Lisa Calhoun
Welcome back to the Atlanta Startup Podcast. This is Lisa Calhoun, your host and general partner at Valor Ventures, a seed-stage venture capital firm operating right here in Atlanta, Georgia. Today, I have a unique guest that I think a lot of you are going to relate to. She is studying private equity. She reached out to me about a career and a path in private equity. And so I invited this young leader to join me on the podcast so that you can hear our conversation about building your career in this fascinating industry. Welcome to the program.
Anne Bailey
Hi, Lisa. Thank you so much for having me.
Lisa Calhoun
I’m thrilled to hear so tell us a little bit about you. Where you grew up, where you went to school, and why do you care about private equity?
Anne Bailey
Sure, absolutely. I am originally from the Midwest, born and raised in Illinois on a tiny farm. Growing up, my family, my dad, had a little bit of an entrepreneurial bent. Starting a consulting firm, and my grandparents started their own bar. It’s kind of in my blood growing up, but I went to college, just got a job afterward, and really ended up in Corporate. I’ve been in the corporate world and in manufacturing for the last 13 years or so. And then last year, I started getting my MBA at Emory. This past fall, I started a course called Entrepreneurial Private Equity, with Klaas Baks and David Hanson. Before this class, I knew what private equity was. Actually, my company acquired a company that was owned by private equity but I didn’t really know about the entrepreneurial side of it. There’s a lot about it that’s really been fascinating to me. I’ve been wanting to learn more and more and more. The reason I reached out to you is that the more we look at private equity companies, I just haven’t seen a whole lot of women. I really wanted to get your perspective about one, being a woman in private equity. Two, I’m not just out of school, I’m not going the investment banking route, that’s not for me, is that okay? I mean, just some general advice about how can we get started?
Lisa Calhoun
Well, let’s break this down. And if you’re interested in private equity as a career or just learning more, this is the program for you. I’m going to start by just saying, I remember when I first heard the words private equity, and it wasn’t that long ago, I was well past making my first few million as an entrepreneur. It had to be 2011/2012. Somewhere in there. I was in my forum group. Forum is a type of peer-to-peer entrepreneur coaching group, peer coaching, organized by Entrepreneurs Organization. One of the members of my forum was in private equity, specifically investment banking, and I said, “What is it? Why is it private?” I had the dumbest questions. I think that that’s where all great careers in private equity start with the courage to ask questions. And ultimately, I think that’s the key skill. I mean, it is about some intuition, but a lot of analysis. And if you’re afraid to ask questions, you’re never going to get to that genuine analysis that drives insights. I’m glad you’re asking questions. And if we’re going to break it down into smaller bites, what would your first question be?
Anne Bailey
Well, actually, I am. I’d love to know, just from your background, what made you want to get into venture capital or you know, private equity? I thought I actually saw you were a Russian major and undergrad, I was too. I’m curious. Is this something that was always in the back of your mind to be an entrepreneur? Was it something when you talk to the person in your group, it went from there, or I’m just curious, because, for me, it’s been like a feeling in the back of my mind. I’m kind of not in the right place. I’d love to hear just more experience from your end. How did you decide to make the move?
