Jon Sonnenschein, a Private Equity Operating Partner and former SaaS CEO, shares his expertise in cultural transformation within portfolio companies. He discusses the challenges of blending legacy and new cultures while emphasizing the importance of employee engagement. Jon highlights the need for data-driven decision-making and open communication to identify growth opportunities. He also explains how to elevate long-term employees to maintain continuity and discusses the 'star player bias' in talent acquisition, advocating for a holistic view of company culture.
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volunteer_activism ADVICE
Cultural Fit Over Star Players
Avoid the "star player" bias during talent acquisition.
Consider cultural fit alongside skills and experience to prevent unintended friction.
insights INSIGHT
Balancing Cultural Change
Respect the existing company culture, as it contributed to prior success.
Balance cultural preservation with necessary changes to avoid talent retention issues.
question_answer ANECDOTE
Strategic Elevation at Earth Solutions
At Earth Solutions, Jon Sonnenschein strategically elevated long-term employees.
This ensured cultural continuity while introducing new expertise in areas like FP&A.
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In this book, Daniel Kahneman takes readers on a tour of the mind, explaining how the two systems of thought shape our judgments and decisions. System 1 is fast, automatic, and emotional, while System 2 is slower, effortful, and logical. Kahneman discusses the impact of cognitive biases, the difficulties of predicting future happiness, and the effects of overconfidence on corporate strategies. He offers practical insights into how to guard against mental glitches and how to benefit from slow thinking in both personal and business life. The book also explores the distinction between the 'experiencing self' and the 'remembering self' and their roles in our perception of happiness.
The hard thing about hard things
building a business when there are no easy answers
Ben Horowitz
In this book, Ben Horowitz shares his personal and often humbling experiences in the tech industry to offer essential advice and practical wisdom. He addresses various hard decisions and challenges that business leaders face, such as firing friends, managing company culture, handling layoffs, and making tough strategic decisions. Horowitz emphasizes the importance of honesty, resilience, and adaptability in leadership, drawing from his experiences with companies like Loudcloud and Andreessen Horowitz.
Welcome back to The Private Equity Podcast, by Raw Selection! Today’s guest is Jon Sonnenschein, Private Equity Operating Partner and former SaaS and software CEO. Jon shares insights on driving cultural change in portfolio companies, blending his experience as a CEO and Operating Partner.
Breakdown:
[00:00] Jon Sonnenschein discusses his experience as a Private Equity Operating Partner and former SaaS CEO, focusing on cultural transformation in portfolio companies.
[00:30] From Chicago to Silicon Valley, with 20 years in startups, followed by joining private equity and leading growth at Earth Solutions.
[00:59] The "star player bias" in talent acquisition and the importance of aligning cultural dynamics.
[01:28] Addressing the balance between legacy culture and private equity-driven professionalization.
[03:21] Transitioning from founder-led to private equity-backed and retaining core cultural elements while driving professionalization and growth.
[05:18] Jon shares how he elevated long-term employees for cultural continuity while introducing professional FP&A expertise.
[06:15] Jon explains his approach to understanding a company’s culture by interviewing employees at all levels.
[07:44] The role of listening and valuing employee perspectives in identifying growth opportunities.
[09:11] Validating feedback through patterns, experiments, and data-driven approaches.
[10:57] Testing new markets through structured, accountable experiments to assess viability.
[11:56] Jon’s methods for influencing cultural change without alienating long-term employees.
[13:20] Professionalizing the product organization and using customer feedback to guide decisions.
[15:17] Transparency, one-on-ones, and open forums to drive cultural change and employee engagement.
[18:11] Creating psychological safety and fostering innovation through direct communication.
[19:38] Jon reflects on insights from being an operating partner and how they inform his executive approach.
[21:06] The importance of collaboration between operating partners, deal teams, and CEOs.
[22:28] Recommended readings include Thinking Fast and Slow by Daniel Kahneman and The Hard Thing About Hard Things by Ben Horowitz.
[24:48] Jon emphasizes the importance of tackling culture head-on and shares key takeaways for private equity professionals.
To be added to the book waitlist, you can email alex.offer@raw-selection.com
The Private Equity Podcast, by Raw Selection 
