In this week’s episode of Not So Private Equity, we share a story from our sister podcast, Beyond Consulting. In this special feature, co-host Steven Haug speaks with David Taube, an Associate at L2 Capital Partners. In this episode we’ll hear David’s journey from entrepreneurship to BCG, and then ultimately, to private equity.
The Not So Private Equity Podcast and Beyond Consulting are co-hosted by Ken Kanara and Steven Haug.
Steven Haug: Hey y’all, this is Steven Haug, cohost of Not So Private Equity. This week on the podcast we have a very special episode. You are about to hear a sneak peek from our sister podcast, Beyond Consulting. Beyond Consulting talks with former management consultants from top-tier institutions like McKinsey, Bain, and BCG, who have since moved on in their careers. Of course, the episode we are sharing with you has tons of great insights about private equity, so listen up. As always, Not So Private Equity is sponsored by ECA Partners, an executive search and on-demand consulting firm that specializes in low and mid-market private equity talent.
Today we have the pleasure of speaking with David Taube, an Associate at L2 Capital Partners and former project leader at BCG. David, welcome to Beyond Consulting.
David Taube: Steven, thank you so much for having me.
Steven Haug: We mentioned that you are currently working at a private equity firm. We’ll want to rewind and hear how you got there, because I can tell you, whenever we’re interviewing management consultants, their dream job, oftentimes, is to end up in a private equity firm. I’d love to hear that story. What do you say we go back to your college days and talk about that first, where you started your own business to pay for college. Is that right?
David Taube: Absolutely. I’ll actually take it just a little bit further as well. My family’s background is that we immigrated to the United States as refugees from Ukraine. That really helped shape a lot of our views of the opportunities that we have. Early on, we really looked at the free markets as a huge opportunity for our family. I didn’t really know, in the college days, the differences between private equity and hedge funds, consulting, banking, all the stuff that many of your listeners are probably far more in tune with than I was. In general, I knew I wanted a business degree. I graduated from Berkeley, and doubled in political science and business administration. During that time, as you referenced, I started a trucking company. Early on I had the entrepreneurial bug and also, I needed to find a way to pay my way through college. We did long haul freight, produce mostly, from Salinas to New Jersey, and ran some of those routes. It wasn’t an easy job, but it was a great experience.
Steven Haug: Were you driving the truck yourself? Salinas to New Jersey, that’s quite a trip.
David Taube: No, I am not skilled enough to handle that job. A lot of it is finding the brokers, the contracts, and really being the support for the drivers who are out there, day-to-day, driving through all weather conditions, uncertainty, with really tough schedules. It’s really just setting up the structure for them to be able to do it efficiently and safely.
Steven Haug: You wrapped that up right when you were finishing college, is that right?
David Taube: It lasted a little bit longer. I tried to do the moonlighting while working a consulting gig. I found out that’s not very easy. Ultimately, it kind of ran its course. Again, it was a good experience, but ultimately I had to phase that one out.
Steven Haug: What was the motivation for moving into consulting because it sounds like you were already a successful entrepreneur. What was it about BCG that pulled you away?
David Taube: Again, I really had no understanding at that time about the type of exposure that I’d have and, and honestly, what an awesome company BCG and other larger consulting firms can be. I interviewed with one of the teams there, it’s called the Value Science Center, and this was a really incredibly deep, corporate finance, applied finance, almost like a think tank that would support our kind of thinking–making sure we’re on the leading edge of finance and helping our clients connect strategy to value creation. Within a few minutes of talking with the team, I realized that they view the world differently. The analytic rigor to really dig down to the truth and relentlessly pursue that, I had an inclination that was an experience I probably wouldn’t get anywhere else, and it certainly paid out.
Steven Haug: You joined BCG right out of undergrad and you were on the generalist track for a few years there?
David Taube: This one was a little more specialized and after a couple years there, I moved over to the expert consultant track, focusing on corporate finance and strategy activism, defense, value acceleration. That’s a lot of jargon that I just threw out there, but in a nutshell, it’s the way I like to think about it. It’s really like putting on the hat of an investor and looking at corporate strategy through that lens. When you put on that hat, you view things a little bit differently in terms of the opportunities, the risks, the timeline associated with it. Not every dollar of cash is valued equally and it was a lot of that type of work.
Steven Haug: How long did you spend at BCG altogether?
David Taube: Eleven years. It was a lot. The funny thing is it feels like it went so fast, but it was a good amount of time.
Steven Haug: Did you spend all that time in the same office?
