Incredibly fun and dynamic conversation with Peter Gudmundsson about business leadership from the military and applying it practically to company and organizational leadership. Internalize leadership traits and principles. Take care of your people and accomplish your mission. Brilliance in the basics. Doing it all ethically. You will absolutely enjoy learning about how to leadership from the military and into business effectively.
And so we’re going to dive right into it today this week. And so I’m incredibly excited to welcome Peter Gudmundsson to the program.
He comes to us from a really, really fun background. So he got his start as a fellow Marine Corps artillery officer like me, which is really cool. But beyond that, though, he’s done a ton of amazing things in business, and I’m really, really excited to unpack a lot of that history and a lot of that story that he’s lived and he’s gone through. And so Peter, I just want to welcome you. Thank you so very much for being with me.
Thanks for having me, Aaron. Excited to be here.
Yeah, for sure. So give us a little bit of a history into kind of who you are what motivated you, what inspired you to join the military?
Yeah. So actually, as you see the antique maps from Iceland behind me, my family comes from Iceland on my paternal side and Canada on my maternal side. Came to the US when I was four years old, actually is still an Icelandic citizen. But since my father was, well, first a journalist then had been a UN (United Nations) employee and then later a diplomat in the service of Iceland, I grew up with a strong sense of national service being an important thing. And that was in suburban New York. Because like I said, he was at the United Nations. And so we had dinner table conversations where, you know, what’s happening in the world and the importance of nationalism, patriotism, all the good things.
And so when I went off to college, well, actually I should say I did aspire to go to the Naval Academy originally as a teenager. I grew up reading a lot of Guadalcanal Diary and Battle of Midway books and that sort of thing. And I wanted to fly, but two things came to light. One was like a lot of people, I didn’t have the eyes and we didn’t have surgery back then. And then my eyes were not good enough to fly. And then second, I learned that as a non-American citizen, I couldn’t get into the Naval Academy. But I did trigger the process of becoming an American but just didn’t come through in time to apply to the academy.
So I ended up studying history at Brown University and I wanted to do national service. I wanted to gain leadership experience. I grew up a big boy scout and outdoorsman and really liked the idea of leading in the outdoors. And then I want to part of something bigger than myself. And back to that reading of history, I read about the Gunnery Sergeant Basilone of the world and so on and the various other – not just Marines, but the accomplishments of history. I did not have a naive sense of some sort of glory. I knew war was hell. I hoped and prayed never to have to face war but I knew that good men had to train to do so for the rest of us to be free.
Wow. No, that’s really well said. And I think that resonates with a lot of people in their own decisions to join. So I was really curious. So having the citizenship situation that you had, then what was that like then having to apply for citizenship or whatever looked like for you?
You know, it’s a funny process. At the age of 17, I put in for the citizenship. I was on a diplomatic visa before that, so I had to become a permanent resident. Actually kind of a funny story. I had to return to Iceland and then come back through New York this time as I call it my Ellis Island experience. I had to come through a different line at Kennedy airport as a first time immigrant. And of course you can already hear I don’t have much of a foreign accent. And in fact, it was kind of funny. The agent at the immigration stand asked me a bunch of questions and had me signed some things. I was very polite and I just silently did what I was told. And then finally at the end, I said, “Hey, I’ve been gone for a while. How are the Yankees doing?” And I think the guy sort of jumped out of his skin. “You don’t sound like much of an immigrant.”
And then fast forward to I was actually 22. I was a student officer at the Basic School at Quantico. And I went up well one day, got a day off to go up to New York to swear in as a citizen. And I did so in my green Alphas as we call them, the suit and tie equivalent uniform. And it was awesome. Actually, I was, again, kind of salty. Like, eh, this is just getting the paperwork caught up to reality. But I tell you. Every native born American should see an immigration swear in at some point, a naturalization ceremony at some point in life because it is heartwarming. There were people from all over the world crying, hugging each other, and I got goosebumps and it was really even better. So I ended up in the first row of this courthouse in Lower Manhattan and the judge came out and before he swore us in, he gave sort of an ask not what you can do for your country type speech. And he said, “Go forth and serve your nation.” And he pointed at me and said, “I see some of you have started already.” And I’ve never been more proud. I mean, my buttons were bursting off of my uniform. I was like, give me a communist, I’d kill somebody. This is awesome. And so it was a great, great experience. And so here I am in America.
Wow. Well, that’s cool. And then obviously, kind of like what you mentioned a couple of minutes ago, but, I mean, I detect practically zero accents. So, I mean, did you grow up speaking Icelandic at home?
No, unfortunately not. Literally my greatest regret in life is that I do not speak Icelandic. My mother was English Canadian or actually Scottish Irish and we spoke English at home exclusively. I’ve been around Icelandic a lot. I tease my relatives. I said, “Be careful if you’re talking about me because I’ll understand more than you think,” but really less than I should. And so I’ve got a fairly good vocabulary, but very little sense of grammar. And so it’s quite humiliating. And then I made the conscious choice in high school and later college to study Spanish rather than Icelandic. Because one, it’s hard to find the opportunities for Icelandic and it just so happens that there are a few million more Spanish speakers than Icelanders.
Yeah, just a few.
Yeah. Well, but then you didn’t pick up really any kind of New York accent either.
Thankfully. I’ll order a coffee and you could check to see if I’m really a New Yorker, but thank God, I’m not. No, I think we’re all a little ashamed of our hometown accents, whatever they are. And a New York accent to me is like nails on a chalkboard. I really dislike it.
That’s awesome. Oh, man. All right. So let’s jump into a little bit of your Marine Corps career and then you punched out looks like after your initial tour of duty. So what was that like for you, your service and then your decision to get out?
