Bonus Episode: GYG & The Ambitions Of Going Public

HOSTS Alec Renehan & Bryce Leske|30 September, 2020

Meet your hosts

  • Alec Renehan

    Alec developed an interest in investing after realising he was spending all that he was earning. Investing became his form of 'forced saving'. While his first investment, Slater and Gordon (SGH), was a resounding failure, he learnt a lot from that experience. He hopes to share those lessons amongst others through the podcast and help people realise that if he can make money investing, anyone can.
  • Bryce Leske

    Bryce has had an interest in the stock market since his parents encouraged him to save 50c a fortnight from the age of 5. Once he had saved $500 he bought his first stock - BKI - a Listed Investment Company (LIC), and since then hasn't stopped. He hopes that Equity Mates can help make investing understandable and accessible. He loves the Essendon Football Club, and lives in Sydney.

In this episode we continue our exploration of Initial Public Offerings (IPO). In the last bonus episode, we got an in-depth understanding of the IPO process at TDM Growth Partners from one of the co-founders, Tom Cowan. We thought it’d be a great idea for Tom to talk us through a real life example of a company considering an IPO.

We were pumped to have Steven Marks join us in the studio – the founder and CEO of Guzman y Gomez. It has been an ambition of Steven’s to one day take GYG public, so we sat down with him to understand the journey of GYG, what about GYG made it an interesting investment for TDM, and Steve’s thoughts about a potential IPO.

Again, this was such a fascinating interview – to have two passionate experts in the studio sharing their knowledge and stories was incredible and we hope you get something out of this interview.


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Bryce Leske: [00:00:57] Welcome to another episode of Equity Mates, a podcast where we help you learn to invest in 45 minutes or less. We break down the world of investing from beginning to dividend so that you can hopefully make some returns. My name is Bryce and as always, I'm joined by my equity buddy Ren. Ho's it going? [00:01:10][13.6]

Alec Renehan: [00:01:11] I'm very good, Bryce. We've just come off a fascinating episode unpacking the IPO process with Tom Talan from TEDMED Growth Partners. And now I'm very excited for this second part where we unpack how a particular company is thinking about the IPO process, getting a little bit more practical and I'm really excited for it. [00:01:31][19.2]

Bryce Leske: [00:01:31] Yes, it is our great pleasure to welcome Tom Cowan again from today. Welcome, Tom. [00:01:35][4.6]

Tom Cowan: [00:01:36] Thank you. Great to be back [00:01:37][1.0]

Bryce Leske: [00:01:37] and very excited to welcome Steven Marks, the founder and CEO of Company Gomez. Welcome, Steven. [00:01:43][6.1]

Staeven Marks: [00:01:44] Thank you. How are we doing? Very well. Very well. Good to be here. Thank you. [00:01:47][3.3]

Bryce Leske: [00:01:47] So the reason we have Steven on the show today, one day he dreams of IPOs and we thought they'd be no better sort of time to speak about how you're thinking about potentially getting an IPO and having Tom here as well. Who knows all about it to talk through it. So let's [00:02:03][16.0]

Alec Renehan: [00:02:03] kick off. Yeah. So, Stephen, for people who aren't familiar with yourself and with Gozman, can you just tell us a bit about your background and how you came to founding Gozman? [00:02:13][10.0]

Staeven Marks: [00:02:14] Yeah, sure. So I'm not Australian, even though I know I sound like it. So I was very lucky growing up in New York. I had amazing Mexican food. And before I landed in Australia, I actually had a finance background. I went to school. University of Pennsylvania in Philadelphia ended up working on Wall Street. Guy who I started with on Wall Street became probably one of the best hedge fund traders of all times, named Steve Cohen, had a company called SAC Capital, changed its name to zero point seventy two. I think billions is kind of based on him. He's he's an amazing, amazing trader. Left there, moved to London to set up the U.S. side of Funchal Cheney capital. That's where I met my first Aussie who was hysterical. Like, now you've got all these running around the east and west coast of the United States. Back then, they weren't around. But I remember just seeing pictures of Bondi Beach and I was just like, I'm moving there. I'm like, I'm out of this Wall Street game. And I actually came down because if my family's from New York, the other half is Miami. And I had this dream since I was a little kid to build a hotel. And I came down and thinking, like, Bondi Beach is going to be like the South Beach. Faisa came down here, my best friend growing up, whose family had a big clothing company and Aussie girl in New York and like all Aussies that come home at some point. So she dragged them back to Australia. So it was him and I in Australia for some reason couldn't zone this building that I wanted. And him and I set up a business and we had fashion and music. And one thing that I truly miss growing up in New York was amazing Mexican food in New York. I grew up a lot of Latins. So as any entrepreneur and I've always been entrepreneurial since I was a kid, if you think you can do it better. So after eating at almost every Mexican restaurant in Australia and making sure I knew that they weren't doing it right, we set up company Gomez, which is named after well named in honour of very close friends of ours in New York. [00:04:01][106.9]

Alec Renehan: [00:04:02] So you went from founding one Koosman store in 2006, is that right? Yeah, yeah. [00:04:07][5.8]

