The private equity ecosystem is known for its pace and unrelenting focus on value creation, yet one often overlooked yet profoundly influential factor is culture. According to Morty Singer, Co-Managing Partner at Traub Capital Partners, culture can make or break an investment. For him, culture is not just a buzzword: it’s the very essence of who they are as a firm.
Morty, thanks again for taking the time to connect virtually. I want to jump right into Traub Capital Partners and its culture. You may be one of the few PE sponsors explicitly laying out an emphasis on culture on your firm’s website. Can you give me an overview of P-E=T (Positivity minus Ego equals Trust) and why you place such a premium on it?
Culture is a misunderstood term in my opinion. Its place in the business lexicon is one of softness bordering on weakness. We strongly feel that fostering a culture of excellence is a communication tool that can transmit the codes of a strong enterprise-first mindset as well as a working partnership between ownership and portcos. So, as the saying goes, if “reputation is repetition” we want to be known for clarity of intent while fostering a collaborative working relationship. Not an “us vs. them” dynamic.
We are one team, as the firm air force to the portco infantry. They should feel comfortable enough to call us in to launch the airstrike that clears the way for them. Calling in that request requires a measure of vulnerability that is not natural to most for fear of appearing incapable. If you can get to that stage, we believe that all the other functional areas can be optimized. That’s why we emphasize trust as the keystone. To get there we need to show up with positivity and remove ego as much as possible.
Culture will be different in every target company. It seems like TCP has a substantive culture playbook, but how do you determine if a prospective portco will likely be a good investment?
We have invested in companies with a vibrant corporate culture and ones that we believe have the opportunity to improve. The playbook varies depending on what we find within each company. The nucleus of our approach, though, resides in the deployment of a series of multimedia assets that attempt to humanize not only the TCP team but also our colleagues across the portfolio.
We showcase case studies of how things have worked well, and not so well, by interviewing our leaders and profiling how we have worked best together. Hopefully, this can help new colleagues mirror the behaviors that work. There are many other components to this but communication of our principles and practices, even for communication’s sake alone, is central.
You’ve previously used a term to describe some companies as “cultural wastelands.” Can you provide some insight on how you define that, and can TCP help fix these types of companies or do you generally stay away?
Every company has a culture. When I refer to a wasteland, I do not mean it pejoratively. Nor do I believe that companies are devoid of any culture. To me, a wasteland is a place with unsure footing, topographically uneven with extreme climates. In a company, this translates to all team members having their own differing views of the company’s goals, priorities, and modus operandi. The extreme swings in climate equate to passions that flare for the good and bad due to colleagues singing in different keys, off pitch, and from different hymn sheets.
Does this emphasis on culture at TCP help drive top-of-funnel deal flow and add a real positive nuance during a competitive process?
I believe that the Traub Capital brand drives most of the funnel as we have been known in the marketplace since 1992. The emphasis on culture drives conversion though. I believe our culture of excellence is more appealing to an owner/management team that is seeking a catalytic partner for the next phase of growth than a generalist firm.
I read the HBS case study covering TCP’s acquisition of Signature Brands and its journey from corporate orphan, through its turnaround amid COVID-19, and now (as of 2022) achieving 4-5x ROIC versus TCP’s conservative base case. Can you walk us through how TCP’s culture playbook resonated with CEO Jared Konstanty and how that partnership ultimately led to sustainable growth?
First of all, Jared cares about a culture of excellence. Some might call it a servant-leadership style, but I don’t think that quite tells the story. Jared was a lineman for Cornell in college. He’s a giant of a man only matched in size by his heart and intellect. His whole approach to leadership is borrowed from football. The linemen will crack open a hole for others to charge through as well as protect them from danger. TCP has the same philosophy.
As the “air force", we are looking over the horizon and around corners as well as clearing the way ahead for the team. TCP’s job as a PE firm therefore is to get to that level of trust as soon as possible after a deal is finalized..
Source: Alvarez, Jose B., and Annelena Lobb. "Signature Brands: Crafting Family Moments That Matter." Harvard Business School Case 523-030, December 2022.
Can we talk a little bit about your podcast, The Safari? TCP might be one of 2 or 3 PE firms in total that have a podcast which I think is a crime – there is so much opportunity to drive insights while having leave-behind content for potential deal stakeholders. Why publish one?
Frankly, I didn’t do it to get a following but after 5 years of publishing nearly 100 episodes, we happily and humbly have found one. The main reason for having one is to put forward our point of view and to talk to people who interest us.
The choice of guests and the tone of the interviews produce, as you suggest, tea leaves that are clearly a tone setter for the company we want to keep. It is also important for me to be able to refer back to an episode when trying to explain my meaning to someone on one topic or another. If we are talking about Live Shopping, I tell them to listen to the Coresight Research or Stage TEN episodes; for beauty, Mana Products, Tata Harper, Milk Makeup, and more; for travel retail, Scott Malkin; for real estate, Ken Himmel, etc. I guess it’s a way to get what’s in our heads out into the world.
Can’t let you go without at least touching on TCP’s investment focus, you’ve described (at a high level) your target portcos as an airplane held up by two wings: the enthusiast consumer and a powerful brand, can you expound a bit?
We are known as a consumer fund. I think we are leadership specialists first with a focus on the consumer. We like family businesses or corporate orphans that have been around for decades or generations. We don’t buy shiny VC-fueled companies that have purchased their brand equity; but rather we prefer companies that have earned their reputations over long cycles. We care about recession resilience, so we focus on perennial and sticky product categories.
The enthusiast consumer provides us with “lift” along with the brands themselves that are usually number 1 or 2 in their segments. And finally, we don’t mind a beautiful piece of silver that we need to polish. In fact, welcome that opportunity and effort as it can sometimes turn competitors away. We are a house of operators and, to a person, end-to-end business builders – and proudly so.
Morty, this has been terrific, thank you so much for the time and wisdom you've shared today.
Thanks, Connor, great to connect!
Morty Singer is the Co-Managing Partner of Traub Capital Partners, a private equity firm specializing in building value in consumer companies using its unique combination of investment, strategic, and operational expertise. Morty has been an innovative, sought-after executive in the retail and consumer branches of the fashion industry. He has advised global companies in retail on distribution strategies, operations, and mergers and acquisitions. He can be found on LinkedIn and at www.traubcapitalpartners.com
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