Summary

Greg Moran shares his journey of growing his company through acquisitions. He started with a small company called Checked and eventually rebranded it as Outmatch. They initially didn't plan on growing through acquisitions but saw an opportunity to acquire older companies with outdated technology. They made their first acquisition before hitting a million dollars in revenue and continued to acquire more companies. The integration process was challenging, especially when merging different cultures and work styles. However, the strategic growth through acquisitions positioned them as one of the top players in their industry and led to a successful exit. Greg Moran discusses his investment thesis and focus on the changing work environment, upskilling and reskilling talent, and the freelance and gig economy. He emphasizes the importance of selecting the right founder and the use of a proprietary founder assessment. Moran also talks about the rapid innovation and disruption of AI and how it is applied to the workforce. He highlights the need for technologies that make work easier, more effective, and increase productivity. Moran shares his approach to exits, focusing on strategic exits and growth through private equity. He also discusses the future trends of AI, gig workers, and the globalization of the workforce.

Takeaways

Acquisitions can be a strategic growth lever for companies, especially when targeting older companies with outdated technology.
The integration process after an acquisition can be challenging, particularly when merging different cultures and work styles.
Building trust and a unified culture is crucial for successful integration.
Strategic growth through acquisitions can position a company as a leader in their industry and lead to a successful exit. Investment focus on the changing work environment, upskilling, reskilling, and the freelance and gig economy
Importance of selecting the right founder and using a proprietary founder assessment
Application of AI to disrupt the workforce and improve workplace safety
Focus on strategic exits and growth through private equity
Future trends include AI replacing traditional software, the rise of gig workers, and the globalization of the workforce

 Watch the Interview

 

Transcript

jon (00:00.897)
Welcome to the show, Greg, how are ya?

Greg Moran (00:03.132)
Good to see you, John. Glad to be here.

jon (00:05.249)
Well, Greg, I just got to mention this. I went back to your LinkedIn and I looked on your site. We both went to the University of Plattsburgh in the 90s.

Greg Moran (00:15.9)
It's good to see Ploetsburg State graduates floating around doing something these days. It's, yeah.

jon (00:20.545)
Yeah, it was a little too cold. I remember in May 1 December, never got above freezing any time of the month.

Greg Moran (00:28.444)
No, no, that was that was fairly routine in in Plattsburgh, New York. Great, great school, great, great place. It's changed a lot, I think, since we've been there. But yeah, it was not known for its weather. I could that's.

jon (00:38.401)
Yeah.

jon (00:42.081)
It's not it is cold. I don't know how the Continental Army did it back in the 1700s man. It's freaking cold Anyway, so welcome to the show We're here to talk about your your journey your acquisitions And can you tell us where you start off and just tell us how this started going? You've made 12 acquisitions. I are dozens at least yeah

Greg Moran (00:45.852)
We're.

Greg Moran (00:59.132)
Yeah, sure, so.

Yeah, yeah. I mean, we never, you know, so last company, yeah, I don't, I don't, we never started out, I think like a lot of the way that &A ends up working, right? We never really started out as like thinking, we're going to grow by acquisition. Just a little bit of context. So the company that we started originally started the company back in 2008, called Checked, C -H -E -Q -U -E -D dot com. And

Eventually, we rebranded that company as Outmatch. And now the company is called Harvard. It's been rebranded again as it's gone through multiple iterations of the business. But when we started it, we were commercializing technology around human or HR applications. So we were helping large companies basically select and hire talent. Excuse me. We got going with this business. And

You know, it was never, like I said, it was never really, we never really said, we're going to grow this thing by acquisition. But it ended up happening like that because, you know, I think what you find is occasionally you find industries where you have a lot of really old school players that were good companies that, you know, the technology had shifted out from under them and, and they really needed to pivot. And that was a lot of our competitors. So as we start, but they were bigger companies and,

You know, so as we started growing that company, originally checked, you know, we were growing fine organically. We were growing at, you know, probably 100, 200 % a year in the very early years. But a lot of our competitors that we were going head to head with were, they had just old school products and that's who we were displacing.