Staeven Marks: [00:04:08] The babies in Newtown. [00:04:08][0.6]

Alec Renehan: [00:04:09] Yeah, I have eaten that one, actually. There you go. [00:04:12][3.3]

Alec Renehan: [00:04:13] Yeah. The flagship store, the very first. Yes. So you went from one store to now operating 140 stores around Australia, which is a pretty incredible growth story in a not that long period of time. So can you tell us a bit about the story and some of the milestones along the way? [00:04:30][17.3]

Staeven Marks: [00:04:30] Yeah, I mean, you know, as a founder, you and especially as somebody that's been extremely competitive and I can't lose. But I think leaving Wall Street, what's most important is having ethics. You know, but it's funny, I thought I mean, the Aussies, I thought they would know what I was doing. Right. And I mean, everybody speaks English. Everybody understands what Mexican food is. But we opened up a new town. They didn't have a clue. I don't know what black beans were. They thought all the Mexicans were Indians. They were the first ones. Don't pull pork shoulders. They thought it was sexual. I had a cold, slow roast, you know, and I didn't know what a tortilla was. I mean, like the ones that knew, but the majority didn't know. They didn't have any put rice and beans in a burrito. I'm like, what else did Puttnam I mean, like it was the education. Either I underestimated or overestimated, you know, I mean, the education. But we didn't stop, you know. And it's funny, like the people that knew what we were doing, you know, I mean, and we had the most beautiful staff and, you know, and our food was it was beautiful. We had the best brisket and, you know, these, you know, beautiful five filets on the grill. And our marinades were all these beautiful traditional marinates. I brought chefs in from Mexico, you know, found every Mexican living in, you know, in Sydney, you know, I mean, I said before my thought was having an affair. I heard somebody speak Spanish, was like a beer back to go find, you know, and then we opened up. But it wasn't doing very well. I mean, I remember the first week, Knewton, that 11000, you know, last week that 95000, you know, but I was just like, you know what? But I knew it was special, you know, coming from running hedge funds to, you know, selling burritos in Australia wasn't like I don't think that's what I would be doing. But the people were so beautiful, GYG, and obviously it's called Guzman Gomez Letter Y means and in Spanish, and I knew the Aussies would shorten it because they like to shorten things. Right. Everybody just call the GyG. And, you know, and as you pour your passion into something and one thing about me is whenever I build something, it's got to be unique. Like, I got to make sure like whatever if you're competitive, you want to build the best business possible, the best experience possible. And I truly believe you can't build something best in class if you copy from other people. So our kitchen set up all the artwork was ours, all the design for the uniform mazars, all the recipes rass. And even though, you know, we were getting killed in the first store, we opened up a second store, you know, and that was worse than the first store. And then like any good entrepeneur, thank God it was my money. And I had a business partner who's a co-founder. Name is Robert Hazen. And we opened up a third store. Right. And that was losing even more money. And then Robert kept looking at me like, why are we the ones that have to reintroduce Mexican food? Why can't somebody else do it? But what you do is when you're struggling and you and you refuse to lose, there are two things you do, right? You don't compromise on anything. Like I refuse to compromise on food. We are a food company. And to this day, 15 years later, I've never, ever compromise. And I think the investors and people are GBG know that they can't push me because to me, once you compromise, then you don't win. You don't deserve that right to win. And the other things people, you know, you know, you realize, man, you need great people around you at all times. To me, it's always product and people. And I think the advantage for us is because we were doing so poorly, like my mom was from New York, she called it the race to bankruptcy. She's like, you sure. You know, you thought maybe she'll come back, work on Wall Street. I'm like, I'm telling you, this is the thing. She says, I'm telling you, you're crazy. Like, you have no idea what you're doing. But what happened to gyg was because Australia is obviously a smaller population than us, is that I was like, you know what? I don't care if I lose all my money, but I'm not going to lose it because the food's not incredible. The systems aren't. And we ended up, you know, realizing that people in Australia between 12 and two and six to nine, that we had to build faster systems to make sure that we can feed the people when they wanted to eat. And, you know, as you build a business, you go through tough times. Either you sink or you evolve, you know, and knowing that you will get there one day. And that's what we did. We actually ended up building probably in time. The first is fresh food operating platform, probably anywhere in the world and it's something that we develop their own sticker's systems and kitchen delivery systems. You know, just knowing that in time, once people got to eat our food, we knew they would love it. And it was just it was so fresh. It had so much flavor. You know, we just people didn't realize they don't know what Chipotle was and they didn't know what, you know, they don't know what real guacamole was and they really know what a real tortilla was. And I mean, I'm blessed that we had amazing people along the journey to help us make sure that we got this beautiful product in people's hands to try. And that's that was obviously the turning point. [00:08:42][252.2]

Alec Renehan: [00:08:43] Epic story. In twenty twenty this year, you opened your first US store in a suburb forty minutes outside of Chicago. Why that location as opposed to somewhere, you know, like a major, you know, L.A. or your hometown of New york. [00:08:59][15.7]

