The Power of the Underdog

Tim Ludwig: Sam, first of all, thanks for joining. Again, I really appreciate it.

Sam Hyde: Yeah, absolutely. It’s fun to be on.

Tim Ludwig: Yeah, and I’m excited, there’s a lot of similarities in our backgrounds, I think, that are maybe non-obvious or were non-obvious to both of us before we went through this together, and that kind of makes it a little bit more fun and special for me. And one of the themes that I thought might make a good jumping off point for this is sort of the role of education and how that’s been pretty foundational, I think, to the success that you’ve had and going all the way back to the beginning of time. So, I thought maybe if you could talk a little bit, maybe short overview of sort of your upbringing, background, but then the school part of that and the first big jump that you made.

Sam Hyde: Yeah, absolutely. So, I grew up in West Bloomfield, Michigan, and was fortunate to grow up and live on a lake. And my elementary school, I could actually walk to elementary school. It was just right at the end of my street. And so, lots of memories of walking to school with my dad. It was a public school system. And when I was growing up, the public school system here was really good. So, I spent my elementary school and middle school in the public school system. And then for high school, I had a chance to go to a local private school called Cranbrook Kingswood, which was a great experience, which I can loop back to in a moment. And then went to Michigan State University for undergrad and then went to University of Michigan for my MBA. And I think there’s a couple of spots in there that were pretty pivotal to me from an educational perspective. I think transitioning from a strong public school system in West Bloomfield to a private school system in a bit more wealthier neighborhood around the corner from us was really an interesting experience for me. My parents both grew up working decidedly white collar professional jobs. And so, we were kind of the upper-middle class. But having a chance to go to this school and being exposed to truly the top 1% or whatever it is these days of families, and having a chance to have my aperture widened with what types of careers were out there and what type of success you could have with those types of careers was really transformational for me. I didn’t see it in my day-to-day life growing up, but having a chance to go there for high school and seeing what my peers, what their parents did and how they made the money that they had and what they were able to do with that money, whether it was travel or philanthropic or whatever, was really a very eye-opening experience for me. And I think it made it so that when I went off to Michigan City University, that I had a different idea of maybe what I wanted to do with my life. My dad was a psychologist, and my mom was a school social worker. And I think I went into, originally felt like maybe I would want to do something similar. I think that’s very natural for kids growing up to think about maybe doing what their parents did. But having had that experience in high school, coming into Michigan State really changed my focus of, okay, actually, I think business is really where I want to go and the path I want to forge. And so, kind of charted my course through Michigan State with that in mind. And then obviously coming back and getting my MBA from the University of Michigan was a continuation of that when the time came.

Tim Ludwig: Going back to the Cranbrook days, was that your decision? Were you directing that jump from public school to private school, or was offer presented by your parents, or what was the motivation there and why did you choose to do it?

Sam Hyde: Yeah, it’s an interesting question to look back on. I think at the- kind of framing it as did I choose to do it is an interesting one because I don’t actually remember choosing to do it. It was my parents presented it as an option. They were big believers in education, having gotten advanced degrees themselves for their own career. And it just felt like the right thing to do. And I don’t know whether my parents, my dad is a psychologist, I don’t know whether he kind of tricked me into it or something like that, but it really was a big change. And as I look back on it today, thinking about how good of a friend group I had in eighth grade in public school, for me to basically start anew in high school, which is, I think, one of the hardest transitions to do as a young child from a schooling perspective, it is interesting to me that I ended up going down that path without making any resistance at all towards it for my parents. In fact, I was excited about it. And I’m not exactly sure why that was the case, but I guess I did de facto choose. And obviously, I turned out, I think, much better because of it.

Tim Ludwig: Yeah, and I think one of the things you said made me think of just the power of being exposed to things that are sort of outside of your worldview. So, in this case, you’re talking about just the wealth that was out there in the world that you hadn’t been exposed to before and sort of the things that could translate into it whether it was philanthropic causes or material possessions or travel or whatever. And I think just having that eye-opening experience can be a shift for people, and they go, oh, there’s more possible here than I thought.

Sam Hyde: Yeah, absolutely. And I think it was also a diversity of careers. I mean, as I said, my parents were both  a psychologist and a school social worker. The people that lived in our little neighborhood all had kind of similar type jobs, veterinarian, things like that. And so, the ability to go to this school and see a wide variety of business owners and successful professionals maybe in a more corporate setting than I was used to was a really interesting bit of exposure that I just hadn’t had in my personal life growing up.

Tim Ludwig: Yeah. And you sort of jumped through the rest of the education pretty quickly, but I want to go back to choosing college because there’s something in there also that I think is a bit of a theme in your journey. Was it just you applied to Michigan State, you got in, you were psyched, or what was the decision making process there? What were the options?

Sam Hyde: Yeah, so actually I applied to Michigan and Michigan State. I felt like I didn’t have a real compelling reason to go out of state when I’m fortunate enough to live in a state that has two really great public institutions. And I’ve had a lot of friends in high school who went to Michigan, they were ahead of me in class or in my own class were planning to go to Michigan. And so, I really thought that would be my path. I did not get into Michigan. And that was, I think, a little bit surprising. I scored highly on the standardized tests and my grades were okay. I had like a 3.4 or something, 3.5, something like that as a grade point average. And I think I just expected to get in and I did not. And that was a really hard experience because I felt like I could compete at that level, that the peers I saw getting into Michigan at the time, I felt like I was as capable as they were, but I didn’t get in. I think looking back on it, it was clearly a grades issue. Like 3.4 was not good enough to get in. My standardized test scores were good enough, and I was captain of some sports teams and whatnot. And so, I think I was good from that perspective. But it really did kind of illustrate to me that there was a gap in kind of where I was measuring up. And so, I ended up going to Michigan State. I grew up in a family that didn’t watch a lot of sports from a college perspective, but I think that’s usually a really natural vector for people to form allegiances with specific teams or specific schools and get exposure to those schools. And so, I didn’t have any kind of preconceived notions of what it would be like to go to Michigan State, but absolutely loved it and absolutely fell in love with the school and became a diehard sports fan. I think so many people do. But it certainly, I think, gave me a little bit of a chip on the shoulder that I probably still have today that I didn’t get into Michigan the first time around. It certainly helped forge who I am today.