Greg Moran (02:56.476)
So as we started to grow, we started to look at these companies and say, hey, it would be kind of interesting. I mean, our value, because we were a SaaS, a more modern SaaS player, our enterprise value was derived from our recurring revenue. And a lot of these companies were service -based models. So we started to look at it and say, geez, it would be really interesting if we could buy some of these companies, acquire them. There's a huge arbitrage in enterprise value that we can get, because we're valued on.

recurring revenue as a SaaS model, they're services businesses and they're being valued at 1X. And so we started looking at this and saying this could be an interesting thing. And I think we did our first acquisition in that business before we hit a million dollars in revenue. We had a competitor that was out there and they were struggling to really find the way in the market, but they had some good customers and we went to them and said, good enterprise sized customers. And we went to them and said, hey, you know, if you want to,

do something, we'd be interested in acquiring you and we were able to acquire them for like one and a half times revenue or something like that. And again, it made sense. It was, they weren't, you know, there may be a half a million in revenue, it didn't cost us a ton of money. We were able to roll them in. We did that like the first time and said, and then we migrated the clients onto our platform and said, like, there's actually something here. We started to do a little bit more of that. And then we ended up getting to this point where we had this opportunity. We had a,

We had a large competitor, larger competitor. At this point, we were probably 2 million in revenue, in recurring revenue. We had a much larger competitor come to us and try to acquire us. And it didn't make any, you know, they were growing at like 10 % a year service model. We were growing about 100 % a year.

And they kept trying to acquire us because they wanted to become to modernize the business. It didn't make any sense, right? From a financial perspective from them. And I had a board member who has grown a very, you know, I've grown a very large company and done a bunch of &A. And I'll never forget this. One day we're sitting in a board meeting and I'm saying, Hey, this company called Assess Systems, they keep coming to us and trying to acquire us. And

Greg Moran (05:17.628)
Board members name is Martin Babineck. Martin is the founder of a company called Trynet, who is now public traded, New York Stock Exchange. Martin said, well, why don't we buy them? And Assess was doing like almost 10 million in revenue and we were doing two. And I said, Martin, like that's not a thing. Like how are we gonna buy it? And he said, well, look, let's...

let's at least float it. Let's see what happens. Right. And he said, we can figure out a way. Let's just us do the same thing that they're asking us to do. So we go. I said, I'll talk to the CEO. And I developed a good relationship with him and said, hey, you know, here's an oddball idea. Would you think about us acquiring you? And he said, how are you going to pay for this? And of course, I had absolutely no idea how we're going to pay for this.

And I said, no, I said, well, look, we've got the financial backing. We'll figure out how to do it. And, you know, just think about whether it makes sense. And probably a week later, he calls me back and said, yeah, we'd be in. Yeah. And, you know, it was kind of like one of those sort of the dog caught the car moment. It was like, OK, Martin, that was a great idea. Now what do you want to do? And, you know, it was it was really this pretty funny thing. And.

jon (06:26.689)
That's pretty easy!

jon (06:34.593)
Yeah.

Greg Moran (06:44.156)
I had exited another business and one of the things that ended up occurring when I exited this previous business was I had become good friends with one of the unsuccessful bidders for that company. And who was in the private equity world out in Silicon Valley. And I said, I called this guy, Eric, and he was partner in a.

larger private equity firm. I said, Eric, I've got this really bizarre situation. I said, I don't know if you would be interested in taking a look at this or not. I said, but you know, we want to go and we want to buy this company that's about five times our size and four times our size, five times our size. And we want to put these things together. We're going to modernize the business. We're going to, you know, bring the companies together. We're going to do all the stuff and we're going to have a much larger platform to grow from. And

Eric said, it actually sounds interesting. He said, you know, can you come out to Palo Alto and we'll talk about it. He said, come out in the next couple of days. And I said, okay, end up sitting there and he said, you know, walking through the whole thing and he said, yeah, we'll do the deal. And sure enough, you know, we go from not, you know, thinking this is completely impossible.

to now we have the target committed and we have the funding and ultimately we ended up closing that transaction.

jon (08:16.769)
So he ran the numbers and say, we can do this. We've got the money, we can raise it.

Greg Moran (08:21.82)
Yeah, and I think part of this is because I developed this relationship over a long time, over a period of time with Eric. So it wasn't like this call, the call on this situation was out of the blue, but the relationship wasn't out of the blue. And so we had been, this is a relationship that had gone back a bit. We had been looking kind of for a deal to do together and.

you know, and if it made sense, we would figure out a way to do it. They actually wanted to fund checked at the time, but we were too small. They're a bigger PE. There were a lot of things that lined up in our favor, but what went from seemingly impossible to, you know, we're doing this transaction, you know, felt like it was overnight, you know, and suddenly we're this, you know, group of 15 people building this company.

And we go close this transaction and now we're 60 people. We go from 2 million to 10 million or 12 million in revenue with a stroke of a pen. And now we're bringing these companies together and trying to integrate these businesses. And it ended up being like the beginning of, you know, this that's where we rebranded the company from checked to outmatch and started really doing a lot of heavy &A at that point, because.

we were sold on this model. Well, you know, and I think there's a lot of parts to this, right? John, I think, you know, when you look at it, there's just a lot of industries, a lot of businesses that are selling into certain industries. They're never going to be the 100, 200, 300 % growers over the long term, right? But they can be solid 20, 30 % organic growers where that additional...

jon (09:46.625)
Well, hey, this is a lot faster growth this way.

