of people that want to sign up for that game. Uh, it's a lot of work. I mean, we're putting in a new CEO in a small company. We're putting in new IT systems. You know, we have a whole new playbook we're putting in. Godspeed if you if you want to play that game, you know, particularly at scale. So, we we that that's what I you know, that's an endogenous winnable game where it's just a ton of work. But then the investment decision ends up being pretty easy when you're when you know when someone brings a deal to you and they say, okay, here's a here's a business, you're paying eight times EBIDA uh with the playbook that you have, you can blend that down to five times EBIDA, you can borrow at five and a half, and your platform is going to trade at 18, like the the investment committee decision there is not the hard part; it's getting the CEO in place and IT systems and all that.

So maybe walk us through the the earliest days kind of right before and right after the start of Alpine. Like what was going on? What what what was your goal in your in your in your journal? Like give us give us the sort of window into that period of time? I was at Wall Street and then I got into Stanford Business School. I deferred for a year, and then um I eventually went, I show up, and I I once again I had that feeling of being unshackled again where someone wasn't telling me where to be when when I was at business school. So, I decided I was going to start buying companies uh out of my dorm room. And uh that was the that was really the beginning. And my my dad um he always wanted to name his company something that started with an A because of the yellow pages. And I wanted it to be and start with an A and come before the word American. And so Alpine was a great I thought a great name. And I lived on Alpine Road. Funny story about that. One time I sent a letter to a banker, and it had my address, and he said, "Oh wow, they named the street after you." Meanwhile, it's like one guy, you know, with no money. Um, but uh anyway, so I I I we didn't have class on Wednesdays at Stanford, so I'd take a redeye flight Tuesday night and uh and then go visit these little tiny little manufacturing businesses in the Midwest and then, you know, go to bank meetings and try to get them financed and then fly back and then try to take my exams and stuff. So that was kind of how I spent, you know, the two years at at at Stanford.

So come what? Keep keep the story going. So you come out of that. Did you buy anyone? Yeah, I bought I bought um a total of three companies. I was 25. So I had no idea what I was doing. And that's not falsely. Did you get Where did you get the money to buy them? So uh you know these were like half a million of EBA businesses that I bought for 2 million. The seller would finance 1 million. Then I they had some equipment. So I get the equity literally get the equity down to like a h 100red grand which I also didn't have. So part of it was I had some people on Wall Street who put in 10,000 here, 5,000 there. And then at this time, Capital One was just starting, and they would send I would get these, you know, you get a envelope in your mailbox. It'd say, "Write yourself a check for $25,000 and pay no interest for two years." And I did that. I was like, "Okay, great." And then that was where I contributed my equity. Yeah. To th those deals. And then later on, thank God, that you would get another one that said, "Roll your balance and pay no interest for another 12 months." So, I I was playing a very highwire act. Uh, which I do not recommend. Do Did those three businesses work?

No, they didn't. I mean, they they they those three collectively ended up at a at a 1x. Um, I had one deal I did right after business school in the same industry that worked out really well and thankfully helped fund a bunch of the early part of Alpine. But the first three um were I did literally everything wrong. Yeah. So, what did you most learn from those three and and then the one that worked right after? They were in the label printing business, which was a good business because no supp label might cost a penny on a $5 bottle of shampoo, but it contains all the product information. So, no one's going to wake, no purchasing manager is going to be a hero by saving a fraction of a penny on the label. So, it was a had very good um predictable revenue. What I missed two things. One is you were really underwriting the underlying customers. You had to go a level deeper and look at like how recession. So, so the companies in the Midwest when a recession hit in 01, they just got destroy their clients got destroyed. So, they they um the revenue went down significantly. That was the first thing I missed. The second thing was I didn't understand how important management was. And this would become a huge part of our philosophy later on. And so, you know, the the founder would retire and then, you know, the the number two person was there. I just backed them. And they were absolutely not backable. Um, and so I I I I wildly underappreciated how m how much the management team mattered, and I made that mistake three times before realizing I I had made it. So in the next one, uh, the next label business, um, the underlying customer, the biggest customer we had was Trader Joe's, which was just like the best customer ever in the early 2000s. They just grew 15%. Yeah. 15% a year every year. They paid in five days. They they didn't, you know, they allowed their vendors to have great margins. So it was just, it was a home run deal. I owned it for 22 years and it paid Yeah, I just sold it a couple years ago actually, and it um it paid dividends along the way which was thank god because that that helped me.

So now you've got a successful deal under your belt um coming out of business school. Um, sounds like obviously at this point you would have said this is the thing I want to do. Is that right? Or was there still like searching to be done? Oh gosh, it was 100% what I wanted to do, and I still chickenened out. So I uh I I I would if you'd asked me anytime in the two years I was like, I know exactly what I want to do with my life. And then uh as as as graduation starts approaching and all my classmates are getting jobs in private equity. I'm I'm getting a little FOMO, and I'm al also scared, you know. U I'm so I I take an interview which turns into a job at an institutional, you know, private equity fund. And I knew in my soul it was not what I wanted to do, and I showed up, and a little bit of me died the day I started. And I did that for a little bit of time. Um, and then I actually had a a close friend of mine uh uh around that time who was who's around my age had passed away. And I think I just took a little time off and I just realized, hey, you know what? When am I going to do the thing I really want to do if not now? And so I walked in, you know, a couple days later and and and quit. I didn't have anything to land on. I didn't have a fund. I didn't have investors. I didn't have anything, but I was like, I got to give this a shot.

So it seems like so many of these stories, uh, when they go this way, they start small and modest, you know, SPVS or single deals or whatever. So, is that how yours was chained together before Alpine funds? A bunch of a bunch of single um SPVS to buy one company. Exactly. What What What advice would you give people that hear that and they're like, "Yep, that's what I want to do. I want to find a company, put together money, make it happen, start to build a track record." I' I'd say a few things. First is I' I'd say pick one industry. Don't go do three deals in three different industries because you're not really going to know that much. Like in my case, I I had that fourth deal was successful because I had done three and learn what really mattered, what really mattered. So I'd say try to stay in the same industry if you can. Pick a good industry. Um, secondly, I'd say um pay yourself. You know, that was sounds really obvious, but I didn't do that. So when I that was part of the pressure that I had about why I didn't go do that full-time. So, you know, carve out enough that you can live, you know, reasonably comfortably, even if that cuts into your total upside or something. Um, because duration is more important, you know, over over the long period of time. Um, but I I like the model, you know, like one thing I I made so many mistakes, Patrick, like everything you could imagine, but I also got in the game when I was 25. So, I didn't I didn't sit around thinking about it, overthinking it, you know? I I got to get in the arena and and that that would be my third piece of advice is like, you know, go get in the go get in the arena.

What did you learn about raising money for deals when you really didn't have a track record and you were 25? I started off trying to sell my track record, which was a catastrophe because what I didn't realize is these people are seeing phenomenal track records, and then they're comparing me to that. So, I I was in the I was on the plane uh in in d the Denver airport going to San Francisco to visit what would turn out to be my largest investor. And I read this little book, and I don't remember anything else this book said. It was a little book of selling it was called, but they had this line that said, "People buy the salesperson, not the product." And on the plane ride from Denver to San Francisco, I completely changed my presentation and was like, "Okay, I'm going to I'm going to sell myself as someone that will figure this out and is going to be trustworthy, reliable, work, you know, kill myself to make this work." And that pitch landed a lot better than, hey, here's my three label deals. Yeah. Yeah.

