Episode Transcript
[00:00:11] Luke Sonnen: Hi, I’m Luke Sonnen. Welcome to The COO Roundtable powered by PFI Advisors. Here’s your host, Matt Sonnen.
[00:00:24] Matt Sonnen: Welcome everyone to Episode 24 of The COO Roundtable. This is a monthly podcast. If I can do my math correctly, I believe Episode 24 marks our two-year anniversary. I have been truly amazed and humbled by the quality of the guests we’ve had the opportunity to interview over the past few years, and today’s interview is no different. Both guests today join us from Segall Bryant & Hamill, an investment firm that is a quarter of a century old and manages over 22 billion of client assets. This is one of my favorite guest pairings to have a COO and a CEO together. We have CEO Phil Hildebrandt and COO Paul Lythberg joining us to talk about the success of their firm, how the two of them play off of one another to ensure the trains are running on time as the organization is continually evolving. Welcome to the podcast, Phil and Paul.
[00:01:10] Phil Hildebrandt: Hey, thanks.
[00:01:11] Matt Sonnen: Awesome. Phil, I’m going to go to you first. I’ll let you give us a little background on the firm.
[00:01:14] Phil Hildebrandt: As you said, we’re an investment firm. We are 26 years old. Pleased to say that this year has been incredible for us. We started the year at $20 billion, went down to $17, and today over about $22 and a half which is just extraordinary. Very diverse and very diversified in terms of what we do, very diversified in terms of the asset classes that we manage. The thing that I would tell people about what we do is that we focus exclusively on inefficient markets. We’re looking for places where there’s less information, where we can bring our disciplined fundamental approach to investing and really exploit those inefficiencies in a way that creates alpha for our clients. Typically, what you find is that is in primarily smaller cap type stocks, fixed income, and alternative. Each of those have certain things about them that make them inefficient and make them exploitable. We have about 122 employees, five offices, diverse workforce, diverse set of strategies. We like to tell people we are an overnight success after 26 years.
[00:02:11] Matt Sonnen: Exactly. You’ve been with the firm over 25 years pretty much since the beginning.
[00:02:16] Phil Hildebrandt: Pretty much.
[00:02:17] Matt Sonnen: You may not even remember a time before SBH but can you tell us a little bit of your background?
[00:02:22] Phil Hildebrandt: Yes, sure. You said that correctly. It feels like I have been here my whole career. I went to the University of Minnesota, got a job with Prudential Insurance and their investment, Prudential Investment Corporation, where I learned – I started out doing mortgage finance and leveraged buyouts. I had the opportunity to move Chicago, took that opportunity, ended up getting an MBA at Northwestern University. Stayed with Pru for a few more years and then was looking for a new opportunity and I got introduced to this startup called Segall Bryant & Hamill. This was in late ’94. They had opened on October 17th of ’94. I joined on April 10th of 1995. I’ve literally worked with every employee Segall Bryant has ever had. I’ve been there since the foundational days and the evolution of our firm from was about a 10-person firm with a billion dollars under management to where we are today has been– Yes, I’m really proud of the way we’ve evolved, I have to say. It’s been– 26 years is a long time. We built a really good firm.
[00:03:16] Matt Sonnen: That’s great. Paul, you joined the firm almost eight years ago. If you don’t mind, tell us the story of your career and then how you found yourself today as COO and you hold the CCO title as well. It’s such a large and prestigious firm.