Greg Moran (10:13.372)
10, 20, 30 % of inorganic that you can bolt on there makes a really huge difference. And that's kind of the way we started to look at it is look, we're gonna grow this thing in a sustainable way organically. We're not gonna go burn a bunch of cash. We're gonna operate this thing. We're gonna take our organic growth. We're gonna put it back into, we're gonna take our profit, put it back into growth organically. We're gonna supplement that growth.

inorganically. So we're just really going to be able to, and that kind of provides that compound leverage to really grow. And that's what we ended up doing. And it worked out. It worked out.

jon (10:53.441)
Let me ask you what happened post -mortem one year later. You absorb a company five times your size. How did it work out? Was there everything work out as like you wanted or were there some definitely some road bumps along the way?

Greg Moran (11:10.148)
I think road bumps would be the understatement of the century. You know, every once in a while when you drive down the road and like you hit a pothole and you're like, it's not a normal pothole. You feel like your tires just all exploded. That's more like what we were hitting periodically. I mean, look, culturally, these businesses were extremely different from each other. You had a business, you had checked, it was a company I started that at this point had been around for like three years.

jon (11:22.113)
Holy sh - that hit the frame!

Greg Moran (11:40.316)
really modern technology, really sort of innovative, aggressive culture. And you had another, in the company we just acquired, not only were they five times our size, they had been around for like 30 years. They were growing and satisfied with maybe 5 % growth annually.

It was very much one of the things that they prided themselves on was they hadn't had turnover in the company in like two years. It's nice. And again, I'm not saying any of this stuff from a judgmental standpoint, but very, very different cultures. I mean, you can imagine.

jon (12:15.681)
Wow, that's kind of a nice selling point.

jon (12:24.289)
Yeah, Silicon Valley, 30 year old company, two different things.

Greg Moran (12:27.901)
Yeah. And, you know, so, you know, when we did this acquisition, I became the CEO of the combined company. You can imagine what the 60 people inside that company thought of us, right? I mean, this was culturally to bring these companies together was brutal. It was it was really hard. I mean, there were long standing customer relationships that all needed to be shored up.

There was a culture that needed to try to get unified into becoming one business. There were speed bumps all over the place that we were hitting, and it took a while. I would say it probably took us a good couple of years to really get it to the point where we could operate this thing as one unified company and really grow together, not as different businesses.

jon (13:22.625)
What was the exercise worth it, the energy, everything at the end result? Yeah.

Greg Moran (13:28.764)
100%, 100%. I mean, I wouldn't do, you know, there are tactics I would do differently, but strategically, you know, what we ended up doing was we got from this small company doing a couple million in revenue to within now, you fast forward out, you go out about four years, we now were one of the top two or three leaders in our industry globally.

jon (13:57.089)
Yeah.

Greg Moran (13:57.628)
And it ended up positioning us to be able to then go sell the combined company now at that point called Outmatch to a very large private equity firm and do a successful transaction. Now that company today, now called Harvard, like I said, rebranded a couple of times along the way.

has, you know, we ended up doing probably another six or seven acquisitions and that company today is probably is one of the largest players in its space globally. So none of that stuff would have been possible without adding that &A as a really strategic growth lever into the mix. So no question, it was, it was an extraordinary experience for everybody involved in it. It really was and you know, well.

jon (14:51.681)
I have to ask you about the CEO. Did you ever have a cocktail later and go, hey, what made you change your mind and sell to us?

Greg Moran (15:00.092)
Well, they had been at it for a while. Yeah, I mean, we, you know, we became good friends and, you know, they had been at it for a while. And I think, you know, sometimes you just get lucky with the timing on things, right? They had a VC that hadn't been involved for a number of years, that VC was pushing hard for growth. And by us,

hitting them, the reason that they were trying to acquire us is because they couldn't really figure out how to grow organically at all anymore.

I think we provide, I'm not sure that had we agreed to be acquired by them, they would have really known what to do with the business. And I think they knew that. And it just made sense. I think we just kind of got them at the right time where their VC firm had been in for a number of years. I think they were five, six, seven years in, something like that at that point. They weren't seeing the growth. This thing was not really materializing and we got...

We just got lucky. We didn't finalize.

jon (16:10.401)
got lucky. They have to go get the permission from the VC who's going to either veto it or go, Hey man, we need an exit or this is going to be written off. Yeah. Yeah.

Greg Moran (16:19.836)
That's right. That's right. And, you know, and that and, you know, I mean, they probably made, you know, a couple, you know, two extra money or something like that. And, and look, when you're going from a position where you're like, I don't even know, I don't even know if there's a path to get myself to one X. Like now I'm now I'm on the investor side today. Right. And, you know, run a venture capital firm, venture capital fund. And, you know, I mean, I see things like this all the time. It's like sometimes you jump for joy for the one and a half or two X. Right. When you think you're playing for

jon (16:47.169)
Especially if you have a few years of frustration of no growth. Yeah.

