On the podcast: Seeking alpha while doing good

PitchBook's London Bureau Chief Andrew Woodman interviews Eric Taylor, founder and CEO of Trident, to discuss how asset managers often overlook the S and G of ESG. Taylor shares his thoughts on how private equity can use diversity and inclusion to drive better returns, what tech can be used to remove unconscious bias from investing and where the industry has room to improve. Plus, Anikka Villegas joins the show to share insights from her Pitchbook Analyst Note: ESG, Impact, and Greenwashing in PE and VC.

In the Upwork segment of "Innovations in Private Equity," Tim Sanders is joined by Blackstone CTO John Stecher to discuss how PE firms are leveraging cloud computing and digitization from deal sourcing to operations, highlighting how cloud-based solutions like tech clouds and talent clouds help PE firms and their portfolio companies go to market faster.

Listen to all of Season 5, presented by Upwork, and subscribe to get future episodes of "In Visible Capital" on Apple Podcasts, Spotify, Google Podcasts or wherever you listen. For inquiries, please contact us at podcast@pitchbook.com.

Transcript

Andrew Woodman: Hey, Eric. Great to have you on the podcast to speak with us. It's good to see you again. For the purpose of the listeners, tell us a bit more about Trident, what you guys are doing, how it came about.

Eric Taylor: I'll give you the canned TV answer, and I'll maybe give you a little bit of a story. The can answer is that Trident is a preeminent investor in small businesses. That's what we're passionate about. We use data and best-in-class execution to generate superior commercial returns for investors, while at the same time, being conscious of creating positive social outcomes in underserved and overlooked communities, in particular, the Black community.

The story is that I've been obsessed with small businesses since I was a kid. I grew up in Southern Texas three miles away from the Mexican border. I had a great aunt, Aunt Jane, who was a ragtag entrepreneur. She made everything from bottled banana beer to ambrosia that she would sell on the streets of St. Lucia. She was a book writer, was an artist, [a] consummate American dreamer. And then as I grew up, I had all these small business entrepreneurs around my Thanksgiving table that were just friends of the family.

I started my career at Goldman Sachs as a member of a group there called Special Situations Investing. [I] was working on behalf of the bank to invest gobs of capital across the middle market, and yet couldn't quite connect the dots theoretically between the work that I was doing there and the small businesses that I saw in my hometown.

Eventually [I] decided to create Trident to bridge that gap. I wanted to be able to invest in small businesses but wanted to be able to also return capital to investors and grow a platform. I wanted it to be a diverse business and I wanted it to actually create social impact as a second-order consequence of what we were doing. So when you think about Trident's three pillars, it's not an accident that it's three: In Trident we speak in threes.

One, we're super quant-focused. We're a buyout, control-oriented private equity firm that uses data and a quantitative approach to find yield to generate alpha for our investors, who are primarily institutions. We do well while doing good. We've returned 23% net over the history, since the inception of the firm. I can also tell you stories about how we're Black-owned business: 60% of our people are Black and brown, 40% are women. That's not women in back office junior positions, they're in senior positions as well. We've got a company where 45% of the entry-level workforce is formerly incarcerated. We take this pretty darn seriously.

Then finally, we use diversity as an asset, not a liability. The unfortunate byproduct of focusing on ESG is [investors] all too often focus on the E and forget about the S and the G. We'll talk about trade-offs later, but we're super focused on the S and the G, the social and governance piece of investing, and in doing so, we use diversity as an asset, not a liability to drive value.

Andrew: We'll actually get that in a bit more detail as well. Going back a bit more to the roots and the communities that you see as underserved, you're talking about Black- and brown-owned businesses, businesses that you grew up around. Tell me a bit more about that, what your feeling is at the moment in terms of access to capital for those businesses in America today.

Eric: For sure. Let me give you some high-level numbers. There are 30 million small businesses in the US today per the [Small Business Administration]. There are a 160,000 that do between $10 million and a $100 million in revenues. The number one source of startup capital for growth capital for most American entrepreneurs is friends and family.

