TLP19 Transcript
EPISODE 19
[INTRODUCTION]
00:00:01
Announcer: The Limited Partner shares in the potential outsized returns of a well-planned and executed investment. But as a passive investor with no day-to-day operating requirements, whose liability is limited to the extent of their share of ownership, the limited partner has the maximum leverage on their most precious asset – their time. Now, they say you're the average of the people you surround yourself with. Are you looking to elevate your network, connect with individuals that bring your average up? The Limited Partner is more than just a podcast. It's a community to learn, to participate, to connect. There's no other community out there like this for limited partners. So, subscribe to the podcast. But most importantly, join the community at thelimitedpartner.com. Welcome to the podcast with your host, Jake Wiley.
[INTERVIEW]
00:00:50
JW: Welcome, partners. This is your host, Jake Wiley. This week I'm joined by Annissa Deshpande of Loklab. Annissa, welcome to the show.
00:00:57
AD: Thanks, Jake. Thanks for having me.
00:00:59
JD: This is going to be a really exciting show. It's a little bit different than most of our just totally investor focus shows. But as we think about the environment that we're in today, the great resignation, so to date, the show we're early January 2022. So we're in the midst of the Great Resignation and all of these things that are happening. I would love to hear a little bit about your background, how you got to where you are, and Loglab and where you are today.
00:01:23d
AD: Okay, well, I have 25 years of experience in HR, IT, finance, and strategy. I started my career in IT and worked in both consulting environments, as well as for companies for about 10 years, and then was in a situation where my boss got fired, and they didn't think I was quite ready for the role. So they asked me to run the department in the interim, while they searched for a replacement, it took six months to find the replacement. And once they did, they realized that that person couldn't really take control until I stepped somewhere else into the business. And so that's what really launched me out of IT, they gave me a couple of different options. And I ended up taking, this role working for the chief administrative officer looking for overhead cost savings across the business. So, they wanted structural overhead savings and non-labor. So, it was kind of a big challenge. This was the year was about 2007. And it was right, this was a bank, and it was heavily in the mortgage industry. And the mortgage industry was turning at this point, right, we were just about to hit the downturn in 2008. So I did that for nine months, and really just took a fresh approach to looking for the savings. And then the chief administrative officer asked me to go lead HR. And what had happened is the business had grown quite rapidly in its heyday, and the HR processes hadn't kept up. So it was things like we would run payroll, we'd run benefits, and not everybody would get a paycheck. Nor would everybody, people would drop off the benefits file. So it was a lot of process restructure efficiency optimization. So I did that. And then the bank had a very public failure. And we went into conservatorship with the FDIC. And suddenly, I became a Chief People Officer of a failed institution did that for a while, and then ended up going to work for a Fortune 500 engineering and construction firm. I was recruited by the CFO of the company to work as his chief of staff. And it was a development opportunity where, you know, you could follow an executive around, but you also got some of your own projects. And so one of the projects that I got was running the strategic planning for the company. And after that exercise, we realized that there was a gap between what the company was trying to achieve and its people practices, most notably, its talent acquisition, right. So this was a professional services firm people were the product, it was really the supply chain of the business. And if we didn't have the right people, there was no way that we could achieve our aggressive business goals. So at that point, I had worked for the CFO for two years. And he asked me to go run global talent acquisition. And so I switched to HR, I took on a role where we were hiring 20,000 people, and 150 countries annually. And over the course of doing that work, I also got assigned a bunch of internal talent initiatives, things like performance management succession. And the concept of those was we wanted to take these more compliance-type activities or activities that HR had been working on, and really align them to achieving business outcomes. So make sure that when you ran performance management, the result when you aggregated the results, they matched the business results. And so I really started to love the work that I was doing around taking these more common people practices and aligning it to business results. And so about seven years ago, I decided to launch my own people advisory services firm, I wanted to have a bigger impact by helping not just one company do this, but helping a variety of companies. And my focus was really on emerging growth and investor-backed companies. And so that's what I've been doing for the last seven years. It'll be seven years in March. I usually get pulled into a company right after a liquidity event and I go in there, kind of assess the HR, assess the talent strategies that are in place, and help to really build those enhanced extenders to make sure that they are aligned to achieving business outcomes.
00:05:10
JD: That's an interesting story with some twists from IT into HR, and then finding that I guess you loved it so much that actually became your career.
00:05:18
AD: Yeah, it was definitely a culture change. But what I realized through all of my different experiences is I would get frustrated when things wouldn't go a certain way. And it was because we didn't align the people there is always a people component to everything we do. And that's what really ended up attracted me to HR. And as a consumer of HR, and sometimes not such great HR, I knew how I wanted to see it be done differently. And that's really what motivated me to do what I do.