Greg Moran (16:52.572)
That's right. That's right. You're sitting there. You're like starting to think, you know, this thing is like a straight line to zero for me, right? Right. Right. You know, those that that quick, you know, that one and a half that like gets my cash out of here and I'm not I'm not taking a full write off. That's great.

jon (16:58.113)
Can't figure it out. Yeah.

jon (17:08.641)
Yeah, I got to return those funds to the investors. So it's not my money. Yeah. Yeah.

Greg Moran (17:12.284)
That's right. That's right. Yep. You know, we just the timing, the timing was right, I think for, you know, for everybody and it worked out.

jon (17:22.433)
Yeah. So what did you do after that? Did you take a hundred percent buyout from this private equity firm or was it a kind of a 30 % rollover I'll stay on for another two years or? Yeah. Yeah.

Greg Moran (17:32.124)
when we ultimately sold? So I stayed on for about 18 months as the CEO. So the funny part of this story, John, is we completed the transaction with the private equity firm when we sold Outmatch. We completed the transaction on February 28th of 2020. Do you remember February 28th, 2020?

jon (18:01.409)
Yeah, the government shut us down.

Greg Moran (18:03.291)
So we had a couple hundred people based in Dallas where we were based. And this is a true story.

jon (18:12.065)
Your timing is impeccable.

Greg Moran (18:15.324)
We, you know, the funny part is we incorporated, we incorporated checked the, you know, the original company on the day that Lehman went under, literally. So we're raising money for check the day that Lehman went under. Now we sell the day that the, you know, the world shuts down because of the pandemic. So it was a few days later, actually. So we end up, we closed the transaction on the 28th. That was a Friday. On Monday, it was like the third or something. We,

jon (18:24.321)
Ugh. Yeah.

Greg Moran (18:45.436)
We have a couple hundred people in Dallas. Just ironically, I live in Colorado, the private equity firm that acquired us called Rubicon Technology Partners. They're based in Boulder, pure coincidence. But it was a highly competitive process. They just ended up being physically close to me. So Monday, we all fly down, me and the guys from Rubicon all fly down. And we're going to do this happy hour and party and announce the acquisition and all this stuff to all of our team in Dallas. And we had...

We have a big sushi lunch in Dallas. Like we have this sushi happy hour, tons of sushi and stuff, right? This is on like March 3rd. So we go down and everybody's in there eating sushi and we have this big party and all the stuff. And of course, you know, pandemic's kind of looming out there. I fly home with the guys from back to Denver with the guys from Rubicon and we had a bunch of sushi leftover and we stuck all the sushi in that we had these big industrial kitchens and stuff and stuck all the sushi in the refrigerator. Nobody went, we shut the office down.

Two days later, nobody went back. And in July, I went back to the office for the first time. I was the only one in there and all the sushi was left over.

jon (19:51.825)
my god, was that stinky or what?

Greg Moran (19:53.404)
That was nasty. I mean, it's like three month old sushi, right? But it shows you like how quick this all happened. So that was that was in, you know, in 2020. I ended up staying on as the CEO for about 18 months. We did did about six more, five, six, something like that acquisitions in that 18 months. And then I left to to start.

Our venture fund called Evergreen Mountain Equity Partners, I left there in October of 22 to go start that. But it was a wild, wild ride. And all during COVID, we were doing, we did six acquisitions or five acquisitions, six acquisitions, one of them, two of them were in Europe. One of them, I had never met the founder because you couldn't travel.

The final one we did, we acquired a company called Harvard, which is ultimately what we rebranded into. That company was based in Amsterdam. I was traveling between Denver, Colorado, where I live, and Amsterdam about every week on planes trying to do the integration of that company. I was flying back and forth about every week or every other week with like four people on a plane because...

I had a waiver from the Dutch government to fly to travel there and nobody else could. It was the most surreal experience ever. But.

jon (21:18.401)
Out of curiosity sakes, how was it integrating a international company to a United States company? I've lived in Europe. My dad was in the Air Force. I lived in Europe. I mean, the culture, there's differences and you just got to be respectful. Yeah.

Greg Moran (21:25.852)
Hard. Yeah.

Greg Moran (21:35.036)
Yeah, and you know, I had so we had acquired that business. I'm trying to remember that it was like April of maybe April 22, something like that. And, you know, integrating integrating a Dutch company into a US company was was a challenge, not it. It's just different work styles and things like that. It worked out.

