Episode 79 Michael Butler, Cascadia Capital

♪ Tell me, you owe me ♪ - Hello and welcome ladies and gents to Middle Market Musings, a podcast dedicated to the people and ideas of the Middle Market. We're delighted that you've chosen to join us today. My name is Charlie Gifford of New Heritage Capital. - And I'm Andy Greenberg of Greenberg Relations Capital. Today we're speaking with Michael Butler, Chairman and CEO of Cascadia Capital. Before we begin, we'd like to thank New Heritage Capital and Greenberg Relations Capital, along with our sponsor, SRS Aquium. When it comes to maximizing the efficiency of an M&A deal, no one does it better than SRS Aquium. Since 2007, SRS Aquium has brought unmatched expertise in-site and innovation to deliver superior ESCO agent, paying agent, and professional shareholder representation solutions. 88% of top global private equity firms and 84% of top global venture capital firms have worked with SRS Aquium. To learn more about how SRS Aquium is the smartest way to run a deal, head to SRS Aquium.com. That's SRS-A-C-Q-U-I-O-M.com. We hope you enjoy today's episode of Middle Market Musings. ♪ Baby, man, man, man ♪ ♪ Down ♪ - Michael Butler, Chairman and CEO of Cascadia Capital, welcome to Middle Market Musings. - Thank you, thank you for having me. And this finds you in beautiful Austin, Texas this morning. Is that right? - Yeah, I look out blue sky, sunny. - Our lead in conversation leads me to think that you are awfully fine to that place. Almost as though that you're on the Chamber of Commerce. You like being in Austin, huh? - I love Austin. You know, the minute my wife and I moved from New York back to Seattle was when my wife wanted to move to Austin. And it took me 20-some years to move here. But now she's got loading rights because every time I say how much I love it, she says to me, "Don't you wish it? "You would have listened to me 25 years ago "and moved Austin earlier." Yeah, you're right on that one. - I find myself on the end of those questions with a great degree of frequency on the home front. So I know to what you speak, but better late than never, right? - Absolutely. - So Michael, obviously you've overseen a pretty significant growth in Cascadia Capital from its beginnings in 1999 till today. And we'll unpack all of that. But before we do, you grew up in a middle class Catholic family in Seattle. Is that right? Tell us a little bit about your upbringing and how that kind of formed who you are today. - I grew up in Seattle, middle class family, five children went to pro-kiel schools. And I think it had a big impact on me from my parents. I learned to work ethic, right? We didn't have a lot, but my parents worked very, very hard. My mom was a school teacher. My dad was a mortgage broker. When I went to high school, I went to an all-boys Catholic high school and they instilled discipline. - So discipline at a Catholic high school in Seattle and I guess the 70s, 80s, what did that look like? - Yeah, yeah. Well, let me give you a couple of examples. If you got that line, you'd have to roll a penny across the classroom floor with your nose. I can tell you from experience, it's impossible to do. - That's impossible. - While your classmates, you were able to roll it across. Could you push it flat or it had to go? - No, no, no, no, no, no, had to be on its edge. - Wow. - Good God. - At that time, it's not allowed. Now they had straps. And so one time they gathered the whole school in the auditorium, they're 400 boys. And everybody had to hold out their palms and get strapped. And they had the Christian brothers, they had the straps, they strapped you. And I remember brother Patatucci saying to me, Butler, he was, my arm is so sore, I was the last one in line. I am gonna strap you twice. And so I got my right palm slapped, my left palm slapped, couldn't do anything for the rest of the day. And so it became very clear to me that to survive high school discipline would be very, very important. Just saying in line would be very, very important. - But you stayed in Seattle went to the University of Washington. - Yeah, it's one of these kids, Andy, that didn't have other options, right? It was, where you would go, you'd either go to a community college, you'd go to the University of Washington or maybe Washington State. At that time, nobody I knew when school had a state. And so it was just kind of what you would do if you lived in Seattle and were from a middle class family and a Catholic school upbringing at the time. - When you were at the University of Washington, were you destined to become a investment banking poncho or was it a circuitous path? - Yeah, I actually was a political science and history major and nothing about finance. I had more gumpshin than brains and I was reading in the Wall Street Journal my senior year, how the best and brightest were all going to New York to work