Formeds: Waldemar Pilch

Waldemar Pilch spent two decades pricing derivatives at Morgan Stanley, Citi and Standard Chartered, seven of those years out of Singapore, before moving back to Poland to run his aunt's lighting business. He grew it from 50 to 100 million euros, sold it one month before COVID, then launched a search fund and bought Formeds, a Polish vitamins and supplements company, six months later. He tripled revenue in three years and reached a liquidity event while staying on as CEO and co-owner. This episode covers his chicken nugget framework for breaking down risk, why he bet below standard search fund size thresholds on a single subcategory, and his honest answer on being a micromanager.

Chapters

• Growing Up in Krakow and the Family Lighting Business (2:19)
• Moving to New York with Little English (6:08)
• A Career Pricing Risk (7:23)
• Seven Years in Asia (8:57)
• Choosing Operator Over Adviser (12:11)
• Taking ES System from 50 to 100 Million Euros (15:48)
• Why an Outsider Can Run Any Business (17:33)
• Selling One Month Before COVID (19:20)
• From a Hydration Startup to a Search Fund (22:00)
• The Six-Month Search for Formeds (24:08)
• The Founder Transition (26:29)
• Tripling Revenue in Three Years (28:00)
• The Telescope: On Being a Micromanager (31:19)
• A Liquidity Event in Three Years (32:59)
• The True Cost of Running One of These (35:19)
• The Chicken Nugget Framework for Risk (37:51)
• Advice for Searchers (39:30)

SOME ADVICE FROM VAL

"This might be 9:00 to 4:00 AM sometimes, but also at the same time, the most rewarding thing ever, if you get it right."

"If you're thinking about it, losing your sleep over making a decision whether to go down the entrepreneurial path, you'll never know the answer to that question until you do it. And it doesn't matter what stage of your life or career you are. Five years from now you could be an entrepreneur if you make that decision. So just make sure that you're driven, because it's a lot of hard work."

Transcript

[00:00:01] Waldemar: So like, what is a chicken nugget?

[00:00:03] Waldemar: If you disaggregate it, you're gonna, you take it all the way to, uh, to a chicken egg and a little bit of corn. Then, the egg, turns into a chick, you feed it with corn, it grows over time. So it's basically egg corn over time,

[00:00:20] Waldemar: that's a chicken nugget. And then you add a little bit of branding on it. So, that's how I was taught to think about risk, from a fundamental perspective. It helps you break down risks,

[00:00:31] Waldemar: When you break down risk that way, at least , you know what risks you're taking and, that risk actually doesn't seem so big anymore.

Intro

[00:00:39] Jake: Today we're speaking with Waldemar Pilch, Val, and this one is a bit of a full circle. Val told me at the end of our recording that he found the "Search Fund Podcast" back in twenty twenty-one, listened to all six episodes that existed at the time, and decided right then he was gonna do this. [00:01:00] Four years later, he's on the show.

[00:01:03] Jake: Welcome to the "Search Fund Podcast." Val grew up in Krakow, moved to New York for high school with barely any English, and spent the next two decades pricing derivatives at Morgan Stanley, Citi, and Standard Chartered, the last seven of those years out of Singapore.

[00:01:22] Jake: In twenty sixteen, he moved back to Poland to run his aunt's lighting business, took it from fifty to a hundred million euros, sold it one month before COVID, and then launched his search fund. Six months later, he bought Formeds, a Polish vitamins and supplements company. In year four, he'd quadrupled it.

[00:01:45] Jake: In this episode, we get into Val's chicken nugget framework for breaking down risk, why he deliberately went below standard search fund size thresholds to bet on a single subcategory, and his very honest [00:02:00] telescope-inspired answer on being a micromanager. Let's get into it

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[00:02:06] Jake: Val, thank you so much for joining me today. Uh, you have an amazing story and I'm looking forward to getting into it.

[00:02:16] Waldemar: Thanks for having me, Jake.

[00:02:19] Jake: Let's start at the very beginning where you grew up in Kra Krakow, Poland. Um, paint that picture for me of young Val and Krakow. Who was in your life and how did you spend your time?

[00:02:35] Waldemar: Sure. , Yeah, as you said, I grew up in, uh, Krakow, in Poland. Uh, that's where I'm based right now as well. It's been a bit of a journey around the world. Um, I grew up, in a lovely family, , parents, uh, brother, the medium extended family. Uh, very nice upbringing, um, with, I would say relatively entrepreneurial parents, trying to do things [00:03:00] here and there.

[00:03:01] Waldemar: Being attentive parents, , looking after our afterschool activities as well. Uh, did a lot of sports, uh, when I was younger. Um, mostly I would say, , call it adventure or nature sports sailing, um, skiing. I think that had, I probably, you know, I can probably add on that, but that probably had a big impact on my life.