[00:03:28] Paul Lythberg: Maybe just a little bit of background. Well, first of all, thanks, Matt, for inviting Phil and I again to the podcast. We appreciate the invitation to do that. My education background, went to Augustana College in tiny Rock Island, Illinois, where I received an accounting and a business undergrad. I have a master’s degree from the University of Illinois campus here in Chicago with a focus in marketing from there. I do have a CPA in Illinois although I’m not registered anymore. I guess I’m considered really a recovering accountant per se. I started my career at Allstate Insurance Company as an accountant, worked my way through the various departments within the accounting department. Really, I guess it was there that I really focused on two pieces – data and the importance of data. I’m not just talking any data. I’m talking about accurate data. We all know the saying that “You could be data rich and information poor”. There were many times where I thought that was the case when I was at Allstate. I guess I’ve made it somewhat my life’s mission to make sure that we can focus on making sure that we have quality data. That was the other piece of it was just really the control structure, not only just the importance but the necessity of controls around data and the processes that relate to them. Who can do what, when they can do it, who needs to sign off, what are the permissible inputs and the values, etc. That’s where I think I honed some of those skills. About a little after 10 years into my career at Allstate, I had the opportunity to help the investment department build out a business continuity plan and the investment department at that time was about 400-people strong. We’ve managed about $100 billion in assets ranging from any fixed income-type of security you can think of with the same thing on the equity side. We had a fairly sizable derivative portfolio as well. For about a year, I spent time really from the ground up working with the asset class people understanding how their processes work. I made my way back into the operations group to see how the trade information flowed through, how the reconciliation processes work through, and then spent some time on the technology side seeing how their support functions work for the asset classes. It was really a great opportunity and a great way for me to learn the investment processes starting really from the ground up. After the project was implemented, I found a home in the operations world at Allstate Investment Management Company, as their advisors called it, and worked my way around the various support functions there before I took over a rather small compliance function that they had there at the time. My job there was really to build out the compliance role. They’re really focusing on all aspects and making sure we have compliance with the Adviser’s Act. Again, as you might imagine, my focus at that point were controls, data, and really forensic monitoring around the processes. After about 15 years in the investment department, I decided I was ready for another challenge in my career and I took an assistant CCO spot up with Dougherty Financial Group located in Minneapolis. Dougherty, at the time, was providing the compliance, the HR, the legal and financial support for two affiliates, affiliated investment advisors. One was located right outside of Minneapolis in Edina, and the other was located here in Chicago. I guess you’re all guessing that the one in Chicago is Segall Bryant & Hamill. Without going into too many more details, at this point, SBH decided that they were going to bring in-house all the support functions, which meant that Phil needed to hire a CCO, a CFO, an HR director, and so forth. Phil and I had a few conversations. I’m glad to say that I accepted the role of not only the CCO but also took on the chief operations person as well here. I couldn’t be happier with that decision. I guess I can give you an example – yesterday I got an applicant ask me what keeps me motivated to wake up every morning and become energized to work. Without hesitation, I told him, “It’s really the challenges that each day brings for me.” No two days are alike. No two weeks are alike. That’s really what I thrive on. I guess what motivates me is just not the routine pieces that we do on a day-to-day basis but it’s something new that Phil will throw my way. Maybe he’s looking at a new M&A deal or he’s just looking at some new revenue sources or different ways of doing things here. In a way, I feel like a problem solver looking for ways of which I can add value to the company because I never want to be viewed as an impediment to our growth. I think that’s one of the areas that Phil and I are certainly on the same page with that in making sure that we’re moving forward, that we’re finding ways to make things work and not just saying “no” to everything.
[00:08:06] Matt Sonnen: You talk about the accurate data. I’ll tell you, we’re recording this on December 3rd where PFI, we are going back and looking at the top blog posts we’ve written throughout the year, ne of the top five, the title of it was written by Jay Veale on our team, “Why Every RIA Needs a Data Analyst.” It was one of the top five clicked on articles that we wrote all year. It is absolutely needed.
[00:08:27] Paul Lythberg: Not a surprise.
[00:08:28] Matt Sonnen: Yes, exactly. Phil, as I said in my opening remarks, this podcast is all about professional management and how it can unlock so much growth for organizations. Can you talk to us about how you and Paul work together and how he’s added scalability not just to the organization but to you specifically as the CEO?