on Wall Street. And so I'm a pretty competitive person. I said, "Wow, I should be there. I should compete with them, right?" I was pretty cocky at the time. And so I had a thousand bucks in my pocket and a plane ticket and moved to New York with really no plan. - One way ticket. - One way ticket. - One way ticket. - No plan. - And then the reality is, I never, that's the first time I've ever been on a plane. Never been on a plane. - That's fascinating. And so when you said to your parents and your four siblings, I think I'm gonna do this and they said, Godspeed, kid, keep in touch or what was that conversation like? - My parents were floored. - Yeah. - They were like, "Are you sure? Do you have a plan?" And like, no, but I figured out. And they were supportive but perplexed. - Uh-huh. And so 1984, young Michael Butler, large buildings gets off his first plane ride ever. It was a great visual here. Then what? I mean, how the hell'd you get a job if you didn't know anybody in New York? - Well, I mean, yeah. So I didn't even, it's show you how naive I was. I had booked the cheapest hotel I could find and it was in Harlem. And I had no idea what Harlem was. I had no idea what New York was. So I started knocking on doors on Wall Street. And as you can imagine, I got rejected. I was a decent student at University of Washington, but I was a standout student. And, you know, $1,000 doesn't go very far in New York, even back to those days. And so one of the, you know, started with the lesser firms. I started working up to the better firms, figuring that, you know, I'd take my first job at a lesser firm. And so after, you know, 20, 30, 40 doors closed on me, I've got two left, Morgan Stanley and Goldman Sachs. And that's it pretty much. And so I walked into-- - That's odd. I just interrupt by saying, those are usually the first ones that say no. So it's interesting how you run it up. - I was going to be on my capabilities, right? And I knew I wouldn't have a chance, desperation, desperation caused me to look at those two. 'Cause I exhaustive really every other option. And so I knew if I went through human resources, or I tried the traditional way to get a job with most firms, I'd get rejected. So I walked into the 30th floor at Morgan Stanley and sat outside an empty's office, literally the whole day. And he kept looking at me, he'd walk in and out, like, who the heck is this guy? - Back before the security measures weren't pronounced as they are today. - No, you could walk up and no issue at all. And so at 545, he said, "Pity on me and interview me." We spent about an hour and a half, Matt Caputo was his name, he's since deceased. And he said, "Look, you've got more gumption than brains." He said, "I kind of like that, though. Come back and meet some more people." And after a week and a half, he said, "You know, I'm going to offer you a job." He said, "It's your job, though, to take advantage of the opportunity because not many people get this opportunity." And he said, "Let me tell you how valuable this opportunity is." And he just got a business card with his name on it. And he said, "Potend the name, Michael Butler's on this business card." And they would have your name in the middle of the business card Morgan Stanley, the upper left hand corner. And say, "This business card, if your name is on it, gets you in anywhere you want to be." That's because people spent 60 years building up the name Morgan Stanley to what it is today. Then he ripped off, he said, "Without the name Morgan Stanley on the business card, he ripped off the Morgan Stanley on the left hand corner, your name on it, it's worthless." So everything you do should be to bolster and improve the reputation of Morgan Stanley. And you have very high standards to live up to. - That's a great story. - John, one condition, and he goes, "What's that?" I say, "If I'm the best employee you have over the next three years, you will pay for me to go back to business school for two years." And he goes, "I thought you had more corruption than brains and it just proves it." - And was he money good on that? Did he help out the business card? - Yeah, I did. - So he said, "Fine, fine." And then Morgan Stanley, your word was your bond, right? - Yeah. - These are three years. I go back to him and I've done pretty well. I've done pretty well. And I said, "Mac, do you remember?" He said, "I do." And he said, "All right, we'll put you through business school." And so I applied to Columbia, Harvard, and Wharton. Charlie, you may not be aware of this, but there was this kind of niche film that came out in the 1980s. There was about a Wall Street go getter. It's called Wall Street. Blue Horseshoe loves Anacot steel. No, I don't have some logic. I figured you did. Did that capture the milieu that you were working in? Yeah, it did. Funny story. So my money was running out. I was looking for a