So then we fast forward to the chapter where now you have Alpine, you have a private equity firm, you're starting to raise bigger and bigger funds. What are like the foundational core beliefs of the business that are most distinctive from other firms of its type, would you say? There there's a number of them. The first one I would say is like what's your objective function? Um, our objective function is we have a specific number we put on that. You we're trying to do 5x on a on a on a fund. Have you done that historically? We've done 5x uh in our last four funds or we we have we have it marked at 5x in our last three, and the fourth one is well on its way. Yeah. Um, and and so we have a a objective function that is specifically, and I think cascading from that is how long you want to hold businesses, how you're going to invest in them, how you're going to build them. Um, so just like what's your objective function I think matters a lot. You know what's your goalpost? Um, and I think a lot of people use irr maybe or they're trying to raise their next fund or something like that. And I think it can muddy up, you know, are you selling your best companies quickly so you can raise the next fund and have higher RS or what, you know, what are you doing? And I think so I think the objective function matters. Um, I think the other another belief that we have is we think the most the way that we're really going to create alpha is through talent. Um, that that's probably the foundation of Alpine is just um uh is we think that you know incredible leaders, CEOs, management teams are going to create amazing results. So we we'll we'll look at B+ industries that other people really don't look at as much, but we've compared that with an A+ team. We found that to be just a great combination. Um, we won't overpay for the A+ industry. We'll will go down a little bit, and I can talk more about that. That's number two. And then number three would be just I'm a huge fan in thinking slash using your imagination. So um we schedule time outside of the office. When we were at in the great recession, we were spending a full day outside the office just really kind of thinking, mapping out what do we want to build, what are the capabilities we want to have. So using time to work on the business and the the expression I use is we're planting seeds of oak trees that will yield us shade five years from now. And if you can do that consistently, you can always kind of create moes effectively. But it's it takes a lot of discipline, you know, um to in in the middle of all the crazy stuff you're working on to actually take time out um to work on something that's important but not urgent. And that's the kind of imagination and innovation.

When when I do my like asking around, I'm always curious like if you condense everything down to asking someone what is Alpine known for? Like what is like the thing? You only get one thing. What you hear a lot is young talent development and um relying on 20-some CEOs to run sometimes very large companies and the search and development process of those young of that young talent, those young CEOs. So maybe you can like explain when did you plant that acorn seed? Like what why how is it grown? Like we could spend as much time as you want on this thing because it does seem to be like a elemental part of the sauce.

Yeah, that's right, Patrick. That is core. So the way it came about was in the early days we were doing all kinds of things. We got a lot of a number of businesses we weren't weren't going well. So one of us um would go out and run the company. So Dan Sander, one of my partners today, moved to Detroit uh for like a year. Will Adams moved to um Maine for two years to run this horrible business. And a guy named Mike Duran was in Chicago, you know, and I I ran one of our companies um a slot machine business for a while. When we were in the recession and we had all this time to kind of look back at our track record, the best deals that we did were always ones where we put in either us or someone just like us to go run this business who knew nothing about the industry, but had these raw raw talent, raw talent and also coachability to like say, "Hey, I don't know everything, so who do I learn from?" Um, you know, I'm not this grizz grizzled veteran that's already, you know, knows everything about the industry, but I'm going to look at things differently and fresh and and by the way, I'm going to just run through walls. Um, and those were our three those were our very, very best deals. Um, just Mike Duran ran one, a guy named Josh Greenberg ran one run, and then Mark Stout ran one. And you know, those were just homes. So at at one point I just I can still remember where I was when we had this conversation. Those are also, by the way, the most fun most fun board meetings. So you're sitting literally with your friend talking about how you're just going to just, you know, crush this crank and and you know when you walk out of that meeting, they're going to do it. Yeah. You know, it's not like the founder who says, "Oh, yeah. Oh, great idea, Patrick." And they're writing it down. You just know it's never going to happen. It's the opposite of that. And it

Was so much fun. And so at one point we just said, "Let's just do that every time." Like, from this point forward, let's just do, let's put our own team in 100% of the time. And we, we, we burn the boats. Brutal to burn those boats because bankers don't sell companies that don't have management teams. Uh, so we had to build, rebuild an entire sourcing engine to do that. Um, we had to change our brand in the market. Um, you know, we're the brand now. If you don't want to continue, you call Alpine as opposed to, um, you know, the other private equity firms that'll back the founders. So it was really, really brutal to change, to make that change, but um, but yeah, we made that change, uh, around 2010.

So is it true now, today, that you will not do a deal where you're not installing your own team in a platform company? We install our own team pretty much 100% of the time. I mean, we'll always, every rule can have an exception. So someone could be amazing. Yeah. Exactly. So if they're, if they're coachable and and they want to run through walls and meet our criteria that we would have otherwise, you know, we're certainly, that would even be easier. But, but historically we've, last I don't know, four funds, we've replaced the management 100% of the time, and we're super upfront going in. We're saying, "Hey, you want to cash out and, you know, go hang out on your boat and whatever, great," you know, um, so, so and then probably 80% of the time in the add-on investments we're changing management.

Can, can you give us like a, a, a platform architecture or a platform building class like 101 or 201, like does platform mean roll-up? Like, like what, what is a plat—that's a word you hear a lot in private equity—like what is a platform? How do you build one? What are the steps? What are the—So for us, it means roll-up, and I'll use our best example. So we started off in, uh, in plumbing and HVAC, and we had this, a guy named—it's always HVAC seems to be a good place to be—AJ Brown was a CEO in training. He, he, we put him to be CFO of one of our companies. He did great there. We sold the business. We repatriated him. We said, "Okay, you're ready for prime time. They're going to be the CEO of a platform." Um, and then we paired him with another CEO in training that was just coming in, this guy, Will Matson. So, they become kind of president and CEO or CEO and CFO initially. We picked HVAC. We had a little experience in that space. So, they, they, they were excited about that space. And then we started just going and visiting tons of companies. And when you go visit a, you know, you go visit 20 companies in the space, you learn more in one three-hour management visit than you do in three weeks in a conference room. So, and, and then what you're picking up in those meetings is what does great look like? And what's cool about it, each company probably does one thing great. Um, so this one company does recruiting great, this company does, uh, purchasing, training, marketing, IT systems they use, and how sophisticated they are with them. But if you add that up across 20 companies and you, you grab every single piece of that playbook, you have the best playbook in the world. And then so you're starting to architect what does that look like before you even have bought a company. So you're, we're hiring the CEO and we're getting the industry right. We're getting this, the management part of the management team right. And then we're getting the playbook right before we've ever even written a check. Then we start going and buying companies. And, and the first couple we try to buy pretty small. I think our first deal here was like $8 million of EBITDA, and we learned a ton, and we bought another one that was like two of EBITDA, you know, and we're kind of building along the way, and after, and then we're also building our holdco. So we're building out the CEO, CFO, uh, chief people officer. That's the platform. That's the platform. Yeah, the holdco is the platform, right? And, and we've, our best companies, we've really overinvested early in those platforms. It's really expensive to do that, and we have platforms that are pretty young that have a $15 million holdco expense, but that, that's really your foundation going forward.

And where does that $15 million come from? That comes from the fund. Yeah. Yeah. It's a capital, putting the money in, capitalizing a new company. That's the—But, but it's not, it's not quite that bad because we're, um, you know, we're pretty quickly buying companies that have EBITDA that we're, you know, using to fund the, um, businesses. So they're, they're cash flow positive pretty quickly. Um, so, you know, this particular deal, um, one of the early things we figured out is that the real, um, that, you know, you've heard, you said there's a lot of HVAC companies, and but we figured out that every, every competitor in HVAC was doing the same thing. They were buying the 5 to 10 million EBITDA business that had a great management team. They were all, they were all buying that same company. It turns out 90% of the market is below that, and management wants to leave and cash out. And so we said, "Why don't we build, uh, a system to go buy that company," and that included talent was a huge lever. So I give AJ and Will a ton of credit, but they tapped into the veteran market. They built their own CEO and training program because they came through with Alpine's program and they said, "This is amazing." So they built their own at, at the company's called Apex. They built their own at Apex. One of the early people, people they brought through was this guy named Brad Schwarz. So his, his resume is West Point, Green Beret, Wharton Business School, and he comes in to run this like, I think, $8 million revenue business. And fast forward, he's running a $500 million division today. Uh, the, the business we initially bought was 40 million, I think, of revenue and EBITDA. They've just been accumulating these small little, uh, businesses. So, the business has gone from, we put in 50 million of equity. This year it'll do 500 million of EBITDA, and we put in no additional equity. And it's just been an exercise in just, um, really, uh, having each business we, we that we acquire, putting in incredible talent. We, we put in, uh, we rip out their IT systems and we put in, you know, a financial package, an ERP system, a, uh, business intelligence, um, system, and then every, every single company we buy has to literally input every job they do exactly the same so we can compare, you know, all the data across all the companies, and then we have a training school now for the, the military veterans. I think that we have 80, 80 military veterans as general managers of that company, and they're phen—they've been phenomenal, and, um, so that's, you know, that's an example of starting literally with a blank piece of paper, which is how we do each thing. We, we form a pod of people to go assess a bunch of different industries, we design the playbook, um, and hire, and, and then re—hopefully repatriate someone from our, our system into be the, the leadership team, and we have a lot of the key decisions already made, um, and evaluated where we have plenty of time and patience before we ever have to wire money.