Staeven Marks: [00:08:59] York. Naperville is the best city in the United States. Now, you guys just have never hurt. You never heard of it. But we were looking at places, you know, once we stopped, we opened up our first drive through Nerang in Queensland. And it's funny, when we had our fifth restaurant and as things started to turn, we needed to find investors and the guys that were responsible for the growth of McDonald's in Australia. The first store in Australia threw out a guy named Pete Ritchie and Guy Russell and Steve German. They come they came on board. And one thing I said to them, I said, nobody touches my food is my food of my people. But these guys are great real estate people and great people in general. I mean, great business people. They've been to the German McDonald's and then make money for years. And they understood that the reason that people love food brands is because of the food. Right. And the guest experience that you give people. So all of a sudden a drive through opened up. And all I was fixated on was like, my people got to be protected. Nobody can touch the food and we got to go faster, fresher and faster and hotter. And all of a sudden a drive to opportunity popped up and rang. And we opened it up. And we we realized we had the same experience time at McDonald's. And I won't go into McDonald's food. Everybody can do that on their own. I'm slightly biased to my food. But and then at that point, I remember Steve German, who was our chairman, who was with McDonald's as a as the deputy managing director and CFO, because I think the time is now. So all of a sudden we're like nobody in the U.S. And obviously Mexicans like pizza over there. Right. But nobody was doing breakfast, lunch, dinner at our speed through Drivethrough anywhere in the country. That Taco Bell you had Chappellet, you know, gyg was like this hybrid of both, you know, I mean, and Taco and Chipotle. We had a linear setup. We built this W Lineas set up so we can do nachos and fries and have a point of difference for our menu where you couldn't do what a linear. So when that drive thru opened up and realized this is going to be the key to Georgiy, that's five years ago now we have between 30 and 40 drive through, will open up another twenty this year. And obviously, during Covid it was very key to have these drivethrough is that we decided that we had to pick the right suburb of the right city in the U.S. and was between. D.C. and Chicago, after doing a whole, you know, quant study, the U.S. and a real estate study, then Trumpy got into office. Got out of D.C. and like, you know, Chicago is a place. And we went to go find the best neighborhood in Chicago, in Naperville. And we opened up this gorgeous double lane drive through in January 2020. And it and it took off and then covid had so it's obviously dropped in sales, but it's still a double lane drive through. And you have drive through dirnt covid right now is key. So sales are picking back up and we're looking to open up another two to three restaurants in the next 12 months. [00:11:27][148.6]

Alec Renehan: [00:11:28] So, Tom, I'm interested to bring your perspective into this conversation now. We've just heard of Steven's incredible growth story with Trey YJ. When did you first hear about JJ? When did you start thinking about it as an investment? And like, what was the process for Stadium to get involved? [00:11:43][15.2]

Speaker 3: [00:11:44] Yeah, not sure. So a number of the people in the office love George for it and had for many years. And in fact, I remember this was probably 2000 and maybe 11, 12, and we used to have an office on Hunter Street would go and get a salad at MLC for lunch. And one of my business partners, Ben, as we're lining up to get the salad, would toddle off and get a burrito somewhere. So where did that come from? I you know, stumblingly salad is awesome. And so there was this building love among the team in the office for gyg. Then we got a phone call from Morgan Stanley and said, we're looking at raises money for this awesome company called gyg. And would you be interested? And they're looking and taking on the US. We thought that sounds a little bonkers, but are you happy to take the money anyway? I said love, love to meet the founder and it was love at first sight. [00:12:38][54.1]

Alec Renehan: [00:12:39] Did you meet out of Georgia? [00:12:39][0.8]

Alec Renehan: [00:12:41] So the first mate had a [00:12:43][2.3]

Staeven Marks: [00:12:43] hundred meetings since July when he's not sending me pictures of tacos [00:12:46][3.0]

Tom Cowan: [00:12:49] and it's definitely love at first sight. So I made statements like, wow, this guy can create a seriously good business and so we actually invested two years ago almost to the day roughly. And it's been an amazing journey and very, very excited about the future. [00:13:05][16.0]

Alec Renehan: [00:13:06] Do you still think the US is bonkers now? [00:13:08][1.8]

Tom Cowan: [00:13:09] So the key with anything is when you're moving offshore. We had to allow businesses and gyg was one even had a number of time is start slowly, have success and keep building. And so rather than going to the US opening 20 stores and seeing with your work open one, does it work? Let's get it to two works. Let's go to three and certainly I mean, all the early signs are fantastic. And, you know, obviously the opportunity is massive and we think it's worth continuing to build from here. And, you know, the first store is awesome. So very pumped up about the future. [00:13:46][37.7]

Alec Renehan: [00:13:47] Yeah, yeah. I mean, Stephen, to your credit, like they say, imitation is the sincerest form of flattery. And you must look around the Australian landscape now and see the amount of other people trying to do Mexican and think that, you know, you started this. It must be a pretty good feeling to see the influence you've had on the Australian restaurant landscape. [00:14:05][18.1]