Forget about the venture capital landscape, because if you're looking to build car washes or gas stations or roll up [a] John Deere franchise—we're talking red-blooded American businesses here—these are folks who could pivot onto Zoom in order to grow the business. These are brick-and-mortar everyday folks. The market for capital is not really there.
Now, we're talking about an already underserved market because we feel that the majority of the institutional asset management doesn't focus on this market. But within that market, there's an underserved piece of the underserved, which is people who are Black, brown and women. If you look at the sources of capital, if you think friends and family are number one, banks are number two, [where underserved communities are] serially less able to access capital.

In Trident, because we have an unbiased way of sourcing, diligence, executing, and building businesses, we're able to effectively close that gap and we do it systematically, and we do it at scale. That's why we're different.

Andrew: Interesting. I want to go back a little bit actually, to what you said right at the beginning. Tell us a bit more about the role models you had when you were younger in terms of your community and business.

Eric: Sure. My first role models are going to be my parents. If you think about Trident's name and even the color red—red is my dad's favorite color—the reason we're called Trident is there, again, three reasons. One is because my mom's an immigrant. She was born in Barbados and the trident is on the national flag. Number two, I actually was a swimmer in high school and college, and Poseidon carries a trident.

Then, number three is a bit of an inside joke among the team. We're all huge "Game of Thrones" nerds. The Battle of the Trident is really where the whole "Game of Thrones" story starts, because that's where Rhaegar Targaryen is slain by Robert Baratheon and so it starts, effectively, the whole story. We've got our reasons and that's the background, but in terms of my role models, obviously my parents, but I've got family members who were small business owners.

My Aunt Jane barely had a high school education but was able to create multiple businesses and multiple lines of income straight up hustling. If you saw me when I was 12 and 13 around the Thanksgiving table, we had a fellow who was a family friend of ours who was rolling up all the car wash and valet businesses that served the local strip mall, local outlet malls, local shopping centers, local nice restaurants.

You can just imagine when I got to Wall Street, seeing tens of billions of dollars of capital flying around, and yet some of the smartest folks I knew growing up, small business owners, couldn't find access to capital. That just fundamentally never made sense to me. Part of the reason why I'm so passionate about Trident [is that] we can talk about the nuts and bolts. We can talk about making money.

We can talk about building an asset manager, but at my core, this is a question that I've had about as long as I can remember asking questions in the first place: Why are small businesses in this country so serially underfunded on the equity side? I didn't even know what equity was, but I know that I knew that there was a problem.

Andrew: In terms of getting Trident going, you've managed to get some great support from some big role models in the industry, the most significant being Robert Smith, who is probably the most well-known African American in the private equity industry today, from Vista and Bank of America. Tell us about how that relationship started because that must have been a really great person to have in your corner.

Eric: Look, Robert is a legend in the industry. He's a mentor, he's a terrific guy. There are very few who have built a track record that he's built. As I've gone on to build this business, having him as a mentor has been critical. I got to know him through another close mentor and pseudo uncle of mine, a guy named Richelieu Dennis, who also is an investor but built a consumer business that's well known to many, called Sundial.

Rich has been a supporter of mine since I started the firm, and him and his family have been critical to making key introductions for us that have been key to our success. I think when you look down the roster of folks, there are financial luminaries, there are sector-focused luminaries, there are folks like a Bank of America and Moody's. You know, we've got a number of endowments and foundations. The differentiator for most is going to be execution.

I think our vision is clear and it's ambitious, and there's a lot to chew on: small businesses, social impact, underserved communities, focusing on outcomes, positive outcomes for the Black community. But the difference is we've been executing for four to five years. We've returned capital to investors. And I think the future is bright for us as we continue to look to expand our business. That's why at the end of the day folks have come on because they know us, they've seen us work and they believe that we can continue to do so.

Andrew: In doing that, obviously, you've had this focus on producing positive social outcomes, as you described the S and G of ESG. But of course, we've discussed this before, there is this misconception, I think, that investing for positive social outcomes is mutually exclusive from delivering outside returns. But they are something that can go hand in hand and do go hand in hand. I just want a bit more information about how you've seen that actually in action.

Eric: I'll give you a couple of examples. There have been studies on this. This isn't unknown to some. The Knight Foundation has produced a study talking about diversity and asset management, and how diverse-owned asset managers, diverse GPs that is, outperform. Bain Capital's produced a study talking about [how] adding women to the C-suite of an organization actually creates alpha, creates value, as opposed to not. From a macro perspective, it has been proven that this is a value generator. You can't tell me that putting a woman in the C-suite of our organization is going to destroy value. That just doesn't make any sense logically to me.