So if I think about, if I step all the way back on like what service Alpine has and will render in the market, it's, I, I have this visualization of like decades of small businesses being built by the baby boom and Gen X generations or whatever. And there's tons of them. I don't know how many there are, probably a gazillion HVACs alone, but true for like every industry. And the problem is that there's nothing to do with them when those people want to retire. And basically your solution is like, solve that with talent. And that was the unique, that was like the unique insight and thing that you've built up relative to, to other private equity firms or something like that. And, and I would say at a headline, it's solve it with talent. And underneath that is a whole bunch of, um, intellectual property about how to make that person who goes into that company on day one be really successful. Because if you just change management, it's really hard, and it can go really badly. We've learned that the hard way. So, there's a, a like, um, we have a, we have a lot of intellectual property on like what, what does that CEO actually do on day zero and the first 30 days and 60 days and 90 days. We have intellectual property on the systems and how we're measuring it and literally how they're hiring. And so there's, it, it is what you said, Patrick, but then underneath that there's a lot of like, um, yeah, intellectual property about how to actually do that.

Without giving away all the secret sauce, can you give us like a flavor of that IP and like some of the things that they, that you've learned? Or—I'll give you a couple things. So, um, first is we have about 30 coaches in our ecosystem that are versed in this playbook. And so they get paired up with this first-time CEO, and they've been through it a lot of times, and they're doing this specifically the Alpine playbook. Those coaches are full-time employees, 1099s, but they're probably—Yeah. They're probably spending 70% of their time on Alpine, and they, they have, um, so they have that intellectual property. They're, they're literally partnering with this C-first-time CEO and, and going through this kind of first six months of exactly what, like paint-by-numbers, what they're going to do. But I'll give you an example. Um, CEO walks in day zero, found, you know, they make their big announcement that people are upset, you know, because Joe's Plumbing, Joe's retiring, they've been working with Joe for 15 years, here's this, you know, 28-year-old that doesn't know the industry, so they're, they're not, you know, they're not thrilled on day zero, which is understandable. The first move for the first 60 days is listen, so they, you know, they sit down with the key employees and say, "Hey, you know, um, tell me about your, your role. What do you do here? Uh, what's going well? What else? What else? What else? What's not going well? What else? What else? Hey, if you were me, what would you be focused on? What should the top priorities be?" Um, what, what are we working on that's a waste of time? What should I be worried about? Um, you know, what are the biggest opportunities we have right now, biggest problems? They're going and doing that, and they're meeting with, you know, depending on how big, big the business is, they might be meeting with 20, 30 people in the business without a doubt, without fail. The one of the first, the biggest things people say is, "I've worked here for 15 years and no one's ever asked me my opinion before." And so over, you know, in a very short period of time, we're really—Joe. Yeah. Exactly. We're really engendering, you know, trust. And then we're, you, you know, we're using that, and we might say, "Hey, you know, I heard that your number one, uh, you know, hey Patrick, I heard your idea, your, your, your favorite idea was that we're going to expand internationally. We're not going to do that this quarter, but we did hear," you know, they don't, you don't have to do everything they say, but they, they have to feel heard. So they do that with the employees. They do that with the customers. And then from that, they're kind of enrolling the top people in designing the plan. Here's what we got to do. Here's, here's what the low-hanging fruit is. And usually the fruit is so low and it's so obvious when you get through that. And I, I know because I did this, I took over a business at one point, and I, I remember thinking how, how did they not do all this stuff? Like, I mean, if they just talk to their own people, there's a—one of my executive coaches had this great quote: The answer is always in the room. You don't have to go hire McKinsey. If you go hire McKinsey, they're going to go do what I just said. They're going to go interview your people and then repeat back what, what you just heard. And you do that with the customers as well. And then the customers will tell you about the product or the service or whatever.

Yeah. So I was going to say like one beneficiary presumably of this is the end customer. You're not going from 50 to 500 of EBITDA if someone's not happy at the, at, at the end. Yeah. 100%. If you work, just work backwards. I think the two biggest under-appreciated leading indicators of success are the net promoter score of the customers and the net promoter score of the employees. So we, we, we go in and we measure the net promoter score of employees right when we buy the business. In other words, before we came in the business, what's the, how, how engaged and happy are employees? And then we measure every six months going forward. And we publish that across all of Alpine. And we hold CEOs accountable for two reasons. One is I think it is probably one of, if not the most important leading indicator of success for the business. And two, going back to being a force for good, it's probably the thing I'm the proudest of in terms of the impact that we have is, you know, 40,000 employees are having an experience that they enjoy coming to work more, significantly more after we buy the business. And I just think about, you know, I think about, okay, you're a single mom and you're, you're working at a call center in one of our companies or something, and before we come in, you know, maybe you're clocking in, you're clocking out, you're not that excited, you're spending half your waking hours doing this, maybe the people don't know your name or whatever. And, and uh, and then how would you show up, you know, in your community? And 70% of people, and this is true across any industries and in the US you can replicate this study, but 70% of people dislike their job or they're disengaged from their job right now, today. And if we can flip that, you know, and have 70% of people feel really engaged. It's not just that it's good for business, but I think it makes a big difference in these employees' lives. And so we take that really seriously. Um, and it's something that, uh, it's probably one of the things I'm the, I'm the proudest of, of, you know, of all the things that we've done. I want to come back and spend a lot of time on the searching, selection, training of this young talented 27-year-old that takes one of these things over, like what that whole system looks like. But before we do that, I just want to kind of close the thinking on the financial outcome associated with these, with this strategy of building one of these platforms.

So if you, again going all the way back to your 5x target objective function or whatever for the funds, what does that mean you need out of these platforms? Like the sort of multiple, where does the return come from? Is it multiple expansion? Is it fundamental growth? Like, you know, simply those are the two simplest areas it can come from. How do you think about like what you need to get for one of these things to be a success? So, the way we think about it is we're underwriting typically, um, an individual deal to a, uh, let's say a, a 3x outcome. Um, and that will typically not have multiple expansion; it'll have, you're buying the business, you're leveraging it with whatever the debt multiple the company is, and then you're growing it, and you know that, that we should be able to get to kind of a 3x, you know, 3.5x gross in five years. So that's kind of our typical standard underwriting. Where the 5x comes into play is you have these asymmetric outcomes where things go right. Organic growth kicks in better than you thought, and you can hold the business longer than you thought, and so you, you can kind of portfolio, your manage your way to, you know, to a 5x through a bunch of, you know, getting on base and then good things happening. Um, but if we, if we underwrote an individual deal to 5x, we would never close a deal. So that's kind of how we think about it.

Now that you have all this data and all these funds, is it true in most of the funds that it's one platform or deal that dominates the returns? Yeah, there's definitely an, an asymmetry for sure. I, my one of my favorite things, I remember I used to read every word that Buffett ever wrote in his annual reports, and I'm going to get this a little bit wrong, but it'll be directionally correct. I want to say in like 1988 or something, he'd made half of all of his money on two stocks, Geico and the Washington Post. So like, he had tons of businesses he bought and sold and everything, but 50%, there's like asymmetry, and, um, yeah, we t—we tend to have at least, uh, one real outlier deal per fund. As we're learning, we're figuring out the ingredients of that outlier better and better and better, so that we're hoping that each, you know, seed that we're planting at least has the potential to be that outlier. And if we could, you know, we want, we want every shot on goal to at least have, have that upside. They won't all hit that, but we're getting better at identifying the ingredients of that outlier. Um, which is, which is, hey, build a real company, you know, build a real holdco with a phenomenal team in a large industry. Really spend the time to get the playbook right, and, and, and then give, you know, give yourself some breathing room. And if we're doing that again and again and again, you know, we're now starting to have a lot more consistent businesses that are, are, are these, these outliers. So, it's not, it's not in our more recent funds, it's, it's not one company, it's, you know, mo—in fact, in our, in our most recent fund, I, I, I mean, I'm biased, but I think just about every company has that potential as of now to be a real outlier.