job. And I was like, "Oh, my God. This is turning into a nightmare." And so I worked out and I was pretty buff at the time. And so I went to a job interview at the Playdeam nightclub, right? The successor to Studio 54. And there were like 60 people applying for the job to be a bouncer. So you fell out this form and this is long live. And you walk into the room and you had a new sheet of paper. And I saw that he took my sheet of paper and put it aside. And I'm like, "Well, that's kind of weird." So they say, "Look, this person, this person, this person, you know, go into the room. We're going to have to be a job to be a bouncer at the Playdeam nightclub." And then he said, "Can Michael Butler stay behind?" And he goes, "Why do you want to be a bouncer?" I said, "I need to work. I need to work. I moved from Seattle. I'm trying to get a job on Wall Street. You know, I'm in shape. I think I could be a good bouncer." And he goes, "That's a stupid job." He says, "Why do you be a bartender?" And I said, "I don't drink." And I don't know how to make drinks. And he goes, "It isn't matter. You've got the right look." So on Fridays and Saturdays, I was a bartender at the Playdeam. And I would see the Wall Street people coming in and the parties. So I got a firsthand look at how Wall Street operates after hours by being a bartender to play him. All right, Charlie, best character in Wall Street? Worst character in Wall Street. I like Darrell Hanna. I like them all. I don't hate any of them. Really? Yeah. I would say, obviously Gordon Gecko, a young James Spader is like the buzzkill friend. It does the right thing. Yeah. I am not into Darrell Hanna with the big hats and the whole '80s, '5. I'm not with you. I'm not into that, huh? Yeah. Michael? I had an Oli Gordon Gecko. Hard enough to go chalk on that one. Absolutely. Absolutely. So post-Greet is good and whatnot. You did two years at Wharton and then you went back to Morgan Stanley first in? Yeah, I was in fixed income, derivatives, structure products. And then I was on the equity, structure product site. So I was in derivatives, my career at Morgan Stanley. You know, I had pretty good quantitative skills and I think I was able to communicate with people. And so there were a lot of, sure-quant folks in the group size working at and there were salespeople and I was more of a product manager type or I could understand the quants and communicate with clients. Michael, what were you doing on Black Thursday? I've sit in my desk like everybody else just watching the world go to Hell and I had a basket. It was at the time beyond anything. Anybody had experience, right? It felt like the great depression. Mark was down 503 points at the time and it was just, it was carnage. I'm never seeing anything like it. Carnage, just carnage. People crying, people, remember Wall Street had a great run and the market had a great run and nobody, and then there were a lot of young people on Wall Street. It was very, very young at the time. Nobody experienced anything like it and people were crying, people were just in a state of shock. We should provide a note for the handful of our listeners who were not working in 1987. You were done president, right? Here, you expect volatility, you see it more often. There had been nothing like that, right? It's probably since the Great Depression and it was just, it was just on Beland. So what, maybe think of that was working in Deribters, living through that shape your view of business risk. Absolutely, absolutely. For everybody, right? For everybody. It changed the view of business risk. I will say that Morgan Stanley was at the forefront of risk management, Dick Fisher and Parker Gilbert, Bob Greenhill and John Mack. They understood, they understood risk pretty well, but still there was just tons of carnage. So Michael, you reached a point in 1999 where you were thinking about your next chapter. Share with us a little bit about what you were thinking and what drove you to head back west of, what drove you to head home back to Seattle? Yeah. So when I met my wife, she had been living in Paris and Milan for the prior 10 years to to marry me and when she married me, she moved to New York City full time and she was not a fan of the city. We had two, two small babies and she did not want to raise a family in New York. We looked at, you know, moving to Connecticut or LA, Ireland and New Jersey and you know, the time when you're senior on Wall Street, you're out four or five nights a week having dinner, right? You just are. And so I think the concern was, you know, to be a weekend dad. So I had, again, I did, Jay has been a blessing in disguise for me. I had the idea to move back to Seattle and start an investment bank. The thesis I had was that the Northwest was going to become a tech hub. And so the plan was to move back, start an investment bank and I co-founded it with