Tim Ludwig: Yeah, the chip on the shoulder is the point that I think was sort of a recurring theme. There’s a lot of, in your stories, as I’m sure we’ll talk about, like aspiring for one thing and being rejected or denied the opportunity and then having to sort of claw your way back into that position to sort of prove to, I don’t know if it would be yourself or others, that you were worthy and merited the opportunity in the first place.

Sam Hyde: Yeah, I think that’s exactly right. I look at my life and I think I’ve certainly been immensely privileged to grow up in the family that I grew up in with successful parents who were able to provide for me and pay for me to go to an expensive private school for high school and travel and whatnot. But I’ve also been in scenarios where I have not gotten what I wanted despite working hard to get it and feeling slighted, which was perhaps a personality flaw or a benefit, I’m not sure which. It certainly served me well, I think, through the years. But then having to work hard to prove to myself that,  yes, I actually can compete and I can succeed where maybe I first didn’t, at first, I didn’t succeed or compete as well as I would have liked. So yeah, that is certainly a theme that’s out there for me.

Tim Ludwig: Yeah. This is sort of a non sequitur, but in our earlier conversation, you talked about the intensity of your fanaticism for sports. And we didn’t talk about it much last time, so I’m curious, did that start when you went to Michigan State? Did it start before then when you were an athlete yourself? And then why did you have to sort of learn to have a different relationship with sports as a result?

Sam Hyde: Yeah, it’s a good question. So, I loved playing sports when I grew up. The sports that I excelled at were actually more individual sports. So, I was a cross country runner and a track runner. And so, I love the feeling of just pushing myself as hard as I possibly could, getting to the end and feeling like I didn’t have anything left on that race. That’s something that I really crave. And I was actually, we were talking about skiing earlier, and I was laughing with Stuart and my friend, that’s what I love about skiing too, like pushing down the hill and your legs are just screaming and dying, and you get to the bottom of the hill and you’re completely spent. And I love that feeling. And so, I love that feeling in sports as well, just the competition of it and the ability to extend yourself to the max. And when I went to Michigan State, I got exposed really to college sports environment for the first time. As I said, my parents did not watch a lot of college sports. And so, I didn’t have a lot of sports paraphernalia or anything growing up. But I went to that first Michigan State football game, my friend was like, hey, we have an extra ticket, do you want to go? And I was like, I don’t really like football. And they’re like, you should come experience this, and sat in the student section and just fell in love with the intensity of it, the fanaticism of it, just the whole atmosphere. I just love it. And really lived and died by those sports teams’ victories and losses while I was in school, certainly for football and basketball, and then when I graduated for quite a few years after. And I didn’t only live and die by Michigan State’s wins and losses, I also lived and died by Michigan’s losses and wins. It was the opposite. And I’ve had my friends joke to me that, you’re happier when Michigan loses than when Michigan State wins, which I think goes back to maybe that insecurity or chip on my shoulder that I have. And I eventually got to the point where I realized this is fun at times, but I shouldn’t base the whole enjoyment of my weekend on whether a sports team wins or loses. And so, over the course of quite a few years, I’ve now been this way for a while, I’ve just adopted a mindset on sports that if I’m not being entertained by it, then I’m just not interested in watching it. And so, if I flip on a Michigan State football game and they go down 14-0 and it looks like they’re getting kind of manhandled, I just turn it off and I go do something else. I’ve been able to disconnect from it in a way that I think has been powerful for me and that I can, when the team is doing well, I can engage on it and I can still be really excited and I can live and die by every shot. But when the game is over, I can move on and move on to different things.

Tim Ludwig: Because it used to be, I mean, you said before, like it would upset your weekend, but you really internalized this. Like, it would affect your mood for not just like the 10 minutes after the game was over.

Sam Hyde: Yeah, absolutely. And I mean, I think that the Michigan-Michigan State game always did to a degree too, where I felt like Michigan State losing was like, in some way, a reflection of me as a person, in some way, like I’m inadequate. I’ve had to move on from that a little bit, although I still enjoy seeing Michigan lose. But I’ve had to kind of move on from that and just adopt a different mindset on things. And now having gone to Michigan for grad school, the majority of my good friends are Michigan grads and they live and die by Michigan winning and losing. And so now I see it from afar to a degree.

Tim Ludwig: You don’t put friends in air quotes when you talk about your friends?

Sam Hyde: Yeah, it’s been interesting the last few weeks. I’ve had so many people that know I went to Michigan for grad school come up and say, oh my God, congratulations on the national championship. I’ve had to be like, actually, I was rooting for Washington. Why would you be running for Washington? I was like, I don’t like Michigan sports. I had to go through that whole thing. But yeah, it has, the sports dynamic and the rivalry specifically I think has continued to play a role in my life, although much less so today than it did ever before. For instance, Michigan-Michigan State played last night in basketball, but the game started at nine o’clock at night. I had to get up early this morning, so I didn’t watch it. I checked the score this morning and felt a little bit of a glee that Michigan State had won, but it had no bearing on my life.

Tim Ludwig: You may hate this question following on this topic about the rivalry and things, but is there an element of being the underdog as you sort of think about the things that get you fired up? And I say you’ll hate it after that last question because I’m maybe halfway implying that Michigan State is the underdog to Michigan in the state of Michigan.

Sam Hyde: No, I mean it is. No, it completely is. And I don’t know if that’s the case. I actually would say probably not because I think usually when I watch sports, and this is probably a paradoxical view for me to have and certainly an unpopular view, I think, for most people to have, but I actually usually root for the team that I think is like more of the dynasty. So like, Chiefs versus 49ers, I’ll root for the Chiefs. I like to see a dynasty. I like to see greatness. And I like to see greatness sustained over time. And so, I enjoy watching that. And so, I don’t think it comes from an underdog mentality kind of writ large. I think it comes from my own personal feeling of being slighted and the insecurity that stemmed from that that kind of permeated that aspect of my life.

Tim Ludwig: Sure. And then, like you described with the skiing or with your individual athletic pursuits, sort of arriving at the end spent, knowing that you gave it your all, has that translated outside of the sports world for you? Do you bring that same tenacity and determination to give it everything in other aspects of life?