So, let's go back to the talent. So, it almost sounds like what you've built is like a captive search fund business. That's right. No, that's a good analogy. It's all the same. Really good analogy, personal attributes, time of their life. So, one question I have is on incentives. How do you incentivize, like in a search fund, it's really tight and clean, like you're buying a business, you're going to do—if it does phenomenally well, you as the searcher CEO are going to do phenomenally well. How do you, what have you learned about incentivizing the people that get installed to run these businesses? You know, using your search fund analogy, you know, let's say that you're, you're the kind of person that wants the ball, you know, early. That's the search fund, you know, person. They, they want to be CEO early. I love that. You know, that, that was, I was 25. I wanted the ball, you know, like, I, I appreciate that characteristic. So, they want the ball early. And if you think about what they want the ball to do, it's to go run a business. That's what they want. But they, in the search fund world, they first have to go build a private equity firm to find and close. And if you actually look at the data, I, I used to invest in search, I don't know, I've invested in 70 search funds or more, um, they usually mess up that first part. Like, they, I mean, investing is a pattern recognition business. They, you know, bankers don't want to sell to them because they're only going to ever do one deal with that banker. Um, they have a clock ticking. So there's a lot of stuff wrong with that first part. And then the other thing that's kind of doesn't really work is they don't have really any support. They're like, throw—yeah, you get the ball, good news, but you don't, you don't know what to do with the ball, you know. So, we're trying to say, "Hey, we, we have, I think, one of the greatest sourcing engines in private equity. We're going to find phenomenal businesses, plus we're going to have a whole team that's going to help you evaluate the industry and get, make sure we're getting those right. We want you to play a winnable game." You know, we want, we want to give you a platform where you're, you're going to win based on your talents and hiring and firing and all those things, not missing on the industry because, because you're, you're not going to figure that out when you're 28. Um, so we, we try to, we try to front it, you know, we're very—

Good at at that part of the of the business. And then once they buy the business, we want to have and we'll get into this the the training. So, we want we want we want to say, hey, look, we have 25 years of intellectual property of how to be a CEO, but not just how to be a CEO, how to be a 30-year-old CEO going into a really established business and and getting that team on your team, you know, alongside you and going forward, you know, that's the specific intellectual property that we have. And um and it's not super complicated, but um but but we might as well start you off 25 years, you know, in your 26th year rather than in year zero.

So where do you find these people? Like where do they come from? How did that start? I'm I'm sure it's much easier now. You've got a reputation like this could be a place you go do this thing. It was a very inauspicious start, Patrick. Like we uh so I I um at the time we started the uh the CEO and training process I was I was a guest lecturer at Stanford business school and I would meet with students, you know, for coffee and stuff and they the class I was a lecturer for um they uh it was an entrepreneurship class and and so the students wanted to be a CEO and they'd say hey what how do I go do this and a search fund was an option and but they they didn't like some of the elements I I mentioned earlier and so I didn't really have a good answer so finally one student. I said, "Hey, why don't you join us? We'll teach you how to be a CEO and we'll put you in one of our companies." And that that sounded great. And we so we hired this guy and we weren't going to put him in a CEO role. We're going to put him in like CFO or COO in in one of our companies. We couldn't get anyone to hire him in our portfolio because they said, "Okay, let let me let me let me get this straight, Graham. You've got someone who's got no experience, is a little bit entitled, and super expensive. Like like how about no." So we couldn't get that first person placed. He left.

The next year we had this woman Laura Walsh and uh and and same thing but although this time I said to the this particular CEO I said listen hire her and if she doesn't work out in a year I'll reimburse you her salary from the management company and uh so like a money back guarantee. And she knocked it out of the park and he's like I want three more. And then it kind of took off from there. And when I say took off then the next year we had two and then the next year we had three. And so it it took a long time and it also took us a while to really figure out what kind of business they would be successful in and where their whole you know where their blind spots were and what they could do and not do. We I mean we we made every mistake you could make but um but thankfully we made that on smaller you know classes of of CEOs and and now we you know we have it a little bit more dialed in and we're still learning. I mean I'm not declaring victory at all.

What what are some of the attri any especially extra points for surprising attributes that have made these young people successful? I like the surprising one. Um obviously hard working, smart. I'll say some and then I I'm not sure how many of these are surprising. So number the the number one attribute is just the will to white hot will to win. Um just this you know I'm gonna take this project or business or whatever and I'm going to put it on my shoulders and run it through this burning building. And you just see that show up in their life historically they've done that just this ownership and drive and that's number one. Number two, which is probably one a is grit. So they've been knocked down, they got up. They've been knocked down, they got up because that's going to happen as a CEO and we want to see people who and and I think the great thing about getting knocked down and and getting up is at some point you just have the belief that you're going to get up and you have the expectation you're going to get knocked down every now and then. And and and that one that one is actually more rare than you would think at at some of the schools that we're recruiting from. That grit isn't as common as and we've made that mistake many times. Um third is I'm going to mash a whole bunch of stuff together, but it's like emotional intelligence, um self-awareness, uh just kind of like um emot Yeah. ability to get along with people. Uh we've also got that, you know, when when we've had big failures, we missed that one. So those are probably the three the three big ones. Surprising one would be probably just a bias for action. So getting in the arena, trying stuff, it fails, try again versus this analysis paralysis.

If you think about the marketing to these people like how you get obviously you would want to monopolize like people that have that trait to come run one of your companies. That would be a great virtuous cycle. How do you do that? Is it just word of mouth? Like do you are you more deliberate about it? The answer is it's word of mouth and that so you know um one of the students goes and has a great experience running a business. Their friend hears about Alpine, calls them and says, "Hey, is this real?" And the friend says, "I am having the absolute time of my life." Like I didn't even know this exists. I could can't believe this even exists. And it is as or better than advertised. Um, and that word of mouth is um that I mean that that's so the best thing we can do is just deliver on the experience starting with giving them a winnable game and and a lot of support and um you know I think last year uh this might this would be surprising probably to you but Alpine was the number one most applied to job at Harvard Business School, Stanford Business School, Kellogg Business School, the Alpine CEO and training program. Yeah. Yeah. I mean, you've literally like shortcircuited the front part of that search fund process and Exactly. Which is a pain in the butt. It is a pain. Yeah. Yeah. It's also so interesting that in that process, like you said, you said it as they have to build a private equity firm and then abandon it. Exactly. They don't get to reuse the skill that they built build it to do one deal. And and you know, the other thing is they can just do something on a way bigger scale. You know, they're going to run something much bigger in this and they're going to hopefully get there a lot faster.

Can we spend a while talking about your class at Stanford? So I think you took Irv GBC's class over who was the father of search funds and maybe first talk about him um any anything you learned from him the nature of this class and then I have lots of questions about how you run it. I would say Irv is one of the most influential people in my life and I would also say there's probably a literally without hyperbole probably a thousand people that would say that same thing. So I don't I don't know anyone else that that's true of. You sit down with Irv uh and you are the most important person in the world for that period of time. He remembers everything from your last conversation. He later told me he takes notes afterwards and then reviews them before he meets you again. So it's not just but he just cares, right? He So he remembers everything from your last conversation. He's always the voice of you've got this. Like yeah, you've got this. I'm I'm s you know I've had seen all these students. I've done all this. Let me just tell you, it's going to be okay. You've It's like It's like your older version of yourself could come back and give you advice. He's He's that person. And I can't tell you how many times in my career where I've been, you know, down and out and gone and met with him and just he just gives me a the shot in the arm that I needed at the right time and from someone that you believe it when he says it. So, uh yeah, he's just he's just incredible. And so my experience was I was a case guest in his class and the case was about buying companies in my dorm room and all the stuff that went wrong. And I don't think I would say this but I think I was like the token failure case in the quarter where it was like you know all these people this pray to champions and I'm this like 28-year-old that just gets my teeth kicked in again and again. So he would he probably wouldn't say that but that that's I think now that I I teach there I think that's the role I played in the curriculum and uh one funny story too when I first started uh teaching his case I was young I was 29 and so I I knew a lot of people in the class because I'm basically the same age and uh one of the students told me like in the wrapup of my case one of the takeaways was as you can see from Graham you don't really need to have charisma or be articulate to be a CEO. So that was one of the takeaways. So I I was so nervous and stumbling over my words and stuff. But anyway, so yeah, I mean Irv is just uh um yeah, the class was amazing. And then um I I was a case guest in his class for 12 years and then he was going to go start a new class and he called me one day and was like, "Hey Graham, do you want to teach my class?" And uh I was almost immediately going to say no because I'm like, "Yeah, I already have a full-time job." But I thankfully said, "I'll think about it." I thought about it for a week and I was like, you know, I just I light up every time I'm in in that classroom and I don't think I'll ever have this chance again. And so, yeah, I ended up teaching. I I know it's like one of the or the most popular classes there now.