But here's how it can work in practice. A couple of days ago, Fed Chairman Jerome Powell talked about how we're at full employment. You hear about this great resignation. You hear about folks finding it difficult to staff up from a labor perspective. Labor markets, particularly in blue-collar industries, manufacturing industries, are relatively tight. Well, we've got a company where 45% of the entry-level workforce is formerly incarcerated.

We just bought a business that manufactures doors in Northeastern Alabama, where we want to grow the labor force. Rather than using temp staffing agencies, we believe we can develop an HR function inside that business and think about where we might be able to hire folks that the company typically didn't look [at]. That's an alpha-generating strategy. We need more bodies in the door. We need more [labor] for these doors. What we found is that in some cases we actually have higher retention rates on that labor.

We can track the alpha creation. We can track the increase in EBITDA. We can track the increase in margin, but at the same time, we can track decreases in recidivism. We can track salaries and wages going into underserved communities that might not have otherwise gone their way. That's just a concrete example of something we've done and literally a playbook that we're in the process of executing.

I share this stuff, really because I want more folks to do it. I think that corporate culture and corporate citizenship is in a period of change. I see Trident as just being a cog in that wheel here. We're running our leg of the relay, so to speak, and we're happy to produce the results, both commercially but also from an impact perspective.

Andrew: When you talk about these data points, is this the kind of technology and the kind of data that you talk about about delivering results and achieving these outcomes, this proprietary technology?

Eric: Sure. Trident's a little bit different from most private equity firms, particularly at this stage, because while building an asset manager we decided to build a technology company at the same time. That technology company within allows us to be more efficient, be more systematic and build a really large file of addressable opportunities that are creative.

Now, as part of just housekeeping while having a technology company, you're going to track things like demographics. You're going to track things like where salaries are going. You're going to track things like where vendor payments or supply agreements are going. You're going to track things like who your operating partners are.

Here at Trident, we specifically do business with folks we call independent sponsors, so tracking them, tracking their demographics, and just being thoughtful about doing well while doing good is a big piece of the strategy. Now, to be clear. We are commercial first, period. We will not sacrifice return. I simply refuse to believe that you can't do both. In terms of the technology, here's the best way to think about where it really, really comes into play.

I mentioned I'm from Southern Texas. I mentioned how underserved communities like the one I'm from are, but one thing that that community has in common with a lot of others is we don't like carpetbaggers. Your ability to do business locally is based on your ability to feel local, to know those local networks, to have, in some cases, decades of subsector expertise or experience, doing business in and around wherever you are.

Part of what our technology allows us to do is to create a catalog and a database of who these folks are, help us effectively use them and utilize them to find great deals, and then partner with them to build businesses. Managing a small business or an ivory tower in New York City is really, really difficult. Our belief is that by going local, you can create alpha [for] LPs, and you can create change in communities.

Andrew: With that in mind, and looking at Trident's focus on lower-middle-market, smaller businesses—and as you said, it's looking at the region where you've got expertise, knowledge and experience—at the same time, is this something that you would like to scale up, expanding to other geographies, not just the US, even other economies? Sure, there's diversity issues probably to be addressed in other developed economies as well. Is this something that you see scaling or being replicated at least elsewhere?

Eric: Look, it's a great question. Obviously, never say never. We're super focused on what's in front of us right now. I mentioned there's 30 million small businesses in the US. What I'd like in the future is for, if you're on MSNBC or CNBC or Fox or whatever, and you're talking about small businesses, you got to bring up Trident's name. You got to bring us into the conversation because we've dedicated so much time, effort, money, resources, to building a brand and building a business with small businesses in [the] United States. That's our immediate focus. Again, never say never, but my plate is totally full with what I got in front of me right now.

Andrew: Do you have any industry peers doing similar things to what you're doing or that you share experience with or have been influenced by?

Eric: There are a number of folks who do something similar, in that they like buying small businesses. They like partnering with operators. We've added two layers to the strategy that no one else has. One is technology, and that's not buying off-the-shelf technology.