Kevin Cable, local entrepreneur in Seattle. And we only focused on the Northwest and we only focused on capital raising for tech companies. That was our business plan. Tell us a little bit about how you grew the firm. So day one, you hang your shingle. How did you attract talent? So I, again, I think people from New York are following me. Nobody followed me. Zero. And so we would hire people that had been on Wall Street, but we're moving to Seattle because their spouse or significant other was taking a job at Microsoft or, you know, at the time of cost, cellular and later Amazon. And so we would hire people that way. Most of them were just to be blunt retreads. And you know, we're not used to picking up the phone and calling. They were waiting for business to come their way. We didn't have much business coming over the transom. And so when I saw that didn't work, I started hiring kids out of college and started training them up. And what happened was around 2014. Some of those kids became managing directors and some of them became pretty prolific. And that's when the firm really took off. And remember, when we started the firm in '99, the Internet bubble burst in 2001, right? And the firm was on its back from 2001 through 2004. I was writing checks into the firm to keep it going. And then we kind of get back on our feet, start getting a little bit of momentum. And by that time, we'd expanded outside of the Northwest and we'd added M&A to our product offering. We got back on our feet, the Great Recession Yetmer, we're flat on our back again through 2011, 2012. And so again, around 2014, some of the young managing directors started generating revenue. And that became kind of the inflation point for us to grow. Michael, we were talking earlier. You were recounting the practice areas that you went through, doing deals yourself alongside of running the firm. Could you run through that because I think it's kind of an impressive list of anticipating a succession of industries that we're about to take off. Yeah, so the first one was wireless software. Seattle was really the ground point for wireless software, McCall cellular. Which is now AT&T wireless. And there was a, a venture capital firm by the name of Ignition Partners, X McCall cellular and Microsoft people. We became a house bank. We probably did, I don't know, 8, 10, 12 deals for them. So we built a nice wireless software practice. I turned it over to another individual to firm and started a clean tech, a clean energy practice. We thought that was going to be the next wave. And then turned that over to a partner, Jamie Boyd. And then started our egg practice, which is now our biggest practice. Turned that over to Scott Porter's on a fantastic job with that practice. And then started our robotics automation and AI practice in 2018. And thought that would be an area of growth. Looked out where the centers of excellence were. Boston, Pittsburgh, San Francisco, San Francisco, very efficient market. Boston, pretty darn efficient market. Pittsburgh not so much. We like inefficient markets. We think that's opportunity. So I started going to Pittsburgh every two weeks. and walk in the halls of Carnegie Mellon, right? Developing relationships there. And that's how we start our robotics and automation practice. - Michael, the first chapter of Cascadia's history, correct me if I'm wrong, was very much focused on private company sellers selling to strategic or trade buyers or private equity firms, is that right? - Yeah, in the Northwest primarily. And that was our business plan, right? Originally technology in the Northwest. And then during the internet bubble burst, we were flat on our back, right? Seattle was dead, the tech sector in Seattle was dead. And Jim Robinson, who's the former chairman and CEO of American Express, called me up one day, a new gym for my days at Lehman. As a name like, he goes, "I know you're only focused on tech, "I only focused on the Northwest, "but my venture capital fund, "he had a fund called RRE with his son, "has a company in Atlanta that needs help. "Would you be willing to do it?" And at that point, I said, "We're no longer Northwest-based, "we're national-based, yeah, Jim, "we'll take on the assignment." And so we got kind of pulled outside of the Northwest. We kind of got pulled outside of, if you look at the growth, a lot of it has been driven by opportunities coming to us and us ceasing those opportunities and kind of seeding the next stage of growth. - Here, listen to Middle Market Musins brought to you by New Heritage Capital in Greenberg Variations Capital. The business, so it went through a little bit of an inflection point and five years or so ago, if you could tell us about what that was and what was the driver behind your desire to really kind of supercharge the growth in Cascadia? - Yeah, so because I mentioned before around 2014, the