00:05:42
JW: Well, I think to tie it in for kind of our investor population here, you said something that really stuck out to me that the people really are the service of the business. And you know, there's some businesses, for example, like consulting, where literally, you rent a person out, and then you charge hours, right, so the people are the service, but in, you know, small growing businesses or investing shops, you know, there's only a handful of people, and they are the service, you know, they're the ones helping find the deals, their investor communications, investor relations, there's so many people, and they're very, very important. And here we are in the midst of the Great Resignation, where people are moving and kind of fed up. And there's a lot of stress. And I know you wrote a book, and I'd love for you to kind of like dovetail into the book and how that plays here.
But I'd love to get your thoughts on what should we be thinking about from an HR perspective as we look at potential businesses to work with and invest with? Yeah, great question. And so you know, I'll just I'll take a step back for a moment because I think the pandemic has really created this inflection point where prior to the pandemic, we started to realize that HR's important, talent is critical. But it was still a little bit more lip service, right?
We weren't super intentional, or a lot of companies weren't super intentional about culture. And because people were in the same environment or working out of the same office, a lot of the culture happened naturally. And for a lot of companies, when they were forced to go remote in the beginning of 2020, they suddenly realized that they didn't have the cultural foundation in place to support a remote work environment, right. And so they were scrambling to figure out what does the culture look like? And so for investors that are looking at a company and deciding, okay, is this an investment I want to make? I often ask them to just take a look at a couple of things. One, like how does the company talk about the culture? Is it consistent across the board? How do they describe it? Does it make sense? And then is it scalable, right, if you're giving a company a bunch of growth equity, you need to make sure that they have a foundation in place that can actually grow.
And then an even simpler step is take a look at their Glassdoor, right, are they engaged? Are they responding to reviews? What are the reviews telling us? Because this is no different, to me Glassdoor is the Yelp of the employment market, right? So anybody can leave a review about anything. And it's up to the company to manage that perception to take what's happening and work on those to amplify the strengths that are coming out from Glassdoor, obviously, but also to look at the opportunities and create strategies for how are we going to change this perception? Or how are we going to change this reality in our workforce? And so asking some of those questions about, you know, how are you thinking about your talent? How are you thinking about your culture? What would people say that work here about your culture? And is it something that you think is scalable, that can really help you to grow to the next level? And even if it's not scalable? Do they at least have a way of talking about the culture that makes sense, right, because that just shows you that the leadership has been intentional about it.
I think those are great questions, as we think about our due diligence on companies, you know, HR is has always been something that probably should be on the list, but maybe it's just nah, you know, we'll just kind of gloss over that. But I think it's becoming very, very relevant and much more important, right? Because if you don't have a good culture, or people start leaving, or there's a lot of turnover, you really don't know what you're gonna get. And when you're making investments with, you know, operating partners, when these investments are five, seven, 10 years, you kind of want to know that the entity, the company, the group that you invested with they're gonna be the one that's around.
00:09:16
AD: That's right. And turnover is profit walking out the door, right? Like, you know, a lot of companies accept turnover as a cost of doing business, there's no reason that you would should accept turnover as a cost of doing business, you do need to get to the root of what's causing it and look for a way to minimize it. That's a really important, it's really important to include HR in your due diligence activities. The other thing I would say is I see a lot of investors worried more about the compliance aspects of HR when they do add it to the due diligence list, right. So do we have any issues from a payroll or benefits perspective? And look, those are important, right, because as you know, if there are compliance issues that could trigger legal action, those would be expensive and you want to make sure you have the reserves for that. But that's only one side of the picture. You do need to take a look look at that talent side and really understand what's happening from a culture perspective to make sure that you're doing the right things and that you're going in with both eyes open.
00:10:08
JW: Let's talk about your book, you wrote a book. You've given me an overview of the book, tell us about why you wrote it. And kind of the thought process.
00:10:16
AD: Yeah, so I practice what I call modern HR, which is HR that's designed to grow revenue and create a place for people love to work. Before I wrote the book, when I was talking to potential clients or even investors about modern HR, they get it, they'd be like, Yeah, that makes sense. But they wouldn't really consume it in the way that I wanted them to. And so at the beginning of the pandemic, like many people, I had ample free time when I wasn't working, and I got tired of binge-watching TV. And suddenly, I had this idea to take all of the anecdotes and data points, and stories that I had told about modern HR and weave them into an overall narrative. So it's a fiction book about an investor-backed, private equity-backed company that faces an external threat and a new competitor that's come in and taken their market share. And the company has to shore up on a variety of different fronts, right, sales, r&d operations, but they also have to do a lot of people changes to make sure that they're addressing turnover and retention. And the CEO feels pretty good about the strategy and all the other areas of the business and developing a plan that makes sense. But he's most concerned about HR. And he's struggling with how to lead HR into being into thinking more as a modern function, in that case, is really trying to address these business problems.