Sam Hyde: Yeah, I think so. I didn’t necessarily on the education front. On the education front, I always got good grades, but I never was the one to be working in the library until 3 a.m. or anything like that. But from a professional standpoint, I think that I have with any of the careers that I’ve had is to try to extend myself to the very end and to at least be able to finish and say I tried my best on that, and my outcome was, my effort was there, even if the outcome wasn’t there. And so yeah, in consulting, certainly logged an incredible amount of hours and dedicated myself to it to a really high degree. And then obviously entrepreneurial, entrepreneurially with my search fund and the business we bought, have felt in a very similar way.

Tim Ludwig: I think we’ll touch on more of this, some of the themes that we’ve already started to discuss. If we switch over to the professional side of your path so far, you raised a search fund with a partner a number of years ago. It was called Ultima Search Partners. I was an investor in that. I never knew where Ultima came from. I thought it was a cool sounding name but had no idea the background story. And so maybe that’s a good beginning for this part of the discussion.

Sam Hyde: Yeah, absolutely. So this was kind of a fun little nugget in my history and the history of Ultima, which is the venture that I founded with Stuart, my business partner. I met Stuart in business school on the first day of business school at a preterm trip in the Canadian Rockies where we were going to go hike in the back country for 10 days with a group of eight or ten students and Stuart walked in and we were just kind of fast friends right off the top. And one of the things that we connected on early on, I don’t actually remember exactly how it came up, but it turned out we both played this game as preteens, I guess, and early teenagers, which was called Ultima Online, which you can go look it up and read a bit about it. But it was really the first game in a genre called massive multiplayer online role-playing games, which was quite the mouthful. But it basically means that it’s a persistent state game where there’s a world set up and players all interact together in the same world. And then when you log off the game, the world continues on and continues to evolve. And so, you can log in and engage in the game, engage in the world, engage in playing it, log off and log back on later. And it was not a wildly popular game, although it was kind of the first of its kind, but it was popular enough. And Stuart and I bonded over the fact that we had both played that game growing up. Very different play styles. Stuart was, for lack of a better word, just a murderer. He would run around and kill people and torment people. Where I was more of a, what you’d consider, this is incredibly dorky, I’ll acknowledge, but I played a crafter. So, I would craft things, like I would be a tailor or a blacksmith, and I would craft those things. I was a fisher person for a long time. So, I’d go out and fish and fish up different things and sell those wares, some of which I sold online. I think we’ve talked about this a little bit, Tim. But I would fish up these items from this virtual ocean, and I would then sell them on eBay for real money, which was some great walking around cash, and it was kind of my first little business that lasted for a few months and made, I don’t know, 300 or 400 bucks on there or something like that. But we bonded over that game right off the top and have been kind of fast friends ever since.

Tim Ludwig: And that was the start of your entrepreneurial journey, as you just mentioned, the arbitrage with eBay as you traded your labor hours for cash on the open marketplace.

Sam Hyde: Yeah, exactly right. That’s exactly right. I had figured out a way in the game to basically craft these items or mine these items out of the ocean, fish them up out of the ocean. And I had found a way to do it semi-automatically so it could be kind of running in the background on my computer with minimal maintenance. And I would set it up before I went to bed, and it would run for a couple hours before it bugged out. But I’d wake up in the morning with three or four little things that I could then go sell on eBay for $10 a pop because nobody else wanted to devote the hours to it or they didn’t know how to automate it or whatnot. And so, yeah, it was exactly what you said, a little bit of labor arbitrage. Yeah, my first entrepreneurial venture.

Tim Ludwig: Did that taste of it give you like a lasting desire to do something entrepreneurial, or were there other examples? I mean, it doesn’t sound like you were the kid that was buying gum at the convenience store in first grade and then reselling it by the piece for a huge markup to your classmates.

Sam Hyde: No, I wasn’t doing that. I also, I traded some stocks with my dad growing up. My dad has always managed his own portfolio. And as I said earlier, he’s a psychologist by trade, a family psychologist by trade, but he always had a big interest in business and tried to instill that in me to a degree, I think, growing up as well. And so I had that. And then in college, I had a painting business that I spent an enormous amount of time on. That was my first real entrepreneurial venture in earnest and have to dive into that as well. But that was part of the big-

Tim Ludwig: Yeah, tell me more about the painting business.

Sam Hyde: Yeah, so I was sitting in a psychology class my freshman year of college, and someone walked in and they were like, hey, I made $10,000 last summer, sign up on this sheet of paper if you want to learn how, which today sounds like a total scam, and at the time, I was naive enough that it didn’t sound like a scam to me, so I put my name down and ended up connecting with the person, and it turns out they had run a painting business over the summer called College Pro Painters, and they were looking for new franchisees for the next summer, and there was no one in my geography for my franchise. And so, I went through a lengthy interview process and ended up taking the job or getting the franchise, whatever you want to call it. I didn’t have to buy in. But they put us through a really rigorous training and taught us essentially how to sell paint jobs and hire painters, other college kids, to go out and paint houses over the summer. And so the second semester- and I did that for three years in college. And so, the second semester of every year, I would come home every weekend and spend most of the weekend going door to door and knocking on doors and saying, hi, I’m Sam from College Pro. I’d like to paint your house this summer and pre-selling all these paint jobs and then hiring the kids to paint them. And it was a remarkable experience. It taught me really the power of sales and how to connect with people and how to connect with people on short notice and also how to hire and to train and to hold people accountable and to manage issues when they came up because, shock of all shocks, when you’re hiring college kids to paint houses, they don’t always do a great job. And so, you have to fix the issues that come up. But it was really just kind of a- it was a masterclass in small business entrepreneurial endeavors. I think it certainly solidified for me my long-term desire to be my own boss and to do something where I controlled my own destiny. I loved feeling like I was entirely accountable for the outcome but also had the flexibility to choose the manner in which that outcome came about. And so, if I wanted to take a nap in the middle of the day, I could go take a nap in the middle of the day. And the only person I was accountable to was myself on that. That was intoxicating to me, kind of all the responsibility with a lot of the flexibility that you can get as well. So that was an incredibly important experience for me.

Tim Ludwig: Did the parent company provide any training about the managerial aspects, or was it mostly focused on sales?