business started, started scaling some of the young managing directors became prolific. And around 2016, 17, 18, 19, we started getting calls from potential buyers. So CIBC, Alontera, TD, UBS, so we went down the path with another started reaching out. And it caused me to do some soul searching, right? The question was, if we were bought by UBS, do I want to run interference, right? And a big firm for the remainder of my career, was that the right thing for young bankers who I felt an obligation to, because they were the ones driving the firm forward? So I made the decision to stay independent. And at the time, most of our peers sold. And what happened was in 2021, 2021, the firm really started scaling and probably scaled beyond my pocketbook. At the same time, I was getting calls from private equity funds saying, what is going on? You're selling us companies, but you're not covering those companies, right? There's opportunities for you to represent us on the sell side, but you're not doing that. And so I made the decision that I needed to build out financial sponsors practice. I knew that would take significant capital. I had to hire a financial sponsors group. I had to add industry bankers. I felt I needed to start at least a debt capital market product to to that product portfolio. And at the same time, in '22, I became concerned that there would be a downturn. And so I started thinking about capital. And I actually talked to some family offices and we got term sheets. They would take a 10% or 15% ownership of blocking rights on everything. And I'm like, I don't want to do that. So I was kind of be twisted between about how to navigate. And on a Friday morning, in February of 2022, I'll never forget this day. I was sitting outside of Bill's Pancake House and man, happened to Beach, California, waiting for a meeting to start. I'm scrolling through my phone. And I see that a firm called Marshbury, if an F services firm, they're taking in a minority equity investment from Alice Merchant Capital. And my who's Marshbury? Who's Alice? I look at Marshbury. Very an investment bank based in Cleveland that focuses on insurance brokerages. I'm like, okay, never heard of them, but okay, they must be good. They took in capital, who's, who's Alice Merchant? I look at Alice Merchant, I'm like, that's Bob Diamond's fund. And Bob had overlap with me at, and I'm already Stanley. And so we reached out to, to Atlas, started meeting with them. And they started the, the diligence process. - Was there other suitors? Or was this really kind of a one-on-one conversation? - One-on-one. One-on-one. Interesting. - Every time there were very few minority equity investors in independent investment banks. Very few. And I met with the Alice folks, and their view was there's a tremendous opportunity here in the lower middle market. You need to find it, you know, bill you to an under. The big firms are becoming like utilities. The bulls-voteeks are moving up. The traditional middle market banks, the fairs, the players, the Lincoln's are moving up. There's a massive opportunity with all the former peers being acquired. And so they started doing diligence on us in February of 2022. - Bob Diamond X CEO of Barclays, certainly has some chops in the deal environment. Tell us a little bit more about what do you think he saw? He were selling to him. He believed and built bought into your vision of what you wanted to do. What, what was that about that, that got him excited? - I think there are a few things. One, they identified the market opportunity. And we were probably the logical firm to take advantage of that opportunity. They did an analysis of the lower middle market and they concluded we are the second largest independent advisor only in the investment bank in the country. So if somebody had sales and trade and you're asked to manage them or owned by commercial bank, they were not including them. The largest was Lincoln International and then us. There's a massive gap between Lincoln and us in terms of size and revenue and any metric you want. And they felt that there was an opportunity to fill that void and that we were the most logical opportunity. So I think that was number one. Number two, Bob and I overlapped it more in his family. And we had the same more instantly DNA, first class business and a first class way, take a long term perspective, focus on clients and internally focus on teamwork. So that was number two. And then number three, they liked the fact at the time that we were 99% focused on family and founder. And we had a green book of relationships with six, seven, 800 family businesses that we knew in time would sell. And they thought that that was the hard work. The easier work would be building a financial sponsors practice. So I think those were the three reasons they invested in it. Like I'm curious, 2021, 2022, what percentage of the