It worked out great and the team is phenomenal. I ended up though, you know, there's always the trust issue, right? It's like, you know, we're the Americans, we're here to save you. And, you know, it's not, you know, I ended up actually moving there for a period of, you know, for a fairly extended period of time, because it just, it was, we just had to build this common trust. And we again had to go back to like we did at Assess and so much of &A just comes down to building a unified culture.

and getting people to trust each other, right? And not operate as two different companies. And I ended up trying to do this while traveling during a pandemic was ridiculous. So I ended up just moving there. And that, I think, ultimately helped a lot. But without that, that trust would have never been established in the same way. It was hard. &A is hard enough.

Integrating companies is brutally difficult. Integrating cultures is the hardest part of that. And then integrating cultures cross -border like that is even harder.

jon (23:13.249)
Even harder. Yeah. So these funds that you started after you left the company, what's the purpose? What's the buy box and the hypothesis?

Greg Moran (23:23.42)
Yeah, so Evergreen Mountain is a thesis driven fund. My background has always been around broadly HR, future of work technology, and it's a thesis driven fund completely focused on future of work technologies on a global level. So there are four sort of main areas that we invest around, it's kind of four pillars of where we invest. AI and its impact on the workforce, automation of work.

globalization and mobilization of talent. So upscaling, rescaling talent, things like that, and the freelance and gig economy. So we invest around that core thesis, seed early series A investing post revenue, but these are post revenue, but typically under call it two to three million in ARR businesses.

And the big area where we really differentiate is we've been operators in that space. We can go in. We can make a material impact on these businesses from a strategic standpoint. We understand &A. We understand the lever. We've got a strategic partner network that we can tie into that not only brings, that not only de -risks on the product market fit standpoint, but can also potentially be buyers themselves and things like that. So it's...

But again, all of that is really enabled through, you know, because it is a thesis driven fund. The other big area that we, you know, because we are my partner and I in the fund are founders. And we, we are, you know, a lot of firms talk about being founder friendly. We are obsessed around really making sure that we've got the right founder fit. And we actually just, interestingly, we just were about to release.

our own sort of proprietary, we've got a proprietary founder assessment that we use where we bring kind of science and objectivity into that, into founder selection, which we really believe is as important, if not more important than the, you know, you want to select the right business, but we can have the right business with a great idea. But if we don't have the right founder who can execute, none of it means anything.

jon (25:41.921)
Yeah. I am really curious about the rapidness of the innovation and destruction of AI and what it's doing. And how do you place a bet on something that's going to be dead and replaced at such a rapid pace? I mean, it's like today, if I date this, May 16th, like they just released ChatGBT 4 .0.

days ago and the stuff that it can do amazing again. Yeah.

Greg Moran (26:15.164)
Right. Because we're investing around the sort of the changing work environment, the disruption to work, right? So we're really looking at making, we're investing around technologies that are actually going to disrupt the workforce. Doesn't make you the best attendee at a cocktail party, by the way.

You know, because a lot of the technologies that we're investing in, in some ways, they're going to put people out of work and other ways are going to augment work in a completely different way where the skills required and the competencies required to succeed in a job are going to fundamentally change. So you look at like, you know, you look at we've got a company in our portfolio today that's using AI to help predict workplace safety. So.

Really interesting thing, it's a wearable device, company's called Spacebands. It's a wearable device. You can wear it in a high risk environment. So construction, manufacturing, logistics, distribution, things like that. Basically collects a lot of data, provides warnings to workers to say, hey, you're too close to this machinery or you're not trained on this, you're too close, things like that. So it can provide, it can provide,

you know, it's providing warnings to workers if they're getting themselves into a dangerous situation. But also what all that data does is it helps predict workplace safety to help retrain workers to, you know, have a safer work environment and things like that. So it's a it's a very practical application of AI and data and how to again in that area, how to keep how to keep workers safe. Right. That's the kind of stuff that we're investing in. We're not investing in the chat in the next.

JetGPT or something like that, but we're investing in the application of that technology to the workforce. How do you make work easier? How do you make it more effective? How do you make people more productive?

jon (28:14.529)
Let me ask you about the exit in mind. What do you like this HR and workplace safety? How do you set that? You got to turn your money. You need to return on the investors. It used to be, I gosh, just 2009, a lot of people were just thinking about IPO, NASDAQ, but they don't do that as much as anymore because it's more about, there's a lot of private equity money.

It's just a lot of easier access to the good instead of going through those all those million dollar legalities that you got to do. Yeah.

Greg Moran (28:47.996)
Correct. Yeah. Yeah. I mean, we don't even think about the &A. I'm sorry. We don't even think about the IPO market. To be honest with you, I mean, if we have one that IPO is great, that would be terrific. We don't count on that at all. If we're looking at it from an IRR standpoint within our fund, we're looking at it from how do we help this company get to a strategic exit, get to an exit with a strategic buyer, or how do we...

jon (28:54.401)
Yeah, yeah, yeah.