I mentioned we've got a dedicated CTO who helped us found this business, who's allowed us to build proprietary technology that we use daily to source and sort through where we should be spending our time from an opportunity set perspective. That's the first layer.

The second layer is social impact, having concrete targets in terms of the impact that you want to create for underserved communities, and particularly, the Black community. We think it's differentiated, especially given we're not compromising returns in order to get there. That's where we are.

Andrew: Moving beyond the companies that you invest in and looking at Trident itself, looking at your website, I can see you're a very diverse board with people of varying backgrounds, and that's great. We've discussed, there's a lot of value in having that kind of diversity in your board, and it's a great advantage even. Despite that, we know that the private equity industry itself is not very diverse. We only need to look at the faces in the crowd at SuperReturn, Berlin to know that there is diversity but nowhere near enough. And then there's the data to back that up. I've got in front of me some numbers from McKinsey & Company for a report they put out last year. I'm sure you know these figures, but I'll just say them for the benefit of our listeners. PE does trail behind corporate America in terms of diversity. Investment deal teams are about 1% to 2% Black in the United States, with other people of color comprising the remaining 11% to 12% of diversity at the managing director level. That's the data we've got from McKinsey. There have been efforts to improve that in the industry.

Firstly, what do you think about the progress so far the industry is making? If you think it's making enough progress at all. What do you think, from your experience, are the main barriers to that, or what could be done to encourage more diversity in PE?

Eric: I think progress has been made and kudos to those firms, kudos to those allocators that have seen fit to hire folks, to allocate capital and to really dedicate various policies to making sure that we have a diversity of outcomes, a diversity of people populating this business. The one stat that I don't think you mentioned is that if you look at all assets under management, about 1.3% of them are managed by women and people of color, and so if you assume the market is efficient, what the market seems to be implying is that women and people of color are ineligible effectively to manage assets and manage assets at scale. We obviously disagree with that. Whenever I think about this, I think about my high school motto, I'm not a big Latin person, but the motto's "finis origine pendet," which means "the end depends upon the beginning."

Here at Trident, we started with a simple concept. We're a Black-owned firm. Sixty percent of our people are Black and brown. Fourty percent of our people are women. The second most senior person on the investment team happens to be female. It's not a surprise when 40% of our CEOs happen to be women. It's not a surprise when today 60% of our operating partners on our deals happen to be people of color. We didn't set targets for this. That's just how it happened, but it started with the beginning. It started with intentionality. That's how we've done it. I haven't spent enough time in this industry yet to tell other people how to do their jobs, but I certainly think that it worked out well for us so far.

Andrew: Looking more broadly at ESG ... Whether it's private equity, hedge funds or public markets, ESG is one of the big issues of the day. Companies large and small are looking to improve their approach with regards to ESG. But you've talked about the S and G being overlooked, do you feel enough is being done on that S and G aspect of ESG, more broadly speaking, not just at the investor level, but also the companies they invest in?

Eric: This is an area where people are making progress, but I think not enough, frankly. We have a very long way to go. To be fair, I think it's because the branding of ESG, which maybe no one is to blame for, hasn't been all that great. If you're thinking about ESG—environmental, social, governance—the environmental has dwarfed the branding of ESG. It's really obvious that if you're trying to produce energy, mining coal is going to be a little bit less expensive than building a wind farm. I get it.

I think that brush has been used to paint over the entire ESG world, and so you end up with these instances where diverse boards aren't necessarily thought of as being good, even though, we've seen multiple studies that indicate that when you have a diversity of voices in the room, you have a diversity of people in the room, you actually end up with better decision making and better outcomes.

There's this market in inefficiency that has just been able to persevere. Part of [it is] institutional bias, part of it is bad branding from ESG, but there certainly is a long way to go. Again, there are a number of folks who are making strides here. I'd like to think that Trident is a big part of that and will continue to be a big part of that. I think others will continue to tap in.

Andrew: One last thought I want to leave the listeners with. You're going to have people listening to this podcast who are going to be senior people in private equity, they're going to be advisers and other decision-makers. What message would you like to leave with the industry, people listening, and they're thinking, "How can I help the cause of better representation in my industry? How can I be a better advocate for things like diversity, equality and inclusion?" What would your thoughts be as somebody who is very much at the front of this kind of movement here?