[00:03:21] Waldemar: Um, academically I, I was a good student. I wouldn't say, you know, I was a, a Nobel Prize winning physicist, but I did well in, uh, throughout my academic, uh, um, journey. Um, and, uh, went to a decent, , pretty good high school. And then, um, you know, , as I was getting ready to become a young adult, , opportunity came up, uh, to move to New York City, um, where I completed my high school, undergraduate degree, um, and, spend my early adulthood.

[00:03:52] Jake: Great. So, any entrepreneurial experiences, that you remember your parents having in your early [00:04:00] childhood that were formative.

[00:04:03] Waldemar: Yeah, I mean not just both my parents as well as family around actually that is a part of a story as well. Uh, how I ended up being back in Poland. Uh, my parents, ran a few small businesses. Was it a gardening business? Was, uh, um, some construction, as well.

[00:04:21] Waldemar: But for the most part, I would say institutional backgrounds. There was always someone around who was doing something entrepreneurial, but I wouldn't say I was. Uh, I was grounded in, um, entrepreneurship, uh, when growing up, although, uh, in the early nineties, uh, my mom's sister started a company, and that's, basically 30 plus years ago, which was a lighting company.

[00:04:47] Waldemar: I did my internship, I think my, first or second year of high school. At a company, um, that was started from scratch, right? Uh, that was also a transformational period in Poland, um, um, [00:05:00] business that, uh, focused on architectural lighting. For retail office, entertainment spaces. And actually that business did really well and was the reason I came back, uh 30 years later to Poland.

[00:05:14] Waldemar: So, there is a, there is that aspect there. Yes.

[00:05:17] Jake: Great. And, and you alluded to some involvement in sports and maybe a story to tell there.

[00:05:23] Waldemar: Yeah, that, that was probably what was most important to me at the time. Um, you know, I was, uh, both on competitive teams, , skiing team, local, you know, regional, local teams. But, uh, I loved the competition. I loved skiing. I loved being out in the nature, uh, being in the outdoors, and then summertime spending on the boats around the boat, sailing racing.

[00:05:43] Waldemar: Um, and both of those are still with me till today. And probably, you know, if I look at the relationships I've built over my entire life, uh, a lot of the important ones were, you know, related to that and to outdoors and to being, being a [00:06:00] skier sailor, and then a diver and traveler.

[00:06:03] Waldemar: I think just being in the nature and being outdoors, uh, had a big impact on me growing up.

[00:06:08] Jake: What inspired the move to New York and what learnings did you take from that?

[00:06:14] Waldemar: Oh, wow. We're talking about New York from the nineties, right? So, I'm not sure if New York still makes such a big impression today, as it as it did on me at least, back in the nineties. Um, but it was, where everything was. And when I moved there.

[00:06:29] Waldemar: I believe the New York was the, you know, beginning and the end of the world. I mean, there was everything there. Um, it's a fantastic city. What inspired me was, uh, it ranged from arts to business, to media, to movies, everything you're growing up with, um, everything in the natural, in a small space.

[00:06:49] Waldemar: And, that's what New York. Actually, provides still today probably, but definitely much bigger way back in those days. So, I moved also in very [00:07:00] formative years of my life. I was, I think I was third year of high school. So, completed my high school there, uh, went on to, um, to university.

[00:07:09] Jake: How was your English at the time?

[00:07:13] Waldemar: You know, little, not a lot.

[00:07:16] Jake: Yeah, yeah. Uh, that must have been challenging.

[00:07:20] Waldemar: It was enough to get by , as a kid , you get by.

[00:07:23] Jake: Right, right. Um, great. And so you finished your schooling and you went on to have a very solid corporate career, spending time at some of the biggest institutions in the world. KPMG, Morgan Stanley City Group, standard Chartered. Did great things there.

[00:07:43] Jake: During your time at Citigroup, you moved to Singapore. What, informed that move and what were you looking to get out of that experience?

[00:07:52] Waldemar: Oh wow. Yeah. After I graduated, uh, from university, then I also went on to get an MBA from Duke [00:08:00] University. Uh, spent a little bit of time. In investment banking at Morgan Stanley, as you mentioned, but throughout that time I continued to, I mentioned race, I was teaching, uh, sailing in New York, sailing school right down by World Financial Center.

[00:08:14] Waldemar: Um, I was racing there. I, you know, I was always into the outdoors, uh, into, traveling around the world to new sailing destinations. Um, just love, love the adventure, I think. Um, and somewhere, following, those, formative years, 25 to 30, we traveled together with my wife today.

