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The 92 Report

Oct 2, 2023

Show Notes:

Steve Lebowitz discusses his journey since graduating from Harvard and his passion for investing. He graduated from law school at HLS. He practiced law for around seven years but decided it wasn’t for him. He developed a passion for investing and joined a private equity group, where he worked for 17 years. Then,four years ago,  he launched a private equity firm called Brand Velocity Group. The firm focuses on consumer-focused middle market expertise and marketing. He believes that private equity often overlooks the human side of the equation, which is critical for founders’ businesses. He believes that founders should focus on employee well-being and culture, giving 10% of their carried interest to the employees of their portfolio companies, not senior employees. This approach is not only about money but also shows that employees matter and that founders care about people. Steve and his firm wanted to make a difference and align their firm with human nature and what successful businesses do, focusing on the important role employees play and not merely reduce them to a number on a spreadsheet. Steve and his team have been working on various initiatives, such as coaching, training, and acts of kindness, to bring their company closer to human nature. He found the current culture of private equity firms is dated and wanted to change how their company operated. 

Building Company Culture and Employee Loyalty

The company is focused on building goodwill and treating their own and their client’s employees well, not just financially. They are implementing various strategies, such as coaching, democratizing coaching, and offering discounts to employees. They are also phasing coaching to 20% of their company's employees, which is a significant portion of their company's earnings. Another example is offering gift cards to employees affected by hurricanes. This gesture shows that the company is committed to helping employees during difficult times. They also provide various Disney perks, such as VIP tours and tickets, in partnership with Barbecue Guys. The company's approach to interacting with frontline employees is based on a mix of in-person and virtual interactions, introducing themselves and discussing the company's goals. However, this can be challenging due to the large number of companies and the distance between them. The company's goals depend on the management team, who can help disseminate the company's values and goals. They maintain an open door policy to allow employees to share feedback and questions. 

Screening Companies as a Private Equity Firm

Steve talks about his investment process and how he filters companies to determine if they are a good fit for his firm's approach. He starts by looking at companies with at least 10 million earnings minimum, but the firms typically come in at around 20 million. His background as an investor comes from his father's interest in investing. Steve began by focusing on consumer opportunities, sometimes with a sports angle. His partner has spent his career in the world of sports and brings that knowledge to the firm.  He looks at companies with a differentiation that gives them a competitive edge, a reasonable growth trajectory,  and a decent history, and if they have those characteristics, they are interested in investing in them. The fit with the owners is also important, as is the price. Cultural factors, such as the company's culture, are also considered. His team brings a range of expertise, including financial analytics, business development, marketing expertise, and relationships in the consumer market. Steve talks about the clients his firm serves and what his firm proves in addition to capital, such as additional support advice, services connections, and connections to the portfolio companies. They bring financial analytics, marketing expertise, advice on acquisitions, and a strong network of contacts to help companies succeed in their respective industries.

The Changing Landscape of Private Equity Firms

Steve talks about the changing landscape of the industry and the importance of focusing on attributes other than acquisition price. He explains that sellers now focus on price versus legacy, which is crucial for the success of their business after sale. He envisions private equity to be more human-centric and less focused on numbers and numbers. He hopes that the idea will spread, and that the business model will be successful in terms of financial success and the message it sends. He emphasizes the importance of focusing on attributes other than acquisition price in private equity deals. He believes that the future of private equity will see a more human-centric approach to the industry, with a focus on promoting kindness, common humanity, and financial success.

Influential Courses and Professors at Harvard

He also mentions his time at Harvard, where he took a course called East Asian Studies with Professor Washburn, which was a Japanese literature course. The class was small and interactive, with a personal touch, making it memorable. He also mentioned that he was not the most serious student and often skipped classes.



01:47 The launch of Brand Velocity Group

06:48 The importance of putting your money where your mouth is

12:27 Sharing the growth and helping employees

15:32 How Brand Velocity Group connects to employees

18:22 How Brand Velocity Group screens companies

25:43 What it takes to compete for deals now