Lisa Calhoun
When I got into it, I think I’ve always had the same passion. I didn’t always know how to emanate that passion in the world professionally. I do think that we are each subject to the culture. It’s not just women that are subject to the culture, we all are. But I think women and people of color, because we receive a lot of negativity through those types of trainings, we become more sensitized to it. But truly, and there are many men who would raise their hands and tell you, they don’t necessarily like the cultures they’re forced into either. And frankly, I feel we should all invent the culture we want to live in. We do that as we show up in the world. For me, my passion has been building sustainable businesses. I was raised in my parents, B2B print shop. We were a bank printer. From the time I was eight years old, I was either sweeping the floor or then I learned darkroom skills. We’re talking like 9/10 cutting paper, 10/11 starting to answer the phone and take orders and sales, 11/12. and at 12 growing up in Georgia, you can start to run the van, so started making deliveries with my dad on Friday. I got the chance to work with most of the financial service businesses of any scale in Georgia when I was really young. Our customers sort of lit my path. I mean, not only were they the focus of my entire family, but my mind grew up trying to help businesses run by tech, solve problems so they could grow, we would also be successful. And at first, when I went to college, I felt that I could take a break from business. I know this is funny but I thought that my scholarship to Baylor was an all-paid resort vacation for four years from the business. I majored in writing in Russian, I was like, “Okay, the brain’s free for a moment.” But I was running an agency out of my dorm room with a fax machine. At the time, you could make 15% off any trade ad placed in publication. I could make thousands of dollars, like passively. It was fantastic. I didn’t even think of that as a business. It was so low scale. But that’s how my mind worked. And then when I got out into the bigger world, I realized that there are many ways to grow businesses. One of the first presented to me as someone who was in fairly knowledgeable, actually, about the balance sheet and sales was marketing. And that’s something that I think women are really told. You’re a woman, go into marketing, possibly. So I went into marketing, and I was really successful at it. I had a lot of fun building a marketing agency that served software companies. I worked in tech consulting as well, helping software developers build maps, basically requirements gathering, and project management for software. Anything to help businesses grow, but I always leaned toward tech, couldn’t help myself. Even in marketing, I leaned towards CRM and automation and CMS, and how do we automate and make this work faster and at scale? Venture Capital was an extremely natural fit for me. Once I realized, as an adult with a few years of business experience and entrepreneurship under my belt, once I really knew what my skills were, I realized that they were a very strong fit for venture capital. And it is indeed, the joy of my life, the work that I do every day. I hope that helps answer the question. And maybe those are unique dots for me, but that’s how the dots go together.
Anne Bailey
That’s amazing. It really is. It seems like it kind of just all worked out and fell into place. I’m curious, what would your advice be for someone who didn’t realize this world existed and went a different route for the majority, the first 10 years or so of their career, and now the world is kind of opening up? What’s the first step in talking to people trying to find a job in this area? What advice would you give to someone just getting started, besides just learning how the business works?
Lisa Calhoun
I think it depends on what you want to do. I knew that I wanted to help companies, tech companies specifically, grow and scale and find access to capital that would really be supportive capital, intelligent capital. I knew that that’s what was needed. Having spent 10 years as a founder running my own business that worked for software startups and helps them scale and grow, I felt like to some extent, there, while the write to market was very strong and very good at what we did marketing services and support, Salesforce development, HubSpot development and integration, turned out commodities, but you can find them, I mean, you can get three bids in two days. I felt like what I was doing was great, but not necessarily truly special. And so it was necessary, but not sufficient to change the world where I care about, which is the south. But venture capital, access to venture capital here is still quite, quite difficult for a seed-stage founder, especially seed-stage founders who are not from traditional backgrounds, who didn’t go to Harvard, or Stanford, or Yale, and don’t have the pedigree of even generations of experience. And so I thought, “Well if I could build a venture capital firm without bias, we could invest in all of the best founders at the seed stage.” That was something I was already very passionate about. Helping the best founders. The capital was just a piece of the puzzle that I was trying to put together within the arc of my life. I would say, examine the themes of your own life, it doesn’t matter if you’re in private equity or not. Imagine your own themes. What are they? And then how does that apply to building valuable, fast scale? Powerful change-the-world companies.
Anne Bailey
Awesome, that actually makes me feel a lot more confident about it. That was a great answer. And actually, it leads me to two more questions, if you don’t mind. First, looking back before you started your firm, what do you wish you knew then that you know now? And also, did you ever have any doubts before you started your firm and how did you combat that? Do you have a mentor? Did you just go for it? Or was there something else that you did to kind of increase your confidence going into the venture?