David Taube: No. No, I moved around. I was mainly in San Francisco and Chicago. We moved over to Chicago while my wife was doing her MBA over there. That’s another awesome experience on the consulting side, it’s lots of locations. Consulting, I think, is really just such an awesome experience for anyone that has the opportunity to go through that. I was taking inventory of some of the projects we were working on and there were over 200 companies in that eleven years, virtually every continent from pre-revenue Silicon Valley companies to banks and Kazakhstan. You think about the breadth of exposure and some of the different offices. Had I known, I would have been even more excited to jump in from undergrad, but it’s been a great journey.
Steven Haug: You mentioned that you were thinking through some of the projects that you worked on there and counting them up. Are there any stories that you could share with us?
David Taube: Oh my goodness, there are a lot. The really exciting part about it is no two projects are ever the same. That’s similar with private equity. You might have a playbook, you might have a process, you might have a thesis and a theme, but ultimately you’re dealing with different companies, different timelines, different challenges, restraints. One of the more exciting ones, I got a call to essentially take the next flight over to Italy as there was a hostile takeover. I had to jump up and kind of join the war room and help the client navigate that. It was a very, very tense situation that lasted a few weeks. Again, you’re tackling it with some of the smartest people that you can find and everyone’s moving in the same direction. That was a fun one.
Steven Haug: When you joined BCG, did you plan on making that your career, making it to partner?
David Taube: Oh no. Every two years I thought I was going transition out. There is just a lot of opportunity. You dive in and you realize how much you don’t know. You’re really kind of swimming in the deep end and then, as you start catching your stride, you really realize the opportunity to make it your own and to start contributing to some of the IP, the processes, the relationships, and helping build out the practice. Every couple of years I’d take an open mind and assess where I’m at. It went from early on in the career thinking, “Hey, after a couple of years I’m going to do this and then move on to the next one,” to take it, have a long-term goal, take it each year out of time, assess each opportunity as it comes. I never thought too long-term, in terms of full-time career, but I would have been open to it.
Steven Haug: What ultimately pulled you away from BCG?
David Taube: There’s always been an itch around both sides, either one, being kind of an operator and the entrepreneurial side. Then, the other side of it, being on the buy side and being a source of capital for businesses. Both of those have always been itches and ideas that I’ve kept with me during the years. When the opportunity with L2 came along, it seemed to go straight down the fairway of both of those. It’s a lower middle market private equity firm and the really cool part about this side of the market is that you get to wear both hats. You’re doing the typical finance side, sourcing, and closing on deals. Once the deal closes, there’s a lot of work and magic that happens to help the teams and the businesses really hit their full potential. It was being able to kind of straddle both of those: get really close with the companies on the operating side, and also working on the deal side that pretty much sold it for me.
Steven Haug: I want to dive into your work at L2 a bit more, but before we get there, you mentioned that early in your career you were trying to moonlight and run your own business while you’re consulting. It didn’t work out, but that didn’t stop you from trying it again. Is that right? Towards the end of your BCG career, you started another business.
David Taube: Habits die hard. I think the entrepreneurial side will always stick. Towards the end my sister and I co-founded a company called Glocal. We’re still working on it. It’s a news intelligence platform. This one was a pretty neat story where both of us were working on a government contract together, her from the public side and me on the private side. We were analyzing patterns of life and behavior right after the initial annexation of Crimea for Ukraine. We noticed a lot of different patterns and inefficiencies with news and information. It wasn’t even so much the lack of information as much as the public’s ability to efficiently access what they need and to be able to process it efficiently. For a couple of years we were thinking about, “How do we pull together all of the different tools, resources, frameworks that we’ve learned over the years to try to create an environment that really makes it so much more efficient for folks to get that personalized information and make it actionable for them?” We’ve been developing it. The process has been going incredibly well, especially over the past couple months. We were able to put together a really awesome team. Hopefully, we’ll be doing a soft launch soon. You could come check it out at glocal.com. We just love the space. We love news, the information environment, helping folks understand misinformation versus disinformation, and finding all those patterns. Feel free to connect with me on LinkedIn or any other kind of platform if you’re as passionate about that as we are.
Steven Haug: That’s really excited David. It sounds like that product has become nothing if not more important since you launched it, or since you started the business. Is the website the best way for folks to find out about that?
David Taube: Yes, I’d say it is. We don’t have a firewall or anything up there yet, as we mentioned, it’s early stage come up. One of the approaches we take is we value the input of the community, of the folks that would ultimately be using it. It’s absolutely not perfect now, but we iterate quickly. We value input from news enthusiasts and practitioners. If there’s any way that folks think that it can help enhance their life and how they access news, join on the website, message us, and connect. We would love to hear from everyone.