Staeven Marks: [00:14:06] Yeah, I mean, especially fast food, right? Everybody wants to get it out of there soon and I want to get into office so you don't look like it's worth it. But I am fast food. Like, I want to really disrupt that industry. And we and we've worked so hard. And we launched a menu that was called a campaign called Clean. It's a new healthy. So we've got a clean menu, you know, I mean, we want to do it all together. We've got real value on our menus is that, you know, we want everybody in Australia to enjoy gyg. And it's so important. And I and I guess, you know, when somebody, you know, imitates you, I mean, it's it's a compliment. Right. But, you know, we really don't care about anybody else. Like, I care about the gyg family and making sure our guests get everything that they want. And I think you notice he said it earlier, is that things take time, you know? I mean, and if you really mean I love this business more than anything, you know, and I want to make sure that my people are supporting, my franchisees are supported. We have corporate restaurants, but I'm in no rush, you know. I mean and that's why I think taking the time to emigrate partners is that what in the rush for. And we want to create legacy. You know, I want to we want to build the best restaurant in the world. You're not going to do that tomorrow. You know, it's just continuous. Like, there's no one thing why? I mean, it's just it's nonstop. You know, even my leadership team like this ever again. And I'm like, never, ever. Yeah. And that's the fun. So you want to be part of that high performance culture because it never ends and it has to be fully ethical and you have to win. And just and as you build momentum, it doesn't stop. And, you know, it's funny to see, you know, and the team, it's kind of like where they play such a major role is that, you know, you need quality, quality people with you to execute it, especially as a founder. I think some founders don't like to give up control. And I'm always looking for somebody that's way smarter than me. Like here you take this right now. I just worry about the Dacos and these guys have come out mean and really helped me build, you know, like Tsay talks about. You mean having a great board, have great investors, you know, I mean, which is really key because these guys. You have to understand the journey and everybody can't be in a rush, right, and it can't be in a rush to compromise once you build that triple A, you know, senior management team, that's when you got it. And these guys, men have been super helpful in helping and giving us time to make sure we got the best team, you know, to to obviously drive what the future is going to look like for gyg. [00:16:13][127.0]

Alec Renehan: [00:16:15] Before we jump into the future of Georgia, I'd be interested to know his Covid resulted in any sort of fundamental change for the business, for the better that you perhaps were thinking about further down the track or that sort of thing, like, you know, a big learning. [00:16:30][14.7]

Staeven Marks: [00:16:30] I would say we were lucky, you know. I mean, we're one of the most delivered I think the chicken burrito was the most delivered product, you know, in Australia. So I always believed that [00:16:38][7.5]

Alec Renehan: [00:16:38] so many riders outside every day, which is why [00:16:42][3.3]

Staeven Marks: [00:16:42] it's tremendous. Like all people kept saying, you know, that's what I said about fast food. We want to be fast food. And the whole thing is like when that fast food become bad for you. Our food is clean, it's healthy, but we have fun with you stuff. Corn chips and nachos. And if it's clean. So all I ever want to do is take away delivery drive. So when Covid it, that's the best part of our business. Yeah, we have dining rooms, you can have a corona and anything, but we do take away delivery, drive you better than anyone. And when Covid head and you want to pick up and it's amazing how people like ah the restaurants clean, I'm like get it clean. I mean like the crew is their hygiene. Yeah. And we run restaurants of course is I never knew that wasn't a focus. So but one thing you know, I think that's really important. When covid hit and we weren't sure what she was going to lockdown, obviously I'm a big investor engaging STC. You know, it came down to the point of what are we going to do? You know, I mean, this comes into governance and everything. Like, you know, we still have a business to run. And one, if this thing goes to full lockdown, there are one hundred and ten people in and out. We call it all our Central and Surry Hills. We got 5000 in the restaurants. We got franchisees. And I said to them, I said, I can't let anybody go unless we're going to lock them. And it's the culture of gyg and these people. I need these people. We invested in his foundation for so long, you know, we're keeping our people we got to open up one last restaurant and that's what we'll do. And these guys were just like, you do whatever you got to do with your team. And we're fully supportive. And that changed our business. So covid change in the momentum of our people in the belief they have engine. You can't fake that either. Colchis, you believe it in your soul. And I'm all like, nobody can touch my people, man, in my life, you know, mean either that's true or it's not right. You can't buy culture. You can't buy product. You know, so I think that's I mean, that's the key when you look at a business, right. They got product and people [00:18:22][100.1]

Tom Cowan: [00:18:23] don't touch the food. [00:18:24][0.5]

Alec Renehan: [00:18:26] So Bryce introduced the conversation by talking about one day in the future, an IPO may be on the horizon for JJ and Tom's given us a lot of good information on how he thinks about, you know, getting companies ready for an IPO. So we're interested to know, you know, how you're thinking about the possibility of an IPO and on the horizon and the steps that you're taking with TDM to be ready for that eventuality whenever it may come in the future. [00:18:51][24.9]