[00:08:45] Phil Hildebrandt: I mean, he touched on the fact of professional management aspect of things. When we were growing the firm, we were using an outsourced– we had a partner up at Dougherty Financial. We used some fraction of their internal people who are extremely talented but we had a third of their attention. As we got bigger, it was just pretty clear that– I think this is what a lot of RIAs don’t quite grasp, if you want to grow beyond a small firm, you really have to make the investment in the infrastructure and the professional management aspect of it. That started with me. We’d run the organization with an operating committee of four people. I tell everybody, I preach sermons about this, operating committees are fine when things are good. They’re ineffective when things are challenging, and we learned that because we were going sideways for a few years. We decided to create the position of CEO. I ended up at that role and I’m here in, what, 15, 16 years later. The infrastructure that it takes, as you scale up, it becomes more and more complex. Even Paul was talking about the day-to-day challenges. Every day is different. You have to have people who are flexible, talented, confident, all those things to be able to deal with the challenges that you get faced because the firms that ultimately succeed are the ones that are the best at processing those challenges and ultimately making good decisions based on the challenges that come out of it. We’ve got a great team, we’ve got a great leadership team, Paul, as you described, my CFO is excellent, our HR director is excellent, we’re very fortunate.
[00:10:12] Matt Sonnen: That’s great. Then Paul, from your perspective, how do you and Phil leverage one another to make the elusive 1 + 1 = 3?
[00:10:19] Paul Lythberg: Great question. I guess if I were to sum it up in one word, I would say trust. Phil trusts me to make the right calls. He’s been known to say that a third of the time, he’ll agree with me, a third of the time that he’ll be neutral, and a third of the time he’ll disagree with me. I hope he doesn’t disagree with me that much. It seems like a big number, but I think we’re at–
[00:10:40] Phil Hildebrandt: The two-thirds of the time I trust your judgment, so yes.
[00:10:44] Paul Lythberg: Okay, that’s still a good batting average, I guess. I think Phil and I are on the same page with most things now. We’ve worked together for eight years. Sometimes, I still have a hard time reading him, and I tell the story about when I interviewed at Dougherty, I interview with probably five people and one of those individuals was with Phil, and he was the only one I didn’t feel real good about. I wasn’t really sure, I couldn’t really read him, but afterwards, when he and I talked, he was, “No, I thought it went well.” It’s me trying to figure out where his needs are and where his head’s going. Again, if there’s things I think that are high-risk or pose high risk for the firm, I’ll be certainly to reach out to Phil or Ralph to get their input before I would move forward with anything.
[00:11:28] Phil Hildebrandt: You know Matt, one of the things I was going to say is my philosophy is autonomy and accountability. I think that’s how you grow because if you have to micromanage everything, you’re never going to be successful. You hire talented people, you empower them to do their job, you trust them to do their best and you hold them accountable. That doesn’t mean just when there’s mistakes, it means when they succeed as well. It’s having that ability to act without a second thought. I think that’s a huge thing we try to get with all of our professionals, not just Paul.
[00:12:01] Paul Lythberg: I was going to echo that. I think that that’s not just for me, but I think that’s the way we treat all of our staff. Phil is huge on empowering the staff, but with that comes along accountability too. So we’ll give them the rope but we’re going to make sure that we do hold them accountable, wherever the decision may have fallen. The last thing I just wanted to quickly mention is that I think being able to handle the day-to-day operations has given Phil the time for him to focus really on the strategic matters of the firm. Again, whether it’s M&A related or new strategies, or maybe even potential revenue streams. I think it’s freed him up where he doesn’t necessarily have to worry about what’s happening on a day-to-day basis. He knows that he’s got people that can cover that for him again, which will really free him up to do other things that he’s certainly more capable of doing.
[00:12:54] Phil Hildebrandt: I started getting uncomfortable under 10,000 feet, so that’s why you got to have quality operations people that you can trust because I’m far better above 10,000 than I am below it.
[00:13:05] Matt Sonnen: We made the joke, oh geez– I don’t want to speak for you guys, but I don’t think it’s a disagreement one-third of the time. What I’m hearing is, and it’s important for our listeners to hear, two-thirds of the time, there’s no back-and-forth email. It’s “Run with it, Paul.” One-third of the time, it’s not a disagreement. You’re not arguing about things, but it may require one or two emails and then Paul moves forward for execution and that’s really the leverage there.