Lisa Calhoun
I think confidence is overrated, specifically for women. We’re always told to act more confident and just show up. Boss up and all those things, and that can actually undermine our power, which can be authenticity. I mean, if you look at leadership from a broader perspective, people follow who they want to be. You can’t make them follow you. But if people are following you, that’s the acid test of are you a leader or not. And so in a way, you can’t worry about it. You can do your best to show up as the leader you want to be and to lead the world in the direction you want it to go. But if no one follows you, to some extent, that’s freedom of choice. I removed myself from the burden of being perfect. I would love to be perfect and I would like to be better and I intend to be better and I have ideas and dreams and goals just like everyone does about showing up as my best self every day. But I also realized that I am a work in progress. And so to me, I don’t judge myself by how confident I’m feeling. I just don’t. I’ve learned not to do that. Because healthy self-doubt and questioning have led me to a place of a lot of satisfaction in my life. I think it’s healthy. I don’t entertain doubts day in and day out. But when they arise, if they are credible, I do think about, “Oh, maybe I should doubt that.” I believe as many investors would, with my private equity sisters and brothers here, there is a relationship between risk-reward. Encourage high risk and be high loss and high reward. You have a high reward, you have to embrace the high risk. And so if you don’t have doubts, then you probably don’t get the risk part of the equation. That might be something to be concerned about. And you asked me, was there anything I wish I had known? Well, no. In fact, my ignorance was a great blessing. If I had known more about how hard it is to build a world-class venture capital firm with institutional backers like we have today, like Georgia Tech, the Kellogg Foundation, Meharry Medical College, a couple of fantastic religious orders, I am so grateful to these visionary investors. But if I had known how hard the path was, to even have them open the door the first time, I might have quit. It’s really good that I didn’t know because by the time I was so invested, I couldn’t quit. It was perfect. Knowledge is a blessing and a curse. It’s okay not to know everything, it’s okay to just really have a vision and want to build it. I think that also can work.
Anne Bailey
Yep, that makes a lot of sense. It’s interesting because whenever I talk to people that own venture capital firms, people tend to tell me the hard stuff about it. Very few people say the good stuff about it. I think it’s almost like encouraging you not to do it, you know what I mean? I understand not knowing beforehand, all the challenges might be a good thing. What was the hardest thing for you?
Lisa Calhoun
Well, the hardest part about venture capital is definitely fundraising when you’re based here in the southeast. And that’s a little bit cultural. I don’t put that on Valor or any of the other venture capital or private equity firms. Here, we’re a little better suited for private equity and real estate, we have a long history. The laws in the state of Georgia are much friendlier to private equity, where fund sizes are 100 million or above. The laws here are an extremely strong headwind to venture capital, seed capital, and innovation capital, because a lot of the natural funders of venture capital in all other venture hubs are some of the public plans, like retirement plans for people who work at parks and recreation, or the police or the fire, teachers, those are natural investors in venture capital, but they’re prohibited from investing in funds sizes under 100 million by the Georgia code, a code that could be updated. I mean, this is not the Constitution, it’s updated all the time. But people have to have a will to do it. And so there’s more of a headwind in Georgia, and in Atlanta, than almost any other state with an innovation hub. I mean, Texas law is completely different. Massachusetts, completely different, wide open, almost everywhere else, actually. That’s part of the environment here. That is not per se on a firm. But that does make it difficult until you have $100 million of investor capital in your back pocket. You are prohibited from an entire class of investors. It’s really important for starting and seeding risk capital.
Anne Bailey
In being successful at fundraising, what have you found is the best way to be successful at that?
Lisa Calhoun
I don’t know that I have found that yet.
Anne Bailey
Persistence. I think persistence is a part of all entrepreneurship.
Lisa Calhoun
I mean, one of the things someone told me years and years ago, I think a couple of companies ago, because I’m a serial founder is, when you’re the founder, you get to say, when you quit. No one can tell you that you’re done building the business. I mean, people can laugh at you. People can tell you it’s not working, people can tell you to quit. But you know, who actually owns that decision? It’s you.
Anne Bailey
That is very true. Being a woman in venture capital, have you found any specific challenges that you have faced versus men? Or have you found the playing field to be fairly equal? I do feel like there are a lot more women in venture capital versus private equity and I’m not really sure why. But I’m curious about your experience.