Greg Moran (29:16.796)
you know, help them move into higher and higher levels of private equity to grow the business larger and larger. I mean, you can build an enormously valuable private company today that can churn, you know, remarkable returns without ever touching the IPO market. So, you know, we're or ideally strategic exit, right? And, you know, we're because we are investing at an early stage, these are highly innovative companies that, you know, provide a really compelling.

functionality or something like that to a strategic buyer. So, you know.

jon (29:50.433)
What's, yeah, what is the thinking that goes around that? How do you set them up for saying, okay, our exits, we need to see an exit in three years. These are the companies that we think you would be interested in purchasing you. How do you do that?

Greg Moran (30:02.972)
Yeah, I mean, from a fund our size, we're a small fund, right? So from a fund our size, our customer, if we think about it from the VC standpoint, right? Our customer are larger private equity firms. That might be a highly reputable firm at the series.

jon (30:22.337)
Well, let me let me ask you about that. What size like a billion dollar fund or a three billion dollar fund or five billion or what?

Greg Moran (30:26.908)
billion plus. Yeah, I mean, you know, billion plus, definitely. But, you know, but ultimately, I mean, what we want to set our companies up to do is, is to get to a highly credible Series B investor, right? We're not going to be able we're not a large enough fund to take them there. But we want to set them up to be attractive so that we've got the growth profile, we've got the financial profile.

We've got the innovation, we've got the customers and things like that that can set them up to go do a series B with a really strong VC that can then help take them to that strategic buyer or a financial buyer. That's really what we're looking at. I mean, so it's like that's what we really try to set them up to is just the next stage of growth. So for investing at a million, what we're looking at is,

How do we help you get to eight to 10 million in revenue, right? And do that in a way that it's sustainable growth, you've got the right profile, and good things are gonna happen as a result of that.

jon (31:38.465)
Yeah. What's your thesis or mandates around profitability when you're doing that? Are you still me? Hey, we need to see 20%. What? Or it's okay that you're not profitable. We just need growth. Cause I've been in that VC world and we raised some money for a turbo squid. And I remember saying, Hey, don't worry about profitability. Really? When I first heard that. Yeah.

Greg Moran (31:46.748)
Yeah, alright.

Greg Moran (31:59.292)
Yeah, times change, man. It just cycles all over the place, right? And, you know, I think there was, I mean, there was a time not long ago, right, where you go through these stages, VC is so like...

jon (32:06.241)
Yeah.

Greg Moran (32:19.868)
I don't know, schizophrenic, right? Where, you know, one day profitability, don't worry about profitability, just burn, you know, and other days, no, you got to get the thing profitable. I think where we, because we're investing at the seed and series A, early series A level, we're okay with companies burning. We definitely don't want to see an unsustainable burn. What we tend to look at is what is your...

What does your runway look like? And we want to see 18 to 24 month runways. So we want sustainable burn that they can quickly grow out of if we need to do it. So we're OK. If they're burning like, on a burn ratio standpoint, if they're burning like 0 .5, maybe even if they're growing fast, maybe even one times. So in other words, if they've got a million in ARR,

that they're burning, you know, if they're burning half a million or a million on the bottom, that's probably okay. Like a half million better than a million for sure. We're not an investor that's gonna be burning, you know, it's gonna have the three X, four X burn profile. Like that, that's not, there are places for that, but that's not us.

jon (33:34.081)
I don't know if anybody's watching has ever been through that, where the runway starts getting shorter and shorter and you just level of panic and everybody just goes up. Yeah.

Greg Moran (33:47.324)
It's terrifying, right? It's just, and I've been, I mean, I've been, I've been on that side of it, right? Where you just, you can't operate, you can't make good decisions.

jon (33:53.057)
Yeah.

jon (33:56.801)
You don't, it's out of anxiety. It's like out of fear. Yeah. Have you ever, I mean, let me ask you, have you ever repeated any of your strategies that you learned through your growth and out match? Like, Hey, there's an offline, slow growing competitor, five X our size, let's go buy him. Have you? Yeah. That you recommend to someone of your.

Greg Moran (34:01.244)
Yeah, 100%.

Greg Moran (34:21.244)
in the fund.

jon (34:26.017)
companies in your portfolio. Yes.

Greg Moran (34:28.316)
Yeah, I have not had, nobody's done it yet. I've had a couple conversations with companies where it's looked like, hey, there's a kind of an interesting play here. We are absolutely not averse to it. Hasn't happened yet. But like I said, I'm a big fan of inorganic growth when done strategically, not just going to buy anybody at any price, but.