Staeven Marks: [00:18:52] You know, it's funny. Do you know what's important? The T.S.A. are important to me, too. But it's kind of when you build the business, you can't have systems like world class systems immediately. I mean, so there's a sequence to what you do. And so we started with the only thing I care about that people edit so obviously is fixated on revenue, right? If I had no revenue, I had no business. Right. Eventually, I'd have the best, you know, inventory systems and everything. But I wanted to build a brand that people really loved. You know, I know where you build a that people love is you have food that they really want that's honest. And yet people that want to sell it, you know, I mean, and then you deliver that we call the gyg experience. I was fixated on that. I remember some of the boards like all you think about as revenue, I said, and because I'm a finance guy as well. So I knew where the economics of the business were. But I know if tomatoes go from four dollars to six dollars a kilo and I'm doing twenty five a week to eighty week, it's a little bit easier to deal with that eighty thousand a week than at twenty. So I knew because we deal with all fresh produce, I knew that revenue helps me if there's market conditions or what's happening. So there's a sequence, that's when you build a business. So to me was about revenue. It was about obviously product, it was about people. And then slowly you get in, you know, you need to make sure your finances tight, right at any time. I see a lot of entrepreneurs like, well, I'm not a CFO. I don't really know finance. Well, if you're founder and CEO, you better know finance. You got to know how to run your business. You got to know the economics of your business. So I'm lucky the economics of the restaurant business is relatively easy, in my opinion, you know, and then it's figuring out who do you bring in, you know, and where your weaknesses are. I know what I'm good at and I know what I'm not good at. And but I'm very good at finding out what I'm not good at and finding those people, you know, he talks about board my board. You know, our chairman is a guy named Guy Rusa, who was the CEO of McDonald's and obviously turned around Kmart and Target. I mean, he's the best, you know. And the guy before was Steve German was probably the smartest investors in Australia. They've been with me for ten years, you know what I mean? So we've picked amazing people that understood the journey like you want to. Besides Cap, you want intellectual capital. So slowly along the journey, we just kept making sure that what wasn't really working for us, we replaced with best in class, like, you know, with our, you know, our inventory systems and our financial reporting systems, you know, bringing in right now, I have a guy named Mike Hershkowitz who built accent group with Daniel Morgan Stanley and Hilton bred these guys, best CFO seal in the country. So he takes care of all the backend stuff. I take care of all the front end stuff, you know, so it's the most important thing is building a team that gives you accurate reporting. Everything is obviously the you know, you get so much. We need those insights into your business, so I think when you when you check all these things that you're ready for IPO and then people look at me, why would you want to be scrutinized in the public markets? You know, the markets. But where I want everybody to talk, I want everybody to share gyg, you know, I mean, like, how cool will that be? Like you love that we'll taco that you love or guacamole and now you can have a piece of gyg. That's the trip. And Tom says, you know, when you have you know, everybody has options at gyg at all essential, like to have those guys have that come to fruition where they can actually own shares and have that changed their lives. And that's that's an amazing experience and ability to be able to do that to someone. [00:21:50][178.1]

Alec Renehan: [00:21:51] Is that the biggest motivator to help people own a share of the company and enjoy the, you know, the fruits of their labor? In some ways, yeah. [00:21:59][8.0]

Staeven Marks: [00:21:59] And have the public own it. Like, if you love Geveden, you can buy shares in it. That's awesome. And I had a dream as a kid and I have to run a hedge fund. I always wanted to take a company public. And this is something that the people that are involved, I mean, they love it. It's a special business. Right. And I'm sure people say that about their businesses. But, you know, we have so many advocates of gyg and the growth of right now. It's exceptional that it really to me, that's all I'm fixated on, is making sure that it continues to grow and that people can have a piece of it. It's awesome. [00:22:25][26.0]

Alec Renehan: [00:22:26] Do you think being a public market CEO might change your entrepreneurial mindset in any way, kind of thinking about how that might? [00:22:33][7.6]

Staeven Marks: [00:22:34] Well, I think they thought I'd go through media training. As I said the F word once today, I wanted to yell at me kidding. But I'm [00:22:45][11.1]

Tom Cowan: [00:22:45] pretty confident that whatever show [00:22:46][1.4]

Staeven Marks: [00:22:47] is like, there's personality. Right. And there's passion behind what I do. And that may sound a certain way this business means ever to me and I would never do anything to hurt it. And I think with T.C. in the board, it's just that we all feel the same way. Let's just make sure that we keep doing what we're doing and just make sure we're tight on governance, which you have to be like. You know, you turn into a publicly traded company like we responsibility to shareholders. And I take that very seriously. [00:23:08][20.8]

Tom Cowan: [00:23:09] I think that's the key thing, is that we don't want Steve to change at all. And the key for any fan of it and Steve has done it very well, is to recognize what he's good at and where he needs help. And he talked about Mike. I think that's you know, Mike's with an amazing addition to the team. And there's been a number of times where Steve has done that. And he knows that that brings, you know, the team and the team will get the outcome. He cannot do it all himself. We don't want him to change that, that entrepreneurial flair. He's got an amazing gut feel for the food and what is a great menu item. And he's got an amazing feeling to how to build the brand and keep at it [00:23:52][43.0]