[00:08:35] Waldemar: Um, we traveled, , we used every minute, every bit of our free time to travel around the world. Um, traveled extensive backpack across Asia. We, we just loved Asia. And then at some point I knew that, you know, if there is an opportunity in one way or another to move to Asia, , for work, I would jump on it and, and those things when you.

[00:08:57] Waldemar: You park it in the back of your mind, and things [00:09:00] like that come up when you don't expect them at all, um, even though you thought about it. Um, I guess just luck, um, just being lucky. And in 2009, 2010, um, colleagues from Citigroup, uh, we knew each other from New York. Reached out to me, and asked if I, you know, I'd be interested in coming up to Asia, to Singapore and, uh, help build out a risk advisory practice for our, uh, for our derivatives business, in Asia. I did a lot of that in the us, uh, had experience in. Derivative structuring, hedging strategies, across interest rates, credits, equities, uh, foreign currency.

[00:09:42] Waldemar: Um, and, uh, so I thought, well, you know, I pretty much immediately jumped on it, uh, together with my wife. Our son was just born around that time. He was 1-year-old. Uh, we, you know, we had a lot of things to think about, but we knew, you know, we wanted to do that then that was, you [00:10:00] know, one of the best decisions of my life.

[00:10:03] Jake: You've mentioned elsewhere that living in Asia for seven years taught you, among other things, that western cities aren't the center of the world. How did Asia, working in Asia shape your perspective and, , how do those learnings affect your life today?

[00:10:22] Waldemar: Well, it changed, it,

[00:10:23] Jake: Yep.

[00:10:24] Waldemar: it didn't just affected, it changed it, um, it changed my, mindset and also my perspectives on the world and how I think about it. I was joking that New York was, at some point in my life, the beginning, the end of the world and I really felt that way ,

[00:10:38] Waldemar: You had the arts, you had the museums, the galleries, the finance, the Wall Street, the media, , everything was there, right? Then, you mature, you realize more, and, you know, moving Asia I think people just live so much closer to nature than maybe, how we think about in the west, when we live in the cities, especially at that time.

[00:10:57] Waldemar: I think today everything's changed, right? Post [00:11:00] COVID, we have remote work. We, we work from everywhere, but, take it back 15 years. Um, it's not gonna be so obvious.

[00:11:08] Jake: Mm-hmm.

[00:11:08] Waldemar: Um, and, and I think just traveling across, uh, you know, especially Southeast Asia, Vietnam, Malaysia, Cambodia, um, I traveled everywhere for bus.

[00:11:20] Waldemar: I covered all Asia. Throughout my experience in Asia, so it wasn't just Singapore, I traveled to every single country, throughout the year, and including Australia and New Zealand. So that was always a nice touch as well. But I've learned, especially in countries like in Indonesian, Vietnam, how happy people are living in small, small villages close to the beach.

[00:11:41] Waldemar: Uh. And how you can create your life, both, in a humble way, but also, like how entrepreneurial people can be, on a global stage. Actually, you know, you, here you are, you know, you think you're an investment banker working out of New York, London, Singapore. And a fisherman in, in Indonesian [00:12:00] village, can, can create as much value for the world around, him, and for himself as well.

[00:12:06] Waldemar: And that's where, I think entrepreneurial, ideas started seeding in my mind

[00:12:11] Jake: Interesting. And, and you did ultimately in 20 15, 20 16, make the decision to relocate back to Poland. Why was that the right time and why did you make that move?

[00:12:24] Waldemar: You know, just around that time, . initially I thought I'm going to Asia for, three years, then three years passed and, we were residents in Singapore. Uh, at that point, at some point I thought, this is going to be forever.

[00:12:38] Waldemar: And the minute you say forever,

[00:12:40] Jake: Yeah.

[00:12:40] Waldemar: you know, something else comes up.

[00:12:42] Jake: Yeah.

[00:12:43] Waldemar: , But during that time, as I mentioned, I, I traveled a lot. Um. I spent, a lot of time with entrepreneurs, manufacturing businesses, services businesses, distribution, I mean, strange businesses, noodle makers in Vietnam, [00:13:00] seafood called storage in Indonesia, palm oil producers in Malaysia.

[00:13:05] Waldemar: You know, and you, you kind of, get that entrepreneurial vibe and. Somewhere around 2015 , actually that, goes back to my story about adventure. I went on a sailing adventure around Greenland, together with my family and France. Um, so, sailing has remained important part of my life, I say that in the jest.

[00:13:25] Waldemar: And, they started teasing me about, potentially moving back to Poland and, uh, helping them, with the business that they started, 25 years earlier. Um, and the transitioning it and professionalizing it. I kind of thought about it as funny idea and then it grew on me and, at the same time I was thinking about entrepreneurship and those noodle makers in Vietnam.

