Private Equity Spotlight: Overcoming Adversity with Andrew Joy of Hidden Harbor

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So I'm really, really excited to be here with Andrew Joy, with Hidden Harper. Andrew is someone that we've had the privilege of working with for a long time. And when I say privilege, meaning like they're one of the groups that really kind of sees PE in slow motion, I think, gets it right. And one of the things I'm actually most excited, usually we'll talk about kind of people's path to private equity. And it's always this very kind of interesting tale, no matter who we speak to.

But I think some of our friends, our colleagues, our clients, their stories are a little more interesting and compelling and have more life lessons than others. And Andrew, at the risk of maybe putting that on you, I'd say you have one of these stories that is, in some ways, should be at least a lifetime movie, but probably even a bigger one. So thank you for joining.

And when I interview executives,

They were together since really high school, but they were career-long criminals. My dad was a drug dealer and not the type of drug dealer that was on the corner slinging nickels and dimes, but moving significant weight in the 70s, in the 80s. So there was this big dichotomy of growing up early on, where literally living multiple houses, race boats, spurt drums from a unique lifestyle. And then the other side of the dichotomy is where the feds arrested my dad for possession and intent to distribute 15,000 pounds. And so that really started the downfall of the other side of the life.

And so two very different lives from an outside-in perspective when I was young, but at its core, it was nothing but chaos, whether we had money or not. Both my parents were alcoholics, addicted to drugs, went through the divorce, just bounced around, just a whole bunch. And so there's tons of stories that you can get into when you go through that as a child and the trauma that you experience. But I'd say the most formidable happened when I was, I guess, 14 years old. So, in the context of not a lot of parental oversight, kind of just running the streets, doing what I want, in and out of the house, staying out all night, that type of stuff.

But I was shot with a 12-gauge shotgun at close range, about five, seven feet away. And it really blew my leg almost off. It was hanging by some tendons, some muscle, a little bit of skin. And the story there was with my buddy, who was similarly young and wanted to stop by his buddy's house. And so we go over there.

And as soon as we go in, guns pulled on me and pointed at me. And I turned to run and he pulled the trigger and hit me in the back of the leg and came out the front. The kid whose gun it was was killed about six months after I was shot. And so it didn't get the full story of how it all happened, but it was really the pivotal point in my life, not just from a growing up quick and a reflection perspective. There's the reflection of in the moment.

And what I mean by that is it shot out my femoral artery, bleeding to death, fading out. Is this it? Is this going to be my life? And you really think about not what you've done in my experience, but what you didn't do, what you didn't get to experience, as you're bleeding out and dying, especially at that age. So I went from there, was airlifted to a trauma center and spent months and months in a hospital battling infection, 25 surgeries, just gunning, you name it.

I really couldn't walk for years after getting shot. And the other part of why I say it's pivotal and probably one of the best things that ever happened to me, is the best thing that ever happened to me? is it just forced me to say, there's only one asset I have left, meaning I was going to go into the Marines or the military or do some labor job. That's out the window. The only asset I have left is now I have to use my brain.

And so really started to focus on school a little bit. I think back then it was like, I'm focusing on school a lot, but the bar is different, right? But again, parents weren't educated. And I had to homeschool myself. So I couldn't go to school because I couldn't walk, still doing surgeries.

And so homeschool myself. took about five years to finish high school, between hospital homebound program and homeschooling myself. And then I did some classes at a local private school that I worked for. the church to help pay the tuition, just really buckled down to do everything I could to finish high school. in those circumstances.

I took the SATs. At that point, I was in a body cast literally from my chest all the way down to my ankles and did okay. And through all this, the guiding light, or the beacon that was at least helping me see of what could be, was my older sister. She dealt with trauma on the home front through studying, reading, just locking herself in the room. And that was her outlet was education.

So getting around to senior year and I'm like, my sister's name is Michelle. Michelle, what's next? Like, well, now you got to do this thing called an application and you have to apply to schools and take the standardized tests. And okay, Michelle, where should I apply? And well, there's some good schools in the South.

There's one called Emory and they got a good business school. So I didn't know what Emory was. I didn't know what any of the path really was, but really relied on. my sister. Luckily got full scholarship, financial aid to Emory up in Atlanta.

and was a wonderful experience. I went to college not to have fun, not to party, not to drink, but I was there on a mission and the mission was make something happen, so I don't have to go back to where I came from. So that's a lot. I covered a lot there in a short amount of time, but a lot of volatility and a lot of things happening, but maybe I'll pause there.

I can't go to school. I can't do anything. How did you dig yourself out and kind of get going?