Eric: Allocate capital to women and people of color. Pay women and people of color. That doesn't mean hiring people, because sometimes you can hire and then the economics at the end of the day will be so skewed that that hiring is a bit of window dressing. It's really those two things. For us, we've always thought about it through the lens of our 13% initiative. When we look at the value produced by our fund, we want 13% of that value to accrue to communities of color. We actually will add and tally up every dollar that goes back into the community.

Now, we're indexing way above 13% right now. But the logic for us is that if you're indexing above 13%, you are closing the wealth gap. If you are indexing below 13%, you are widening the wealth gap. You're part of the problem in some ways. Coming up with metrics that are based in economics, that are based in Black and white data and numbers, has been a big part of how we've been able to create impact. It's been a big part of how we've been able to promote and focus on DEI.

As folks think about the answers to some of those questions, yes, I think you're going to get more allocations to Black and brown GPs and women. I think you're going to get more people higher, not just at junior levels, but in senior positions. I think you're going to have bigger portions of carried interest or bonuses split into folks who are people of color and women. I think frankly, the industry needs it to stay fresh. I think the industry needs it to continue developing.

Andrew: Excellent. Thank you very much.

Eric: Thank you.

Andrew: I don't know if there's any other thoughts you want to leave us with, but if that's good, then thank you very much, Eric, for your time. Eric Taylor, it's been great speaking to you. I look forward to seeing you again.

Eric: No, thank you so much. I look forward to seeing you, if not in Berlin this year, I'm sure I'll see you a little bit sooner. Thanks so much, Andrew.

Andrew: Fantastic. Thank you.

In this episode
 

Eric Taylor is the founder, CEO and CIO of Trident, a private equity firm focused on acquiring US-based small businesses in industrial, consumer and healthcare sectors. Trident uses proprietary technology to systematically source and diligence small-cap opportunities, with an eye toward reducing the racial wealth gap by incorporating post-transaction elements of diversity, equity and inclusion to amplify commercial outcomes.
 
Eric oversees day-to-day operations, the investment team and is actively involved in portfolio management. He also leads the firm's investment committee and makes final decisions on all additions to the portfolio.
 
Eric began his career at Goldman Sachs, where he spent four years in the Special Situations Group, focused primarily on lower- and middle-market companies. After Goldman and prior to Trident, Eric was a portfolio manager (credit) and originator (equity) at Brightwood Capital, a lower-middle-market asset manager that invests debt and equity primarily in companies with $5 million to $75 million of EBITDA. Eric personally originated and built a $400 million portfolio at Brightwood, oftentimes raising side-pocket capital from current Trident limited partners.
 
Eric holds an AB from Harvard University with honors and is a CFA Charterholder.

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Tim Sanders: Hi, I'm Tim Sanders, vice president of client strategy at Upwork. Welcome to our segment of the program where we discuss innovations in private equity.

Digital transformation is a burning topic for CEOs, investment professionals and leaders of private equity firms. Leveraging cloud computing is foundational for firms that want to make the leap to modernization. 

Blackstone, the world's largest alternative asset manager, recently moved their technology to the cloud in a remarkably short period of time. They did this in partnership with Amazon Web Services, also known as AWS. Recently, I talked to their chief technology officer, who led this migration and here's that conversation. 

Tim: Today, I'm talking to John Stecher. He is the chief technology officer at Blackstone, the world's largest alternative asset manager. John, thanks so much for being part of this program.

John Stecher: Thanks a lot for having me, Tim.

Tim: What drove you and your team to migrate Blackstone's technology to the cloud?

John: Yeah, making the move to the cloud, there's kind of four main factors that drove me really to move out there, really thinking about what does the cloud give most people? It gives them scalability, reliability, to me, a really advanced and capable programming model with a whole bunch of new feature function that you can play around with, build applications faster with. And then another big unspoken one ... is by forcing you to kind of lift yourself out of a data center and out onto the public cloud, there's a lot of tech debt that you can actually eliminate to make your applications more highly available and scalable as you kind of go through that migration process.