[00:13:48] Waldemar: How lovely that that what they do is actually, and how amazing it is for everyone around them. Um, and I thought that this would be probably the most. [00:14:00] Natural way for me to transition into entrepreneurial sort of side of business. I decided basically at that point that I really wanted to be on the other side of a table, from being an advisor to being an operator and decided to pursue this.

[00:14:16] Jake: Tell me a little bit more about that desire to be on the other side of the table. Did it come from a place of intellectual curiosity or desire for impact and legacy,, where did it come from?

[00:14:29] Waldemar: Interesting question. I don't know if that's gonna be the right word, but it was a bit of an ownership sort of mindset , when you're an advisor, you think you have the ownership, but you don't have it. You come in and you can be extremely strategic and important advisor to your customers that and can change, transform the business that they run.

[00:14:47] Waldemar: In many different ways. But, at the end of the day, you're an advisor. I loved what I did. Thanks, to my specialization, you know,, got me around the world and, you know, I got to see, , a [00:15:00] lot of countries, a lot of cultures, and I wouldn't change a thing.

[00:15:03] Waldemar: And probably, I wouldn't be where I am, uh, if it wasn't for that experience. But, at that time, I've realized that , being in derivatives business, the global markets business, it provides you with ability to disaggregate things, to look at them, from a first principle.

[00:15:22] Waldemar: Perspective, from an atomic perspective and then maybe, connect the dots, right? I wanted to connecting the dots. You can connect the dots as an advisor or you can connect the dots as an operator. That has a very different meaning and different impact when you live it on a day-to-day basis.

[00:15:40] Waldemar: And, and it was actually, it was , I guess, an , intellectual idea, but it actually exactly how it turned out and how I perceive it today and how I still love it.

[00:15:48] Jake: Beautiful. So you took over a company called ES System. Tell us about that. Is that, uh, related to the, the family company that you mentioned earlier?

[00:15:58] Waldemar: Yes. I [00:16:00] remember when the name was created. I think we were on a family holiday trip, uh, like, uh, to the Lake District in Poland. And they were thinking about the name of the company, I think three employees at that time. And they said, well. You know, lighting, , and so ES stands for Energy Savings System.

[00:16:20] Waldemar: It has a lot of meaning today, when we think about green technologies, but they came up with that concept in 91. So that, that was quite a vision actually. So my family, my mom's sisters started a company with, their friends. Focused on providing, architectural lighting, , importing and selling and advising on lighting projects and calculations around lighting. And then it became actually the largest. It acquired a company that was manufacturing, lighting products, fixtures. And at a time when I joined, it was the largest lighting company in Poland, both the manufacturing and selling.

[00:16:56] Jake: About how big at that time.

[00:16:58] Waldemar: at that time it was about [00:17:00] 56, no, it was like 50 million, euros in annual revenues. Um, I think we got it to about a hundred, uh, by 2021. Employed, you know, a few hundred people, , it was, , a solid sort of industrial. Company with industrial, , capabilities, , from iron casting to, you know, metalworking.

[00:17:23] Waldemar: I mean, we're talking real industrial approach and as well PCB production, so electronics and LED lighting and getting into new technologies at that time.

[00:17:33] Jake: Yeah. So on the surface, this role leading this commercial lighting company sounds. Completely different from everything you've done to date. And, , you see a lot of that in the ETA world and it's befuddling to many, , looking from the outside. But, , case in point, , growing the company from 50 to a hundred million , in turnover.

[00:17:53] Jake: Like, why did that work? , Having never really operated a company like that before.

[00:17:59] Waldemar: I [00:18:00] do have an answer for that, but it will not be probably very enlightening. Or it will be surprising. Um. Business is business. When you run a daily p and l, um, if you have the right mindset, I still run business like a daily p and l,

[00:18:15] Jake: Sure.

[00:18:16] Waldemar: So when you, when you have this mindset of breaking things down, disaggregating, connecting the dots, uh, working with people, being right by people. I think it doesn't matter what background you have, unless you're going into science, right?

[00:18:30] Waldemar: Or, into space. But business is business really. And I think that's why, I mean, you referred to ETA path. I think that's why it works. 'cause you don't always need the background if you're open-minded and connect and can look at things and with open mind and connect the dots and work with people. I don't think you need the background, uh, in that particular specialization. You just let people educate [00:19:00] you around, there's a lot of people who are specialists like, lighting or now vitamins, minerals, business, supplements and health.

[00:19:07] Waldemar: There's so many good people around that can help you with the journey. I think if you let them.

[00:19:13] Jake: You make it sound so easy, fel DeMar. It's simple as that.