Sam Hyde: It was mostly focused on sales. Looking back on it, they do a really good job of providing the right students a platform to see if they can do it, but the actual infrastructure at the time that was provided was administrative mostly in nature. So, payroll, account at Sherwin-Williams, so you could buy paint at a discount, someone to talk to occasionally to hold you accountable to goals, and running some ads on your behalf. But there was not an element of managerial education to it, which I wish there was honestly looking back at it, because I think it would have been important for me to- I would have avoided some of the mistakes I think I made through that experience if I had had more managerial oversight or managerial training as I came up with it.

Tim Ludwig: I just wanted to dig into that a little bit more because I’m reflecting back on my own experience as an early manager, and I was terrible at it. I didn’t think I was terrible at it, but now with some hindsight and perspective, like I was just abysmally bad in a lot of ways and recognize that this was after business school even. So, there was no real practical training for me how to be a manager of a small team in business school. I had, to that point, not received really any mentorship in how to lead a small team or even an individual. And so, I just made, similar to the point you’re making, just a lot of mistakes that I think with some proper training or better guidance I could have avoided. What’s your self-assessment of you as a manager back then?

Sam Hyde: Yeah, I think that I made a mistake that I think a lot of managers make certainly earlier in their career. And it’s that my natural inclination is to be more of a supportive manager, which is to feel like my team is going to internalize the responsibilities in the same manner that I do and have the same desire for high achievement that I do and that I can support them by being a supportive resource that they can lean on to help problem solve, question, and drive to an answer. And the reality is, as a young manager in the role that I was in then and I’ve been in other parts of my life as well, where my employees were college kids who were just trying to make an hourly wage, I needed to be less of a supportive manager and much more of a directive manager, which is to say like, these are my expectations, you need to meet those expectations, and to do so, you’ll be rewarded. And if you don’t, then obviously this isn’t going to work out. And so I was, I think, more of a friend and less of a manager to my employees at that time. And I got what I deserved on that to a degree, which is that these were college kids that were more interested in what they were going to do that night versus making sure that the paint was a great paint job on the house around the corner. And so consequently, we had good quality ratings, but they were sometimes troubling to get to, touch-ups and coming back and jobs would drag on a day or two longer than I wanted. And I think that was a result of the fact that I did not set clear expectations with my team and then hold them accountable. And looking back on it, I can see it clear as day now. At the time, it was confusing to me as to like, why can’t these guys finish a job on the same time schedule that I think they should be able to, et cetera, et cetera, et cetera. And so I think the classic managerial 101 type of mistake. And I certainly lived it for a number of years in that business.

Tim Ludwig: Did you continue with that after you graduated from college? Was there an opportunity to be a real franchisee and just make it a career?

Sam Hyde: Yeah. So not within the franchise that I was in, but there was a painting company that I had become acquainted with and another franchisee that I knew had become acquainted with, and they offered us an opportunity to come and start a new branch of that painting company. And so, I went down to Phoenix upon graduating and trained with the owner of that business. And that was a much bigger painting business than we were talking about. In my painting business over the summer, we did anywhere between $90,000 to $125,000 in revenue over the course of the summer, which I think that’s pretty good for a summer job. But this was a business that was doing into the millions in revenue. And we went down there and trained in Phoenix and then had an opportunity to open up a branch of that business in Atlanta. And at that point in my career, I really realized that I liked the entrepreneurial elements of the business, and I liked feeling like an owner in the business. In this case, I was obviously a very small portion of the ownership group because the original owner still owned it and I had a business partner as well. But I didn’t want to be in- My parents, yeah, it’s interesting. Yes. My parents were supportive. Again, similar to my decision to go to Cranbrook, I look at it, I don’t remember them pushing me to go to Cranbrook. I don’t remember them pushing me to do something else besides going to run this. As I look back on it, I’m surprised that they were so supportive of it or not unsupportive of it because it was kind of a what are you doing type of as I look back on it today.

Tim Ludwig: These white collar professionals, their kid goes off to college, and then he ends up as a painter, which probably didn’t require a lot of college training to get to that point.

Sam Hyde: None. Yes, exactly right. Although we tried to bring some sophistication to it, it certainly was- I didn’t utilize anything that I learned in school, other than the interpersonal skills perhaps. But I really realized at that point, like I don’t think this is the type of business that I want to manage over the longterm. I liked elements of it. I liked the sales element. But I did not like managing that type of employee base, not that there’s anything wrong with it, it just wasn’t for me. And I was just not solving the types of problems that I felt were like intellectually interesting. And the partnership that I was in, while I liked the individuals quite a lot, I didn’t feel like it was going to be a good long term fit. And so, at that point felt like, okay, I need to go do something that gets me into more of like a corporate career track where I can have a steady job, learn more, and maybe I’ll revisit this entrepreneurial thing down the road. And so, I made the decision to go back to business school. I applied to the University of Michigan, which has a great business school, and was fortunate enough to get in and attended.

Tim Ludwig: And so when you went back to business school, the focus was not on preparing for your next entrepreneurial venture. Did you have any particular aims to come out like in terms of career that you wanted to pursue?

Sam Hyde: Yeah, it was interesting. It was not to prepare for my next entrepreneurial venture. That’s for sure. I knew I wanted to go get a corporate job. I felt like I had things to learn. I wanted to have a strong salary and earnings potential. And I originally went to school thinking I wanted to be a banker, which is interesting because I started school in 2009. So it was just after the financial crisis, but I really enjoyed, as that financial crisis unfolded, I read a lot about it and I found it very interesting. I enjoyed reading about what was happening within the subprime world and everything associated with that. And so, I thought maybe this is a potential path that I want to go down. Having gotten to graduate school, I quickly learned that actually what bankers were doing on a daily basis was actually not really what I wanted to do. Finance I think is interesting from a conceptual perspective, but actually the nuts and bolts of the investment banking world, especially at the associate or analyst level was not where I wanted to make my hay. And so, I ended up going into consulting, which I think is much more suited to my skill set of there’s a sales element to it. There’s a showing up on site and getting up to speed quickly element to it and being able to talk to people and talk to clients and move people in the right direction in a way that I think is not present in a lot of fields. And it really spoke to me. And so I ended up deciding to go down the consulting route, feeling like it was a great place to lay my head until I knew what I really wanted to do with the rest of my life, understanding that there was hopefully some entrepreneurial elements to that, but this was a great way for me to continue learning, see a really broad spectrum of the corporate world, and develop a skillset that was going to be valuable basically wherever I landed.