[00:13:30] Phil Hildebrandt: Yes, I think that’s right. Basically, what I said to him is like, “Look in that third, let’s talk about it because that’s the third that needs discussion because that’s probably the more challenging of the decisions,” and that’s where the collaboration I think comes in because we are in a very open and direct environment. I think the ability to ask questions, to challenge each other, and do it in a professional respectful way is really critical, and that’s really what that other third is.
[00:13:59] Matt Sonnen: Yes, I love that.
[00:14:00] Paul Lythberg: Good, and he hasn’t fired me yet, so that’s good.
[00:14:03] Phil Hildebrandt: Eight years, there’s still time.
[00:14:06] Matt Sonnen: I said “It’s December 3rd”. Let’s talk about how you both develop the culture at SBH. Phil as the CEO, I’m sure you have a lot to say about culture, so I’ll go to you first on this one.
[00:14:20] Phil Hildebrandt: Sure. Culture, this year, in particular, I think has been one where it shines a light pretty brightly on your culture because this is a kind of environment where if your culture is not strong, it can really fracture pretty quickly. But the thing about culture to me is it is a living, breathing organism, and you can’t fabricate it. I think back to the beginning days of Segall Bryant and I give Ralph Segall a lot of credit for being the cultural rudder of really early days. Just by the way he treats everybody with respect. He’s a very sincere person, he’s a wonderful human being, and he conveys that to the people around him. I think that set the tone, and I think you reinforce culture through your hiring decisions. What type of people are you hiring? Are they consistent with that culture? Are they not consistent with that culture? We’ve created a set of values now, which provides a framework where we can very overtly look at somebody and say, do they live out these values that we’ve established for ourselves, but I’ll also tell you culture has got to evolve. The culture that worked when we were 20 people in the early days doesn’t work when you start to grow, and I think that transition period is probably the most critical when it comes to culture. I can speak more specifically, but we had an HR director who came from the old culture, who liked that culture, and who actively supported that old culture behind my back, which is that family sort-of culture. Well, that doesn’t work when you get to be bigger because there’s a certain amount of infrastructure that you have to build to hold the weight of the organization. I think the culture has to evolve just like that to the point where you still have to treat people fairly, still have to include people. You have to diversify – all those things, but our environment is really fast-paced. The culture of independence, the culture that Paul is talking about, autonomy, those are cultural things that you build over time and they’re set through example and they’re reinforced through repetition. Those are the things I think that define our culture, and you take a pandemic year like this, where we’ve been remote. It’s been amazing how well our culture has done. In fact, it’s given me strangely enough, more access to employees rather than less, because I can do it through this remote technology that we have now. It’s been fantastic and there’s been a lot of social issues this year that have come up and that we’ve dealt with openly and raw fashion that’ll make us better going forward.
[00:17:07] Matt Sonnen: You hear a lot of people say the only constant is change. Everybody has got to be ready for change, and for a firm like yours that’s growing as fast as you are, that definitely has to be ingrained in the culture.
[00:17:18] Paul Lythberg: Absolutely.
[00:17:19] Matt Sonnen: Paul, what can you tell us about culture, and how do you as the COO, how do you help shape the culture at the firm?
[00:17:25] Paul Lythberg: Well, I would say ditto to what Phil said. It almost felt like a mic drop moment. They talk about culture being really set at the top, and Phil does an excellent job with that. I think it’s empowering nature of the employees. I think that comes through loud and clear to all the employees. Phil has been known to say from time to time about we try to have an entrepreneurial-type of thought process here, and we want all the employees to feel like they own their processes, and it’s their own business. To me, that fosters them and encourages them to create a very good work ethic, a hard work ethic, encourages them to continually look for process improvements along the way and ultimately, when the company wins, they win as well. That’s really what we try to encourage within the employee base. Phil mentioned earlier, our open-door policy. I think that that’s another perfect vehicle to help create the trust that we have with all of our employees, and Phil is a very visible CEO. Although we’re not in our office, he has a number of ways in which he still keeps in touch with the 120 employees and not just with maybe those that report up through him, and the employees, they really love that. They love the exposure to Phil, they feel like they can talk about any particular issues that they may have, which again, I think it just fosters the drive from the employees and keeps them motivated as well, which is good. If I were to flip that with my CCO hat on, I would say, it’s the same story. Phil sets the tone at the top with that, and he’s got a fairly low tolerance for mistakes and for not following the processes that we laid out. That’s very helpful to me as the CCO, knowing that he always has my back when we have things that might pop up from time to time. That’s a very good thing from a compliance officer to say that he doesn’t feel like he needs to do an end-around every time something happens.