Tuck -in acquisitions, even at a small stage, can make a big difference. So we haven't executed it yet, but we've had a couple of situations where it's starting to look like it may come together. I've got one right now in our portfolio where they've got a really interesting opportunity to go buy a very complimentary product and pick up a bunch of customers. And the value looks right on it. Similar kind of situation.

where it's more of a services model that they can incorporate into their tech platform. We may have one looming here. We'll see what happens. But.

jon (35:39.457)
Yeah, I'm going to ask you to kind of look in the future because that's what you do. That's what VCs actually kind of do. And I've read Brad Jacob's books. I've read a couple other sources that said, and I'm just giving an example, that AI is going to replace QuickBooks. Why would we even have that? So what are you looking at for HR software to replace and just change our...

way we were.

Greg Moran (36:12.124)
It's.

jon (36:12.705)
I'm asking you to kind of put some bets on some trends.

Greg Moran (36:17.308)
Yeah, I mean, within the AI's application at work is going to be enormous. And we see it the way that we hire, the way that we recruit talent, the way that we manage talent. And I think if you look at it from a broad standpoint, I think the biggest areas you're going to see is just in the way that people, just the day -to -day way that people do their jobs, right, is going to change so fundamentally. So.

A lot of the systems that you see today that are the big CRMs or the big, you know, HRAS systems that exist, like you have to your point on QuickBooks, you're not going to need that analysis is already going to be there and things like that. Right. So, I mean, I think where we where we tend to look at it, the bets that we're really making today are around upskilling, reskilling.

freelance gig, because we're not, I'm not trying to figure out necessarily what the next thing to get automated out of existence is. What I'm trying to figure out is how do we help, how do we provide technologies or ways to keep the global workforce with the skills that they need, right? The skills of work.

that we think about that an individual needs to work today are changing so dramatically and so fast. We've never seen anything like it. And, you know, the skills say that somebody needs on like a factory floor are going to radically be different than they need, you know, than in just a couple of years from now than they have today. So a lot of the bets that we're really excited about right now are around how do you upscale and reskill the global workforce?

We just we just did an acquisition or not an acquisition. I'm sorry an investment in a company called one range Really interesting company that is exactly what they do. It's a marketplace of of services Learning and development support that an individual can tie into to to very rapidly Change their

Greg Moran (38:46.204)
basically change their skills, right? And upgrade their skills to be able to be more competitive. So, you know, that's the kind of stuff that we're looking at today is how do we, how are we a part of that? How are our companies a part of that changing nature of work, right? And then, and that's upskilling the workforce, it's re -skilling the workforce, and it's the freelancing economy, which more and more of, you know, the, the,

Interesting thing is over the next couple of years, the United States is going to have more freelance workers than FTEs, than W2 workers.

jon (39:21.889)
Yeah, despite what California wants to do, there's going to be more Gidwaters. Yeah.

Greg Moran (39:26.268)
California is not going to be able to stop this, right? I mean, it's so crazy that California, it's so the opposite, right, of the way that the world is going because, you know, there's going to be more, when you hit that tipping point, and again, this is, it's scary in one perspective, but it's also exciting from an investor perspective because what happens, just think about the dynamics that start to occur when more people,

jon (39:28.865)
Yeah, it's -

Greg Moran (39:56.208)
are self -employed than have a W -2. Well, what about healthcare? What about benefits? What about job security? What about getting a mortgage, right?

jon (40:08.481)
All of that, like huge marketplaces, all of that. That's the way it's going. Yeah.

Greg Moran (40:11.068)
Massive, massive disruption. So to answer that's a really long answer to your question, John, of like, where are we? That's the stuff that we're looking at, right? What is this? What's going to happen when we hit this tipping point? Where do we invest?

jon (40:23.809)
The way you said that, that's the way you said it. There's going to be more gig workers than W2s. Yeah.

Greg Moran (40:31.1)
That's right. That's that's the trend. So as an investor, what I want to do is invest in, you know, invest in those trends. We know that that's a trend, right? We know that that is going to happen. So what are the bets that that need to be made in terms of the way that people get mortgages or the way that they get benefits or the way that like all of these things that are going to have to happen because of of that trend in the bet in.

more people, and it's not even a bet. I mean, it's a given, right? More people will be, unless something, unless the entire country decided to go the way of what California is trying to do, right? And slow it down, but it's not gonna happen. So that's a huge area, right? So that's a huge bet that we're looking at. The other bet is the globalization of the workforce. We can recruit talent today, not,

You know, we're not limited to not only are we literally to W -2s, we're also not limited by any geographic barriers anymore either. And that's the shift of that's part of that shift to freelance, but it's also part of the shift to a global talent base. Where are the investments? You know, how do we start to invest behind that?

jon (41:44.001)
Yeah. You see that Nick Huber, I don't know if you know Nick Huber, he does storage facilities. He bought a support shepherd, which is a marketplace of workers down in South America. Yeah. Only because he didn't buy it. He goes, Hey, I'm a tech guy. I'm looking for opportunities. He looked at his P &L and his expenses go, this is what I'm hiring these people to do. I'm a invest in my P &L.