Alec Renehan: [00:23:52] just on that tone. Then when you guys came in as investors in JJ, what have you really brought to the table in terms of your expertize in that process that we spoke about in the last episode? Where have you sort of filled the gaps the most? [00:24:04][12.2]

Tom Cowan: [00:24:05] Yeah, so I think we're in terms of what Steve talked about, there's a right time when you start focus on different things and you know the business. I can't remember exactly let's call it was two hundred million revenue when we first invested. And Steve has, you know, a very clear objective to build an amazing business, a very long term. Now's the time to build and scale the business for the future. So in the last 18 months, pretty much every system has been overhauled. You don't want to do a new ERP once you public. So let's make sure we've got the best technology and leveraging that technology. So the team has done an amazing job in the last three months on that. Let's make sure we've got the right board. Will Steve, as it happened, had already done an amazing job on that. He had three or four of the best non-executive directors you could dream of, and so he'd done exceptionally well. So there's been very limited changes at board level, really, apart from Hilton myself coming onto the board. You know, and we've worked with Steve on a number of things around, you know, making sure that the entire team does have options and make sure that the whole process and nailing that and a whole raft of other things. But it was the right time to bring in someone like us who can, I suppose, helped bring in that additional rigor to help the business go to [00:25:22][76.9]

Staeven Marks: [00:25:22] the next level. It seems if I can say something, what's amazing about TDM is the level of due diligence. I remember like after like a month and I'm like, is this ever going to be supplier? Every franchisee, every state, they'll make this better. Pay off a guy who sits on a broad, Bruce Buchanan, who's who has he's the CEO of Rock, who's one of the best entrepreneurs, CEOs. He's like, do you sure you know what? You're doing that to the investor. As I said, I told you about what happens with that level of due diligence. And these guys, we work hard. These guys work hard. Is that because they're not private equity? They're in it for the long term and so am I. You make the right decisions together. Like when he speaks to me, like I know we're not doing anything short term just to create you know, it's not an opportunity, a monetary opportunity. Grab it. It's kind of what is best for this business. Like we're just starting, you know, I mean, we only have one hundred and forty plus restaurants. McDonald's has 30000 Chipotle. He's got 3000 thousand. We got 140, that's it, you know, but we've worked so hard that we built something where somebody said to me, Well, you're not McDonald's. I said, no, we're I think we're better. I think we own fast food, but is still young. He's I have a lot of restaurants yet we just got to keep building them but it's that journey never being rushed, like, you know, I think, you know, see something once, you know, you invest in companies that that can't be replicated and you can't like there's a restaurant in New York called Balthasar. Right. I go to every city. Everybody tries to copy it. You can copy the fit out and copy the menu, but you can't copy it. You know, I think what you mean when you're a line, you know, with one another, maybe that's not the right word. But T.C. and I you know, we see eye to eye with Guy Raz on the board. It's like where we truly believe this company can be and we make sure that we're together and all those steps, which makes a great guy. And it's no pressure like. I know. I mean, he's got an amazing analyst group over at TDM and these guys do due diligence on every fast food company in the States, every loyalty app, every, you know, every app, you know, to do delivery, which obviously Guajira, you know, the level work these guys do to help us is insane. And that's what gives us some major, major edge. [00:27:15][113.4]

Tom Cowan: [00:27:16] I think that alignment piece is very important. You know, we always say you need to be all, you know, to be fundamentally aligned around core values. And Steve mentioned around the people during Covid, that was a very easy discussion about the world. We're all alone. We understand that people are the most important asset this business has. We want to keep the people on pretty much any circumstance. And that decision was made very quickly and. [00:27:40][24.0]

Alec Renehan: [00:27:45] It sounds like you guys are highly aligned and I don't want to throw a cat among the pigeons, but I'm going to anyway. Obviously when Tatum first came on board, your perspectives would have been very different. You know, Stephen, you would have been building the business for over a decade, Tom. You were investing a lot of businesses, but were relatively new to Georgia. Was there anything that you guys didn't like weren't aligned and you had very different perspectives on a certain issue or a certain aspect of the business. And then as a founder and a major investor, you had to sort of overcome that and find alignment. [00:28:16][30.5]

Staeven Marks: [00:28:16] As you get to know me, I'm extremely direct and extremely transparent. And I would honestly tell you we haven't had one case like that with him, really. And I think it's because of the due diligence process we had to make sure we were the right partners for each other. Not once you know me, because I think he's he understands how important, you know, I mean, I could keep going back to it. And it's the experience of Georgia and the people. What else are you going to invest in that's investing? Right. I mean, do you have the right management? You have the right product, you have the right people, you have the right vision of what the future has to be at the economics right for your business. If he knows that's so important to me and that's why he's investing what are going to disagree on. [00:28:51][35.0]