[00:19:32] Phil Hildebrandt: I would say that it’s been interesting this year, culturally, because the amount of trust that it takes to believe that people are going to work hard while no one’s looking, and that’s the thing where we’ve had– the operational efficiency this year has been amazing. It’s truly attributed to the people that we work with because—there’s not oversight, they’re doing their job. The thing about our organization is while we’re fairly large, we’re not deep and so each position carries a very important role. When that role is not being fulfilled, it slows the machine down. I think that is what we take great pride in this year. I’m blown away by how much our employees have done. We’ve tried to do creative things. Today’s a perfect example. I started this concept called SBHU, which is SBH University. What we did today was we talked about– we’ve set up 10 sessions that all employees can click into voluntarily to learn about different parts of our business. Today was learning about the statement I made early on that we invest in inefficient markets. Pretty good chance that our CSAs don’t know exactly what that means, and so we spent an hour today where I interviewed Ralph Segall, just like you’re doing with us, on that aspect of our business. It just creates a cohesiveness because the employees think, “Wait a minute, these guys stopped and took time to try and make me smarter.” I think that really does matter to people. I think they really do appreciate that.
[00:21:11] Matt Sonnen: Absolutely. When you’re investing in them, they just feel that much better and are going to work that much harder for you.
[00:21:17] Paul Lythberg: I was just going to add on, Matt, something quick to what Phil said when you talk about the employee base, and Phil has been a– he’s the loudest cheerleader for the staff, too. When you talk about public acknowledgment of efforts, I think sometimes the staff feels like they don’t get recognized appropriately, but Phil has been very good with them and making sure that he acknowledges the efforts of the staff, and that goes a long way to I think just helping out the culture as well.
[00:21:49] Matt Sonnen: The whole basis of this podcast was the chip on my shoulder as a past COO, I’ve seen so many I’ve talked to so many people that at the end of the year, they look at the COO and they say, “Well, how many clients did you bring in? Well, you’re not very valuable around here.” That was the whole basis of starting this podcast was to give COOs some recognition that they so deeply needed, but Phil I can tell that’s not a problem for you. You do a great job keeping everybody motivated and let them know how important they are to the organization.
[00:22:22] Phil Hildebrandt: It’s easy for me to get credit, but it’s more powerful to give credit. I think that what Paul’s talking about is something I overtly do try to do. I think people do appreciate that, but I’ll also call them out. They know that there’s another side of that coin. It takes a little bit of getting used to, I swear, Paul, you pumped the truth serum into them. It takes a little bit of getting used to the direct way that I approach people because it can be very off-putting. It can be very unsettling. But what I tell people is that the good news is you’ll never have to wonder what I’m thinking because that’s where ambiguity creeps in and that’s when uncertainty creeps in. Just trust– if I’m not telling you there’s a problem, just trust there’s not. Then we move faster further because the rumor mill is the worst possible– when you talk about culture, the thing that drives me the most crazy is rumors. The funny part about the remote environment, people don’t have time or the capacity to create rumors. That’s fabulous. It’s like when you take that away from people and when they trust that if there’s something they should know that they’re going to know it, then they stop wasting time wondering about. I think that that’s a subtle thing that goes unappreciated I think and it’s really, really powerful.
[00:23:53] Matt Sonnen: That’s great. Paul, I’m going to go to you on this one. First, global pandemic aside, running a business today is very difficult, how do you manage the complexities of the business?