How did you build it? Like same same set of questions kind of as for Alpine as for as for the class like what what do you hope the class does for the students and how do you architect it to achieve that goal? The first four years I just wanted to learn how to be a professor and teach and uh and I was I was so um I had so many limiting beliefs like thinking I'm not I'm not a professor I've never taught and so I just was probably the first four years I was just trying to you know be like a B+ in that and and I and the curriculum is largely around how to be a CEO things like hiring, firing, having difficult conversations it's not big strategic things it's kind of like at the one foot level like you're going to have a conversation with an employee about getting demoted or whatever it is and we're going to roleplay that actual conversation. So, it's really like granular people stuff which is the is the important stuff as a CEO. So, it's a great class. Uh but but so I did that for four years and then what I realized is students love the class but they weren't doing it, you know. So, they were they were like, "Oh, that was a great class. Thanks for that." And then their dream was to go run something and they didn't go run something. So I said I need to add something else to this class which is like I want to help students figure out what their dream really is and spend a bunch of time on that. A big part of the class is like really giving the students some space and asking questions and having them do exercises, visualizations and some other exercises to tr really tr truly figure out what the thing is that they're excited about. Like if if they if they could do anything over the next 10 years, what would that be? And that takes some time. We spend a bunch of time on that. They have to keep a journal and we have a bunch of, you know, classes and visualizations and then when they get kind of clear on that immediately they're going to have all these doubts and fears and limiting beliefs and all these, you know, their head's going to talk them out of it. And so we go right at that, you know, hey, what are the obstacles? How do we how do we overcome that? How do we design a path to go do that? So that's probably 25% of the class now. And I think that's probably the students what they remember the most.

Yeah. Yeah. You you've told me before some of these incredible framing questions to like really like like expand the mind beyond like incremental thinking into more like blank sheet thinking. Yeah. One of the ones you told me that I liked best that I've thought about a lot since is imagine you have nine lives like you're you're just going to do this life. What do you want to do in the second life and the third life and like really like make it feel bigger, you know, and more expansive. Are there other questions like that one that you found to be the most effective to get people to like give you the real answer to what you're trying to help them find which is like the thing that's burning inside them? Yeah. What's cool about the nine lives exercises I think people get really intimidated by saying you got to find your passion and I got one thing and they get in their head and I'm like okay let's say you had nine they can rattle them off like right away. Okay, I'd do this and I you know I'd be a professor and I'd be a law author and I'd you know I'd start this business. I do a nonprofit and I you know they they could come up with them like right away and then I'm like okay well good good news let's do those yeah good good news your thing is in there somewhere you know I bet and then we try to take those nine and talk about which ones they have the most energy for who are they going to meet along the way how are they going to grow how are they I mean a great example is a student of mine one of their lives is the thing they did before school they're going to be a convertible bond salesperson and the one one you know life number three was like run a run a business and as they started learning you know how are they going to grow and learn the convertible bond one wasn't as interesting even though they were going to make more money doing that initially. And so yeah, you can dig into those nine lives and then they can kind of like it's just a lower um stakes way to kind of get them to their their something they're passionate about. And the and the secret is you can have all nine at some point in your life just not all at the same time. And then other questions are like um we we do visualizations which is like you go out 20 years and we and we spend some real time on this and you're you're meeting your future self 20 years from now and your future self has just been incredibly successful and everything's you know worked out and and you really spend some time on like what does that look like? And then you come back and say well what advice did that future self have for you now? And you know the advice is always like go do this thing or hey relax it's going to work out or you know don't stress about these things. So we we do exercises like that. Some of the key questions are you know what would you do if you knew you wouldn't fail. Um relaxing the how not worrying about how to get there. The nine lives you know there's a whole bunch of those incredibly powerful. Like and I'm curious how you've learned to administer them. Like do you personally have to do it like one-on-one with the student or is it more scalable than that?

It's both. So, there's a lot we can do in the class and then they can break out into groups and do some one-on-one stuff. Earlier in the quarter, I have a class just on coaching where they learn how to be like a good enough executive coach for each other. That's a we have a whole class on that. So, then throughout the quarter when they have to coach each other, they have some core skills. So, they they so I can do that in for an entire group. And then I do tons of one-on-one meetings. And uh my one-on-one meetings are typically they're almost always the same. The student comes in and says they ask the same question which is like what should I do with my life number one question I get asked great question and then and then they say okay I have path A and I have path B and I'm torn and then as we I spend a few minutes with them asking some questions and in 10 minutes it's clear that that their heart wants to do B but their head's talking them out of it and you know A is the kind of safe thing and then we just spend the rest of the time trying to un unpack how they can do A in a lower risk and that sort of thing. So it's and and that's the framework I use in the in the class as well.

How has being a teacher changed you personally? Like what what are the takeaways that you have or the behav like how are you different as a thinker as a person because of this experience that you've had with all these students. So I mean hundreds of I'm sure students thousands. I try to make each class and each quarter be a reflection of like the the best I've got. Like this LA this is my 12th year teaching this year. I spent more time preparing than I did in year one. Like so I'm I'm trying to like use it as a as a way for me almost like to personally share my latest and greatest frameworks and thinking on really everything from everything from running a company to personal growth to spirituality. you know, I'm I'm trying to bring everything I can. So, it's a forcing function that almost like makes me download an entire year of of reflection into into, you know, 19 classes and and and bring, you know, bring the best that I can. Um, so just the process of of that reflection and having to codify it is has made me learn it better. And and and then the other thing is I have to practice it. I can't stand up in front of class and say um you know what's keep you if you're running this business you can't have B+ people in your key roles in your executive team and then I I look in the mirror and I'm thinking okay I got two B+ you know and so I got to go you know I just adise yeah I I do I do fall I I I have this thing where I really can't stand up in front of the class and say something that I'm I either I'm not doing or don't believe and then and then sometimes it's a good mirror to look at my own life and make sure I'm living that way.

What is your relationship with the students like after the fact? Like do lots of them come work for you? Do like it this is a very common story you hear especially at Harvard and Stanford it seems and and and other schools too of someone teaching and that they're doing it usually for a good the right reason but it ends up being tremendous fuel for their business because of the talent. Is have you had that happened to you? The way it became a fuel for talent isn't because I was going out and recruiting my students. It was because I was meeting with enough students to learn what they really care about, what they're passionate about, and then that helped me design a role at Alpine that was directly catering to the things that students wanted at the level that the students were because I understood that really well. So that's how it was helpful is that I could say, "Wow, there's all these MBAs who want to be CEOs. They have this skill set, but not this skill set." And it just happened to marry up really great with our strategy which has like all these um you know 12 to 20 million revenue business. I you couldn't ask for a better training ground you know so it it that's how it was helpful. Uh mechanically.

It works out really well because we do all of our recruiting at Alpine in the fall. So, by the time my class comes around in the winter, students either have a job or they don't. So they're not at Alpine. So they're not inter—it's my class is not a job interview, which is really important to me. So I, I draw a line; you know, I, I, I never interview students. I, I don't even ever give feedback on students. Um, you know, so, so I'm when I'm when I'm teaching, I'm really just their, their to be their professor, and um, and and the calendar works out that I can do it that way.