I never thought of myself as being smart or intelligent, but when I had to teach myself algebra and pre-calculus and the teachers that check your work when you're doing homeschool, not teachers, but administrators are like, wow, you taught yourself this? So there's a set of like small confidence boosters over time that really then even parlayed into Emory, which I felt very out of place at first. I remember first day on campus, some guy asked me, it's like, what happened to your leg? I get up in his face and I'm like, F, you, you want to fight? Like, and people are looking at me like, I'm like, oh, that's not how things get solved here.

You know, I'm in a different, I'm in a different environment. And so that, I felt very out of place, very, but that turned into competitiveness too, like in this, this chip that's been on my shoulder to kind of prove I belong. And so again, I was at Emory for a reason. And my first semester I got all A's and I was like, second semester, got all A's. And I was like, well, maybe I can do this.

And I ended up graduating with a 4.

0, not a single A minus, number one in my class. And so I look at that and all the way back, it was just a series of just like, I mean, one foot in front of the other at a time, build the confidence, build a skill set. Still, a philosophy I have throughout my career is just, you're learning something new every day. You don't need to know where you're headed, but as long as you're enjoying what you're doing, you're learning things, you feel like you're contributing. You don't need to know where you're going, but you are bettering yourself.

But that's why it's just like little bits at a time and take a step.

But it just starts kind of one foot in front of the other. And you kind of mentioned this a little bit,

And so it was still a very tough period and contributed to it being a tough period. But no, I think it was just, hey, like I said, when you're sitting there, bleeding out, saying, hey, for me, it wasn't, oh, your life's flashing before your eyes. It's, hey, my life's ending. and this is it. Like, this is all I got to do.

And so I think that was the part of it. that's like, I'm not sure where this will end up, but it's my only, it's my only way from here to get to there and where there is being better than here. And so I'm gonna do everything I can to kind of focus on the controllables, right?

It's just in life, there's things that are totally out of your control, where you were born, what color your skin is, what resources you had as a kid. There's the part that's just random, right? There's the randomness of each day, whether you set your alarm at six o'clock or 6.01, it can impact how your day ends up. And that's just pure randomness. And there's this part that you can affect the outcome, it's the controllables.

And so it was just, well, all this other randomness and uncontrollables were happening. This is the part that I can control. I'm not sure where it ends up or where it leads to, but I know that it'll improve the odds that it ends up somewhere.

And I mean, what you're portraying is, I think, what all of us try to do, whether it's our kids or our team members, or people in our lives or stakeholders, I think what you really demonstrated here is just the power of taking that step. And if something gets in your way, it's easier sometimes to just stop. But a lot of times it's harder and better to figure out a way to go around it, above it,

Do you feel like you're getting better by doing this? Does it feel like you're learning? And you don't need to know where it all culminates, but it's like stochastic, right? As long as you're trending up and to the right, there's going to be downs and there's going to be stagnation, but over the longterm, just keep pushing, man. Just keep pushing.

Humans are very resilient, especially when you're backed against a wall and have no other options, and then it's pushing forward from there. And that just changes your.

Where did I screw up? And so it's something I struggle with too.

And I try, and it's not that I don't want to, it's just lost on me. And so that I can appreciate, without having nearly the same set of experiences, but maybe a proclivity that might overlap in our Venn diagram a bit. It's just like, we've come so far. It's like, it's okay. You can take a moment.

So I think this is, thank you so much for sharing that story. It's an amazing story, but it's also, I think, a great set of resetting, certainly my own perspective on things, where even, whether you're talking about it, it's that one step at a time, but like there's big things and there's small things, and whether they're big or small, each of them present this great opportunity to.

And so that's kind of what we look for most importantly in the businesses we look at. As an element of that, though, one of the most important metrics that we look at is we survey the employees before we do a deal. When we do employee NPS scores and this thing called power scores, and that is critically important to be able to gauge whether you're going to be able to have that impact post-close, because in the real world, I manage a team of extremely motivated, extremely career-driven, extremely intelligent, hard-working type A professionals, but that's not what most of our businesses, the employee bases, are. And so one of the most important things for us is employee net promoter score, engaged employee base, and if it's low, how do we really improve it? Because the employees that are interacting with internally, day-to-day, with your customers, are what really drives value.

at the end of the day. It's not in the boardroom, it's not even at the executive team, it's at the folks in the field. So just that labor component that is just so critical to having success in what we do.

But it's this whole idea.

. I don't think Chris would disagree.

My name is Sean Moody, I'm genetically predisposed. It's not my fault. But one of the things that we would always talk about is like, it's not what this business is, it's what it can and will or should be. And I think that's something that you guys bring really kind of an amazing mindset to, as value investors of companies is like, this is what it is. And it's got some real like, it's got some good foundations.

And I think the hard part is actually doing that stuff. And in staying laser focused on just two or three of those initiatives, and driving them to completion. And so fundamentally, through that, though, our businesses look very different from when we buy them to when we sell them. But it's through just a really deep appreciation for and respect for operational execution. It's fun, and we like to think of ourselves in private equity as these big strategic thinkers, and we're going to solve these fundamental industry problems.

