Panel Discussion on Getting into Portfolio Ops

January 19, 2024

EVENT RECAP

For early-career leaders with generalist and strategy backgrounds (like consults and MBAs) interested in roles in PE and VC portfolio operations, this panel will include portfolio ops leaders whose perspectives span Private Equity, Venture Capital, and working in operation roles in PE-backed companies.

Paul Stansik is an Operating Partner at ParkerGale Capital, where he leads the growth practice. He previously held sales leadership roles at operating companies, was a Senior Manager at Bain and Company, and is a Wharton MBA.

David Demres has held portfolio roles at companies backed by Alpine Investors, Luminate Capital Partners, TA Associates, and Shore Capital Partners, and has led value creation at Peterson Partners. David graduated from Stanford Graduate School of Business.

Annie Lapides is a Partner and Head of Talent at Drive Capital, a Venture Capital firm that invests in technology companies in non-tech cities. She previously worked at the startup accelerator, Techstars.

We'll take questions from the audience and discuss topics like:

  • What is the portfolio operations job like? How does it vary at different firm types?
  • What do firms look for in candidates for their PE ops teams?
  • What types of backgrounds and previous experience are useful in portfolio ops?
  • How can a PE/VC portfolio job help you develop professionally?
  • How do portfolio ops jobs compare to joining an operating company, or a consulting firm?

Video

Unnamed Speaker

Hey, everybody. Welcome. Thanks so much for joining. We’re really excited to talk about Portfolio Ops today. I’m just going to go ahead and kick into introductions as we have people join. Without further ado, we’ll start with Paul. Paul, do you mind giving a little bit of background on you and your Portfolio Ops journey?

Unnamed Speaker

Yeah. I’m Paul Stanzik. I’m a partner here at ParkerGale Capital. We’re a small B2B focused PE fund headquartered in the West Loop of Chicago, and we buy software businesses from founders. I’m part of the in- house value creation team here, and that means as the go- to- market guy, I spend most of my time in the Bermuda Triangle between sales, marketing, and the CEO. Basically, my job is to help our team create the plans and the training and the processes that helps us go find our next 100 customers.

Unnamed Speaker

Awesome. You are an ex- consultant and an MBA. Just to give background on how you got into PE Ops?

Unnamed Speaker

Yeah. Recovering sales guy, recovering consultant, and I’d say those are the two experiences that I draw on the most. I spent five years selling stuff to hedge funds, managing a couple of sales teams myself, figuring out what it takes to put a foundational go- to- market motion in place when there’s not a lot there, and then moved on to consulting after business school. That’s where I learned to take the instincts that I picked up in my sales job and apply some really structured thinking and analytical chops to that.

Unnamed Speaker

Yeah, I’d say get to exercise both of those muscles every day and have a lot of fun doing it.

Unnamed Speaker

Awesome. David, do you mind giving your background?

Unnamed Speaker

Sure. Hi, everyone.

Unnamed Speaker

David Demarest.

Unnamed Speaker

Primarily since my MBA, I’ve primarily been at PE- backed portfolio companies in leadership roles across a handful of private equity firms. Started out at Alpine Investors in their CEO and training program. Was at Luminate Capital Partners working with one of their portfolio companies. Another one backed when we sold by TA Associates and Shore Capital Partners.

Unnamed Speaker

Most recently have been Chief Development Officer at a medical aesthetics platform backed by Shore Capital Partners and happy to represent the point of view of what it’s like working within a private equity- backed portfolio company in this space.

Unnamed Speaker

Awesome. Annie, over to you.

Unnamed Speaker

Hi, everyone. Annie Lapides here, talent partner and part of the operating partner team at Drive Capital. We’re a venture capital firm based in Columbus, Ohio founded by two former Sequoia investors with about 2. 2 billion under management investing in pre- seed to pre- IPO companies. My portfolio ops journey is a curvy one. My career started out, I was in finance. I spent seven and a half years at Silicon Valley Bank and was a VP when I left.

Unnamed Speaker

Then joined the investment team at Techstars and helped build out their new investment product there, which then led me to drive as they were looking for their West partner. I was their first partner hired outside of Columbus, so out here in Denver, Colorado. Since then, our portfolio ops team has grown significantly.