Exactly. So I went in with service in mind. I never aspire to a career. And so I was part of what’s called the Platoon Leaders Class program. I think it still exists, been around since World War II, and it was two six-week periods – the summer after my freshman year of college and the summer after my junior year. And Officer Candidates School in Quantico, the whole washing out process. And can’t say I enjoyed it, but I did thrive there. And yeah, I’m so, so old school that I think that summer of ‘82, we were one of the first OCS classes to have camouflage uniforms, not the old Vietnam era green. How’s that for a uniform?
And so anyway, so I did that. And then, so when I graduated in May of 1995, I was commissioned, had a little private commissioning ceremony at Brown where I went to college and then they didn’t want me until the fall. So I went to active duty in the fall at the Basic School, six months of learning how to be a basic Marine infantry officer. And from there, I chose artillery as I know you did largely because I knew I wanted to do the combat arms and I knew that artillery in particular is what I call the thinking man’s combat arms. Because looking at the infantry officers I was exposed to at the Basic School, there was really a binary choice. They were just some incredible leaders of men who you’d follow anywhere and a few real jerks.
And so I thought, whereas the artillery folks I met were always a little bit more cerebral and I was interested in the intellectual aspects of the art of war and artillery really sort of brings it all together, you know, the king of battle as Napoleon said and all that. Plus I knew I only had a three years of active duty. And after the Basic School, like two and a half years more, and I wanted to do two things. One, get exposed to an army school, and in those days, artillery and tanks. We still had tanks in the Marine Corps then. We went to army schools. And so six months, it’s really the army’s equivalent of the Basic School. It’s where the basic training takes place for junior officers. And so I really enjoyed learning army. In fact, to this day, I often joke when I talked to army veterans that I’m not fluent, but I speak army. And I really did.
And in those days, of course, it was really the waning – we didn’t know at the time, but it was the waning days of the Cold War. So we learned all about sort of World War III, Fulda Gap, tank formations type stuff, which was kind of cool. And then I wanted to make sure I went to sea so I wrote a letter. I knew I was going to Camp Pendleton 1st Marine Division and that’s 11th Marine Artillery Regiment. And so I wrote a letter, a paper letter, to the adjutant of that regiment. And I said, “Hey, I’m checking in.” And whatever it was, I think October of ’86. “And if at all possible, subject to the needs of the corps and the regiment, can you send me to a unit that’s going to deploy to sea?” So in those days, the 1st Battalion, 11th Marines supported the 1st Marine Regiment, which was earmarked to send groups out in what we then called MAUs (Marine Amphibious Units) later changed their name to Marine Expeditionary Units. So those were four amphibious ships with about 2000 Marines embarked, our battery supporting a battalion of infantry.
So tremendous experience I had. And then I had six months with the Navy. So ever since – well, it’ll probably come out later in the conversation when I’ve addressed veterans’ groups, I have sort of a standard joke that I use, which is: I understand all of you people. I was a Marine. I went to an army school for six months. I lived on a Navy ship for six months. And I’ve been a civilian for a long time. So I understand you Air Force people too. And that’s usually gets a good laugh. They appreciate it because that’s sort of their self-image too. Like yeah, we’re relaxed. We live in dormitories and use first names. So anyway, I’ve got to figure out a way to get the coast guard into that joke, but it never fails to amuse a multi-service veteran audience.
Yeah, for sure. Well, I mean, that’s an incredible, incredible move you made there writing a letter to the adj because I think that’s everybody’s secret desire. Maybe not so secret, but you know, everybody wants to have a chance to deploy and make the most of their time, whether they’re doing three, four, 30 years, if people want to – especially in the more junior ranks, you really do want to get out there and max it out.
Exactly. And again, we were lucky. Like I said, it was the end of the Cold War. And so in fact, it was interesting. So it’ll come out later. I was a forward observer attached to an infantry company for you Army types. That’s FSO or fire support officer. And did that for my deployment. And then when I came back, I was briefly a fire direction officer in the battery, but then I was immediately selected to be the battalion intelligence officer S2 largely because I was getting out 11 months later. But in those days, we had nuclear artillery. I don’t know if that was still in when you were there, but we had nuclear artillery, and that was a special – it was a very big deal that each battalion had a nuclear safety officer who was in charge of the nuclear programs. Screening the cannoneers who were in this sort of all-star gun team that was trained to fire the big silver bullet as it was called. And it could choose to just with the Cold War mentality still was to have nuclear tactical artillery. But anyway, so I did that. I was in intelligence then for the last part of my tour. But yeah, so I maximize the types of opportunities during those years.
For sure. No, that’s awesome. So then what was the transition like for you? Where did you land as soon as you were – ?
Yeah. So I started graduate school. Actually, I got married in my last year to my longtime girlfriend from my hometown. We’re still married 33 years later quite happily. And so she had started the first year of law school and when we got married taken a year off to come be a paralegal in San Diego when I was at Pendleton. And so she was gonna go back to grad school and I wanted to go to grad school. So I applied to some business schools. No, actually, I applied in one business school and it was Harvard and I got in. So I got in early. I also applied to some law schools because I wasn’t quite sure whether I wanted to do that and got in some law schools as well, but I decided to do business school. And so we moved to Boston. She also transferred to a Boston College Law School. And so she finished her last two years of law school while I did my two years of MBA.
Wow. So how the heck did you guys make it during that time, man?
Yeah. I mean, just a lot of hard work. Hard work, a little debt and some savings. Things were cheaper then. And our GI Bill of our generation was terrible. It was save $100, get 200 more, you know, type thing. It was nothing like the post 9/11 GI Bill.
Sure. Well, so what was the experience then going through business school? Because there’s a lot of folks that have elected to go that route.