Your whole um, effect and and the story and the setup, it, it just so rings of like athletics, and um, you said personal growth. Somehow, in the world of sports, it seems obvious and cool that LeBron would have like 25 coaches and spend all this money on his body and like do all this stuff to get better. Like, not our heads. Like, it sounds obvious. And then somehow, in the professional world, there still seems to be like a stigma of sorts associated with like personal growth and executive coaching. And what, why do you think that is? Like, it's the two aren't fundamentally that different, but there doesn't seem to be the same appreciation for the potential value of something like coaching.

Or the first coach I had in 2009, I sat across the table from him; his name is JP Flom, and he pitched me on being an executive coach, and I remember thinking, "What the hell is an executive coach?" You know, "What are you going to do?" And he, um, and I, and to this day I don't even know why I signed up. I think he was just really compel—he was a compelling person, but I think he bought the sales—salesman.

Not I bought the salesman.

Yeah, good one.

Yeah, I bought this salesperson. And uh, I, I think most of the people that probably have negative things to say have actually never done it. You know, it's uh, I, I, I, I don't, I don't think I've ever met anyone who actually hired a very high-quality coach and had anything negative to say about the process. So, and they probably just don't really know what they can get out of an experience like that.

So, if you think about the, the reason you do it or have done it and and have all these coaches that are part of your business or whatever, can you define personal growth? Like, what, what does that actually mean?

I have a number of different coaches I use for different things, but I'll, I'll give you a couple of real examples. So, I have a coach, um, named Mandy Shoemaker, and just to have a call with her, I have to fill out a form that says, "What are your one-year goals? What did you say you were going to do last week? What did you do? And what are you gonna do this week? And what's the outcome of the call?" And just filling that out every week, if I never even talked to her, would be a great accountability. And then obviously she's an amazing coach. She came up through the Tony Robbins system. So, for her, it's like, it's like a personal trainer for your goals and your life, and like, I, what better investment is there than that, you know, to have someone who like, like I don't need a personal trainer to go to the gym, but I actually do need a personal trainer to like grab me and say, "What are your goals? Are you sticking to them? Are you on track?" I, I think that's really valuable. I, I'm not able to get there by myself without a coach.

Um, then I have another coach I use, and and we will set aside four hours, and this will be like really blue sky, messy thinking. Sometimes nothing comes out of it. Uh, we ask big questions like, "What do we want Alpine to be 10 years from now? Um, what do you want your life to look like 10 years from now? Where are you getting on track, off track? You know, if you were going to achieve your tenure goals in six months, what would be true?" You know, just these really big questions. Sometimes amazing things come out of that. Sometimes amazing things come out of that 3 days later in the shower. But I like making space to have that. And I just enjoy that, too. Um, so it's like that's more like just a way to put space on my calendar. You activate different parts of your brain when you talk than when you think or read. So, just the act of having another coach, you're actually lighting up more of your, of your brain. So, th—those are just a couple examples. And then I have another coach, uh, Rachel Lockett, who helps with the org chart of Alpine. You know, I haven't every—at every step of the way I'm running a business that's bigger than I've ever run before. She's run—she's been the chief people officer at really large companies. So, she can kind of help guide me through like, "Hey, this, you know, this org chart makes no sense, and here's some ways you could be thinking about it."

So, I want to come back to that definition question again. Personal growth. Yeah. Like, what, what, what does that mean? I'm assuming it's get better. What does better mean?

I'll go like a little bit deep here, but um, you know, I, I think that ultimately each of us has, uh, most of the answers in our, in our inside of us, in our intuition. Like, I think we have this—we have this compass, um, and you could call it your intuition, your soul, whatever that is that's incredibly powerful. It's like our own LLM, right? It's, it's taken every experience and every, every um, input we've ever had, and it's storing all this, and it has all the answers. And so I think a lot of personal growth is understanding what that intuition is telling you and um, and and spending the space and time to, to, to really understand what it's saying and getting out of your, your head, which is a lot of times confusing things, and then having the courage to go do what it says. Um, that's probably my highest level of personal growth because I think if you can do that over and over, you'll, you'll become you, you know, you'll sort of self-actualize and become the best, you know, version of yourself, for lack of a better word. And then there's a whole bunch of things underneath that, um, to, to try to make that happen.

What are some of those things? Being really intentional about your life. Um, figuring out what does a successful life look for you—look like for you in all your different areas and like, and really spending time on that and designing it and then, and then li—you know, and then, and then having a practice where you're, you're working toward that, you know, almost on a daily basis.

Is there an episode of the second part of the description—courage—it's a key word—it seems like that stands out in your memory—like, what does that mean in practice for you? What's a time that you felt like a thing you—your intuition told you and then it required courage—which is a big—a big—

I mean, I'll tell you like a really early one, um, this is the first one that came to mind when you just asked the question, but as an early one. So, I'm in Toledo, Ohio, and the, you know, to be, to be the, you know, popular and be the cool kids, they, you know, they didn't care at all about school. You know, a lot of them were drinking, you know, doing drugs, you know, they were, um, some of them just really weren't nice kids, you know, they were, they, they were bullies in, in many cases. They were like the athlete group, and I just remember that just didn't feel n—you know, that, that wasn't—that took a lot of courage for me to separate myself because I could, I could have been in that popular group, but it just—I chose a different path, and at, you know, 12 or 13, that took for me—that took a tremendous amount of courage, and um, and isolated me. In a very short period of time, I realized that that was the right call, and that that gave me just so much um, confidence in listening to that gut from then on. I still try to tap into that, but, but I think, I think at a pretty early age I, I just got a sense of like how, how, how powerful it was to just listen to that voice.

If, if we have this amazing onboard intuition LLM and then, you know, courage we can learn or something over time. It, it seems like the other key step here is asking the right question of the intuition. I'm curious about two things: what you've learned about that part, like how to get to good questions, and then I'm also curious like zoom into today, what those questions are for you today.

Your head is a really powerful tool; it'll, it'll talk you out of a lot of things. Um, three really simple ones that I think, you know, so, so first off, to get into your intuition, a lot of times it's meditating, uh, breath work, um, really being still and quiet and getting out of your mind and, and you know, a lot of things that people have talked about for thousands and thousands of years. So, I think that's, that's a part of it is to try to get yourself in that state where you're, you're silencing your mind or, or separating yourself from your mind as much as you can, which is kind of the core principle of meditating. Um, but if you had to jump to just questions, which is a form as well, it's some of the ones we talked about like, um, "What, what would I do if I, if I wasn't afraid?" "What am I afraid of?" "What's, you know, how is fear, um, playing into my life right now?" You know, there's a great um, Carl Jung quote, "Where your fear is, there is your task." Usually look at where you're—where something is, is holding you back that you're afraid of and go into that and toward that thing, and then there's, there's your, your work going to be in there versus running away from it.

A good question, you know, just kind of uh, using, using kind of your future self. Uh, okay, I, I, I have this decision to make, going left or right, and right now I'm in the fog of war, and it's scary, and gosh, it's going to be really hard to go either direction, but stepping out and saying, "Okay, if you—if your—if your 10-year—10 years older version of yourself were to give you advice right now, like what, what would they want you to do?" And so you're getting out of like the immediate fog of war. And a lot of times the answer is super clear. So, those are all just a few, a few questions or tools that might help.

The point on fear and being afraid or whatever makes me realize I didn't—we talked about an amazing deal. What was like a terrible early deal?