buyers in your mandates were private equity? Yeah, I would say north of 65%, a little more than 65%. So how did it, I mean, you mentioned that some of the funds would say to you, hey, you're doing a great job. You're selling these businesses and then you're not covering them. But my guess is that when Atlas was looking at you, they said, well, Cascadia is a very good bet to build a sponsor's practice because they've got their name on these companies coming in. Was that like a white light moment or was it a process? Yeah. They absolutely saw that. You know, they have cheap relationships into the sponsored communities. So they did some back channel diligence and like, yeah, this firm has an opportunity, right? They're just not covering the companies they sell into us nor any other companies in our portfolio. And so I think they saw some low-hanging fruit, right? Where we would be able to get the round trip on some of these companies we sold in. The Charlie, I don't think he's ever noticed this, but like the quest for differentiation is like a theme that runs through. I'm always the last to know. It's like a lost key. Let me write this down. The quest for differentiation. OK. You know, beyond the obvious connection of being able to take a business on a round trip, how did you think about differentiating your sponsor's coverage offering? Yeah. So I give you an example. I had a come to Jesus meeting with a fund about a month ago. And they weren't-- they were calling on our bankers, picking their brains, not giving us business. And I said, down with them, and I said, look, we're servicing you well. You're talking to our bankers every other day, picking their brains, but we're not getting business from you. And he said, I hear you. He said, but I don't get as much flow from you as I do from who I hand or bear it or blur. And I said, I get that. We're a lot smaller. But my flow is more valuable. He was, what do you mean? I said, because we have family and founder businesses, right? That's right now 65% of our flow. That's a better opportunity for you than buying a PE back business, because it's not optimized. There's more upside for you. And I said, so I don't know what the ratio is. Every four or five deals you see from an institutional firm that's PE back. I think one of mine is as valuable to you. And so that family founder business still differentiates us, right? Because we think it's very valuable flow to the funds. [BLANK_AUDIO] We're never going to compete, at least in the very near future, with a whole hand or a bearer or a bluerlein in terms of the number of engagements, right? We have a 65 deals market right now. They probably, they have 545, 6 times. We're never going to complete one for one. So we have to identify where we have value and we think it's a family counterflow. Michael, I do think that Cascadia is the answer to the question, what is the largest independent US-based investment bank without operations overseas? And a lot of your contemporaries tout their ability to correspond with either boots on the ground or some type of relationship they have with member banks overseas. How do you address that? If you're at a pitch with an individual selling a $15 to $20 million dollar in the job business? You'll let me tell you short-term what we're doing in long-term, whatever I think we go. So we have our bankers focused on sub-verticals, right? So our empties in the food group are not food bankers. They're an ingredients banker or they're a food and beverage contract manufacturing bankers. So we have deep relationships with the buyers overseas. That's short-term how we can beat. Long-term I expect us to do something over in Europe. When I talk to Bob and my board and Steve Winningham on my board, who lives in London and ran Google hands international operations as well as running a business banking and Lois bank. We will eventually go to Europe. We've looked at opportunities, their single country opportunities. We would rather get scale in the next couple of years and then do something large in European bank. We think that's a much better way to do it than trying to knit together smaller firms that are countries specific. So well, it is probably our biggest challenge to overcome along with continuation vehicles in a pitch. We've addressed continuation vehicles and we're addressing the overseas question through narrow subsector focus and knowledge of those buyers. We walk through the recent conversations and deal discussions we have with the overseas buyers. Michael, when you talk about doing business overseas, it reminds me of tariffs and the broader category that you know, cannery in my practice, I've been writing a lot about this resurgence in non-diversifiable market risk. I'm curious, is that affects all of these different industry groups that you're in? Do you take a sectoral view of these trade, foreign policy