I mean, it was a tremendous experience. I mean, especially being at Harvard was a real privilege because I was the only former Marine in our class, which is unusual. There were three in the class ahead of me and two in the class behind me. And they’re about 780 in a class. I would say 40 or so had military experience. So it was not uncommon. And it was interesting. So it’s a case method program. So if you’re familiar with the case method, it’s kind of like the old 70s law school movie, The Paper Chase. We have an intimidating professor firing questions at you and you have to defend your point of view.
And actually the first day of class, I sat down, and sitting next to me was the one non-MBA student in our class. He was a doctorate business candidate. So he had been there the year before and he asked me, “Where are you coming from?” And I said, “Well, I was a Marine officer 10 days ago,” and I point to my short hair. And he said, “Wow. You know our marketing professor was a former Marine, right?” I said, “No, I didn’t know that. Thank you. That’s good to know. I’m going to get called on early.” Well, sure enough, I was not called on the first day to open the case, but the second day, I was. The first day, he called out a woman who had come from Bain consulting who nailed the case. I mean, she saw things that none of us got close to. The second day, I fumbled through the case as best I could. I had no business background. I was a history major from undergrad who had been a Marine artillery officer with a diplomat father. I mean, so I didn’t know anything about business.
And the joke was about a month later when people sort of opened up socially with each other, someone said, “Yeah. And that first day when Kim opened, I was so intimidated, but then you opened the next day and I felt much better.” But what happened, the way the curriculum works is the first couple months are more technical – accounting, finance, marketing – concepts that I had no background in. But then when we started turning our attention to leadership, organizational development, human resource management, they called it, all of a sudden we, military people, were giving our each other eyes in the class. These people don’t know anything. I mean, they might’ve come from Bain or Boston Consulting Group or Goldman Sachs, but they don’t know how organizations work. They don’t know how to lead and we’re here to teach them. So we stepped up and started explaining the basics of leadership and as a result helped them and us learn the science of management.
Man, that’s so good. So you’re speaking to topics near dear to my heart because the leadership lessons that you can learn in the military are incredibly invaluable. And if you’re able to go and apply them in a way where, you know, because I mean, cause folks have this – and I don’t know if this is your experience getting out, you can correct me or agree. It doesn’t matter. But people tend to assume in my experience that you’re going to come in as a drill instructor and you’re flipping tables over and mother effing everybody and knife-handing everybody and just going bananas, right? And like, it’s my way or the highway type of –
Culture fit fear. Well, culture fit fear is very real. But the positive way of spinning that is that you don’t have to ever convince someone that you’re tough enough to fire somebody or tough enough to make the tough decisions. So as part of a personal brand in a civilian business career, it’s a very important element if you know how to use it. And now to be fair, there are other maturing experiences. College athletes or elite athletes or people who have had other character building experiences. It doesn’t have to be in the military. But Military is a very good way to get that. But yeah, being conscious, being very aware of stereotype, frankly. You know, it’s become forbidden in our culture to talk about stereotypes, but it’s how the human brain works. And so people draw conclusions, whether right or wrong or whether they’re fair or not. And so the smart veteran developing a career will learn to use the stereotype to their advantage while making sure you address where it’s a weakness.
Yeah. But then you’re coming with these soft skills and you’re just simply applying them in context. And so you’re able to make a really meaningful impact because you’ve seen, you’ve experienced a lot of different things in terms of like highest levels of stress and then obviously you go down to lower types of stress. And so then you’re overlaying that against the backdrop of business school in your learning about all these different business concepts and ideas. And like you said, there’s a lot of the science behind it, but then you’re kind of bringing in the art into it as well, right? Well, it’s maybe not as well understood or well executed. It’s understood on paper, but then the actual execution of leadership is a totally different thing.
And so bringing that up and bringing that into the forefront, I’m sure, was a bit of an eye-opener. Because you probably were like, man, I didn’t really – I mean, not trying to pat yourself on the back, but at the same time realizing like, wow, I actually learned something..
Maybe I didn’t really realize it, right?
Well, that was it in particular. And I remember, you know, similar, and again at a place like Harvard Business School where I think those days are admitting 8% of the applicants or something. Everyone was a very good student in college. Everyone had impressive backgrounds. And I remember having conversations with people and I would say things not like a fan boy, but more or less, “Wow. You worked at McKinsey & Co. in Hong Kong, that must’ve been amazing,” or “You were an analyst working on big deals on Wall “Street, that sounds so awesome.” They were like, “You are a Marine officer.” And I was like, “Oh, yeah, I guess that’s impressive too.” Just because it’s me, I didn’t think about it. So it’s funny how that works.
But yeah, you definitely does build confidence, I think. At the same time, there’s opportunity costs. I had friends that had become CPAs. They had three years of hardcore what was then called Big Eight now Big Four consulting experience or accounting or consulting experience. And they knew their way around a spreadsheet or a substantial financial statements that I’m sure I still don’t know quite as well. So there’s trade-offs to everything. But again, and I always call it the idea of the art of leadership or the science of management. Combining the heart and the head, the two aspects to that, are critical. In addition, it’s not just soft stuff, there’s hard things you learn too.
I mean, the importance of a desired end state, for example. We were just learning it was just sort of secretive that some of us were studying maneuver warfare theory back in the 80s. It became doctrine a few years later in the Marine Corps, but at the time it was considered sort of rebellious thinking. And we prided ourselves on reading this, you know, secret literature and books on maneuver warfare and so on. Part of that was understanding the commander’s intent and understanding of the end state. What are you trying to get to?
And it’s amazing in the civilian world how often the meetings will start where people will just start talking and, you know, 45 minutes go by and no one raises their hand and say, “Wait. Why are we here? What are we trying to accomplish? And what will this meeting look like if it’s successful? I mean, what’s the conclusion we’re trying to work towards and not the answer necessarily, but what’s the question we’re trying to answer in this session.” It’s amazing how simple things like that aren’t done, but to train for the fog of war, the military, in our experience, the Marine Corps, has taught certain techniques. I mean, the five-paragraph order. To this day, I still use a five-paragraph order format when I’m offering an instruction to a civilian organization. I don’t call it that because it’s just theory but that’s essentially what it is. So those types of experiences and exposures are critical.