Tim: John, tell us about the internal benefits that Blackstone has experienced thus far as part of your cloud migration journey.

John: Yeah ... think of the migration that we did kind of in two separate phases or two separate lumps of applications. One of the big things, part of your application side that you move out to AWS, as you move it, you modernize it, so basically you take an application, you crack open the box, you renovate it like you would your living room with new APIs and new tools that AWS offers up for you. Once you do that, you start to be able to take advantage of the inherent scalability built in to a lot of the services that Amazon provides. That was one big benefit.

The ops that actually have migrated forward and kind of cracked the hood open and started to take advantage of the capabilities Amazon offers, those ones are reaping benefits in terms of more productivity from a developer perspective, less reduced cost because we're able to do stuff like use lambdas and a number of other kinds of serverless compute options that are out there, a whole bunch of interesting stuff in that space. Then you have another set of applications that are much more like what we classify as the lift and shift applications. These ones, they could be vendor products, they could be products that have a lot of, I would say, gnarly code inside of them. [They are] very business-specific stuff, very kind of black box things that you don't want to break open right away.

You take those, you package them up using containers, move them out onto AWS. The big benefits you get out there is you just get a lot more high performance computer than a lot of times you have in your data center, and you can vary the size of the compute up and down based on business demands. And so what we found is going through quarter close—quarter close we do a lot of accounting functionality, a lot of valuations—there's a ton of transactions being processed through our system, and our ability to just turn the knob off, add more compute underneath the covers, made a huge difference in our ability to do things way faster.

Tim: Many private equity firms add a lot of value, create a lot of value, by accelerating the digital transformation of their portfolio companies. Talk about how Blackstone's cloud migration can help you do that as well.

John: You know, a lot of what we do with our portfolio companies is we act as advisers to them and kind of try to give them best practices. And so one of the things that benefited us when we moved to the cloud was we talked to folks that have either businesses that were born in one of the hyper scalers out there or businesses that had migrated to AWS or GCP or Azure already, and we got the best practices from them so it made our journey a little bit easier because we knew where the pitfalls were. That's a lot of what we do with our portfolio companies as well, ... we work with them to kind of say, "What is your strategy? How are you thinking about it?" Here's what worked for us, and then ultimately here's key contacts from consultancy groups, independent contractors on the outside, or even AWS themselves that you can work with to actually accelerate your move forward.

Tim: It's not just the modernization benefits, the technology scale-up benefits. You got a lot of knowledge sharing that obviously took place in this migration.

John: Lots of knowledge sharing, and if you think about one of the great things, to me anyways, of working with AWS, or it could be Microsoft with Azure, or Google with GCP, is you're really building upon the back of a bunch of really hardcore engineers building these services, and they themselves are using these services. So all the services in AWS are in some shape or form getting battle-tested inside of Amazon itself to perform its core functionalities. And so that's just something that it gives you a little bit more trust in the platform. You learn from what folks are doing, best practices out there, how they're thinking about building their services, and it makes you a better engineer, a better developer because you can look at what good looks like, and then you can basically pressure test your own builds [and ask], "Does mine look as good?"

Tim: Talk about the competitive advantage that Blackstone develops through this cloud migration process. Is it in terms of data-centric decisions or cost efficiencies, or just total capabilities?

John: To me the biggest advantage of getting out to AWS and moving out of our proprietary data centers really is the fact that we can attract engineers that understand the tools that are out there and are world-class, right? Part of, to me, the alpha you can create in any type of technology organization is predicated on by being able to hire the best minds, the best engineers, the most efficient coders, proficient engineers, DevOps folks ... cyber security people. AWS helps us attract those in the door right away. A lot of people have the preconceived notion that financial services is a little bit old, stodgy. You're working on Cobalt and a bunch of other, to use the word again, gnarly old stuff, but the reality is you're not. You can work with state-of-the-art tools, so that's the biggest advantage we get.

The second advantage that we get is just time to market. So going from hey, we co-create something with somebody in one of our business units [to] hey, we want to go off and build function X, right? Well, in the past, sometimes you had to actually go off and buy a server, rack and stack it, wire it in from an ethernet perspective, and then you could get to actually starting to build. With AWS we can spin stuff up right away. We can literally go from concept to code in little to no time, and that just gives us the ability to fail fast for stuff that's not going to work, and more importantly it gives us the ability to capitalize quickly at things that do work.