Unnamed Speaker

My focus is on people initiatives for our portfolio companies, executive hiring, and really helping all of our founders, whether they’re seed or growth stage founders, understand how to think strategically about building really powerful teams. Because we truly believe that no matter what kind of product you have on the market, if you’ve got a bad team behind it, you won’t be successful. That’s my focus. I’m happy to answer questions today.

Unnamed Speaker

Awesome. I’m Kate Hopkins. I’m the founder of OneGuide. We serve portfolio operations teams through portfolio knowledge hub software and associated service support to help drive value creation. The reason we put this panel together is because I often get questions, and I know that our panelists often get questions as well, from people who are trying to get into portfolio ops. It’s not as though there’s a obvious pathway. It’s not nearly as clear as I want to get into consulting or I want to get into sales.

Unnamed Speaker

This is an opportunity to talk more about the different flavors of portfolio ops and the different backgrounds that lead to them, and give some advice to people who are interested in this space. There were some fantastic questions pre- submitted. I pulled some of the most common ones. One of the biggies was, what are the different setups? How does portfolio ops look different at different firms? There, in my view, are at least a couple of common trade- offs.

Unnamed Speaker

One is one- to- many platform, which is, hey, we’re going to do lots of reusable resources and one- to- many events. The other is more one- on- one consulting. We’re going to work one- on- one with our portfolio company.

Unnamed Speaker

One is generalists. We’re gonna have portfolio ops generalists. One is: we’re gonna have specialists, you know, tech- specific people, marketing- specific people, industry- specific people. And then the final one is: we’re gonna build just a team of senior folks versus we’re gonna build a full- stack team. We’re gonna have a bunch of associates, we’re gonna have recruiters, and so maybe going through these one at a time, paul, do you mind sharing what does Parker Gale look like? And we can kind of talk through experiences that the panelists have had.

Unnamed Speaker

Yeah, I think you laid this out well. To me, the decision tree starts at the top with that generalist versus specialist thing. Right, I’d say we’re a bit of a hybrid. So each of us on the operating team- there’s three of us- we’re pretty comfortable sitting down having a conversation with a CEO or another member of the senior management team and talking about any aspect of the value creation plan, and that’s good because the things that we’re doing with our companies to help them get from here to there, it doesn’t just touch one functional area, right?

Unnamed Speaker

So if we’re coming in and we’re inheriting a company with really good NPS and a product that works with a really solid code base- but we understand that our market awareness is maybe a little bit low and not enough people know about us. That’s not just a problem for marketing or sales. That’s a problem for the product team, for the engineering team, for the CEO. It’s a cross- functional effort right.

Unnamed Speaker

So we pride ourselves on the ability to go deep in one functional area- for me that’s sales and marketing- but to also elevate and have that more strategic conversation if and when we need to, because there’s very few issues that create value inside of our companies that are relegated to only one function. So as you put this up on the screen, I kind of gravitated towards the middle of the page. For us there’s three of us. There’s me, I’m a partner, Jim’s a partner and we’re cast as a principal on our team.

Unnamed Speaker

So we probably gravitate towards a little bit more of the partners and VPs only versus the full stack team. I think David and Annie can speak to this.

Unnamed Speaker

But the way I’ve seen it evolve is that as funds get bigger and they have more AUM and they have more discretion about where they wanna put that operating expense for the fund, you’re able to make the choice about whether you want more senior people or you want kind of analysts and associates under them, not only to create an apprenticeship program but to help with some of the analytics, with some of the playbook building, all the stuff that I would say is a great idea. I just don’t have the time or bandwidth to always do.

Unnamed Speaker

And then maybe the other guys can talk about the one- to- many versus the one- on- one. But to me, the right- hand side of this, it’s very much a discrete choice. You kind of end up on one side of the page. What I’m seeing at our fund and other funds is there’s this third option. That’s a bit of a hybrid where you have people that have to be dangerous in multiple domains but they have one major where they’re comfortable going really deep.

Unnamed Speaker

That makes sense. Annie, my understanding is that in VC the platform model is much more common. Is that true? At Drive, yeah, I think every VC fund runs their ops and platform routine differently and I think if you were to give platform and ops folks truth serum, their number one complaint or just concern is like how do I quantify how I’m really moving the needle?