[00:24:06] Paul Lythberg: That’s easy, great staff. As Phil said, despite having 120 plus employees, I still think that we’re a pretty lean organization, and we just can’t afford in our fast-paced industry to have the weak link in the chain, so to speak. We expect a lot from our employees, and we think that we reward them — commensurate with that. We try to keep our employees motivated and fully engaged because I think that’s where you’ll see peak performance out of your employees to others. There’s nothing worse (and we’ve all been there) than if you don’t like what you’re doing, that’s not a good thing for anybody. It’s not a good thing for the employee, and it’s not a good thing for the firm, so we try to make sure that we continually keep the staff motivated. We try to change jobs around a little bit, different assignments just to keep things ever-changing for them. It has been a bit challenging at times since we’ve been working from home the last number of months here since we can’t meet in person. But I think we’ve become proficient now in the use of Teams meeting and Zoom meetings just to make sure that we do keep the face-to-face interactions going and the discussions going because I still think that that’s key. Phil had alluded to it earlier that he really tries to emphasize that as well. Then, I think it’s just to recognize the efforts like I talked about earlier of the staff, I think that that’s critical, and I think that means a lot to them when they know what they’re doing it benefits the firm as a whole. To me, when you’re providing the coaching and the training that’s necessary, that’s what leadership is about, being involved with them and providing all the tools that they need to succeed.
[00:25:55] Phil Hildebrandt: Paul just passed along– I mean, I had cited I think in my board meeting, my management committee, just how really impressive are operations and IT people had been through this period, and he was like, “Do you mind if I forward that part of your CEO report to the team?” I was like, “No, that’s totally fine.” I think that they saw that that wasn’t coming from anything other than just something I was saying, so I think that helps.
[00:26:22] Matt Sonnen: That’s great. Phil, I wanted to ask you, you talked about always staying above 10,000 feet, so what key performance indicators– I get this question a lot from people, what KPIs do you rely on to give you an accurate picture of the health of the business when you’re trying to stay up high?
[00:26:40] Phil Hildebrandt: By staying up high, it’s basically keeping a strategic focus on everything we do. I’ve got people that can handle the day-to-day, and as Paul said, I’ll look at a lot of different things. I try to create interesting new ways to think about things, and a lot of them are bad, and so you got to sift through those. For me, the stability of our staff is probably the single largest indicator that I’m curious about. What’s interesting is when I became CEO, Ralph Segall and I had a heart to heart about the fact that our stability, in that case, was actually a negative because we weren’t holding people accountable. We had a bunch of people, and he was proud of these people that worked for us so many years, and I’m like, “Yes, but they’re not accomplishing what we need them to accomplish.” Some turnover is good, some turnover is healthy. I don’t want to see a lot of trips to HR. We’ve been very fortunate in terms of people feeling like they were treated fairly. The personnel part to me is a really key metric. Compensation is always this time of year, making sure people feel like they’re valued, but also merit-based because if you don’t create a merit-based compensation structure, that means certain people are being under-compensated because they’re not being fully appreciated because somebody else is being over appreciated. It’s a combination but a lot of is personnel. One of my key metrics is AUM per employee. I look at total assets that we have per employee, which right now comes out to about $183 million. When Segall Bryant started, it was about $120 million, 10 employees $1.2 billion. Today, it’s 122 employees and about $22.5 billion. That to me, it shows efficiency growth, productivity growth and creates operative leverage in our business, which is something that is vital to our ability to go profitably not just grow up. That’s probably the biggest one that I pay attention to.
[00:28:53] Matt Sonnen: That’s great. I like that one. Paul, as we’ve discussed, SBH is a very large organization, you’re much larger than many of the firms we’ve had on the podcast. Can you talk to us about how you managed change within the organization? This is something every firm struggles with but when you have the number of employees that SBH has and multiple office locations, it can be even more difficult, so how do you tackle change management?