[00:19:18] Waldemar: Simple as that, and you know that

[00:19:20] Jake: Yeah. Um, you, uh, you ultimately led the sale of Yes System to, uh, I don't know if I'm pronouncing it right, but Glam Ox. Um, and I infer from your prior comments that this was, this transition was part, maybe part of the original plan. , Maybe talk about that and share a bit about the experience finding, a new owner for.

[00:19:46] Jake: ES system and, if any, perhaps some takeaways that would inform your search fund journey later down the line.

[00:19:54] Waldemar: Sure. In a way it was planned and not planned. In a way it was planned [00:20:00] because the founders of the company and the owners were basically approaching a retirement age And, with no succession.. Obviously there are few ways to think about that.

[00:20:12] Waldemar: Um, there, I didn't know about search funds back then, so I don't think about, acquiring the business. But at the same time, I thought it would be interesting to help them, when they brought it up. Given my background in finance and relative ease of moving when talking to private equity. I thought it would be interesting to help them with this as well, but it was not part of a plan on day one. So, following three, four year sort of expansion of the company, we, kicked off a process where we worked with,

[00:20:44] Waldemar: the owners actually and the founders had a very good mindset here. They wanted the company to be in the good hands. It wasn't just about selling the business. They really wanted the company , to prosper and be in the right hands. And they wanted to get the feedback from the employees , when there were a [00:21:00] number of different competing bids.

[00:21:01] Waldemar: It wasn't just about the highest bid, it was also about, where the company would fit the best and how employees . felt about it. So we took that into consideration as well. I helped spearhead the process. We talked, to, Triton, that is the, I think it's one of the largest private equity firms in Nordics.

[00:21:21] Waldemar: Which had a company in a portfolio, , glam Ox, which is top four lighting companies in Europe or globally. And, then that's how we came about , glam ox, the lighting, the strategic buyer backed by private equity firm acquire EO system. , I stayed on for a couple of years. I became a commercial director for the whole group. , Helped, with, integration, and that was literally the change of control one month before cOVID, so we locked down very quickly, , two years later we came out of COVID and, at the same time, I decided that, I wanted to have another go at this, search fund model.

[00:22:00] Jake: Perfect. So my next question was gonna be, about your decision to go buy and run a business yourself. You just had such a great time at. ES system and you saw the opportunity, exercised by the PE firm that you wanted to do it yourself. Is that, the rationale there?

[00:22:19] Waldemar: Nope.

[00:22:19] Jake: Nope.

[00:22:20] Waldemar: Nope. Totally different.

[00:22:23] Jake: was it?

[00:22:25] Waldemar: So, during COVID I played with an idea of a startup business and, I even hired an external lab and, professionals. My wife is a pharmacist, so together with my wife, we worked on a recipe. For electrolyte, powder mixes in sticks.

[00:22:41] Waldemar: And I wanted to launch, basically go at it and, do a startup, focused on hydration. And, um, we're talking 2020 2021, right? Today this seems like it's everywhere, but I think it was still relatively early stages of thinking about supplements and [00:23:00] hydration. Created a business plan. I created a product together with an external labs that I hired.

[00:23:05] Waldemar: I shared the idea with an entrepreneur, serial entrepreneur here in Krakow.

[00:23:11] Waldemar: Um, and at that time I didn't know anything about search and maybe I've come across search funds a couple of times, but that was it. So that's probably 2020, and 2020 21. And he said that, that sounds like a great idea. Very difficult said, with your experience, why don't you buy a company, that could make this, product it's easier and faster to introduce it into a market.

[00:23:37] Waldemar: And that got me thinking about as well. Okay. I mean, how do I as an individual buy a company? Um, started, thinking about it, uh, obviously came across. Stanford, search fund program. I looked at the guide. I looked for some podcasts. I found you the Search Fund podcast in 2021.

[00:23:56] Waldemar: I listened to all six episodes. Uh, the other one I came [00:24:00] across was Chicago Booth. Uh, I listened to that as well, and, and that's when I, you know, and I, right away I knew I'm gonna do this.

[00:24:08] Jake: Fantastic. So you launched your search, and in six months you had a company that's super fast. You bought a company called For Meds or for Meds. Uh, why was this the one for you?

[00:24:22] Waldemar: Well, , so here's my investment thesis, right? My, uh, my paper, I said, , I'm open to ideas of companies, in industrial space basically in anything around. Homes like lighting. Um, but my focus will be on the niche of the market and there are probably, you know, 20 companies. That I could try to approach and, but then, you know, search fund wouldn't work if one of them didn't work.