Greg Moran (41:49.436)
Yeah, I do.

Greg Moran (41:53.948)
Yep. Yep. Yep.

Greg Moran (42:09.692)
Yep. I'm looking at a deal right now. It's exactly the same. Well, I mean, different business, but same premise, right? Looking at a deal right now that's offshoring the work of BDRs. I'm not talking call center stuff, but offshoring BDR work that so much of the job of a BDR today because of the change in technology, BDR like business development. So the...

And so much of that, there's two things that are really affecting that workforce in a really profound way, right? Number one is the shift in technology. So much of the work of a BDR today is actually just running cadence programs, like running outreach programs to just keep pinging buyers and automated email sequences and stuff like that. They end up spending 90 % of their time just running what's automated.

jon (43:03.969)
It's also like staying in front of everybody's mind with social media, just like having posts on X or having on LinkedIn, whatever it is, just like constantly.

Greg Moran (43:15.26)
personal branding and things like that, right? So all of that stuff, but what it means is BDRs are spending less and less time on a Zoom call or a phone with a prospect and doing what BDRs need to be doing, which is qualifying opportunities, right? So looking at a deal right now based out of India to actually offshore.

a lot of that work. It's not an Indian call center. They're not dialing into those prospects. We're offloading a lot of that back end work so that the LinkedIn, you know, the LinkedIn outreach is getting done, the email outreach is getting done, all this stuff, and basically teeing up qualified conversations so that BDRs can spend more time on the phone doing what we want them to be doing. You have less BDRs, so there's a huge cost arbitrage there.

And they're spending the time on those calls doing the actual deal qualification. We'll outsource all of that back end. Same thing as like what, you know, same kind of concept as what Nick is talking about. But, you know, that's the kind of, those are the kind of bets that, you know, we're looking at because that stuff is going to revolutionize the way that people work.

jon (44:34.529)
Interesting. Well, Greg, I appreciate it, man. This is like a interesting talk. You went from buying a company that was five times your size to now placing VC bets or money on gig workers being more plentiful than W2 workers.

Greg Moran (44:51.644)
Yep, totally. Yeah, I mean, look, it's all work, right? And the company that we did all the &A, I mean, that was the space that we were in, right? So we were doing all this &A, but it was always within this future of work space. That's how we got to know it. But there's nowhere today that is more disrupted. There is no part of society that is more disrupted today than the way that we will be disrupted in the way that we work. It will not look.

jon (45:04.161)
Yeah.

Greg Moran (45:21.5)
anything like the careers that you and I have had, John. And that's what we're building on.

jon (45:25.729)
I can't see, I can't fathom. There's a couple of things. One is that I drive my kids to high school and I drive by University of Arizona every day. So we see these kids spending 30 to $50 ,000 a year on education. I don't see that happening. And then I just don't see anybody working for a company for 30 years like you used to do at IBM as an example. Yeah.

Greg Moran (45:40.924)
Yep.

Greg Moran (45:48.092)
No, no, no. And that's it because you can develop, you know, one of the things that is so interesting to me, so I had a conversation with a guy, freelancer, guy, team we do our social media with, right? Comes to, from Kosovo, comes to the US, gets an MBA, looks at a bunch of jobs in the US, says,

Hey, I understand this kind of change in social media and personal branding and stuff goes back to Kosovo and starts this company doing social media, SEO, PPC, that kind of thing in Kosovo for US tech companies. Just think about we talk about arbitrage and &A standpoint. Think about the arbitrage there. You are now operating a business on Kosovo level expenses.

jon (46:42.849)
Economics, yeah.

Greg Moran (46:44.828)
selling into the US market, right? I mean, these businesses just explode in growth because they're able to do it really well. These are, you know, US or Western educated individuals, although that difference doesn't even matter anymore, right? And they're able to get US dollars and build these companies. And it's just, it's extraordinary what you see, what you see happen. I think that...

My daughter just graduated with her MBA last week. And you look at even her cohorts in her MBA program and stuff. I mean, entrepreneurship as a viable means of the barrier to entry is so low now. You can go out, you can graduate with your MBA and start a business or skip the MBA and start a business or buy a business. Right. That's it. Yep.

jon (47:37.473)
or buy a business or buy a business. Yeah. Greg Moran, we're out of time and I really appreciate you being on my show.

Greg Moran (47:48.988)
a lot of fun, John. Good to see you. Maybe we'll connect in Plattsburgh, New York sometime. That's right. For anybody listening, Plattsburgh State, State University of New York, Plattsburgh, it's an awesome school. You just have to like cold weather. But if you can get beyond that, great school.

jon (47:56.289)
I'm not going up in there in December, nothing.