Lisa Calhoun
I don’t know what it’s like to be a guy in venture capital. I don’t really know what it’s like to be a woman if you don’t have the other experience. I’m just me. I show up every day, I work really hard. I love what I do. I try to make sure my founders are incredibly well taken care of. Make a lot of introductions to customers and make introductions to next-level capital. I talked to sophisticated investors about why we’re an outstanding and unusual strategy for their capital. I don’t concern myself one bit with what it’s like in a different position, because this is the card and hand that I am playing, and I’m going to play to my utmost. I do not have a second to think about anything else, to be the best I can be at this.
Anne Bailey
That’s awesome. I think you’ve talked about how you don’t worry about confidence. And I think that’s probably why you sound like the most confident person I’ve ever met in my life.
Lisa Calhoun
My friends, my founders, I mean, if we had more time, you would definitely know that it’s not so much confidence. I think clarity, maybe stand proxy for confidence. I have plenty of doubts, and I have lots of risks on my plate. And I know what my risks are, and a lot of them are quantified, but some of them can’t even be quantified. Because I can’t quantify them anyways, what can you do about it? I have some clarity about where Valor is today? Who I need on my team, who I have on my team, and where we’re going together. That clarity is very helpful. And I can explain those clear principles to those who would like to partner with us, whether it’s a founder that is looking for investment or a high net worth individual that is looking for a venture partner that sees the world the way we do, or an institutional partner. I can provide clarity, confidence, that depends on what we’re talking about. I can be clearly unconfident, too.
Anne Bailey
Clarity, has that been something you refined over time? Or did you make a conscious decision at the beginning of your firm on what you were going to do?
Lisa Calhoun
I made a conscious decision at the beginning of my firm. And it’s in our name, Valor. I wrote a 10-year plan for this company before I talk to my first investor. And while there have been some adjustments, they have been fairly small. We’re unfolding the plan that I see. It’s like, a silver path at my feet. It doesn’t mean that it will work out. But I know where we’re going. And I know we can get there. I see that path. It’s a dollar and cents opportunity when quantified, to be honest. I am fortunate that while I took my resort vacation and undergrad in Professional Writing in the Russian language, I went back for my MBA in quantitative stat. I was raised with the ledger sheet of my family’s business literally at the dinner table. Because my family has no style and that we just went through the day’s receipts every day. Because at the time my parents had to do it. They weren’t trying to teach their children to grow up and learn Accounting. They just don’t have any time so dinner was it and so I have a very financial mind and I was raised to have a very financial mind. That’s how the world in business speaks to me is in a fairly quantified manner.
Anne Bailey
Yep, makes perfect sense. I’m all about the numbers as well. I’m curious. What do you find makes someone successful? Obviously, you have to understand the numbers. You have to be persistent. But are there any traits that you’ve seen in associates or different people you’ve worked with in the business that is similar and tends to bring success to people?
Lisa Calhoun
Persistence. I mean, there’s a book written a few years ago, I think a lot of people have read it, but called Grit. And it goes into the science of persistence and why persistence trumps talent pretty much all the time. I mean, there’s something to be said for the joy and beauty of raw talent. But a lot of times the raw talent burns out, it has a shelf life, that doesn’t have lots of stamina. Persistence generally wins. And that is something that, speaking with you here at 49 years old, I can now see the results of persistence in my own life. But I see it manifold 100 times in the journeys of the founders that I know, you know, the bright, energetic, energized young founder that has a relatively straightforward path because everyone has recognized their brilliance can be really unhorsed by the first serious bump. That person who is maybe even a little less bright, but really know where they want to go and won’t give up, sink their teeth into it, and keeps coming back for more just overtakes that a lot of the time. I think that that’s true, that grit matters a great deal. Grit is a type of resilience that can be built. It’s not necessarily inherent, you can choose grit. You choose grit when you get up 15 minutes earlier to get something done that you didn’t have time for every day. That’s just literally an exercise of grit. You do 10 gritty things a day, and you can have a 10x performer.