Unnamed Speaker

Because some of the PE it’s a totally different playbook than VC, and so in VC our investment team sit on the board of our companies, so they’re really kind of the main person at the table that’s guiding these founders. From a board perspective, and just like Paul said, as AUM grows you have more resources to put towards different superpowers. But when you’re a smaller fund that doesn’t really have the wherewithal to hire a bunch of people, you kind of have to pick which lane you wanna stick in.

Unnamed Speaker

And I think what VCs kind of a mistake that they make on the operating or platform side is that they try to be everything to everyone. And back to my kind of truth serum comment: it’s too squishy, the metrics are too squishy and before you know it you may be expendable to the VC team and the GPs. They’re like we don’t need a top person.

Unnamed Speaker

or we don’t need a person that’s just focused on go- to- market sales. So for us at Drive, we, from the very early days, decided that talent and helping our companies build teams was something that we just wanted to really double down on. Our operating partner team consists of most functions. We have a head of finance, a head of marketing, me and talent, operating head of ops.

Unnamed Speaker

A lot of that’s internal, though.

Unnamed Speaker

Our head of marketing does help with our company’s kind of figure out early branding and go- to- market on the marketing side. But I would say our big secret sauce, aside from our amazing investment team, is the talent team. And so we have a few products within the talent team, one of them being a full- cycle recruiting agency for our portfolio companies, which a lot of VCs actually don’t have, but PE firms do because they’re big and they have a lot of people and they can hire a bunch of people.

Unnamed Speaker

So yeah, I would just say that it’s, you know, you have to really try to think about where you want to specialize early on because otherwise, as you start to grow and you just start hiring people that aren’t really moving the needle, you know, those folks don’t typically stick around that long. Yeah.

Unnamed Speaker

We had a related question here that David, I’ll kind of pass to you, which is how do firms structure their teams, people focusing by function, people focusing by company? You’ve had experience with a bunch of different firms. What’s been your experience here?

Unnamed Speaker

I think the most important thing is matching the strategy of the private equity firm or the venture capital firm with how you’re building out that team. And so I think there’s a lot of ways it can get done, but matching that really closely to what you’re doing. So for example, if you are a small VC fund, who’s writing seed stage checks or even angel investing, you’re putting small dollar amounts in a lot of different companies.

Unnamed Speaker

It’s going to be really tough to do a one- to- one consulting model because you have very limited capacity to send a full person or let alone a full team to a portfolio company to work there for one month or four months or six months because that’s such a small piece of your pie. And that’s just the reality of sort of the economics of that fund strategy. Other funds could be different. I also think just matching it holistically, you think about someone like Alpine Investors.

Unnamed Speaker

They are best in class at talent arbitrage and they are going to lean towards having a platform of value creation that’s geared towards talent. One of the reasons they do that is because part of their entire strategy and they have done this phenomenally over many years now is buying companies that don’t have management teams and putting talented individuals from generalist backgrounds into those portfolio companies. That is the core of their strategy. So it makes sense for them to do that.

Unnamed Speaker

Does it make sense for everyone to build a platform like that in- house? I don’t think so. But if it matches your strategy, that makes a lot of sense. At Shore Capital Partners, they have a few different funds now, but their main one for many years has been healthcare and they have done a phenomenal job of time after time investing in multi- site healthcare companies from dentistry to dermatology to so on and so forth across behavioral and clinical specialties.

Unnamed Speaker

Empower Aesthetics is in the medical aesthetic space, but whether it’s vet or addiction treatment, all of those have a specific playbook. And so they have built in- house functions to help support that playbook, like in- house sourcing teams to source new deals for smaller platforms that are getting going. And so they’ve built that specifically tailored. So I wouldn’t say there’s one right way or one wrong way. I think it’s just how do you match that?

Unnamed Speaker

How does a portfolio ops team match what they’re doing to the strategy and sort of the special sauce or the secret sauce of that fund? I think that’s the most important connection point.

Unnamed Speaker

Yeah, I think that makes a ton of sense. A question from somebody at a more junior level. How do you find those firms that are going to have associates and not just senior advisors? So the more full- stack teams versus the partners- only kind of setups. For anybody, what would be your advice?

Unnamed Speaker

I mean, it’s marketing has gotten better in the investment world. And as a part of that, getting better and more digitally native, it’s pretty easy to see who’s on the team at these funds. And it’s pretty easy to figure out just looking at some lists and awards out there, kind of who skews a little more operationally oriented.