[00:24:47] Waldemar: But my primary focus is gonna be on vitamins, minerals, and supplement space VMS space. And the company could be B2B, no marketing, nothing, just, good quality product, good, good product offer, [00:25:00] with clean label preferred. The size doesn't matter.

[00:25:03] Waldemar: But I was extremely passionate about this space and, my wife used to run a pharmacy in New York City. Back when we lived in New York, she introduced Sogar into the market when it was originally the first clean label, sort of a, um, vitamins company. So we knew the space a little bit. And the challenge was there were very few companies, and the right size. Sort of your search funds, target size, you know, let's say. 2, 2, 3 and a half million dollars in revenue in ebitda. Nothing like that was available. So I had to make a, basically I had to make a decision to go to smaller size below 2 million euros in annual ebitda.

[00:25:48] Waldemar: And so it happened, I dropped the name to a number of people that, formats was potentially for sale. We got together with the seller, with the founder who ran the company for the past 10 years. And [00:26:00] ended up, working together on LOI and, uh, closing the deal on six months.

[00:26:04] Waldemar: Yeah. From starting the search fund.

[00:26:06] Waldemar: But why it happened. It was lucky. It was one, one, you know, a hundred percent focus on a single. Sub-industry, single category. I wasn't looking at health companies. I told everyone I'm looking for a vitamins company. Two, I was willing to go down, , on size of the business, , and basically place my bets on high growth.

[00:26:25] Waldemar: And the fact that the company was available actually.

[00:26:29] Jake: Fantastic. A, hot topic among the entrepreneurs that we work with recently has been, navigating that transition period from the, , typically the founder who sold you the business, to your leadership. Can you describe that dynamic, , in four meds and,, what worked well and what didn't?

[00:26:51] Waldemar: Yeah. Again, I think lucky or the founder was really, clever, shrewd man. What we agreed to, [00:27:00] is that, day one I take over the company, he steps down. He remained as an investor, in the company, and made himself available on, advisory basis, especially in the first couple of months.

[00:27:12] Waldemar: Following, a couple of months, he joined our monthly meetings just to see how he can be helpful. But the founder, what he did really well and what was helpful, and I think I will share that was there to help me build trust with the existing team.

[00:27:28] Jake: All right.

[00:27:29] Waldemar: Um, and that team is still here with me today, and they have matured and they've grown into new roles as, as the company has grown. Um, and I think, you know, it would've taken me maybe three, four months or six months to build trust. I think with the transition period on how, uh, how we work together with the founder and the seller, um, you know, we were able to cross that bridge a little faster and that definitely helped a lot. He stepped back also very quickly.[00:28:00]

[00:28:00] Jake: You did phenomenally well operating that business. And I would like to understand how you, how you did it. You, you approximately tripled revenue in three years. Correct me if I'm wrong. What, how'd you do that?

[00:28:18] Waldemar: You know what, one thing that I've, that I've always enjoyed doing was study how others are doing things. Study the best, right? I guess that's what, that's where, and there is a private equity firm in the us very well known, worth studying. Vista Private Equity.

[00:28:34] Waldemar: You probably don't know it probably.

[00:28:35] Jake: Hmm.

[00:28:35] Waldemar: Vista. What Vista does is when they acquire a business during due diligence process, they study where the 20% revenue best business is, and then they focus on that a hundred percent.

[00:28:49] Waldemar: If you can, , triple that 20%, you've grown the business a lot,

[00:28:53] Waldemar: so the business that, that actually wasn't 20, but it was zero. The business had no e-commerce, , zero [00:29:00] social media presence, had good product offer, no branding, no marketing per se, , not a very strong one. So we focused on, basically expanding into e-commerce space, which if you do it well. Can be extremely dynamic. And I mean we've used every professional resource, I've used every single professional resource I had at my disposals, from agencies to friends, to people that I've known to bring the best talent to, from the outside, not necessarily hire, maybe on a consulting and advisory

[00:29:30] Waldemar: basis, to help us build out that business.

[00:29:34] Waldemar: And basically. That, but what we didn't assume that building out our e-commerce business would have extremely positive impact on our B2B business as well. So it kind of grew all in tandem.

[00:29:49] Jake: Hmm. So you mentioned launching your e-commerce channel, building out your social media. And these are tactical things, [00:30:00] underlying those. Often as a new owner, there's some sort of fundamental shift in, in perspective or call it culture or just leadership. Did that happen in form?

[00:30:14] Jake: Or was it, pure tactical execution.

[00:30:18] Waldemar: I would say, I think we know that from. Being on the ground, that is probably the most important aspect, right? I had a relatively easier task at hand. We needed to build a trust to a trust, but the team in place was fantastic, and was willing to grow.

