Kathryn Minshew, Founder of The Muse, discusses the differences between working for a venture-backed versus private equity-owned company. She emphasizes the importance of consistent cadence in managing the business. The chapter also explores the dynamics of working with venture capital and private equity firms, including communication challenges and the transition to a profitable operating model.
The transition from venture-backed to private equity ownership led to a greater focus on day-to-day operating metrics and more frequent deep dives on specific topics and performance.
Partnering with a private equity firm facilitated expertise in structuring and engineering successful M&A deals, becoming a key aspect of the company's growth strategy.
Deep dives
Closer attention to day-to-day operating metrics
One major difference Katherine Menchoux noticed when transitioning from a venture-backed company to a private equity-owned company is the increased focus on day-to-day operating metrics. As a venture-backed company, board meetings were held quarterly, leaving gaps in tracking the business's day-to-day rhythm. However, in the private equity model, there are more frequent deep dives on specific topics and overall performance, allowing for more detail-oriented analysis conducted every other week.
Shift in M&A orientation
Another notable difference is the change in M&A orientation. Katherine had a clear strategy and thesis for rolling up parts of the recruitment and HR space, and partnering with a private equity firm facilitated their expertise in structuring and engineering successful deals. This M&A-focused approach became a key aspect of the company's playbook and contributed to its growth.
Transition from high growth to profitable model
The transition from a high growth, high burn model to a profitable and cash flow-focused operating model was the third significant difference. This shift required comprehensive communication with employees to explain the reasons and implications of the change. It also affected decision-making processes, investments, and the company's overall mindset. Despite the challenges, embracing a profitable operating model has provided discipline and proven beneficial for the business.
Unique experiences with venture capital and private equity
While venture capital and private equity structures share similarities, Katherine Menchoux acknowledges that working with private equity feels distinctly different. As she made the transition, she found it challenging to find perspectives from founders who had undergone a similar journey. However, she believes that understanding the unique characteristics of each funding model and evaluating their pros and cons can help businesses make the right decision for their specific circumstances.
Today on The Daily Bolster, Kathryn Minshew shares the top three differences between working for a company that is venture-backed vs. private equity owned. Whether you’re actively considering a transition, or are a CEO just looking for perspective, this episode is a great resource.
Kathryn Minshew is the founder of The Muse, a career platform used by over 70 million people to find jobs at companies whose people, benefits, and values align with their unique professional needs. Under her leadership, The Muse pioneered the concept of values-based job search and was recently named one of Fast Company's 50 Most Innovative Companies in the World.
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