Anne Bailey
Yep, that makes sense. I think it’s also the people who are attracted to the challenges even though they don’t know how to how to necessarily do them, or be successful and just do it anyway. I have just a couple more questions. what is your advice on partnerships? I potentially would have a chance, right? I do have a chance to have a business partner as we look at buying businesses, what is your recommendation? What to look for in a partner? And do you think that’s a good thing to do?
Lisa Calhoun
Well, I think the listeners want to know more about what you mean by a business partner, is this a person or an entity? What do they bring to the table? What do you see as your strengths? And how is the potential partner supposed to compliment you? Do share.
Anne Bailey
Sure, absolutely. Well, you know, part of this class, Entrepreneurial Private Equity, which is an amazing class, plug for Emory. Only I and one other person from the executive program took this class. We both just loved it. A lot of people that take the class are like, “Well, I’m gonna go do that and buy a business.” But we really want to do that. And we’re serious about it. We just kind of found each other because we knew each other and we were in the evening class, and we’ve been in the same team since the first semester. We have very different skill sets. He’s in financial services, I’m in manufacturing. We’re kind of trying to figure out what we really want to do at the end of the day, we want to buy a business and then maybe buy another one. Not necessarily with a traditional private equity fund because that seems too crazy to start out with but just using our own money or using investments from our fellow classmates or something like that. Really excited about it. FYI as well, I’ve been reaching out to different people to just learn more. We’re starting to do research and kind of try and build a thesis to see, what area between financial services and manufacturing, and other areas we’re interested in, and what makes sense for us to focus on where we are right now.
Lisa Calhoun
I see. You could have potentially an FDIC-backed credit financial services facility that focuses on underwriting manufacturing businesses. That would be the biggest, quickest thing from my perspective, but never mind me. Let’s talk more about you, you don’t want to do that. That’s not what you’re talking about. What size are you looking for? And by the way, manufacturing, and financial services, entrepreneurs that are listening, perk your ears, what size are you trying to lay out there?
Anne Bailey
Well, I think we want to start small. We can go find a million-dollar company and put our money in funding through more of an independent sponsor model. We think that that would be a good way to just do this.
Lisa Calhoun
How much money would you put to work in total in your first, how much money in total? No one’s gonna hold you to this, this is just hypothetical but let’s put a number to it. What’s the number? What’s the checkbook size you’re hypothesizing about?
Anne Bailey
I’ll just say, a million dollars.
Lisa Calhoun
Great. Okay. Are you looking for minority or majority control? Or a full buy? Like, entrepreneur, see you later. This is your cash out. Kiss you goodbye. What kind of leverage was that million would you theoretically be hoping for?
Anne Bailey
I’d be hoping for like full ownership kind of thing. Well, not full, but the majority will say.
Lisa Calhoun
One of the things I would do to get clarity on that is going to a database of information, which you could get to through Emory, PitchBook would be a great source. Look at all of the control transactions that have been struck at about a million dollars in the last five years so that you get a sense of what’s been done before in the area that you’re interested in operating in.
Anne Bailey
That makes a lot of sense. I feel like sometimes it’s better to look at what hasn’t been done a lot before and kind of see what are the new trends, if that makes sense, in manufacturing or financial services. What are your thoughts on that?
Lisa Calhoun
I think it’s important to know both. I think before you can really invent from a solid foundation, it’s important to know, a lot, maybe not everything, who knows everything, but a lot about what’s gone before. Because if you’re going to break the model, it’s good to know what the model was. That gives some guidance to your reinvention.
Anne Bailey
I like that. The only thing I haven’t asked about is, I’m curious if you have a mentor? And if so, is that something you recommend and how did you find them?