Tim Ludwig: Yeah, consulting seems like a good place to hang your hat for a while when it may be what you want to do forever, but you’re certainly not going to close any doors by being a consultant. And then you can pick and choose exactly the spot you want to be in down the road when you figure it out.

Sam Hyde: Yeah, absolutely. Obviously, I have a small data set because it’s only my life, but I’m a huge proponent of the skillset that consulting brings to the table, just the ability to go from project to project, to be able to be thrust into like a high learning environment with a high functioning team, solving interesting problems in a myriad of different ways. It’s just really transferable to, as I said, basically anything else you want to do with the rest of your life. And that’s certainly been the case for me. I look back at my consulting experience today and think about all the different things that have translated well into my entrepreneurial venture, and a lot of those foundational things come from the education I got as a consultant.

Tim Ludwig: I want to come back to the consulting in a second, but you’re almost 15 years out of the start of your MBA program. It was, for me, certainly a real inflection point in my life for lots of reasons, personally and professional. And I get asked pretty frequently from people that are thinking about getting an MBA, is it worth it? What did you gain from it? And I have my answer, and it’s usually not what people expect to hear. But reflecting back now on your MBA, how would you respond to that question?

Sam Hyde: Whether it was worth it or not?

Tim Ludwig: Yeah. And what did you gain from it? Like, what’s the value? What has been the value of an MBA in your professional career or just your life even?

Sam Hyde: Yeah, it’s been a total game changer for me, I think. And there’s a number of ways in which that’s the case. First off, similar to my experience going to Cranbrook, going to business school widened the aperture yet again with regard to the number of available options that are out there from a career perspective because I came in obviously with a very kind of, it was a unique skill set or a unique background that I ran a painting company before business school, not many people had that skill set, but I got to see people who came from banking, came from consulting, came from the corporate world, came from Teach for America like Stuart, my business partner, or the Peace Corps like our good friend Kathy. And to be able to look out there and say, oh my goodness, there’s even more potential careers out there in the world that I can pursue was a really eye-opening experience. Secondarily, I think the network of friends that you’re able to develop over those two years is really transformational or has been for me. Unlike high school or college, business school felt like there was no element of popularity contest to it or click element to it. It was really just, hey, we’re all here, let’s hang out and have fun together, and everybody’s interesting in their own way, and we appreciate that interestingness and diversity in a way that I hadn’t experienced in my previous life. And so, the depth of connection, I think, that you’re able to make with classmates in an environment like that really provides great balance for friendships for the rest of your life. And I have many friends from business school that I’m confident I will speak to literally for the rest of my life. And that’s been incredibly transformative. And then thirdly, and there’s a fourth too, but third, the ability to interact with people outside of the classroom to solve problems was really unique for me. That’s the type of classwork that I didn’t have in high school. It’s the type of classwork I didn’t have in undergrad. But it has a lot of really close corollaries with the type of work you do in a corporate setting or an entrepreneurial setting, which is get together with people that have a common goal and solve a problem together. And you’ve got a chance to do that in business school or I did at least in a way that was a really big learning experience. And then finally, the most obvious one is the content in the classrooms. I really enjoyed the learning experience and the ability to digest topics that I hadn’t digested in the past. A lot of those can be learned in books and whatnot. And so, I don’t think you go to business school just to learn how to do credits and debits and accounting 101, but I think it’s those first three things that really were the transformative pieces for me.

Tim Ludwig: Yeah, for me too. People talk about building your network, and for me, the professional network has not been all that impactful. People will maybe respond or pick up the phone if I reach out, but it’s not like people feel such strong ties to the school that they’re willing to just do whatever I ask them to do. There’s still a level of professionalism, and they’re protecting their jobs and their companies as well. But the personal networks, certainly for me, built lifelong friendships that made the whole experience, even if there had been no other benefit, worthwhile in my estimation.

Sam Hyde: Absolutely. I 100% agree. The professional network, I think, depending, it varies from school to school, certainly. And Michigan has a great professional network, But I agree no one is doing something just because we both went to Michigan. It really is those personal connections and the connections that those connections can make. The number of times I’ve spoken to a friend of a friend from business school and made connections that I haven’t been able to in the past is numerous.

Tim Ludwig: Yeah, the one thing you didn’t mention that I would add is just the credential itself and how it credentializes you in certain settings. In small business world, most people don’t care at all, but certainly there are certain circumstances where people do care and they look at the background or the pedigree in the school and they think like, oh, that signals something that to them is meaningful. And I probably see the inverse of this more often, people that don’t have an advanced degree feel self-conscious about that in certain settings. And as somebody that has a degree, it is probably a position of privilege where I feel like it doesn’t really matter. Like I can see now that with the degree that doesn’t matter. But if you don’t have it, I think you don’t have it.

Sam Hyde: Yeah, I agree. And I felt like I probably needed an element of that coming from Michigan State’s a good school, but we should be honest about kind of where it sits in the national pedigree of great colleges. And then going and doing a painting company, my ability to translate into a job. I went to Deloitte after business school and then McKinsey after that. I would have no access to those types of careers had I not gone to a school like Michigan that’s a very well ranked business school, even though I may have been smart enough to do that. Just, the access wasn’t there and the credentialing piece is really, really an important piece of it for sure.

Tim Ludwig: You just mentioned the Deloitte to McKinsey. That’s a great segue back into the consulting. So that’s another one of those tips on the shoulder stories, right?

Sam Hyde: Yeah, it is. Yeah, that’s exactly right. So, in business school, after my first year, I went for consulting internships. I was very fortunate to be able to get an internship at Bain & Company, a consulting firm, and I was in the Chicago office. I had a great experience over the summer but struggled on the case I was on and didn’t quite grasp, I think, what the core of the consulting job really was, and so did not get an offer to return, which was disappointing for any number of different reasons.

Tim Ludwig: And you were the only one in that office, right?