Tom Cowan: [00:28:51] And I think the other thing is, if you think up front, you know, we always said to marriage, if you think up front, there may be an issue where you might not have a lineman or race at the beginning and get a lineman. So there were two key things that we got along and up front. You know, the business as they've talked about was focus on revenue. And that was the right decision for the first 10 years of its life. But the back office wasn't where it needed to be. And so, you know, we came up with a plan right at the beginning, said, guys, this is what best in class looks like from a back office perspective. Do you agree and do you agree we need to fix in the first three months quick conversation. Seems like he felt for best in class. Is that what it is? Let's do it so well, that that was an easy conversation. So we're like that really on any topic, if you've got an issue, you raise it, you get along and you move on. [00:29:42][50.9]

Staeven Marks: [00:29:43] You know, we actually had one issue, OK, at our store on Australia's screen screenies like I think we've got a problem. I'm like, you have it? So he goes, what's up with the plastic bags? I'm like, the biodegradable goods, biodegradable plastic bags as it says it on. And he goes, I know, you know, I mean, as if we're trying to go to paper, he's like, let's go quicker because all of our packaging made sugar cane pulp and compostable cutlery, even though had biodegradable, he was like, I don't know if I believe that. I said, I don't believe it either, but I have eight hundred thousand things I'm doing. But you know what? You're right. Let's change it. And that was that. [00:30:18][34.3]

Alec Renehan: [00:30:18] Wow. Wow. So you're your due diligence process seems extremely robust. [00:30:23][4.6]

Tom Cowan: [00:30:25] Depends who you talk to. [00:30:26][0.9]

Alec Renehan: [00:30:26] Cost over Equity Mates. [00:30:27][1.1]

Staeven Marks: [00:30:28] But you know what happened. It's so thorough. Like you think it's exhausting. But, you know, when the he knows everything. Yeah. He can't be. I didn't tell you [00:30:35][7.0]

Alec Renehan: [00:30:37] what I do in broad strokes. We don't need to go into too much detail. It sounds like we might be here all day. But can you just give us broad strokes, what you needed to do to be comfortable with J.Y. but with any business you're investing in before you actually make that investment? [00:30:51][14.0]

Tom Cowan: [00:30:51] Well, as I said before, it's a marriage. So we actually think it's beneficial for both parties to do detailed due diligence on each other. I mean, in terms of, you know, we gave Steve a list of ten or fifteen CEOs that we'd worked with and their phone numbers and he went and called them. Now, a lot of people, a lot of CEOs don't do that. But he wanted to make sure that we were the right partner for him and we think that's the right thing. So in terms of us, I mean, our process and is I mean, it does take some time and certainly, it's not easy on on on management, but getting alignment us understand the business that when we come to that first board meeting, we know exactly what's going on. I would say it's actually a win win for both parties and we want them to do the same work. And I say it both ways. [00:31:37][46.4]

Alec Renehan: [00:31:38] That says a lot about TDM or a lot about your confidence that you're willing to give a list of if they say, [00:31:43][5.1]

Staeven Marks: [00:31:45] oh, you know, we went on and obviously went on a roadshow to raise capital and we spoke to, I think, 25 different companies. You know, and nobody I mean, you can sit. I mean, I've very good intuition, you know, I mean, I sat across from T.C. I was just like and this is that after going through New York, San Francisco, L.A., you know, Singapore well. And these guys, I mean, they got together an amazing team that's pretty high priced, built an amazing unclipped. [00:32:09][24.3]

Alec Renehan: [00:32:10] And they're looking forward to the due diligence process on the Equity Mates business. One last question around the IPO process that, you know, you're one day thinking about undergoing, is anything that surprised you about it? Like you obviously, Stephen, you've been in markets for years on the investor side and then you've been building this business. But was there anything in conversations with Tom or anyone else that surprised you that you didn't think that you would have to do before you went public, that you now building into your plan? [00:32:39][29.5]

Staeven Marks: [00:32:40] Well, I guess because I don't have to do a lot. You know, I rely actually on TDM, my job is to run this business and grow revenues. And obviously TDM and Mike Hershkowitz and our finance team, you know, take care of a lot of stuff. But the level of governance, you know, and documentation is is a lot, which I've always been. We've been ordered for years and we run a really, really clean, tight ship, like unless you and I believe in it. Right. I mean, it's kind of like that's how we run restaurants. We run our business the same way. [00:33:08][27.8]

Tom Cowan: [00:33:08] But and you've had aboard for ten years [00:33:09][1.6]

Staeven Marks: [00:33:10] and a board for like a real board, you know, I mean, no, I mean I mean, it's just getting everything even tighter, you know, more documentation, making sure that we're right. So when, you know, when potential investors remain, I want them to it's kind of like when we you know, what to do. Don said that he did. And it was so thorough. You know, I think it's Georgi Grossman was different, like back in the HEG when we were losing so much money. Like, I'm telling you, it's going to be great, you know? I mean, try the black beans or I'd swear, you know, about a piece of steak like this. Now, it's kind of like, I want you to read everything. I want you to know everything. I want you to make sure this decision is your decision, but you're not selling it to anyone. You know, you want somebody to become part of this journey, but to behave the ability to do such thorough research that they're making up their mind on their own. And I think having that level of documentation and due diligence, you know, what law firms or investment banks mean? It's key, but it's a lot of work. And my job is to make sure I don't take off my business to be prepared for an IPO. Yeah. So I'm going to ask for a lot of help. [00:34:05][55.0]