No, I love what you said about leadership management. So the art of leadership and the science of management because it’s also a misnomer that a leader is something that you just are instantly, and maybe being a positional authority, but it’s an entirely different thing to be a leader. And so it’s a great visual in terms of like – I’m just thinking. There’s people that are exceptional managers, but they’re not leaders, right? And then you might have leaders that are very gifted in that respect, but maybe not a very effective manager. And so it’s really interesting to kind of see those two things as you said. You said the heart and the head, you know, being able to align those two things up successfully. And I mean, that requires really a lot of patience and a lot of hard work on yourself in order to make all that happen.
Yes, absolutely. And again, the military is great also for the… I call it the cult of leadership, which sounds a little cynical, and I don’t mean it that way. But there are so many lessons on leadership sometimes not followed up by reality. You see the gap between aspiration and practice which can breed cynicism in most cases. In fact, one of the things I’ve observed very much about veterans, which is interesting, and in fact, it’s the lesson that most veterans have to learn in the civilian workplace pretty quickly is that the sort of gallows humor, cynical humor of the military, doesn’t always translate very well because there’s no disconnect in the military between cynical humor and absolute dedication to the cause. You can have both. In the civilian world, that’s called a bad attitude. But in the military, it’s very common. You know, how many times did we refer to the Marine Corps as the sock, right? Or embrace the suck. It’s really, really negative, cynical view, Oh, the old man’s at it again, you know, type stuff on the one hand, but at the same time would we not have died for the Corps? We’ve took total dedication to the ideals. And so it’s an interesting juxtaposition that doesn’t really exist in my view in any other institution of which I’m aware.
That’s interesting. Yeah. I mean, you’re dead on. And that’s a funny realization to stumble upon. As you’re explaining to me, like, man, that is so true. Because you try to pull that off in any organization, you’re instantly toxic, incredibly negative and just a bad influence, right? That’s something you don’t want inside of a company.
No, no, exactly. But some of it comes from institutional confidence. I mean, the institution. And again, we live in a society where many of our institutions are in decline or decaying. The military still maintains its posture as strong institutions. Marine Corps is where it has an element of insecurity because it doesn’t really need to exist relative to the other services being the Navy’s army. So there is an element of insecurity institutionally, but at the same time, there is strong institutional confidence in the values the way Marines are selected and formed. That confidence really comes out in a way that we need more of in our society.
Well, then let me throw this at you because I think this is a great culminating point in terms of a question here. And this is service-wide so, you know, Air Force, Army, Marine Corps, Navy, it doesn’t matter, but how do you see those of us that have been fortunately – and I don’t care if you’re enlisted or officer, it doesn’t matter. If you’ve ever been responsible for more than somebody other than yourself, that requires some level of leadership and management. So how do you take these lessons learned and what have you seen in terms of how do you best take leadership from the military and apply it into a civilian career, whatever that may look like?
Yeah, that’s a broad question. I mean, I would say it’s understanding the leadership traits and principles, internalizing them. Understand what you’re trying to accomplish. I mean, all of leadership, the very definition of leadership we were all taught. And to be fair, I was taught in the Boy Scouts before the Marine Corps, which is the purpose of leadership is to take care of your people and accomplish your mission. And I’m a big believer in back to basics. Really ask yourself, all right, well, how are you going to take care of your people? And what is your mission and how are you gonna accomplish it? And doing that in an ethical context, making sure you’re behaving with integrity and making sure you’re setting that example for others. If you have those basics, if you really understand those basics, and I use the phrase all the time, overuse the phrase, which I apologize for this long letter, I didn’t have time to write a short one.
And if you’re really doing your homework, you should be able to distill in as few words as possible. Why are we here? What are we trying to accomplish and how are we going to do it? And so that by constantly returning to basics and answering those fundamental questions, because remember, again, back to the Marine Corps, we were trained in a service that is designed to take hostile beaches. I mean, so a lot of thought goes into that. It’s not just jumping out of the amphibious vehicle and hoping not to get shot. There’s a lot that goes into that. But fundamental is a spirit of accomplishing that mission.
We have to get off the beach one way or another. And that is inculcated in our bones. And I think keeping that spirit, whereas the same time at the beginning, we were talking about softening the edges a little bit for the audience you’re talking to, but that goes to managing for diversity in any case, which diversity of background or age or whatever it is, different gendered approaches or whatever it happens to be. You can’t go all rah, rah hoorah all the time because it’ll alienate people, and then you won’t be effective. But the spirit of it is still you may communicate differently with different words and with a smile to soften certain edges, but the spirit is still there.
Yeah, that’s well said. It’s a great way to understand how you can take a lot of the hard earned lessons and things that you learn when you’re in service and applying those as best as you possibly can and doing it in a way that your humane, right? You’re able to relate to people. And so I think that goes back to the point you made about internalizing a lot of these leadership traits and principles and making those a part of your fabric, of who you are. And then understanding, again, to your point, about managing the needs of your people, but then also the needs of whatever your mission happens to be.
And that I think comes into the art side of it. Because it’s not always gonna be mutually exclusive and it’s not always gonna be mutually inclusive either. Sometimes you’re working against some competing priorities. And how do you balance that? And I think, again, that goes back to the arts. So it’s fascinating. Like I could sit in here and talk with you about this topic for the next hour solid. So then share with me then, you know, you finished business schools. What was that like? So let’s go ahead and use you as a case study, right? How did you take that with you?