[00:30:37] Waldemar: Was willing to learn. There were a few people we parted our ways pretty quickly within a month. And then the team that stayed has just performed extremely well, curious, interested to grow. It's also a young team. The company is only 10 years old, was 10 years old, but was 14 years old.

[00:30:54] Waldemar: So the team was relatively young and also hungry to do new things. So I was lucky [00:31:00] with the team that was there and the management team, became part of a management board now, and, help continues to help me grow this business. I think I was able to bring new perspectives and new tools and new ways of doing things, that they were really happy to jump on and use and leverage, in the business.

[00:31:19] Jake: Yeah. Great. You've described in one of your Polish podcasts, a management philosophy, with a telescope analogy. Tell me how you came to that. Describe what it is and what it means in practice.

[00:31:35] Waldemar: You know, I've been told I'm guilty as charged of being a micromanager. Uh, so, uh, and you know, I'm not gonna, I'm not gonna define it, you need to know your weaknesses, that's one that I would have.

[00:31:47] Waldemar: So I always use this analogy as a, as a way of looking at things in a small business, you know, and it depends, right? If you're running a, multi-billion [00:32:00] dollar international corporate business, that wouldn't work. If you're running a small business, I think it is important and that's what entrepreneurs do.

[00:32:07] Waldemar: That's what they did when they founded the companies, right? That's what the founders did. Whether it's the right approach or wrong. And I think when you're a manager of a me small, medium sized business, it is helpful to be able to zoom in into the details and when I say details, I mean details, minute details.

[00:32:28] Waldemar: But when, you know, the team's handling it, being able to zoom out and basically not be an obstacle. And I, I think I'm still learning that, when to create value and when not to be an obstacle, but when to zoom in when it's needed , go down into the details is it's also my nature.

[00:32:45] Waldemar: That's a tool that I have. I'm happy to use it when it's helpful to use. But in a nutshell, I would say it's managing ability to look into the details, but also zoom out and not to be an obstacle for the team.

[00:32:59] Jake: Got it. [00:33:00] so not only did you triple revenue in three years, but you also achieved. liquidity event in three years. Most people in ETA talk about a five to eight year hold. You had a liquidity event in three years, and you're still CEO and co-owner of the company today. How did that liquidity opportunity come up and how did you contemplate your continued involvement, alongside a new co-owner?

[00:33:32] Waldemar: so, and that was my original plan as well. Three to eight, right? Or closer? I would say, let's say closer to seven.

[00:33:38] Jake: Yeah,

[00:33:39] Waldemar: It was a cold call that came in from a private equity firm that I knew. I knew it, it's a very high quality private equity firm. It's sort of , the first original private equity firm created in Poland, very prestigious, known for successes in the market.

[00:33:55] Waldemar: In fact, I asked them, why do you call me? I'm too small for you. They said they would [00:34:00] like to talk. I said, let's talk, and my initial response was yes, but probably just not yet. Maybe let's stay in touch and and let's connect in a couple of years.

[00:34:10] Waldemar: But then I brought it up to the board. The company was growing fast. We had certain, return targets for investors. And the board said, when someone calls you in serious about it, you always consider it. Um, so we've considered it, , we've presented it to investors.

[00:34:25] Waldemar: so it turned out we got a consensus that we worked on it with a private equity firm that was making an offer. Um, and I think from my perspective, I've always said if I can do, higher than three times in, in five years, two exits, then, I can deliver to investors what I promised to deliver, and that was the most important thing first. And two, I knew that I'm still planning to remain involved, long term and I was, transparent about it. And in fact, I extended my investment horizon a little bit, which fits with my own personal goals as well.

[00:34:58] Jake: Fantastic. [00:35:00] So it's a very clean and clear success story. You have a six month search, , good growth, , and a liquidity event in three years that achieves. The target returns , for your investors and you're still running the company. That's a lot of activity in a relatively short period.

[00:35:19] Jake: I wanna ask you. 'cause it's on prospective searchers minds who are listening to this, what the true cost of all that is. I don't mean monetary, I mean physical, emotional, uh, psychological, that doesn't typically show up in a, in a case study.

[00:35:39] Waldemar: You know what someone told me once, I don't agree with it a hundred percent, but there's truth in everything that the only people that want to be CEOs are not the CEOs. ,

[00:35:52] Jake: Yeah, yeah.

[00:35:53] Waldemar: um, so, uh, I mean, I say that in the, just because, this has been a truly most rewarding experience I ever [00:36:00] had, every step of my career or professional life has been rewarding in different ways.

[00:36:06] Waldemar: I think finance has taken me around the world, I got to know people from different cultures. It's been amazing. From a sort of intellectual perspective, ownership and running things and, being able to influence things faster than anywhere else.