Steven Haug: I’m looking forward to the launch. Let’s go ahead and chat, in a bit more detail, about L2. I would love to hear high-level of L2, what the playbook looks like, the types of companies you invest in, and then I want to dive into the life of an associate in a private equity firm.
David Taube: I’d love to dive into that. As I mentioned, we’re a lower middle market private equity firm. We typically look at companies with enterprise values less than 150 million, revenues from 10 to 125, two to 15 on the EBITDA side. Industry wis, there is a set that we really focus on. I personally am very involved in and love the outdoor products and services, especially if there’s a digital, direct-to-consumer path. That’s a very exciting space for U.S. business services, environmental and safety, regulatory and compliance, vertically integrated manufacturing. One of the areas that we look at is folks that are really category managers, beyond really good product specialists, but folks that own the shelf in categories and spaces. High level, full…we acquire full companies, hold them anywhere from Three to seven years plus or minus. It’s a pretty standard holding period there. We work very closely with founder-lead businesses. Oftentimes its founders that have created a phenomenal product, great business connection with the customer, and they either need just a little more help to build out the org structure, put in a few more tools and resources to really help accelerate their ability to hit their full potential. Or, folks that have run a really good race and are thinking about their legacy and handing the business off to the next owners while making sure that it stays true to the core of what the founder intended. There are lots of businesses. Most of them are at that critical inflection point for a lot of the things I just mentioned.
Steven Haug: I appreciate that walkthrough. In the associate position at L2, do you mind telling us what your job looks like? I mentioned that I think a lot of folks in consulting see that as a very exciting opportunity. I’d love to hear about what you work on and also if they can expect the same type of work for associate level positions at other low or mid-market private equity firms, or if those positions vary quite a bit depending on the firm.
David Taube: Yes, that’s fair. For the first one, this is another one where I had no idea what I was really walking into. In general, I understood private equity and how I viewed the tools and skill sets from consulting and how that could add value, but it is just a completely different world. If you just think about what you’re incentivized on. In consulting it’s client services and at the end of the day, it’s billable hours. You’re working on projects and you need a smooth process to help the clients answer questions and then ultimately it’s on them to execute. Over here, the pace is much faster. It’s less about presentation, blocking, tackling, and herding all the cats, and all that other stuff. You have a finite amount of time to execute on the strategy that’s put in place and, quite frankly, I would say with much fewer resources, from the expert networks to the databases, to, if you’re out of a company like BCG, the 10,000 other consultants that are in the network. You lose a lot of that support structure, but day-to-day, it’s really split, I’d say, between deals–on the deal side it’s finding, sourcing, processing–after the deal is closed, its working with the companies–strategy development, execution development, filling in the gaps. Oftentimes, the companies might not have the resources to build the data platform or architecture, so you’re in there, in the weeds, and building all the capabilities where there are gaps. Or, the companies are humming along just fine and you’re just there as a support, as needed. On the operational side, especially with the smaller teams, there’s a lot of internal business development and building out more of the tools and capabilities there. Everyone just brings in so many and it’s building a more processes around that.
In terms of whether I think it’s standard across the board, obviously I think the simple answer is no. It all depends on what the life cycle at the businesses you’re looking at are, and what is the life cycle of the fund that you’re at, and how many folks are there. There are many different flavors, even within the lower middle market for private equity. For anyone that’s on the consulting side looking to make the shift, especially if they’re looking to make the shift towards the deal team side, really look at all of those different pieces of it and see where your skill set fits the most. If you’re an industry expert, great. If that’s an industry you love, find the firms that are at that industry and then think about whether you want to be more operationally involved or less? I think the positive is that there are many amazing firms out there that would really benefit from folks that have a consulting type background. It’s not a very standard transition, but once someone really gets integrated, and it’s absolutely a process to change the cadence, change the mindset, learn all the different capabilities, I think it’s a 1 + 1 = 3 type situation when it happens.
Steven Haug: David, you’re at the one year mark at L2 now. You had the BCG toolkit when you joined, you had also run a couple of companies as an entrepreneur, was there anything missing from your toolkit when you joined the private equity world?
David Taube: Oh my gosh, absolutely. For anyone, I think, that switches careers, not just consulting to private equity, but when you make such a big shift, I think it opens up the world as well in terms of all of the unknown unknowns of so many different things. Whether it’s the financing side, the legal side, how you work with companies, negotiation…the list just goes on and on in terms of even things that may have been similar. You put it in a different setting and the approach is just completely different. Where I think the consulting training really helps is, “Alright, let’s structure it, let’s cut it up, let’s put a framework around how I’m going to tackle this,” and then you just start chopping it up and making progress individually there. You really get exposed to so many different parts of business whether you’re doing it as an entrepreneur or as an advisor, or you still have that experience.