So from there, I ended up going to Wall Street working at Morgan Stanley, an investment banking, which frankly was a mistake in retrospect, but I fell for what’s human nature to some degree. When the recruiting machines come to campus and I knew I aspire to run organizations, to lead them, but the investment banks and the consulting firms – it’s the same today at leading business schools – are so persuasive. They become the desired things that a lot of people shoot for. It turns out the consulting firms didn’t like me at all but Wall Street loved me. And in particular, it was my ability to articulate in interviews. One, they liked my background of having gone to Brown and Marine Corps experience. But I think, in particular, I was able to articulate that a career in investment banking or finance in general had to do with dealing with people and numbers under pressure.
And that’s what artillery does. And they instantly got it or some were a little slower and I explained, you know, a big bullet shot over 25 kilometers or whatever it happens to be. And when they understood that you can’t make mistakes, you can’t just wing it, you have to have the right firing data and you do that under extreme pressure. And that’s how they saw themselves. I mean, in those days in particular, and I think still today. There was a lot of machismo on Wall Street and it became sort of a joke after a while. Some non-veteran interviewing you and say, “Yeah, you know, it’s funny you were in the Marines. I was almost a Navy SEAL.” Like “Really? You were in the Navy?” “Well, no, I swam for my high school varsity team.” I’m like, “Well, oh, that’s almost a SEAL.” I mean, you know, both of them were wet. I mean, it was really kind of pathetic, but I had to go along with “Oh, yeah, well, that’s very impressive. You were almost a SEAL. That’s right.” And so we’ve all been there about being interviewed by the non-veteran, almost veteran. And so, you know, “Thank God you made it back from that mission, sir,” you know, type of thing.
That’s amazing. Yeah. When you’re talking to people who don’t have a direct connection to service, they either know somebody or they almost did it themselves. It’s usually one of two answers.
But okay, so you’re on Wall Street.
Yeah. I did it for couple of years, and I actually got a job offer to go work for a client who was kind of funny. He was an old, big, sort of macho guy who had an oil refining company called Tasco Corporation at the time. And long story short, he hired me to be sort of like a general’s aid, an assistant to the chairman, which was a great exposure to a lot of different things, including mergers and acquisitions. So I learned a lot about – in fact, we bought a big refinery in Northern New Jersey and we sold a phosphate fertilizer plant in Florida that we owned. And so I really got exposed to M&A. Actually, I had been exposed earlier at Morgan Stanley, but I learned it from a client perspective.
And then from there, I knew there wasn’t much of a future in an oil refining company other than a staff job like that. Because oil refining, you need to be a petroleum engineer or an industrial engineer to really understand how the plants work, or there was another way forward, which is being what they call a marketer, who we would call a trader. Someone who looks at a screen and trades crude futures and so on around the world. I didn’t really — I’m not ADD enough to want to do that. Those who do it do it very well, but it’s not my style.
So I ended up going to work for KKR (Kohlberg Kravis Roberts) had a media company called K3 Communications, later it changed its name to Primedia. And it was a what’s called a leveraged buildup at the time. And it’s an interesting moment in business history that a lot of people thought the age of the LBO (Leveraged Buyout) or the private equity was a thing of the past. Imagine that. In the early 90s. And they were wrong, by the way. But the idea was to borrow a lot of money and put capital in to not buy a big piece of a company and then sell off the pieces but do the opposite. Buy the pieces and assemble a larger company. And that’s what we did at K3 for the seven years I was there. Including in 1996, we bought a company in Dallas called Westcott Communications. It was a distance learning satellite television company. And I moved down here – where I still am – to be chief financial officer and later a chief operating officer and then president of that over four years. And so that was my path into general management. And then from there, a series of what I call buy, grow, sell iterations with smaller businesses along the way.
Yeah. So I mean, that right there, I mean, we could spend a ton of time talking about that. I wanna make sure I understood what you just got done saying about Primedia. So were you helping do leveraged buyouts?
Yes. I spent three years doing acquisitions, which we called it business development, but in today’s lingo, we would call it corporate private equity. So I think I did 12 buy-side acquisitions over three years for the corporation. I didn’t run the piece. We bought the pieces and these would be apartment guides, trade magazine companies, directory publishing companies, and so on. And we buy those and then hand them over to our operating teams to actually run. But I learned all about how a deal gets put together. I didn’t have to raise the money. That was the one piece of private equity I didn’t – we had a treasury department to do that. But I was involved with prospecting, which is essentially sales. It’s trying to convince owners of businesses to sell their business to us.
Did you see the businesses as being potentially undervalued or you’re trying to go with a broader strategy of trying to roll up more companies?
Basically, from a finance strategy standpoint, I mean, there are three primary ways you can do any sort of investment, and you see this in mutual fund marketing materials. It’s income, value or growth. We were mostly income investors. So we were trying to buy high cash flow print media properties. This was right before the internet got going. And so a trade magazine, for example, if you’re a – I don’t know – national hog farmer magazine, that was one of our 300 titles, or beef magazine and so on, they would own their little segment. All hog farmers needed to get a copy of hog farmer magazine. And then likewise, anyone selling to hog farmers would advertise in those magazines. Again, this is pre-internet. And so those were very high cash flowing businesses.
And then because of that, the corporation as a whole was able to borrow money in the form of corporate debt, usually bonds or bank debt, that allowed a better return on the equity they put in that would show a high return on equity. And that was really the goal was to grow the value of the equity, which primarily had been put in by KKR. So kind of like in a short term that you don’t hear much anymore, but at the time was used a lot, was an LBO (Leveraged Buyout), which means you’re using primarily debt and as little equity as you can get away with to buy something.
And think of it as buying a bunch of houses, one or more houses, where your mortgage is really big and therefore your down payment doesn’t have to be that large. That’s really what an LBO is. And then in that example, if you’re buying a $500,000 house with only $100,000 down and you borrowed 400 and the market is headed up, and now you can sell that house for $1 million, you just made 500 on your 100 ignoring interest costs and taxes for a second. And so you just, you know, 5X on your money in that example. And most people understand it with houses. They get confused with businesses when people throw around terms like LBO or private equity and so on.