Sam Hyde: Yes, I was the only one. I was the only one in my internship class in Chicago not to get an offer to return, which was disappointing and certainly felt aggrieved by that situation, but understood that I didn’t deliver. I didn’t look at it and think someone’s done this to me. I didn’t meet the bar. I understood that. And I knew that I had struggled during the internship. And so, I was fortunate enough during full-time recruiting to get an offer to go to Deloitte, which I loved and had a tremendous experience at Deloitte. I had a number of managers there that were fantastic and had the opportunity to do really, really interesting work that I loved. But about two and a half or three years in, something like that, I had an experience where a former classmate from Michigan came and said, hey, I’m at McKinsey in the Detroit office and we’re looking to hire, are you interested in putting your resume in? And I felt like I had something to prove because I did not get the offer at Bain. And Bain and McKinsey, along with BCG, are kind of considered the three best consulting firms out there. And Deloitte’s a great firm, but it’s not on the same kind of tier as those three. And so, I felt like I had something to prove. And so, I put my resume in and was fortunate enough to go through the interview process and get a job. I actually took a step back in terms of pay and in terms of kind of the level I was in the organization to go over to McKinsey. And again, felt like it was an opportunity for me to try to prove that I could compete and prove that, yeah, I had stubbed my toe on my internship and not gotten an offer to return, but that I actually could compete at that level and do the work required to solve the problems that McKinsey was trying to solve. And there was also a credential element to it as well, I think, where I felt like this was a resume builder from a name brand perspective in a way that Deloitte wasn’t quite. It was a great experience. As much as I love my time at Deloitte, I love my time at McKinsey as well. I had just a phenomenal experience. Again, I was fortunate enough to work with great managers on great teams, solving really interesting problems. And like my time at Deloitte, at McKinsey, I ended up working my tail off, but ended up being rated really highly and receiving kind of the accolades that went with that, which was nice but also felt, I think, some validation for myself that when I had not been able to get the offer at Bain, that that was a mistake, obviously, that I made, but that it wasn’t reflective of my actual true ability.

Tim Ludwig: So, at this point, you’re excelling at McKinsey, you’re getting top ratings at the evaluation periods. How did that translate into that sort of dormant itch to be an entrepreneur again?

Sam Hyde: Yeah, I was sitting in the spot where I was thinking about, okay, what’s next? I was very fortunate to work with some great partners there, but as I looked at their lives, they were not necessarily lives that for me personally I wanted to pursue. There was still an intense amount of travel. At that point, my wife, Marcy, and I had just had our first child through the IVF benefits given to me by McKinsey, which I’ll be forever grateful for. And I just was not the type of father that I wanted to be, one that was traveling all the time. At the same time, I looked at jobs that people were taking as they left McKinsey and they left the firm and went on to new things. And there weren’t any of those that were really speaking to me either. And so, I had this idea of something entrepreneurial. I had a classmate at Ross at Michigan who went and did a search fund upon graduation in 2012, and so that was always kind of in the back of my mind and felt like that’s an interesting way to go do entrepreneurship. I felt like I wanted to be my own boss again, but I didn’t have a business idea that I was really passionate about. And this felt like a great way, this entrepreneurship through acquisition felt like a great way to end up in that spot without having the burden of having to have the idea. And so, I was talking one day to Stuart about it, who we had been close friends ever since business school and stayed close in contact and had always bandied back and forth business ideas and whatnot. And I was talking to him one day about, hey, maybe I would want to go do a search fund and go try to buy a business. And he was like, well, maybe I’d want to do that. And I was like, well, wow, if I could go into business with Stuart, that’d be quite something. Stuart is probably one of the smartest people I know. We have a very similar worldview across a lot of different elements and just have a good rapport.

Tim Ludwig: You’re both like Ultima Online.

Sam Hyde: Yeah. Like we both played Ultima Online. Exactly. And so, yeah, he kind of invited himself to my search fund. And one thing led to another, we decided to make the jump, and we had to go talk to our respective spouses and make sure that we could convince them that taking a 50% pay cut and going off and trying to find business to buy that could be anywhere and that we might have to move across the country would be a good idea. And thankfully, I think we’re both good enough salespeople to pull that off with our respective partners. And so, yeah, we set off to do it. And we called Ultima Capital Partners in homage to the original game that we played.

Tim Ludwig: That was, if I got the math right here, your second partnership.

Sam Hyde: It was, yep, yep, that’s a good point. So, my first partnership was with the painting company with the original business owner in Phoenix and then someone else that joined in that.

Tim Ludwig: So, for you, what’s defined a successful partnership, and why did you choose to have a partner in the search?

Sam Hyde: Yeah, good question. I felt like that having had the experience running a painting company by myself in college where I did not have a partner, that entrepreneurship is a pretty lonely game as a sole entrepreneur. That it’s hard out there. And your employees can be great colleagues and great connections, and over a long period of time, I think can become great friends, but there’s always a different relationship between an employee and an owner than two owners. And so, I felt like I wanted to have someone to ride along with. And then I think I was also cognizant of my own skill set and that I had a strong consulting background, but I’m not super detail-oriented. I don’t have a lot of finance background. Stuart, I think, has an ability to do both of those things in a way that’s more successful than I was capable of. And so, I felt like this was a good partnership and that we had a very similar worldview across 80 or 90 percent of our viewpoints and that the other 20 to 30 percent or 20 to 25 percent that we could work out the delta on pretty easily and come to a good solution. Stuart’s mother is also a clinical psychologist, just like my father. So maybe there’s some similarities in our upbringing that allow us to communicate in a way that’s effective. But it felt like the right thing to do. And it felt like it gave me the best chance to succeed in this venture was to do it with a partner. That certainly ended up being the case, honestly. Stuart and I are now six or seven years into our partnership. And I think it’s as strong as ever. We talk a couple hours every day and have solved any number of different issues together during our tenure as owners of the business. And I think that he would say and I certainly feel like we made the right choice.

Tim Ludwig: Are there any key ways that your partnership has evolved or improved?

Sam Hyde: I think that the one thing that I think is really important about our partnership, and I think it’s what I tell as we speak to potential searchers who are going about this and thinking about doing a partner search. I think that you have to have an incredibly high level of trust with the person you’re going to have a partnership with. And the way that I describe it is, if it’s the day before a board meeting and we haven’t gotten the board deck out yet, and I call Stuart in the morning and he says, hey, I’m going golfing this morning, that my response would be, that sounds great, man. Enjoy it out there. I hope you shoot a good round. It wouldn’t be like, hey, man, we got to get this board deck out. What are you doing? Why haven’t you done X, Y, Z? It’s the level of trust to say Stuart is capable of assessing what needs to be done and making decisions about his life and his own prioritization in a way that I just trust explicitly. I think he feels the same way. And we’ve certainly had to cultivate that trust over many years, especially now that I live in Michigan and he lives in Massachusetts. And so, we don’t have a lot of in-person kind of checkups with each other. But I think that trust is the thing that was foundational and has continued to evolve through the years. That’s really been the key to our success.