Unnamed Speaker

So if you do a little desktop research, and you figure out, hey, who are the most innovative, most founder friendly, most operationally minded funds, or you just Google portfolio operations, you sort of can’t help but stumble on a couple of these teams, and then you can get a sense very quickly about what age and stage the portfolio operations team is kind of consistent on. But I welcome other thoughts from my fellow panelists, too.

Unnamed Speaker

Yeah, I agree with that. I think if you’re a junior person looking for these roles, you’re going to be spending a lot of time in the team pages of private equity funds and just looking, read through every single profile and see what school they go to, what’s their background, what is their profile, and you’ll see a large range of different profiles. And you can kind of start to match of what is the type of profile they’re looking for. And it’s really different across different value creation teams.

Unnamed Speaker

I would also keep track of, you know, when it’s announced, you know, funds that have been fundraised, because typically, it’s like hiring. And, you know, a lot of times they get started on hiring before the fundraise, maybe putting the cart before the horse, but especially in 2024. But, you know, having a pulse on that, I think, is also really important because, you know, when funds start hiring, it’s usually pretty quick. Awesome.

Unnamed Speaker

Let’s talk about roles. So we’ve already started getting into some of the different types of roles in the backgrounds for each. We can bounce around, Annie, maybe we can start with talent. What is the role of a talent partner and who gets into being a talent partner?

Unnamed Speaker

Yeah, again, the role of a talent partner kind of runs the gamut at multiple different funds at multiple different levels, and I’ll kind of speak from the VC perspective. You know, so, you know, firms like Sequoia have huge talent teams and kind of run several different models. They have an RPO model, they have exec search models, they have just kind of strategic advisory folks, they have just, you know, DEI focused members. So, again, the bigger the fund, the more resources you have. The role of the talent partner.

Unnamed Speaker

So, you know, I get brought in on at least again, I’ll give Dr. You know, perspective. I get brought in on diligence before an investment is done. And, you know, so post term sheet during diligence phase and understanding kind of what are some of the blockers of the exec team? So kind of an exec assessment product as well as, you know, noting any red, yellow or green flags. And then from there, I am like a direct resource for our founders and other exec team members on anything people related, any questions.

Unnamed Speaker

So for our stage companies, it’s how do I set up an effective interview process? A lot of our founders don’t even know how to interview. They may be first time founders to our growth stage companies that are like, hey, we’re thinking about bringing on a seasoned CMO. I would love to understand what great looks like. So that’s kind of part of my job is that strategic advisory piece. So that’s kind of the squishy stuff. The, you know, also helping our companies understand, you know, exec search processes.

Unnamed Speaker

So, you know, teeing up great introductions when it makes sense when, you know, and building out our exec talent benches is will always continue to be a weapon for the talent team for any portfolio company is you’re in with awesome execs. So, you know, I do spend a lot of time on the phone at meetings with just great execs across all functions. And then I manage our team of recruiters. So like I said, we run a full cycle talent agency.

Unnamed Speaker

We actually charge for this product, which, you know, a fraction of the cost of a lot of our competitors, you know, search firms. But the advantage of working with drive talent versus, you know, other search firms and we’ve had to work really hard to displace those relationships because I’ve spent the last three years referring our companies to search firms when we didn’t have this product. So, you know, we we know the investment from day one, we know the company from day one.

Unnamed Speaker

So, you know, we don’t have to spend a lot of time at the onset ramping and understanding what does the company do? How do we position the company to a candidate? How do we kind of sell the product?

Unnamed Speaker

So we can, you know, start from day one. Also, when you’re recruiting from a VC, you know, the open rate on LinkedIn is much higher than if you’re a recruiter. So we actually get in with people really quickly. And, you know, 75% of our searches close like under 50 days. And I think that’s because we can say, hey, we’re Drive Capital, we’re the biggest venture capital fund in between the coasts, venture capital fund, not PE or growth fund. And we’ve got an awesome portfolio, can we, you know, tell you more about it.

Unnamed Speaker

So that that’s the role that I play at Drive. And then, you know, being a part of the operating partner team, you know, just helping make a lot of strategic decisions kind of at the leadership level, and how we want to think about people initiatives within our portfolio. Awesome. Paul, maybe you can speak to the generalist or generalist with a spiky specialty type of role.

Unnamed Speaker

Yeah. And my comments might apply to all four of these, because I