Well, but then the challenge with that, though, is securing those funds, right? And then, you know, how do you raise that? Because theoretically, that’s something that if you’re studying the market really closely, you could identify these targets, but then convincing someone to give you, like, why do I want to give you $10 million to go do this?
This is the advantage of scale. This is what a lot of smaller businesspeople do not have by definition. So scale. Because we were a multihundred-billion dollar corporation, I think our sales, my first year was some like 500 million or something. And we had KKR’s imprimatur on us, which allowed people to get comfortable. It was well known name. And it’s one of these weird things about finances that bigger entities can sometimes borrow a lot more money than small ones. And that tends to be a little bit of a lemming race on Wall Street too that, well, if they’re lending money to them, we should lend money too. And by and large, it worked. I mean, it really did. The only problem. What happened at that corporation is that in ‘95, I think, we went public, give or take a year, and the stock didn’t really go anywhere. I got cut off there, Aaron, but I’m back.
I think we got you. All right.
So anyway, yeah, so basically I was saying that bigger companies can often borrow more money and it’s the same thing today and we had that advantage. But the internet was coming. And this is where I had a little bit of a career frustration because I had already moved to Dallas at this point. We had a distance learning company. The term e-learning had not really come out yet. It was starting to emerge in some forward thinking centers. I pitched the corporation on the idea of transferring from a satellite-delivered television to more of a streaming. And you have to remember, though, this is a world where DSL was considered fast. People didn’t have cable modems yet. They didn’t have cable delivered. We take for granted high-speed internet now, but in the late 90s, that was still a thing of the future.
And so anyway, we pitched that, but the corporation really wasn’t interested because they had sort of an old school view and they also had so much debt in the capital structure that they couldn’t risk too much. They had to keep producing the cash to feed that debt machine. And so anyway, that’s why when I got some recruiter calls to go to dot coms, I entertained those. And ultimately, I went to jobs.com in June of 2000, which actually was a stupid career move. I mean, I learned a lot, but at the June of 2000, for those who don’t know their business history, was about two months after the internet bubble had burst, the first internet bubble. And I had a joke at the time, I still don’t have grandchildren, but closer to reality now, which is, someday I will have grandchildren and they will ask me, “What was it like at the birth of the internet?” And I’ll say, “I don’t know I was there the morning after and it was ugly.” Really, really ugly.
But it was joining this experience, and as it turned out at jobs.com, we ended up returning about 10% of the equity’s money, which return of capital, not return on capital, which is what you’d prefer. But as dot coms went, believe it or not, that was a pretty good outcome and we paid off our creditors 100%, whereas most dot coms flamed out and had nothing to show for it.
Yeah, that’s crazy.
It’s a world that Facebook and Google didn’t even exist yet.
Yeah. It’s not odd to me because I can still remember the sound of a dial-up modem, you know?
Oh, the squeal. Absolutely.
Yeah, for sure. So I mean, there’s a lot of really interesting things to take away from this. So one I’m genuinely curious. So where did you learn and how did you develop your own system when it came to the buy, grow, sell method a bit? Because it seems like there’s so – you’ve done so much, right? And we only have so much time to talk about each one of these. Because you’ve had some pretty notable experiences, but where did it start for you? Was it that first role at Primedia? Is that where you felt like you learned the buy, grow, sell?
Yeah. I really learned what I call – no one else uses this term, but I call it seller relations. It’s learning how to relate to sellers. And a lot of people don’t get that. It’s amazing how – and I often tie it back to the military experience. So one of the great things, I mentioned why I went in the Marine Corps, but one aspect or benefit I got from it, which I did not intend on the way in, but on the way out I realized how important it was is what I call demographic education, which today would be called diversity and inclusion. But it’s exposure to people from different backgrounds. And I don’t just mean race. I mean different cultural backgrounds. You know, that the farm kid from Wisconsin or the inner city kid from LA or whatever. Whatever it happens to be, learning different backgrounds, learning the commonalities of the human experience, I know that sounds very broad and grand, but it really is true.
And so that and being reasonably well read just as a matter of intellectual interest, I could relate to a lot of different sellers. I could speak their language. And that’s the amateur anthropology that brought me into the military in the first place. I fancy myself as an amateur anthropologist. I really like figuring out people’s backgrounds. Again, to editorialize, one of the most unfortunate things we find in our divided society today is that genuine intellectual curiosity is punished, not rewarded. And it should be. When someone says, “Hey, you have an interesting background. I’d like to learn more about that,” but you’re afraid to use the wrong phrase or use a dated phrase, or somehow label yourself as a bigot or an ignorant person. That’s a terrible thing. Because it should be, and again, we go back to the military, imagine how many times someone from a different background would say something to somebody else, and they say, “You can’t say that,” and everyone would be laughing about it, but the lesson would be learned.
Anyway, so my point is that I think having a genuine intellectual curiosity about people leads to better relations with people and that’s a big part of getting a deal done. And that’s not just the seller. The seller is primary, but also then looking back to the capital source, to the investors, whether they be institutional like a private equity firm or individual, what’s now called angel investors, whatever it happens to be, understanding where they’re coming from. What are they trying to do? What are they trying to accomplish? They may not be able to articulate it fully, but you have to understand what they’re trying to do. Like most investors are looking for a return on their money. What is their risk profile? And then you learn to bring certain opportunities to certain investors because it matches their risk return view of the world.
And anyway, so that’s how it all fits together. And there’s luck involved as well, for sure. But I haven’t always been able to buy businesses. Sometimes along the way I get hired by an investment group to run something they already own. And that’s what I’m doing just now. For example, I just joined a group called BeHome247. We do a software as a service for property management. And I don’t own it. I am buying in, but I’m not the majority owner. But that’s okay because I’m learning and it’s a great growth opportunity and so I’m grateful to have it.