capital market questions or do you look to have more of a firm posture that gets applied? There's a lot of correlation, right? We like to say we have different industry groups and they should be uncorrelated, but look, the macro environment forces correlation among the different industry practices. What we're trying to do is diversify our client base and product base and I give you an example. We are on the precip of hiring a primary direct product group. They work with fund sponsors and help them raise capital for their transactions. Essentially, equity private placement for individual opportunities that a funder has. We think that gets us into the equity market, whether it gets us into the funder's sponsor market. We're not diversified as much as possible because in theory, you should have the diversification among your industry projects groups, but when the macro environment goes one way, it impacts them all. There's a high degree of correlation. Who within Cascadia develops the macro view? It's really myself and the senior team I have an operating committee. In my board, look, I have an unbelievable board, right? I probably get information sooner than 99% of the people on the street, Bob and Steve and the rest of the board, David Chamist. They're talking to the CEOs and senior people at every other investment bank. I've talked to the Federal Reserve. An unbelievable wealth of information comes from my board and it's cutting edge. It's real time. So Atlas has not only been a great investor from a financial standpoint, but just a business building standpoint. Bob and David and Christian and Brian Saunders have just been fantastic. I spoke with Bob at 4.30 a.m. this morning. He was over-amunded. Same more about that relationship. It sounds like your past cross prior to. What's he like as a thought partner? He's very focused on growth. Managing risk of focus on growth, profitable growth is Bob's mantra. You earn the right to grow by being profitable and you use your cash flow to reinvest in the business. He knows organic growth is not cheap. You have to make the investment and it's 12 to 24 months before you see the return on that investment. You earn the right to grow through being profitable. He is very focused. Let's take our cash flow to continue to grow. Michael, since you have put in place this growth strategy over the last five years, what is some of the kind of looking back if you had a do-over, what would you do differently? It sounds like moving from Seattle to Austin would not be on that list. What would be on that list? So I spent a lot of my time recruiting senior bankers. I got some great advice from my board. They said, "Michael, you're recruiting a senior banker and you have your 30 MDs interview that individual. You're getting 31st impressions. You need to meet with an individual eight nine times in a variety of situations. It's really at the core understand who they are. Because bankers are salespeople and they all lie. It's just how much they lie. Not my bankers, but they lie." I've learned a lot from that. I think I'm much better at recognizing who's being honest, who's not, who's a fit on our platform and who's not a fit. I've come to value people that are our focused and will pick up the phone. I've also come to value people who have a chip on their shoulder and are real drive to succeed. The chip can be different for different individuals. A chip is not a bad thing. I think it's a good thing. It drives them. I really want to understand what drives an individual. It's a hard business. Then I've learned a value coachability. People take guidance and will people take advice when they're on the platform? This makes me think about the conversation that you had with your mentor Mark Morgan Stanley way back when. You're interviewing somebody as a candidate to join your platform. How do you cut through what they accomplished as a result of the brands that they were associated with as opposed to their own productivity? First of all, we're building a brand. We are an emerging brand. We are not an established brand. I'm very cognizant of brand. It's to me the most important thing in a best and bank has. I would say 30 to 40% of my time and you spent recruiting. I do a lot of diligence. Just in order to my time is peeling back that onion. You have spent a lot of time with these individuals. And eventually, in my opinion, they will reveal themselves. It may take a while, but they reveal themselves. This is another term that we kind of originated here. It's good from great. When you hear that, I came from Charlie and I would ask you about superior and great. What makes a superior banker? Not only thinking about the business, my best bankers are thinking two weeks out. Who am I going to meet with? What am I going to tell them? I think you have to think about the business almost on a 24/7 basis. You have to have the