You know, we, we had a lot of deals that just didn't go well, but probably the worst deal we did was this slot machine business that we owned. It wasn't economically the worst deal, but it just was so consuming. So, we, we, we put money in the slot machine business. They made them manufacture; they, they made basically software that went into slot machines, and then they assembled the slot machines somewhere else and, you know, put them in casinos. They put them in in a rev share. So, we give away the machine for quote free, and then we get 20% of the win. So, it had a recurring revenue element to it. It was, it was, you know, on paper a good business. Um, and and we, we, we sold to Native American tribes, which was exploding at the time. This was probably the early 2000s. So, there—they—Native American tribes were just growing their, their gaming presence. So, all those fundamentals are the reason we did it. But there was just something, and I'm sorry I'm going to probably offend a lot of people here, but there's just something about that industry where there was still an undercurrent of like some people that weren't playing by the rules. And um, so two things were tough, a few things were tough about that. Number one is we just had way too much money in it. We had co-invest in the deal. It, it got to be—we, we were in a $68 million fund at the time, and we had $170 million in the business, including co-invest. So, it was just like too big to fail. So, we had to make it work. I became CEO of the business. One of my partners was basically the CFO. Um, we had technology, we had customer concentration, we had capex. So, it was a very hard—we had uh, product obsolescence. It was a very hard business to run. And then there was just again this element of like you're competing with some people that don't follow the rules or the law. And there was—I don't know—just it was just this undercurrent that it just didn't feel right a lot of the time. And I, and I still remember this one time, uh, I, you know, someone would ask me about it and I'd say, "Oh, you know, it's just entertainment, and the median income of people who play slots is actually higher, and they can afford it," and I'd have all those things. And then I remember this one time I walked—we had these like local casinos. I remember one time walking in, and there was this like five-year-old girl sitting, um, outside with a coloring book, and her mom was in there blowing her paycheck, you know, and I just—I just was like, "I don't want to be in this business," you know, and um, so that—aside from it consumed a lot of our time—it just—that was probably the worst deal we ever did. It set us back quite a bit.

How did you work it out? What was the end of the story?

We saved the deal because we read that Illinois was going to open up and put slot machines in bars, and Illinois is like the fifth or sixth most populous state in the US. And so we were—we were like, "Oh my god, this is going to happen." It was going to happen in like a year. Then it was two years and three years. But in the meantime, we went around Illinois and made deals with all the bars. You know, they had no money coming in. These bars weren't making any money. So, we'd pay them X dollars to have the rights to put slots in their bars. And we, we were like three years ahead of time, ahead of people. So, then when the game—thankfully the uh, law finally passed, and the games came out, we were, you know, the largest or second largest supplier in that, in that market, and then we were able to sell the business on the back of that.

But did you earn a return on the equity on the 170?

The initial equity was about a 3x, and then some of the late equity was like a 1x. But yeah, we didn't—everyone—everybody—the banks got paid back. Every one of our investors made their money plus we had some preferred equity. They got all paid. So, it was like we did escape. Uh, but yeah, I would never want to bet our business on one company.

So, in addition to the concentration lesson, is, is the other key lesson just like don't back businesses where you're not a fan of the core product or service?

Yeah, I, I think so. I think you want to—at least for, for, for us, you know, I want to think that we're having a—I mean, it sounds cheesy, but we're, we're having a positive impact. You know, the world's a little better because we're building this company. And I just—if I'm being honest, like I, I don't think that was true in that, in that business.

What are you most afraid of today?

I told you this when we talked the other day, but um, my two boys went off to college, and it was, it was like the end of a, a chapter that was really one of the first times I, I kind of felt like I needed to start facing my mortality. And I think that's the thing I'm the most afraid of is like, "Hey, how long do I have? And like, am I going to be able to do all the things that I want to do in this lifetime?" And this is the only one that I know that we have, and like, am I doing that right now? Am I, um, you know, or, or am I going to look back and have any kind of regrets? So, I'm—yeah, that's probably the thing I'm the most afraid of.

What do you—what have you done about that?

I try to—whatever I'm—I'm—I'm in at the, at the moment—just be 100% fully on and fully present and just, just be all in with, you know, a thousand percent of, of my energy at, in kind of each thing, and like, and actually ironically not overthink it. That's been the thing that I guess has, has allowed me to feel the—feel the best about, about the mortality.

If I think of like pillars supporting the ability to do that day in and day out as like a human biological thing that has limited energy or whatever—this could be anything—you know, what you eat, what you do, whatever the pillars are. What, what are those pillars for you that let you do that?

I think one of the pillars is that you have spent the time being intentional and spent the time getting in touch with your intuition so that you just know the things you're working on are the things, and you just—you don't have to be hedged at all. Like, you're not spending your time—"Am I in the right job? Am I in the right relationship? Is this—am I living in the right place?" You know, like, you already—you've already answered those questions. So, you can just kind of relax into those things. Um, so a lot of the work that, you know, I do on that has allowed me to relax in, in those things. I think the physical part is massive. I think the most highly correlated thing to having a good day is if I feel good physically, like, and that starts with sleeping well, and then there's a whole lot of things you back up from sleeping well. So, I don't—I don't drink alcohol. I don't drink caffeine. I don't take sleeping pills. You know, I, I have a kind of nighttime routine. I try not to schedule stuff early in the morning that's going to stress me out. You know, I think, I think that is so underrated, right? How, how you feel physically like matters a ton. Um, so those would be two that I think—if I go back to our, our Teal versus Schwarzenegger analogy—my experience with the Schwarzenegger of the world is that the structure of their days matters a tremendous amount, typically a lot more than the Teals.

Um, so maybe could you give us like a day in the life, like in, like a—let's say a normal day of work or something, a Tuesday? Yeah. What, what does like a—in some detail—what does like a day in the life look like?

I'm waking up with no alarm. Hopefully, sleep in 8 hours. So, you know, maybe I go to bed at 10 or 9:30, getting up at 5:30 or 6. Um, I'm having a, a somewhat relaxed morning that's going to include like at least 15 minutes of meditating and then a workout. And I try to work out really hard. Like, I try to—I try to shocked. Yeah. I try to like put like kind of ease into my workout enough and warm up that at some point in that workout, no matter what it is, I'm going hard for at least something because it just—I don't know—it has some kind of impact on me that I enjoy. Um, and then I'm trying to have my day—if I, if I'm successful—I have my day start, you know, a little later, like 9 or 10, so that I have a little time in the morning to just kind of gather myself and kind of get organized. And then like I have this habit I've done since I was 12. I write out, you know, "What are the three most important things you're doing this year? And what are the three things you're doing today to move toward those things?" So, I, I write that list every day. Every day. Weekends. I check that—probably not weekends. Yeah. Weekdays. And then um, I have it—yeah—all on OneNote. And then I try to just compare my schedule to that. I look at the things I have on my calendar. Hopefully, I'm prepared for those things. And then I try to just be present, you know, until throughout the day. And, and in that day, if I think about the archetypes,

A second, like pairing of archetypes for people running investment firms: you have a category of, like, investor-focused people and more like what I would call CEO running a business that happens to do investing as its thing versus people that are like doing the deals. So, like, very famously, like Schwarzman or the KKR founders, like they were kind of CEOs from day one. They weren't really like deal people. They were, of course, involved, but like it was more about building the machine than executing the individual deals.

And I know you've done both, but if you think about the day in the life today, like if I looked at your meetings, how does it break down between like, wow, we're making this huge equity investment, like let's talk about the company versus talking about Alpine? I worked at four private equity firms before I started Alpine. The leader of every single one of those firms looked at their job as being a deal person, you know, trying to close deals. And in many ways, they almost were competitive with me and like, my deal is better, and I'm gonna have I'm gonna grab your analyst because, you know, whatever. And um, and they spent virtually no time, if any time, saying, how do I make this the place where the best people want to stay?

And I remember the last place I worked, if they had spent 25% of their time doing that, you know, they'd probably have the best returns. And so I remember thinking that, like, tucking that away in my head and thinking, gosh, that's so—to answer your question—I think that's the most important part of my job is: is Alpine the place where the best people want to come and work and spend their lives and their careers? That that's the most important part of my job. Um, and then similarly with our portfolio companies, which are really an extension of us, as you know, because we're putting our own teams in there, you know, are those a place where we can attract the very, very best people? So that's—I—I spend a lot of my time on that and, you know, how are we structuring the deal teams? What is, you know, what does career advancement look like? How are we recruiting? Um, you know, meeting with the world-class people on our team and trying to say, hey, how are things going? What's what's working well? What's not? And then, you know, that that that's a big part of my of my day.

But to answer your question specifically, I have gone through periods where I'm doing, you know, I mean the first 10 years at Alpine, I just did deals, and then I've gone through periods where I did—I wasn't working on deals and wasn't on boards. I think for me the right balance is to probably spend around 25% of my time in the action because I think it it's good for me to keep one hand or, you know, in in the action so I can know what it's like building one of these companies and what problems they're facing. I don't want to be totally out of that, and then I'm spending probably 75% of my time, you know, working on Alpine itself.