Wow. Yeah, no, it’s a neat study because just understanding a little bit of your background and your history and the lessons that you’ve learned. And it’s just a genuine fascination of mine how people find themselves in positions where they’re in a company for a few years with the expressed intent to help grow that organization so that there is a sell. And so it’s just fascinating to me. I think it’s a fascinating study of how that’s done. It’s a contrast against the “I’m going to stay here for 25 years and go through the ranks” and whatever may come with that.
That’s pretty rare. That’s pretty rare. I think one of the keys, and I hate sounding too new ageish about it, but I do think self-knowledge is very important. Understanding strengths and weaknesses which probably correlates with preferences, things you like to do. And so for example, and I think another dichotomy that is not given enough emphasis in our society, I think, and actually, this is interesting since we talked a lot about leadership earlier, is I think we sometimes talk too much about leadership. Meaning some people could build careers based on being an expert, not so much a leader. And I think more young people in particular should contemplate as they think ahead to a career. Do I want to be the smartest person in the room on a given subject? Or do I want to be the leader who brings out those thoughts from different other experts?
Well, I am more the latter. I’m more the generalist who likes to bring out, learn new things. I don’t have to be the biggest expert. I just want to know how to get to the experts to work something out. Others really want to be the best expert and that could be manual skills. You could be the best plumber. You could be the best electrician, architect, whatever that happens to be. It doesn’t have to be purely cerebral. Do you derive your satisfaction from the leadership and the team building? Or do you want to be the source of knowledge? And for example, a lot of successful lawyers are more the latter or accountants for that matter. Nobody knows more about intellectual property law of this type of software than Susie. You need to go to Susie for that. And they drive great satisfaction about being content experts.
But anyway, that’s what I think that sort of self-knowledge is really important as you go into the world to find your path. And you mentioned someone who stays around for 25 years, maybe they’re really good at managing bureaucracies. Maybe they’re really good at sucking up in big hierarchies. And I don’t mean that in a condescending way. I mean, that’s clearly. I mean, look, again, I’m not making a political statement, but Joe Biden, you know, almost 50 years in Washington, regardless of what one things about his politics, positive or negative, he’s figured out how to stay in Washington for a long time. That is a skill. And so likewise, if you’re going to be at Lockheed Martin or Walmart or some big corporation, a similar set of organizational skills and instincts are going to be important. Some people don’t have that. I don’t. I have an attention span where I’d rather move on and learn other things and that’s what I’ve done in my career and I’m grateful to have had the opportunity to do so.
I mean, that’s a great way to lay out the roadmap for folks that are contemplating their careers and their pursuits. And you’ve laid out some really good examples. I can think of some of the best attorneys. They practice this flavor of law. They are known for being just the expert on this one specific type of thing. Or a doctor, right? Or like any number of examples that you laid out. For me, it’s a lot easier to understand that person’s value because they have a very clear track record and a very clear history, very tangible results as to what they’ve done. And then I suspect the answer is very similar, but I would love to hear your approach on this or your perspective. How do you become – I don’t even know how to say this the right way – the generalist that has an awesome track record that is the person that is very accomplished, right? So you’ve got the very accomplished specialist, the very accomplished generalist. I can easily measure the accomplishments of the specialist. How do I most effectively measure the accomplishments of a generalist?
Yeah, that’s a good question. And it’s something that most generalists struggle with. I call it the generalists’ curse. Because you can do anything, it’s hard to articulate what you do. But I think a lot of that has to do with, again, helping your audience, whoever you’re communicating with, understand what the goals were. So in the case of small business or any business, profitability and return on equity, return on investment, those types of metrics are things that you can articulate. So, for example, if you go to my LinkedIn or get a copy of my paper resume, you’ll see things like, you know, achieved a 34% IRR (Internal Rate of Return) or tripled equity in X number of years or those types of things. Because those are measurable. It’s kind of like – I don’t know. They don’t do this – an oncologist that says, “I have a 73% survival rate for this type of cancer for my patients or whatever.”
So you learn to use metrics like that, but it’s not the numbers alone. You learn the culture of hiring entities. So for example, when investors decide to invest or boards decide to replace the CEO with a new one, which might be me, you learn their lingo, you learn the cadence, the pacing, you learn an approach, which is very similar to the case method. You learn an analytical orientation that allows you to build confidence in the listener. So for example, and again, having some sort of structure. I mentioned earlier the military five-paragraph order. That’s a great structure. Another one, and then some of them I’ve forgotten after all these times now from the military, but like an intelligence, you know, MET-T, I think it’s called, you know, things like that.
But same thing in business. It’s all right, well, what’s the addressable market? What’s our value? What is the submarket that – what’s the problem we’re trying to solve? What is the unique value proposition of our product or service? And so on. You go from the big picture to little and you really bring it down to, and therefore, the second customer service person in team B should be doing these things or this is the type of culture we want where frontline customer service people feel empowered to make decisions because that’s one of our unique values, which is what makes our value proposition valid and so on, all the way back to the addressable market.
So that ability to go from big picture to small picture and back again is somewhat unique. I think some people don’t have it. I was very proud to be chewed out once. I think it was at Fort Sill. A Marine captain chewed me out as a young second lieutenant because I kept asking big picture questions in the class. And he said, “Lieutenant, one day you’re going to make a fine colonel, but right now you might want to focus on being a lieutenant.” And I took that as a great compliment. I was very proud to be thinking on that level. But to that point, thinking big picture is important, but you also have to bring it back down. What does that mean to the person on the frontline, to the customer experience or whatever? And then bring it back to big picture again.