And so he's got a great HR leader potentially focused on the wrong things. So he brings in a coach, and the story is a transition of this HR leader, her journey as she really becomes a key player of the business and builds a strategy to help the company achieved its goals. And so it's her transition from more of a traditional mindset to a modern mindset. The coach is loosely disguised as me. So there's an element of truth to it. But it's a story of how it evolves. And the book is called The Comeback. It's available on Amazon, and would love for people to check it out. Let me know what they think.
00:12:05
JW: That's awesome. I'd be interested to see some of the anecdotes that you put in the book, what are some of the bigger mistakes that companies are looking at or not looking at appropriately? Or to your point, focusing on the wrong issues?
00:12:17
AD: Yeah. So, I think one of the biggest things that I tell companies is that you have to be as thoughtful and intentional about acquiring talent, as you are about acquiring customers, right? So you see, companies put together all kinds of sales and marketing strategies to attract the right customer, but they don't take that skill and apply it to the employee market, right. And employees are a valuable asset as well. And they're very specific to what you need to be successful. So you do need to think about your employees the same way that you think about your customers with that level of intentionality. Another thing that I mentioned is you don't have to accept turnover as a cost of doing business, right, a proactive strategy that really addresses why people are leaving, you know, looking at those structural things that you need to improve figuring out why people stay with you, right, and amplifying those strengths, addressing those opportunities. I think those are important reasons or important ways to make sure that the company is well-positioned for long-term success.
00:13:19
AD: So, let's pivot into you know, what I've kept referring to as the great resignation. But what's leading to all of this transition? What are people moving for? Well, I think there's a couple of things. One, I think that over the last now, almost two years, people have figured out that they can get their work done in a flexible way. And I think companies have been slow to adopt this, right. And when we really think about it, there's been a number of challenges, you got the pandemic, you've got social unrest, and you've got just a political environment that, you know, is so polarized and creates a lot of stress to people on a day to day basis. Right? When you put all those factors together, people are realizing that they have a lot more control over how work gets done than they previously thought. I think one of the biggest challenges that we saw, even like a year into the pandemic is people had been predominantly working remotely in these environments and companies, we're still talking about the return to work, right? And it's like, wow, you trusted me for a year to get work done. Why are we now going back? Right? They didn't look at it as an opportunity to define what the future of work would look like. They're saying, oh, let's go back to the way things were. And I think that's a lot of the frustration of folks who have the ability to work remotely, and are now being asked to still think about well, you know, return to work this uncertainty, and companies have to think about it from the employees’ point of view, you know, what makes sense? What can we do? How can we define a way that work gets done without forcing people to all conform to this one way of getting work done?
And I think on the other side of it right in these where we're seeing a lot of the turnover is service jobs that had no, like certainty, right? So like retail jobs where your schedule change week to week where you had no ability to manage your life, you add in like we've had a challenge with childcare, right in general, just with schools going remote, and then limited options for childcare, even when schools were open, I think this created a lot of a sense of, well, we have to do better, right, either, I'm not going to work for minimum wage and try to manage all of these different things, and you know, have all this uncertainty, there has to be a better way for things to get done. And if I can't figure that out, then I will think about different ways for me to be successful and earn money.
So, I think, you know, there's a lot of push back to the way that we had just assumed work to get done. And I think this is a real opportunity for leaders for HR folks to redefine how work gets done right. Just another quick point I would make is when the pandemic happened, and we went to remote work, a lot of people tried to take the workday that they had, and just convert it to zoom. So if I had 10, back to back in-person meetings, I tried to do the same thing on Zoom. And as we all know, that doesn't work, we do look for that opportunity for how can we be smarter, we have all this technology available to us. So, I think people are just seeing and sensing that there's a better way for work to get done. You know, I can demand more certainty in my schedule, I don't want to put my life at risk because to go do these service-level jobs because people aren't respectful or they're not being thoughtful about community spread. I think this is a very natural pushback where we're seeing the employees have the power to say no, and are asked or demanding for better working environments.
00:16:35
JW: I'd love to get your opinion on, there's always that the grass is greener on the other side kind of feeling, right? So if let's say you're frustrated with where you work, now, you're like, Oh, I do have the power. And there's opportunities, and I can go somewhere else, or people just moving around. They they're either trying to solve like one specific issue, or, you know, they just kind of assume that the grass is greener on the other side. But it's not really any better. I don't know if anybody's really doing it well, yeah.