Alec Renehan: [00:34:06] Do you find that that sometimes happens to Tom, the founders or CEOs get so focused on the IPO process that they take the eye off their business. [00:34:13][6.7]

Tom Cowan: [00:34:13] We want to make sure that the management team don't take their Afterpay. I mean, there is you can't get around, you know, the roadshow they want to make safe. So there are some [00:34:24][10.8]

Alec Renehan: [00:34:24] things I think Steve is going to be fine. All right. [00:34:27][2.2]

Tom Cowan: [00:34:27] So my point is that is it. Yeah, that's a week or two. It's intent. There are some things that he has to do, but we want to take as much pressure off the management team as possible. So we ideally will try and take wherever possible away from the management team to allow them to run the business, because if they're not running the business, we all have problems. So, I mean, that is part of our pitch, so to speak, to founders is we're actually here to help. We're here to take some of that workload away from you so you can run the business and get the best outcome from a business perspective, [00:35:01][33.3]

Staeven Marks: [00:35:02] you know, with T.C. and his team is that, you know, I mean, it's kind of like with me, you know, as the founder and CEO, like I'm in this business, you know, T.C. doesn't have like a team of analysts working with taxes in it with us, with his team. And I think you really don't see that. When we look at other private equity firms, you probably have a team of young analysts helping you out. But like you got somebody who's got a ridiculous amount of experience with you, not like kind of with you, but like with you. And I think that's. You mean that pairing is what will give us the high probability of being very successful? [00:35:29][27.5]

Alec Renehan: [00:35:30] Well, Stephen, I know you need to get back to what was the name of your HQ, [00:35:34][3.4]

Staeven Marks: [00:35:35] Bolat Central O.S.S. Lacassine, of first testing some new menu items? Oh, no, [00:35:41][6.4]

Alec Renehan: [00:35:42] that's a great part of the job. [00:35:43][0.9]

Staeven Marks: [00:35:44] But if we ever IPO, I can't tell anyone until we launch it. [00:35:46][2.2]

Alec Renehan: [00:35:49] It's been a rather inspiring conversation, I must admit. And one thing that we always try and get all of our guests to pass on to our listeners is perhaps a book that they're reading at the moment, or that is a must-read, either investing related or otherwise. And I'm sure in the entrepreneurial space, you know, a lot of our listeners would love to know if there's anything from your point of view that are [00:36:10][21.3]

Staeven Marks: [00:36:11] actually just finished that Theranos book, [00:36:12][1.4]

Alec Renehan: [00:36:14] Bad Blood or so, [00:36:15][0.9]

Staeven Marks: [00:36:15] but don't do that. [00:36:16][0.8]

Tom Cowan: [00:36:16] No, I thought I was going to say scaling up, but [00:36:19][3.3]

Staeven Marks: [00:36:21] it is a podcast. But when you mean really I mean, you know what's great about this world now? I mean, because it's actually very transparent and you have to be competitive, but you have to have ethics. People keep saying you can't build a business that's sustainable and competitive and not have ethics like ethics is everything, you know. I mean I mean the Theranos book. And these guys are I mean, I can't believe they would just believe this lady left and right. I boosted the Bryce. You know, it's amazing. But yeah, ethics is everything. Yeah. [00:36:50][28.7]

Alec Renehan: [00:36:50] They needed a stadium level of due diligence listening to [00:36:54][3.6]

Staeven Marks: [00:36:55] TCB like was the machine that's coming. All right, Reza Machine, [00:36:57][2.5]

Alec Renehan: [00:36:59] speaking of scaling up and TDM, if you would like further resources on everything, we've sort of spoken about the IPO process, as well as more info on the scaling up a podcast and to subscribe to their quarterly newsletter. Head to Tedham Growth Partners dot com. A wealth of information there for all sorts of investors to sort of better their investing journey. So make sure you go and hit that up. TDM Growth Partners dot com. But Stephen and Tom, thank you very much for joining us. It's been an absolute pleasure. Best of luck with the next phase of Goozman y Gomez. I love eating it. Alec loves eating it. [00:37:33][34.6]

Staeven Marks: [00:37:34] Thank you, Equity Mates guys. [00:37:36][2.1]

Alec Renehan: [00:37:38] And hopefully at some point Bryce can actually get the name right. [00:37:40][2.4]

Alec Renehan: [00:37:41] You don't hear it. [00:37:45][4.0]

Staeven Marks: [00:37:45] Say gyg its easier. [00:37:46][1.4]

Alec Renehan: [00:37:49] Thank you for joining us. It's been an absolute pleasure. [00:37:51][1.2]

Tom Cowan: [00:37:51] Thanks, guys. Thank you. [00:37:51][0.0]

[2142.6]

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