energy, the motor to execute upon that thought process. My best bankers, they've got the next two, three weeks planned out. Then they have the energy and the drive to execute upon it. Well, I think at least, I operate a boutique practice, but it's the same idea. It's being able to look at a client or a situation and visualize exactly what their world will look like in four months. Yes. Yes. And just put yourself at that table where you've gotten through quality of earnings. It's a relatively clean quality. Now, you're negotiating their employment agreement. And they've never done it before, but months ahead, you see that cloud on the horizon. and have some idea about how to think about it. - Absolutely, absolutely. The best bankers look around corners and anticipate the strategic, but they're also active, right? They're strategic and knowing what's coming, but then they can also execute tactically. - You didn't ask me the question, but as a consumer of such services, I always say that the definition of a great investment banker is when the spread between the market clearing bid and the second bid, secondized bid is material, and they can keep their feet to the fire, the buyer's feet to the fire, and make sure that that outlier price stays true. - Yeah, we're absolutely always looking for the spike bid. - There you go. Charlie, we had to say, we had to say, I understand what you're saying, is very results oriented view, but think about all the time that you or other friends of ours in private equity are not the market clearing bid. - Sure, by the way, 100%, I'm answering that question as, who do I wanna buy from and who do I wanna buy through? As a different question. - You wanna buy wholesale and sell retail. - Which is words I've spoken and written in our pitch decks and the bass for our fundraising docs. Michael, you've been really generous as our time before, we let you go, tell us a little bit about what your day is like in the city of Austin, and what gets you excited? What gets you out of bed in the morning? - Yeah, so I spent about half my time in Austin and half my time on planes. When in Austin, I wake up at 5 a.m. in the gym by 515 and a great group of people at the Gold Shimmer and Wush Lake in the morning, I really enjoy going there. That gets me going, come into work. This is our engine room. This is where all of our young people are. And I get invigorated by them. We have some really hard working, very talented young people. So, you know, interviews with them on the phone and like going today and then usually I wrap up with a business dinner. And, you know, I'm from the era of the ladies, 90s in New York City where you went out to dinner almost every night and personal and professional blended. That's the case here, you know, whether it's local folks or people coming into town, probably at dinner, you know, four nights of the week, the business week. And that's how I wrap up. Let's go to a restaurant in Manhattan, go to restaurant in Austin. - Well, I'm in New York. I'm very partial to Bella Blue, which is on Lexington and 73rd and Rico, the owner's a friend of mine and I used to go to his former restaurant, Burronda, almost every night when I was in New York, living in New York. And then in Austin, there's a new restaurant called Kimberly. The ownership group also owns Red Ash and J Carver. So I'd say our little three Kimberly's my favorite but I love all three of them. - No bad choices. - Love it. - There's no bad choices. You know, it's interesting. It's in New York last week and I had drinks it. One restaurant, it was packed. I'd dinnered another restaurant, quality beef, sure who was packed. And then I'd drinks the San Pietro and it was packed. And you just realized how many great restaurants there in New York and they all seem to be packed. - A reflection of a good economy. Well Michael, grateful for your time today. This conversation had high expectations going in but your story is a really compelling one and what you built at Cascadia is a story that should be shared with others and glad that you elected to join us. So thank you very much for sharing that with us. - Thank you. - And wishing you and your colleagues continued success. - Yeah, it's just great to have you. - Great, thanks for having me. I appreciate it. - Thanks for joining us for this episode of Middle Market Usings. Once again, we'd like to extend our sincere thanks. The Michael Butler for joining us today as well as to New Heritage Capital and Greenberg Variations Capital, along with our sponsor, SRS Aquium. Thanks as well to our editor, Jason Zappolo. If you enjoyed today's podcast, we'd encourage you to like and follow Middle Market Usings on Spotify, Apple or whichever provider you use to access podcasts. And of course, feel free to share with your friends. Thanks again and look forward to catching you on the next one. (upbeat music)