But for us, transformation comes through just day-to-day execution.

As you said, it's a lot of execution. And the thing that I've appreciated watching you all do what you do well is that you're bringing more than a PowerPoint deck and a check. And so, I'd be curious if you could share some of the things that you all, in terms of value creation and helping your porcos not only figure it out on their own, but to kind of get there.

And Hidden Harbor University is a set of our standard operating procedures in multiple different forms, whether it's presentations, but really live in action, examples where we have our management teams go through these modules. And these standard operating procedures are applicable irrespective of your business model, your industry. And they're just, hey, what are the 12 things that every business should have, regardless of what they're doing? And so, that's on one side of the spectrum that we've really invested in and give our management teams access to. We've then also built our functional operation folks.

So, if you need help with recruiting, we have a head of talent, we have our accountants, we have just their smart kind of strategy consults and just general athletes. We have our operations, folks, manufacturing. And so, we have a bench of say, hey, what do you guys need in terms of resources, outside of just money? And my personal view from the board perspective is my job, again, in the context, that it's pretty easy to figure out what we need to do to make this a successful investment and where it's difficult comes down to execution. My job is to serve the executive team in the sense of what can we provide you guys to put you in the best position to be successful?

Because, to your point, if the management team is successful, the business is successful, Hidden Harbor is successful, our LPs are successful, and we all win. So, instead of this top-down approach, I think we really put our humility and say, hey, what can we do as Hidden Harbor to make our executive management teams put them in the best position to succeed? And what resources do we need to provide them to increase the probability of success? I think that's a spot on perspective.

that leads me to think some will come out tomorrow. But I would be curious, what are some of the things that you're thematically or tactically talking with your teams about right now? Right now, it's the obvious stuff, right?

And it comes down to doing the right things in terms of being a good employer, quarterly check-ins, annual reviews, all the good kind of HR managerial stuff. But I think fundamentally, that is the biggest challenge that all of our companies face, almost regardless of industry, is just finding good talent across the organization.

But you realize just I've learned things to you. Before I used to work with 10 out of 10 type A people who would take hills anytime, like we were told to. No, you actually have to manage your things, but it's just like... And to now being in a business, it's just you get the right people and you keep them and you develop them. Everything becomes easier, easier, easier.

Why can't anything go right? What problems do we have today? When you really get the right people in the right seats, growing in the same direction, it becomes fun. Yeah. Because you start winning and the team celebrates the wins together, and it becomes a lot of fun then.

But hard to get to that point.

I used to do investing in China, and this was right after the WTO. And one of our executives would say that. He's like, everything's possible in China, but nothing's easy. And then I realized the next six years, every day I'd have an 8 AM and an 8 PM phone call where I would learn that the word yes does not mean yes. It does not mean no.

It means I acknowledge what you said.

Is that a yes, yes, or a no, no, or a yes, no, or no, yes? I don't know. But to your point, what you say is once you get... It's that whole point. It's like, good market, good team, magic happens.

On the value side of the spectrum, you're inherently pricing more of that in, not that you're getting fully priced in, but yeah, it's the same thing on the risk side. It's never what you think goes wrong, it goes wrong. It's always something. You leave yourself more room for error and.

That's what I know, what you do so well, what your firm does so well, and you think about other business builders that are listening to that, you just add that too, it's like your chance of success goes like way through.

This is why I like podcasts, it's an audio medium.

What I love to do is turn the page here and talk about one of my favorite topics, life hacks. I spend an inordinate amount of time looking at gizmos and gadgets and buying stupid things on Amazon because I'm curious to see if it'll work. It causes unbelievable tension in our home because boxes keep on showing up and my wife is like, when is this going to stop?

What it means is I'm a connoisseur of these things. I'd be curious if you have any little.

It doesn't mean I don't like the little $12 iPhone holder that I put on the back of the plane.

I'm in the and, versus or bucket on that, but I think that answer is another pearl of wisdom. What I'd say is, eventually, when you have extensive time under your hands and you're just wondering what do I do with my time, and you write all this stuff down, I'll read it.

I'll be the first to buy the book, for sure. Perfect. Andrew, thank you so much for really having this really open conversation that I can truly say has changed a lot of how I view things. It's a good kind of hit the reset button when things otherwise seem topsy-turvy. It puts things into perspective, but also says the future is so exciting.

Let's get excited about it. I appreciate you having me, man. Anytime. Okay. Thanks, Andrew.

All right.

Special thanks to Andrew for joining. If you'd like to learn more about Andrew in Hidden Harbor, please see the episode notes for links. Please continue to look for the Karma School of Business podcast anywhere you find your favorite podcasts, including Apple, Google, and Spotify. We truly appreciate your support. If you like what you hear, please follow, rate, review, and share.

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