Tim Ludwig: With that example, do you think that you would have had the same response if it was the first board meeting?

Sam Hyde: Yeah, it’s an interesting question. I hope so. It’s hard to go back in time and think about it, but I hope so. And because Stu and I didn’t partner until 2016; we met in 2009. So, at that point, we had known each other for a number of years. We hadn’t operated together, obviously, in that same kind of crucible of entrepreneurship. But I hope that I would have had that same reaction. Although I think for the first board meeting, we were kind of burning the midnight oil together to get it done. And so maybe that contributed to that trust that now I leverage in a different way.

Tim Ludwig: That’s what I was just thinking, that there are certain data points you need to accumulate as you’re building that trust. So, six years in or whatever it is, if somebody says I’m going to go golfing, you give them the benefit of the doubt and say like, I know and historically there have been lots of examples where they’ve always delivered and I don’t need to worry about this. The first time, there isn’t that much evidence to support it. And there’s a different kind of relationship building in a partnership that you can maybe have then, which is having a discussion about like tell me about why that’s the decision you’re making and help me understand why you think that’s the highest priority right now.

Sam Hyde: Right. And I think we came into it having some strong data points already. Stuart actually went to Bain & Company after business school as a consultant and excelled to the highest degree there. So, I knew that he had worked really long hours and grinded on a bunch of stuff, just the way that he knew I had at McKinsey. So, I think it was never a is the capacity there for this person to do what needs to be done. And so, I think we came in feeling like I already had a little bit of the benefit of the doubt built in just because I knew his work history and the intensity that underlies that.

Tim Ludwig: Okay. Maybe you can say a little bit about the business that you and Stuart ended up buying. And then I’d be curious to know what was it about that business that made it attractive and made you want to buy it?

Sam Hyde: Yeah, absolutely. So, we bought a business called Circle Surrogacy and Egg Donation, and there was a couple associated entities along with the insurance and a couple other things for the surrogacy and egg donation field. And it’s a really unique business. We are like a travel agent, staffing agent, law firm, project coordination, everything all rolled into one. Everything except the medical work. So, we actually don’t do any provision of services from a healthcare perspective, but we provide all the wraparound services that allow parents and surrogates and egg donors to complete each of their individual journeys, which result, hopefully, in a family being started and a baby being born. It is truly a feel good, do good, do well type of business. And we started to look in the fertility space during our search because my wife and I had gone through our own infertility journey. At that point, we had two kids through the help of IVF. And this felt like a space that, if nothing else, we’d feel really good about the work we were doing at the end of the day. And we get to see baby pictures every day. And that would be, if nothing else, immensely rewarding. We actually started looking at the IVF clinic space to begin with, decided that really wasn’t the field that we wanted to be in, and started to look at kind of one concentric circle outside of IVF clinics and came across a surrogacy agency, which was owned by this gentleman named John, who had just created a really successful business in the space. And we frankly just badgered the hell out of him until he would sell us the business, which I think is the story for many searchers. We weren’t living on his couch, but we were in Boston all the time trying to go out to dinner and talk and learn about the business and convince him to sell it to us. And it was really- we really felt like this was a business that had so many elements that were attractive. It was a growing business in a nuanced, highly specialized space where we can be the biggest player in the field. It had a great staff of people working at the business, many of whom are still here today. And as I said, at the end of the day, we got to do true good in people’s lives and help them start their family. And that’s just an incredibly important element of I think many people’s lives, not everybody of course, but many people’s lives. And so, it was just an immensely attractive business. Now, from a search fund perspective, there’s actually some elements of it that are not that attractive. Search funds are built on buying highly recurring revenue businesses in B2B services where you can stick an entrepreneur or two who have no idea what they’re doing, and they can kind of learn the business for six months and you can not worry about it going off the rails. And we bought a B2C business with a very high price point and a low end number of customers per month in a non-recurring way. But thankfully, our investors, Tim, yourself included, saw, I think, that there were a lot of elements here that there was a lot to like and that the strengths outweighed the weaknesses. And that’s certainly been the case over the course of the whole period.

Tim Ludwig: Yeah, and it’s generally gone very well, and I know you sold to a private equity buyer a couple years ago. But it’s not all up and to the right, as they say. I mean, they’re… Watching the sausage getting made is always a messy process. What were maybe one or two of the inflection points or crucible moments for Stu and you in your stewardship of Circle?

Sam Hyde: Yeah, I mean, one was kind of right off the top. We bought the business, and we did like a mid-month close on the business and soon realized that the original owner, bless his heart, had maybe pulled a couple of sales forward a little bit and he was taking a step away, so he wasn’t going to be doing quite as many sales in the future. And in those first couple of months, we found ourselves in a spot where we had taken a good amount of debt to do the deal, and we were struggling a little bit from a sales perspective. And all of a sudden, we were looking at the bank account and looking at the covenants and everything and feeling like we were in not a great spot. And it was really a learning moment for us in a couple of ways. One for writ large, and I still believe this today as I look to invest in search funds now and participate in that world, which is don’t take too much debt when you buy a business that you don’t have a lot of experience with because you don’t know what you’re going to get when you get under the hood and you can always lever up down the road to a greater degree and have similar returns. But secondarily, it was just the importance of bias towards action when required. And so, in those early days, Stuart took a really strong hand on the finance function to make sure we were controlling costs, and I leaned in really heavily on the sales function to understand how we were selling our service and what was meaningful to the consumers that we were talking to and trying to figure out how to ramp that up over time. And so, it was a really intense first six months. We managed it well and we got through it. We did not bust any covenants, thank goodness. And kind of we’re off to the races from there. I think the other thing that was, I think, transformative for us as a business was we spent a lot of time in the first couple of years investing in the business and investing in different initiatives that we wanted to try and execute on, that we thought were going to be successful for us as a firm. And we had some successes there where we saw revenue go up, but because we were spending money here and spending money there to test this and test that, EBITDA was kind of flat. And I think our investors’ natural question was like, hey, topline’s growing, but we’re not seeing anything translate to the EBITDA line, like what’s going on? And then finally we hit on it. We had done enough of these tests, we had kind of tinkered with enough things that we found a couple levers that were really transformative for the business. One was opening offices in new locations and secondarily moving to an all fixed fee program for us as a business in terms of how we deliver our services. And it drove home for me the fact that like to make a basket, you have to shoot, and you’re not going to make all of your baskets. I don’t know if we would have scored. But it emphasized for us the importance of in the early days of owning a business, once you’ve gotten your legs under you, to go out and decide what are the five or six different things that I want to go test and I want to invest in and understanding that three of them won’t work. And that’s okay. You can adjust it out for one, if you want to, when you go to sell the business, but two, those are learning experiences for you moving forward. I think that if we hadn’t done that and we hadn’t had the support of the board to go test some of those things, we might not have hit on a couple of those things that have been really transformative for us as a business. And it’s something that I kind of try to take forward now as I look at and evaluate businesses to invest in or new searches, et cetera.