So it’s constant to use the overused aviation image. You’re flying at 30,000 feet and then you’re down in the trees and you’re back at 30,000 feet. And that’s what a general manager or a CEO, a managing director, whatever, has to do is constantly go back and forth and tie those things together. So being conceptual, not necessarily the best expert in everything, but being to pull that together is bang, back to self-knowledge. If that’s how you think, if that’s how you’re wired – in my case, it is – then you’ll find a good fit between what the world needs and what you offer.
That’s fascinating. So let me back brief you and I want to see if I understood what you told me correctly, and I’m not afraid to take the risk of looking like a complete idiot on this, but a very, very awesome visual. So taking it from the macro to the micro and back up to macro again, like having that flexibility mentally to do the mental gymnastics of starting off with maybe as high level of like vision, mission, values, those kinds of items at the C-suite level in terms of the brain trust there, but then boiling it down to like, okay, how do we take that? How do we translate that to say our marketing plan, our strategy, our sales strategy, like the positioning that we want to have in the market? But being able to take that, boil it all the way down so then you have tangible business objectives for whatever that business unit is. And then even taking it down further to how does each department, how does each team, how does each team member contribute? And it then funnels its way back almost like branches in a river and they all just feed right back up into the mainstream. Am I close?
No, you have it exactly right. And that’s it. And then you have to be careful – I guess the term is keeping it real. What I mean by that is there are all sorts of consultants and so on that will take you on a multi-day retreat to talk about your values and this and that. And very often that ends up being more fluff. It’s just, hey, be nice to people and we value people and all that’s great, but do you really value people? And what sort of people?
And for example, if your competitive advantage is that you have better customer service than everybody else, well, then you have to make sure you have a culture where frontline customer service people can make decisions on a refund or whatever. It’s one thing to say, “Hey, we have great customer service” and then you call in, or you get a phone tree for 20 minutes, and you finally get a human who’s reading a script who says, “Oh, I don’t know. I have to check with my supervisor.” You’re thinking, do you don’t really care about me? On the other hand, you get a human on the phone right away who says, “Wow. I feel your pain” in a Clintonian sort of way. “I feel your pain. And wow, that shouldn’t have happened. Let me fix that right now.” And you leave thinking these people are awesome. They really care my experience.
But on the other hand, you may not want that if you’re in a very small, a very tight margin business, for example, where there are a lot of whiners and complainers will take advantage of you. You may want a more structured dispute resolution program in your customer service operation. But it all has to tie back. What is our business? What are we really trying to do? I mean, if standardization of experience is your thing, let’s say McDonald’s, it’s a very different set of training and culture that goes from I don’t know a high-end law firm that has to make different decisions in how it serves its customers.
Yeah, no, I mean, it’s a really good visual to understand. So the point you’re making is it’s one thing to understand vision, mission, values, business goals, you know, and then going all the way down to the tactical. But it’s another thing to, okay, does the day-to-day blocking and tackling of the business – are we actually living what we say we are? Are we holding true to these core values? I mean, a great example. I’m not going to sit here and repeat it all, but that’s a great example of like, okay, do we really believe this? Because if we do, then we need to make massive changes down here or vice versa. Or maybe we understand maybe this really isn’t a good move for us for whatever reason.
And so what I hear you saying then is the most effective generalists a) understand how to maneuver through that entire tree that we just kind of laid out for everybody, but then b) and I think this is probably the biggest value add would then be connecting the dots. Being situationally aware enough to understand do we actually believe what we’re saying? Are we actually executing what we’re saying? And then maybe making some changes, and it may not be so black and white, right? So we’re using very extreme examples, but there may be a lot of –and I’d say more often than not, there’s going to be a lot more gray area. Like, okay. Are we trending more towards being representative of our core values? Or is this really drifting us away from it and having a real, you know, the real talk point that you made just a second ago.
Helping people understand. And that’s where communication is so important. Then you figure out what communication methods are best for you. You know, writing, video, audio, handshakes – back when we did that sort of thing, you know, seeing people face-to-face, management by walking around as they called it in the 70s. All these things are really important. But learning what’s the right tool for the task, but again, fundamentally it is what are we trying to accomplish? How are we going to do it with the resources we have? What are the relative priorities? Help people understand that. And that’s where you can say, “Hey, frontline person, I really appreciate what you’re doing on this project, but it’s of secondary importance right now. I need you to be focusing on this.” And or “What do you think?” Or maybe more Socratically, just sort of, “Given that our purpose is very clear in this, what do you think is the most important thing?” Let people buy into their own conclusions. It’s gonna be a lot stronger rather than just following orders.
That’s good. That’s good. Well, we’ve already gone over time and I wanna honor and respect your time to spend with me today, Peter. I really do. I appreciate being on to have such a really, really deep conversation. I felt like we went a lot of different places related to leadership and management, to specialist versus generalist, the story of buy, grow, sell, the education and cultural experiences and all things in between. I mean, I’ve thoroughly enjoyed it. We mentioned briefly what you’re doing. But what’s the best way for people to get in touch with you?
Yeah, absolutely. They can find me on LinkedIn. It’s probably a good way to note the spelling on the name. Thankfully, my first name is spelled in the English way, not the Icelandic way so that there are too many people with my name. And yeah, there you go. Put it on the screen. That’s probably the best way to get me. My company is behome247.com. And again, we’re, a fairly young company, fairly small, but we’re growing fast in this what’s called the prop-tech or property tech area. So yeah, there you go. And so we’re very excited about that. So check us out, especially if you’re a property manager and in search of great systems to help you save money and make your tenants happier. So that’s what we’re about.
That’s terrific. Well, Peter, again, I really want to thank you. I thoroughly enjoyed our discussion and thanks for going deep with me and sharing a lot of your insight and a lot of your experiences.
Likewise. I would have done it even if you weren’t a Marine artillery officer.
That’s awesome, man. Thank you.