[00:36:21] Waldemar: This has been by far the most rewarding experience I ever had. So, now with having said that. I think not just me, I mean, we, search fund CEOs, in Europe we all know each other. We talk to each other. It's exhausting. It's a lot of work. Most of us didn't have nine to five before, but you know, this might be nine to 4:00 AM

[00:36:45] Jake: Yeah.

[00:36:45] Waldemar: sometimes. You know, it's exhausting. And then, you have to make tough decisions. And you can't just say, I'm gonna make that decision, two months from now. There, it's, I would say emotionally, not emotionally rewarding. But it is physically exhausting.

[00:36:59] Jake: [00:37:00] Right?

[00:37:00] Waldemar: Um, I think, but also at the same time, most rewarding thing ever.

[00:37:05] Jake: Yeah.

[00:37:05] Waldemar: If you, if you get it right,

[00:37:07] Jake: Has it been a net positive or a net negative on the family side?

[00:37:13] Waldemar: both, I think positive it. In a way that, family also can, sees the, like I have three sons and they can see how, how being entrepreneurial can be. And , it is kind of a living lesson for all of us at the same time.

[00:37:31] Waldemar: But the traveling schedules, . Working, sometimes late, that's probably a negative on the family side. Then, taking holiday, we cherish every minute we have together. So then, we take holidays and weekends and every minute , you have to squeeze everything out of it, basically.

[00:37:48] Waldemar: So that's positive. You, you learn how to squeeze things out of minutes.

[00:37:51] Jake: Right, right. Um, your background is in risk and finance derivatives, pricing, [00:38:00] capital markets. Most people describe entrepreneurship as an inherently risky proposition. , How did you start your career pricing risk professionally? , And, how did that career shape the way you think about risk?

[00:38:14] Jake: , Particularly as it. Pertains to your entrepreneurial career decisions?

[00:38:20] Waldemar: Yeah, it relates in a way, I'll use one of my old favorite analogies for this. When you price risk or derivatives, you learn to disaggregate things and look at them at the most, uh, fundamental level. So like, what is a chicken nugget?

[00:38:37] Jake: What is a chicken nugget?

[00:38:40] Waldemar: Chicken nugget? If you, if you disaggregate it, you're gonna, you take it all the way to, uh, to a chicken egg and a little bit of corn.

[00:38:49] Jake: Hmm

[00:38:49] Waldemar: Then, the egg, turns into a chick, you feed it with corn, it grows over time. So it's basically egg corn over time,

[00:38:59] Jake: [00:39:00] hmm.

[00:39:00] Waldemar: that's a chicken nugget. And then you add a little bit of branding on it. So, that's how I was taught to think about risk, from a fundamental perspective. It helps you break down risks, whether it's. People, business, production, , branding, marketing, , whatever that is. I see it as a very helpful tool.

[00:39:18] Waldemar: You can be pain the ass with how you look at the details. But I think, when you break down risk that way, at least , you know what risks you're taking or not taking and, that risk actually doesn't seem so big anymore.

[00:39:30] Jake: Love it. Last question. people are listening to this from all over the world. Some are thinking about going down this path. Some are at the very beginning of their discovery journey. What do you have to tell them?

[00:39:44] Waldemar: If you're thinking about it, losing your sleep over, making a decision whether to go down the entrepreneurial path. You'll never know the answer to that question until you do it. And it doesn't matter what stage of [00:40:00] your life or career you are.

[00:40:01] Waldemar: I mean, five years from now you could be an entrepreneur if you make that decision. So it's just make sure that you're driven because it's a lot of hard work.

[00:40:10] Jake: Val, thank you so much for sharing your stories with me and us today. What an amazing journey. It sounds like you have some runway ahead of you, so we look forward to checking back. At a later date.

[00:40:23] Waldemar: And Jake, thank you as well. As I mentioned, the search fund podcast, was very helpful when I was thinking about, searching. So also, good luck and I'm happy to participate as a, as a way to pay forward actually.

Outro

[00:40:38] Jake: Val said something halfway through the conversation that I wanna come back to. He's describing what it actually costs to run one of these things. "This might be 9:00 to 4:00 AM sometimes," he said, "but also at the same time, the most rewarding thing ever if you get it right." And I think that's the whole episode in two sentences.

[00:40:59] Jake: If [00:41:00] that resonates with where you're at, reach out. Otherwise, until next time

The information in this podcast is for general informational and educational purposes only and does not constitute financial, legal, tax, or professional advice. Views expressed by guests are their own and do not necessarily reflect those of SMEVentures or the hosts. We may have financial interests, investment relationships, or business partnerships with some guests or their companies. Before making any acquisition or business decisions, seek advice from qualified professionals familiar with your specific circumstances.