Tim Ludwig: I was just reading an article the other day about statistical process control and using that as a tool in business analysis to evaluate the inputs that lead to the outcomes and how in most processes there’s a lot of variation. And it’s really hard if you’re not either really dialed into the business or tracking it statistically like this to know what normal variation looks like so that as you’re running experiments like the ones you’re talking about, was it just within the normal range of variation, and so maybe you’re getting a false positive? Or did this actually create the step function change that you were hoping for, in which case now you want to double down on it? And I don’t know, you probably didn’t use any of those tools. You intuited the outcomes that you were looking for and the inputs that you were trying to measure against. But it’s a pretty interesting way to think about a business, I think.

Sam Hyde: Yeah, it’s incredibly interesting. And I think it’s hard to do, though. It’s hard to get the quality inputs. I think as a CEO or a manager of a business, you’re always trying to pick up as many contextual clues from your employees and your team to just give you a sense of what is going on out there. Stu and I kind of call it feeling a tremor in the force, which is like, what am I hearing from the team that I can start to roll into a snowball of an idea? Certainly, if you can do it from a statistical perspective with a high volume of KPIs or quality outputs, that provides great buttressing, I think, for that decision making. But I think for most of the time in these small businesses that we see, you’re really looking to make 60/40 calls with high conviction on a very small data set. And that’s hard to do. And so, you hopefully make multiple bets out there so that if you’re on the 40 instead of the 60, you still come out ahead on a net basis. But then also have this belief that, and I tell my team this all the time, it’s like, look, if you follow baseball, you don’t need to bat 1,000 to be in the Hall of Fame. In fact, if you bat 300 or 350, you’ve got a pretty good chance of making it to the Hall, and that’s amazing over a long career. And so, the statistics are probably not exactly the same from a business perspective, but you have to be willing to get up and swing the bat and strike out sometimes. Otherwise, you’ll just never get a chance to hit a home run.

Tim Ludwig: You talked earlier that your family had some fertility challenges. You now lead a business that helps other families create the families that they’re seeking to build. I imagine that’s some part of the purpose that you find in your work. But are there other things that define purpose for you now at this stage in your life?

Sam Hyde: Yeah, it’s a good question. The one thing that I’ve really enjoyed over the course of owning Circle and managing this business has been to be able to see the growth in the employees that we’ve had, and both from a professional perspective and a compensation perspective and what that’s allowed them to do with their lives. We’re fortunate that we bought a business that had a really great management team in place. John, the original owner, had hired a great team. And we’ve certainly added to that team over time. But we’ve been able to retain a lot of that team and then promote from within up into adjacent positions from a lot of the people that were kind of staff level people when we acquired the business, kind of day-to-day frontline people that are now managing teams of 20 or 30 people and making two or three times or four times what they made when we first bought the business six years ago. And that’s been an incredible experience to watch them grow as managers, watch them understand and take on some of the same challenges that we had to in early days and see their responses to it. And that’s been really rewarding. And I feel like I’m in the experience today, but I’ll come away from it, whenever the time comes, having a group of people that we were able to share some meaningful moments of growth together, myself included. I think I’ve grown as a manager and grown as a leader over these six years. Now, some of my staff might not agree with that. But it’s been a really rewarding experience from that perspective. And I think coming into it, I didn’t anticipate that to the degree that I felt it. And so, it’s been a really rewarding aspect of the journey.

Tim Ludwig: Yeah, and this show is about transitions, obviously. And I won’t ask you what the next transition is for you, but if you’ve given any thought to what you hope you’ll be doing and where you’ll be spending your time maybe 10, 15, 20 years from now. Is there another transition out there for you in that time frame?

Sam Hyde: Yeah, I mean, I want to be you when I grow up, Tim. There’s some truth in that. I think that I have just as much as I’ve enjoyed seeing the employees that we have grow and develop, I’ve enjoyed developing relationships with the people that put faith in us to go buy Circle in the first place and to be able to maintain those meaningful relationships with, Tim, like yourself and any number of other people in the field who whom you know and appreciate has been really meaningful for me. And so I think as I continue on this journey, like I will be at Circle as long as it makes sense for me to be here, which I hope is quite some time from now because I get a lot out of it. But I also have really enjoyed starting to sit more in an investor role where I get to see people like I was six to ten years ago wanting to go bet it all on this crazy venture called entrepreneurship. And I think there’s just something incredibly intoxicating about the ability to interact with people at that stage in their lives, see them go attack this incredibly hairy problem of and ambiguous problem of go buy a business that you can make money with and grow and have a meaningful outcome for your clients and your customers and your investors and your employees alike. And I’ve gotten so much energy out of that. And my hope is that the community will continue to welcome me and that searchers and entrepreneurs will continue to see value in having me be part of their cap table, that I can lend stories about the stuff that we screwed up and some of the stuff that we got right and commiserate when it’s not going well and congratulate when it’s going well. And so that’s, I think, over the long term, that’s really where I see myself heading, and the time frame in which I get there, TBD.

Tim Ludwig: Well, I think you’d be an amazing partner in that capacity and that there’s a lot of people in future years that are going to benefit from not only your experience, but I think also just your approach to business and ethics and morality that you bring. And you’re a good person. And if I were starting out in an entrepreneurial venture, I would love to have you on my cap table.

Sam Hyde: Oh, I appreciate that. Thank you for the kind words.