00:17:01
AD: It's a good point. I think a lot of people, we've had so many limitations over the last few years, I think people are trying to control what they can. And in some cases, they just need a change, right? They just feel like if I can make one change in my life and have control over that change, I will be a lot happier. And you are seeing people that just want to do something different because they need to dramatically change something in their life, after two years of having their freedom kind of limited and constrained.
00:17:28
JW: The jury's gonna be out for a while on this one, we'll have the ability to look back in a couple years and say like, man, you know, a couple of these people really got it right. And these are great companies. And I think that there's some folks that are trying and I think there's there's a lot of folks that would be like, Man, I just, you know, jumped from one frying pan right into another. Yeah. And I wonder how many people are really going to try to take advantage of the gig economy, right to go out on their own to figure out how they can either fractionalized their services across a variety of companies or, you know, just try to do something different. And I think there are new work models that we haven't explored yet, beyond the 1099. And the W-2, there's going to be new ways of getting work done. And a lot of it is going to come from innovation, because there is such a lack of talent across the board, right? We need all this talent, it doesn't exist. I think this is a ripe opportunity for innovation and how work gets done.
00:18:18
JW:I also appreciate it because I know it's happened to me in this new environment, I think about things very differently, things that I never would have done before or conversations that I've had to have, and this past couple of years wouldn't even have existed, you know, in the prior life. And I think that what it's done for me is it's opened my mind to different possibilities. And I've tried a bunch of different things. And I think that some have been successful. And some have been like, hey, well, I'm glad I did it. You know, it's like the Thomas Edison and a light bulb. That's one thing that doesn't work. But I think companies are seeing that too. And I think the bigger they are sometimes the slower it is for them to maneuver the ship and sometimes they overcorrect. And those are going to be some issues. But I guess this has been a great conversation and in totality anything else that you can think of that we should be looking at for like an HR diligence culture, talking with our potential partners.
00:19:07
AD: Yeah, I mean, look, I just think you have to put the right weight on your HR diligence or your people and culture diligence to make sure. I think an investment can go very wrong if you don't know what you're getting into from a culture and people perspective. So, you know, try not to assume that just because there's a great product and service that there is potential for growth. It's not a reason not to invest in it. It's just a reason to understand that I'm going to have to invest a lot in people and culture. If those investments haven't been made upfront.
00:19:37
JW: I like to wrap up every show with a bit of gratitude. And I think that you know, none of us get to where we are all on our own somebody's given you a leg up along the way. I want to give you an opportunity to publicly give a shout out to you know, one two however many people you think that if have impacted your life?
00:19:50
AD: Yes, so many people and you know, early on so just the number of people that took a chance on me right from what I had a liberal arts togray and my first boss gave me an oppearn it. And then, you know, the chief administrative officer that saw something in me, you know, Ray, Minnesota at IndyMac bank and continued to give me opportunities to continue to try different things and just kept saying, go do this, go do that. Yeah, let's do it. Let's do it. And then, you know, I think, you know, Mike Burke, the CEO, who was the CFO at a calm and eventually the CEO, you know, hiring this this HR like this person with IT and HR experience, who came to him and said, Look, I don't want to work in HR, can we come up with something different and really designed this Chief of Staff Director of Special Projects role for me, all of those folks have been instrumental in my growth and helping me get to where I am today. And then just even now, like the coaches, the clients, I have that, you know, continue to invest in me and, you know, leverage my services and give me feedback, all that all of them are truly wonderful and have helped me get to where I'm at.
00:21:02
JW: Well, love that, you know, I like the concept of appreciating that somebody gave you a chance. And you know, you've grown so much from it. Like, you can always point back to that and say, you know, if it wasn't for these people giving me a chance, you know, you could just be stuck in it somewhere.
00:21:16
AD: Yeah, thanks for that.
00:21:17
JM: Well, this has been a great show, we've learned a lot. I think it's a little bit different than, you know, most of my shows, because it's been focused on HR. But I think that's so important that people make the business and the opportunities and these investments that are long term investments, and you want to know that you're going to get involved with somebody that's going to be around or their their company is going to be around. So Annissa, thank you so much for being on the show.
AD: 21:39
Thanks for having me, Jake.
00:21:41
I JW: hope you've enjoyed this episode of the limited partner podcast, please subscribe and leave a review. If there's any reason you would leave us a five-star review, please email me directly at JW at Jake wiley.com. Your feedback is always appreciated. Now the show is just the tip of the iceberg in terms of the limited partner community. It's a community where limited partners can come together. Learn about what best in class looks like opportunities, and most importantly, a place to connect. There is nothing out there like this. So, head over to limited partner.com and sign up. We'll see you next time.
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