Where do you think private equity is going? Like, it it is—it's a very interesting time in the news because Yale and others have just sold these, you know, big secondary interests and a whole bunch of their private equity exposure, venture exposure. Um, it's a mass—it is an industry. I mean, it is professionalized, mature, huge. There's huge public companies that do this. Um, when you started Alpine, it was it was very much still in its in its absolutely, you know, whatever earlier innings, let's say. Where do—how would you describe it today? What does it kind of feel like to you having been in it a while? Where do you think it might go?

Well, if you go back to when I started, like, let's just say 1990—I started '94, but let's say 1990—I think the 10-year Treasury was around 8%. And then you watched over the subsequent 30 years from 90 to 2020 interest rates steadily went down. I mean, they had a little few spikes, but they went basically from eight to zero over a very steady period of time throughout that, and that had two massive impacts. One is the pension funds pretty much all underwrote their pensions at eight or nine percent. I don't know why they picked that number, but they all did. And all of a sudden your your risk-free rates at zero. You have to find alternatives, and so over that same period of time that last 30 years, you had allocations just steadily increasing, like it was a biggest tailwind, right? I mean, over that time CalPERS probably went from a 0% allocation to I don't know, 20% allocation—that's a lot of money—and then multiply that by foundations, endowments, and everybody, and so you had this just massive tailwind. And then the second one, the obvious one, is debt was really cheap, and so that's a big part of the private equity model, and borrowing was cheap, and so you had multiple expansion over that entire period of time. I don't care what anyone says, there was multiple expansion, you know, I mean, we were buying the same companies in 1994 at five times that we're paying 13 times for now and excited about to do so. So, it's um, you had that trend going on over that same period of time, and therefore, you know, returns were good, generally speaking.

Um, today, you fast forward, there's 5,500 private equity funds. It's very efficient. Interest rates are going the other way, and um, I—that's dynamic one. And then and and dynamic two is there's a lot of um—there there there's a dynamic. It's very early and it's tiny dollars, but p—individuals are starting to be able to go into private equity through um their wealth management um which they didn't used to be a thing. I think the impact of all that is that the people kind of who were putting up, you know, median returns um and and felt like they had this, you know, god-given right to raise their next fund and it was going to be bigger—I think that's not going to work out very well in the next, you know, decade or so. I think you're going to have to be pretty differentiated, or the really, really massive firms that are able to collect the money from the individuals, which is the new tailwind coming in, I think they're going to do really, you know, they're going to be able to amass assets. But I think it's hard. I mean, it's it's gotten harder every single year. I've been in it for 31 years, and um, I think it's going to get even harder just given some of the potential headwinds of interest rates.

One of the themes here has been between your class and Alpine and the talent program—all these things kind of requires that you see the best in people. Yeah. What have you found are the keys to doing that specific thing?

Well, I think one of my probably favorite things is when I went back—when I was telling about you earlier about Irv Geck and how at certain times in my life, I would walk in and ask for his advice and he would tell me, "Hey, you know, I've seen a lot of students, I've seen a lot of people, you know, you got this." And coming from him, like I would believe it, and I would—it would matter that he said that. And I think a big part of it, Patrick, is we get to be that force now for these these MBAs who are coming in and saying, "Hey, look, look, I know—I know you've—here's been your track record. Like, we've done this a lot. You're going to—you're going to be awesome at this. Like, you're you're you're ready, and we're going to help you go do that." It becomes somewhat self-fulfilling, like the the students uh believe it, and they start behaving as though it it's true, and that it kind of becomes true. So, I think I think seeing the best in people is um it's really one of my favorite things about Alpine. Our passion statement at Alpine is unleashing heroes. And so, we we think that the people we're bringing on at Alpine and our companies really are heroes. And they they just haven't had the arena yet to really like fully, you know, be the hero that they that they can be.

If you think about the industry as a big participant in it, are there any parts of it that really bother you? Like, are there features of the private equity investing style, landscape, industry, whatever, that you think are messed up?

Yeah, there's a lot. I mean, there's so much money in the business that it's it's just very, very hard to not get distracted by that. If you really think about, you know, I was talking about before about the objective statement and how much that matters. If you watch what firms do, maybe not what they say, but what they actually do, their objective statement is go raise the next fund, go raise a bigger fund. And I think that that makes sense, right? That's how they stay in business. But I think it can lead to the wrong behaviors. You know, specifically, you cut your flowers and water your weeds. You know, you you have—you show these great realized returns, and you're compounding your stuff that's not great. It it leads to a lot of people that come in the industry and and you know, maybe maybe are in it to you know, to make money as opposed to build things, or—and they don't always show up the best way sometimes.

Anything we haven't talked about that you feel like is an essential part of your story, Alpine's story, ingredients of success as this in as this style of investor that that we haven't—I mean, I think probably the biggest thing is um it just took a long time—through the first um 14 years at Alpine and and then I had seven years of private equity before that. So I'm 21 years into the industry. I think we managed $400 million or something like that, and we had a huge team, and we weren't really paying ourselves, and uh 21 years in—21 years in—I mean 21 year—21 years in—my salary was $100,000—that's a fact—and we hadn't yet had a carry check uh because our we had a a European waterfall, and so you know, we're waiting for the last company, which was our best one, and it just took a long time. And I think I think Alpine is a success story. A lot of it is because we just stayed with it for a long period of time and were kind of constantly growing and learning through that entire time. I think that's something that at least my students and I think a lot of people miss is, you know, they probably hear people on your show who sound really successful and because they are, but they may not really understand that it didn't just—it doesn't just happen. Like it takes—it takes a long time. And I think giving people the un—the the perspective going into starting a company that it's going to take a long time and and like be ready for that ride. So pick something you're excited about that you want to stay with for a long time because if you're in it, you know, to to to make money and exit, like you're you're probably going to be disappointed.

Doesn't that pair beautifully with your questions for your class though? Like the the lifetime questions or whatever—that—I mean, to for you to go 21 years and be making 100 grand—like obviously you've you've loved part of it—like you wouldn't have kept going otherwise. It seems like there's quite a nice pairing there.

Absolutely. Not to get too philosophical, but like the real journey, the the real part of your life is the journey, and and like the building and the not knowing how it's going to turn out and the, you know, the challenges you face and like that's when you look back—that's all the fun stuff. And so you wouldn't even want it to go great in the first year even because I think you'd be you'd be depressed, you know? I think you want it to—you want it to take a while, and you want to learn because what's happening along the way is you're growing and you're learning who you are and you're building your own confidence and your own resolve. And I think the dirty secret is that's actually what it's really about. You know, that's really why we're here. I was reading uh some of my old Alan Watts notes this morning around philosophy, and I I found this quote which was so good, which is the point of dancing is not to get to a particular spot on the dance floor. I love—I I love that story. He talks about dancing is so awesome. And he says, "Yeah, you know, you're not rewarding the fastest dancer, right?" He says that in that quote.

When I do these, I always ask the same traditional closing question. What is the kindest thing that anyone's ever done for you?

First thing that comes to mind was last year, uh, we're um—I my my wife's out of town, and I have my middle son, Blake, and Lily were at home, so it's just the three of us. We had these crazy power storm uh storms going on. I get up in the morning early. I drive down to Stanford, and Blake calls me, and I'm like, "Oh no, what's happening?" And he says, "Hey, school's canceled, you know, cuz there's no power." And I said, "Okay, no problem. Just, you know, make sure you drop your sister off somewhere. She couldn't drive, you know, before you you you go wherever you're going to do. Just make sure she's okay." And he's like, "No, Dad. Um, Lily and I want to come down and watch your class, you know." And uh, I just remember thinking, "Wow, you know, these these two teenagers uh who could have done whatever they wanted on their day off, like they're going to drive an hour and a half and come hang out with me at Stanford." And I don't know, it just really, really moved me, and it meant the world to me.

Amazing. Amazing place to close. It's so cool how you've built what you've built with um some simple ideas just taken very, very seriously over long periods of time. I think that lesson is especially powerful. So, thank you for telling us the entire story, and and so cool what you've built.

Thanks for doing this, Patrick. I love your podcast. I've listened to so many episodes. I learned so much. So, I'm really honored to be here.

Thanks so much.

Pleasure is mine. [Music]