Steven Haug: Is there any other advice that you would give consultants eager to make the move into the private equity world? Are there any projects they should try to get on or industries that they should get exposure to?
David Taube: Yes, lots. I’ve probably been thinking about this, literally my entire life, and it took several years, to be quite honest, even within consulting to find the right fit. At a very real level, you would think it’s a great name, great experience, great background, but the process might take time. Be patient with the process. Obviously, lean into the work within whatever firm you’re at. At the end of the day, if you’re at a BCG and all those like it, it’s an incredible place to be, but be patient with the process. Be very intentional about what kind of a role you’re looking for. I cast a really wide net in the early process. Towards the end, I knew exactly what kind of role, what kind of a firm, the types of people that I’d want to work with and surround myself with and learn from. Be very intentional with the process around making sure you’re the right fit and that they’re the right fit for you. Private equity obviously has a very nice appeal to it, but not every firm’s going to be a great fit and vice versa. On that side, be patient with the process, be very intentional with scoping out the types of teams.
On the project side if you’re able to get on any kind of deal-oriented projects, whether it’s within a PE type setting or any other kind of transaction where you at least understand the process, that’s going to be helpful. At the end of the day, you’re going to have to relearn everything anyway, but at least it’s going to be a little less of a shock potentially. The biggest one that I would say is start developing really strong conviction around what are the themes that you would really underwrite. Lt’s say you have really good skill set at transforming companies from legacy software to SaaS, or taking consumer to digital, whatever the case may be, really understanding and developing an internal thesis and an internal framework of, “If I was an investor, how would I look at this, how would I scrutinize this? If it’s my capital at work, what do I have to believe?,” and I’d also say it’s, for what type of investor, at what stage in the company, with what risk and growth appetite, and all that other kind of stuff. On the consulting side, you get a lot of exposure to a lot of different companies and industries, so really thinking like an investor and getting comfortable building really strong conviction around your recommendations.
Steven Haug: I think that is really good advice, David. The reason I say that is because it’s not uncommon here at ECA for our private equity clients to come to us to help hire associates and one of the questions we often ask those folks is, “Why do you want to move into private equity or join this team?,” and we don’t ask it just because it’s something that we’re supposed to ask in every kind of interview. The private equity world is a very thesis driven type of environment and folks who have thought through that, and have understand the value that they can add on certain teams or with certain private equity firms that focus on a specific industry, or have a specific way of generating value, they tend to be the most successful in those interview processes and impress our clients most. I think that is really valuable advice.
David Taube: Absolutely. On a personal level, you want to have that before you join, and that’s not to say, look, you have the perfect answer, right? My view of the thesis has really evolved as I’ve joined and it’s going to keep evolving probably for the rest of my career. I think that’s all a very good, positive thing. For me, I knew that my comfort zone was sitting at the intersection between strategy and finance. Really, those are two very different hats, two very different worlds in terms of how you even approach the portfolio companies. I still approach them with very much a client services mentality, like, “Hey, let’s solve this together.” It’s super collaborative and I’m having fun with that process. I had an incredibly strong conviction around the value for me personally in that kind of role. A lot has evolved beyond that, how it’s applied, and how I’ve ironed certain things out, so I wouldn’t say you have to have the answer for what the best investments are out there, but really having a strong conviction around what value-add you have, especially if you’re a slightly more tenured, higher PL switching over, and having that perspective on how you could be a real value add and what kind of gaps you might be filling for the team.
One other part to get to, it is a completely different world. Surround yourself with people that are willing to throw you in the deep end, but really help you learn how to swim as well. When making the transition, you can’t emphasize enough the importance of surrounding yourself with the right people, the right mentors, and really feeling that these are folks that will make you better by training you in the tradecraft on the private equity side, but also, that really want to lean in and utilize your unique skill sets and experiences that you bring from a different background.
Steven Haug: Thank you for that David, and thanks for joining us on Beyond Consulting. I always enjoy our conversations and I’m so glad that we could have you on
David Taube: I appreciate it very much Steven. I’m happy to join and whether it’s folks you’re talking with or audience members, I’m happy to connect with folks that are serious about the process or have questions. Get in touch and we can find time over a weekend to talk about and dive in. I really appreciate what you and ECA are doing, and I’m happy to help.
Steven Haug: Good. I appreciate that, David. I think we might know a few folks that would take you up on that.
David Taube: Well, let’s make it happen.
Steven Haug: Good. Have a good one, David.
David Taube: Alright, bye.