Lisa Calhoun
I have close to 50 mentors, and it’s perhaps a difference in semantics for sure. For any issue that one has in the business, I think it’s best to aim for the best possible talent and didn’t go down the list. And so if I need to know something, have a lack of clarity about something, I will look for the top two to three people in that space. When I was younger, it was a really, perhaps even arrogant thing to do but I was so hungry, that I didn’t know any better. There’s also very lucky as I was one of the first power users of the internet. I became accustomed to accessing really interesting people in 1990, 1991, and 1992, because they are on the internet. And so for me, I just didn’t switch my paradigm as the world changed and grew. I still do that. I don’t always reach, of course, the person I think is the number one most informed. Of course not, but a lot of times by developing that shortlist, I can reach someone who is extremely well thought up and then I write them an honest email shortly about why I want to know something that they I think they know. My goodness, if the hit rate on something like that isn’t over 80%. I keep it real. I talk to them about the one thing, I am extremely grateful. I welcome anything I can do for them ever, and I let them go, because they’ve given me their expertise. I’m so appreciative. I really am focused on what I need to know or who I need to know, and who can help me.
Anne Bailey
Focus seems to be a key theme. I think that’s great advice.
Lisa Calhoun
I also used to think about the scale of the ask. If you ask someone to be your mentor, it’s an unclear, undefined, enormous ask. They may not be up for it emotionally, energetically, they may not have the privilege of the time especially if they’re dedicated to big causes in their own life. But if you ask them for something that may take 20 minutes, most of the wonderful people I know in the venture capital, private equity, and founder space, they make time and find 20 minutes to help people every single day. And so it works, I think you can reach out with confidence especially if you use the shortlist approach, you can really get some amazing tours of information. And people have opened up their experience to me, in much the same way. I’m trying to open it up to you, and even record it for those who are also interested in private equity in general. Information should be free.
Anne Bailey
Absolutely. I was gonna say they may even ask you to be on their podcasts, you never know.
Lisa Calhoun
You never know how they’ll respond that I have had people say, I can do this but you have to come to this event with me because this is where I’ll be. This is where I have the time at the boring event. I don’t really have an agenda. But I have to show. Can you walk the hall with me? Yes, I would love to.
Anne Bailey
Absolutely.
Lisa Calhoun
Thanks for your amazing questions. Good luck in your private equity future. I hope that you did everything you want it to be. And the thing is, if you focus on what you really want it to be, if someone was mentoring me recently and said, “Hey, people want to grow a garden. Maybe I want to grow tomatoes.” That was literally her example. There are two types of tomato gardeners. There’s the one that planted tomato seed and watch as it sprouts and celebrates it. Enjoys the smell of the little tomato plant and watches all of the butterflies come and watch it grow and flourish. Maybe it does or doesn’t make tomatoes, but they’ve been having fun the whole time. This is the person that said my tomato plant didn’t make tomatoes. What a blast. I’ll never do that again. As long as it’s your journey, you can enjoy it every day. You don’t have to just enjoy the success.
Anne Bailey
100% that’s all about the journey. Well, I’ve been enjoying it so far, I have to say.
Lisa Calhoun
I am really glad and shout out to Emory and that class with David Hanson and Klaas Baks. I have been a frequent speaker in that class. It’s had a lot of fantastic private equity aficionados come through it. I wish you all the best and thanks for the conversation today.
Anne Bailey
Thank you, Lisa.
Lisa
Thank you for listening to the Atlanta Startup Podcast. You know, we’re not just a podcast, we’re a community, and we’d love to see you at one of our digital or physical events, go to valor.VC and sign up for an event that makes sense for you. We have events for founders and the investors who back them. Another event you might enjoy is Startup Runway. The Startup Runway Foundation is a Valor organization that provides $10,000 grants to founders who are women or people of color building next-generation software products. Applications are free and we’d love to hear from you at startuprunway.org. And as always, thank you so much to the organizations that make this podcast possible. Not only Valor Ventures, but also Write2Market, a tech marketing and PR agency in Atlanta, Georgia, and the Startup Runway Foundation and Atlanta Tech Park Valley’s headquarters, and also headquarters for over 100 local entrepreneurs, building global businesses. See you next week. Please bookmark the podcast and join us.