[00:29:17] Paul Lythberg: Good question. To me, I guess again I would characterize it by engagement. I’ve worked for large firms, and sometimes you feel like a decision or a process change is just being forced down on your throat and that never feels good for anybody and often times it doesn’t end well. I think what I try to encourage is just to make sure that we have the right parties at the table to talk about the potential change that may be coming down the pipe here and gain different insights and perspectives. I still feel like we’re a small firm even though we’re 120 people spread out across a number of offices here but I still feel– to me, it still feels like we’re a close-knit group of people. We interact daily with people throughout our different offices so it doesn’t matter if you’re in Chicago, or Denver, or St. Louis. I still feel that our communication lines are open, and if I ever need input from a portfolio manager, an analyst, or a trader, they’re only a phone call away or a team meeting away from me at that point in time. I think it’s good to gain the insights of many before you start moving forward. I think that you’re only doomed for defeat if you don’t engage people like that, and you start making decisions upon what you think might happen or what you thought did happen. Again, that just doesn’t end well. I guess that’s really my take on this, just making sure we’re involving the right people in the decision-making process.
[00:31:00] Phil Hildebrandt: Yes, the thing I’d add to that, which is interesting, because I’ve put people through a lot of change in the last 10 years. The ability to deal with change is almost like a muscle. It takes some repetition for people to get used to it and then they realize that it’ll be okay. The initial shocks, the early changes that we made in the structure whether it be operational compliance, all of those things, I think were more jarring because people would just– change was new. I think as we’ve gone through the last 10 years, people– they adapt so much more quickly now because they realize that it’s going to be okay. Not every decision is right. Not every decision will work, and if it doesn’t, we’ll fix it. They just roll with the punches better now. That is a huge component of being able to grow.
[00:31:56] Paul Lythberg: Yes, I think just involving the staff in the decision-making process– and you’re right Phil that there’s going to be a time where we’re going to need to make a call one way or the other. Some people are going to like it, and some people won’t, but I think again as long as people have had a voice in the process, I think it’ll go much smoother.
[00:32:18] Matt Sonnen: We come into organizations a lot as that third party and we ask, “Why do you do things this way?” We always– many times, doesn’t say always, but many times you get the blank stare, “We’ve always done it this way.” I’m assuming you guys don’t have that problem too much.
[00:32:32] Phil Hildebrandt: Oh my God. You just touched on one of my hot buttons which is inertia is never a good reason for anything. Just because we did it that way last week has nothing to do if that’s the way we should be doing it next week. You have to constantly challenge what you’re doing. You have to constantly be willing to listen and learn and fix it. That one that drives me crazy–
[00:33:00] Matt Sonnen: We hear it a lot. “I don’t know why we do it this way. I don’t know why the performance reports look this way. I don’t know why this happens, but it was like that when I got here and I was too scared to change it.”
[00:33:14] Paul Lythberg: Matt, that’s a great point because when we hire new staff on board, that’s one of the things we look for. We want fresh ideas. We want fresh thoughts. We want to hear what they think about it because the way we’re doing something, you’re right, may be a little archaic. That was great 40 years ago but it doesn’t work anymore like that.
[00:33:35] Matt Sonnen: No, this is great. Well, this has been a fantastic discussion. As I said at the outset, I love taking a break from our normal format of having two COOs from two different firms speak. This is great having a CEO and COO to hear how the two of you work together to make the firm tick. Thank you, Phil and Paul, so much for being here today. You both were fantastic.
[00:33:55] Phil Hildebrandt: Yes, happy holidays. Thanks for having us.
[00:33:57] Paul Lythberg: Yes, thanks Matt. Talk to you later.
[00:33:59] Matt Sonnen: Thank you. This is our December episode. I guess it’s going to be 2021 by the time we talk to our listeners next, so I want to take a moment to just wish everyone a Happy New Year, 2020 has definitely been a wild ride. I think our family’s going to spend New Year’s Eve– I think we’re going to be saging the house trying to get all of the 2020 mojo out of here. It’s been an interesting one to say the least. For everyone listening, please stay safe and really celebrate the fact that we made it through this rollercoaster of a year. Let’s hope 2021 is a bit quieter and a little less wacky. We’ll talk to you all soon, thank you.