That's the second big benefit we've seen, that our ability to deliver stuff quickly back to the business, back to folks inside of the firm that need it, is accelerating. We expect that to continue to accelerate as we modernize more of the applications that we lifted and shifted out there. Once again, it goes back to that whole risk equation, so I think that that's the biggest reason a lot of people slowly kind of wade into the waters. The approach that I took was a little bit like I do with my kids. They get a boo-boo, eventually the Band-Aid has to come off. You can't let it hang on for a long time. You just rip it off, get it done, and then get back to work building forward. And that's really what we've focused on since I got here two years ago, was let's get this done. Let's set ourselves up for future success. We know Blackstone is a firm that is very, very ambitious with its growth targets, and we want to ensure that the technology platform that underpins those growth targets is one that can grow with the firm.

Tim: What advice would you give fellow technology leaders about moving their enterprise to the cloud, and I want to ask it in two areas, John, change management and implementation, like stages or speed, cadence?

John: Yeah. I think that upfront, the biggest recommendation that I'd say is to focus on a culture and having everybody aligned behind a goal, a single goal. For example, here we did a lot of work in essence putting up a scorecard: total applications—numerator/denominator thing—how many applications are in the cloud divided by how many applications do we have inside of Blackstone. We scoreboarded that on a regular basis so that people actually knew that it mattered. It's a lot more about a cultural mindset of we're going to get this done. Let's come together, work together across all variety of teams because it really is like it does take a little bit of a village to move everybody out to AWS. You have to have your cyber security folks, you have to have your engineers, your DevOps folks, your business users all aligned with what you're doing, being willing to test, being willing to take downtime on the weekends or at night to kind of get these migrations done, and ultimately have them be successful.

It is not just a technology problem. It really is an all-in business problem to get those things out there. So I really focused a lot of folks on that. I think that was probably one of the biggest things we got right here. We didn't get it right, right away. We definitely stumbled and kind of took an approach of hey, let's get this done. This is a cool technology exercise, and after a few months you realize it really isn't just like a couple of independent folks can package up and move applications. You really have to have everybody making that move forward. That's a big one.

The other one I'd say was identify your cloud leaders and kind of recognize and support them through the process. There's a lot to be said about celebrating little wins as you kind of make the big strides to get to the end goal. I equate this to the first time if you want to go out and run a marathon, you've never run before, you can't just step out and knock out the 26 miles. It's like you start with all right, I'm going to run a mile and maybe you attempt it. You get half a mile done, you cough, you walk for a little bit, but you walk a mile and get it done. First time you run it, you want to celebrate it because it is like a milestone, and so we focused a lot on that type of mentality as well for kind of the incremental progress that we were making as we were moving out to the cloud.

Tim: That's right, that's right. I couldn't agree with you more. John, thanks so much for your time. You've been generous, informative, educational, and I've got some terms I'm going to be using today in a couple of my tech syncs internally.

John: Excellent.

Tim: Thank you very much for being on the program.

John: No, thank you for having me, Tim. Appreciate it!

Tim: There were so many insights in that conversation! Blackstone's foray into "full cloud adoption" is a leading innovation in the investment industry and I hope it's as inspiring to you as it is to me.

I'd like to key in on John's comments about how the technology cloud enabled more specialized capabilities, speed to deployment, scale-up, scale-down flexibility and of course, cost efficiencies.

It's a breakthrough in the world of technology, but also, it's a new paradigm in how to lead an enterprise in the 21st century.

Upwork's marketplace of independent talent … freelancers, contractors and virtual teams, represent the next iteration of cloud economics. Think: The Talent Cloud.

As John said, part of creating alpha is bringing on the best minds in the business to work on your problems … but in the case of the Talent Cloud, it's a matter of access, and not acquisition.

Much like AWS offers hundreds of micro-services, which are easy to deploy … Upwork's talent pool possesses thousands of specialized skills sets ranging from technology to marketing to customer support, just to name a few. They can be sourced and deployed to help you or your portfolio companies deliver work in just a few days … giving you that flexibility, speed and efficiency you need to stand out in the market and create value.