In this clarifying episode, Eric Wiklendt, Managing Director of Speyside Equity, shares how to succeed as an investor when someone else is driving and you can no longer grab the wheel. If you’re moving into true ownership or private equity and struggle to let go of hands-on control, you won’t want to miss it.

You will discover:

- Why managing through people, processes, and systems is the essential skill at Level 6

- How to use scorecards and exception-based reviews so you lead without micromanaging

- What makes strong investors accept 80-90% results and focus on removing impediments

This episode is ideal for for Founders, Owners, and CEOs in stage 6 of The Founder's Evolution. Not sure which stage you're in? Find out for free in less than 10 minutes at https://www.scalearchitects.com/founders/quiz

Eric Wiklendt is a Managing Director at Speyside Equity, where he is responsible for sourcing, executing, managing, and exiting investments. Before joining Speyside Equity, Eric was President & CEO of Kelix Heat Transfer Systems. Prior to that, he held leadership roles at Eaton and Hilti Corporation, where he oversaw M&A activities, established a manufacturing plant in Mexico, managed a large marketing team, and directed industrial sales operations. A graduate of the University of Notre Dame, Eric obtained his MBA from the Wharton School at the University of Pennsylvania.

Want to learn more about Eric Wiklendt's work at Speyside Equity? Check out his website at https://speysideequity.com/

Connect with Eric through his LinkedIn at https://www.linkedin.com/in/ericwiklendt/

Hello, hello, and welcome, welcome once again

to the Start, Scale, and Succeed podcast-the only podcast that

grows with you through all seven levels of your journey as a

founder. I'm your host Scott Ritzheimer, and I want to talk

to those of you out there who are either getting close to or

have already made the move from being an entrepreneur or even an

executive to becoming the investor, especially those of

you who are at the true owner level of your journey. And

here's what I think makes this level so disorienting, and that

is that so many of the things that worked that got you here

start to become a little bit more problematic. For example,

if we were to use a just a quick metaphor, you win through levels

one through five by putting your hands on the wheel at the right

time. But here in level six, it's still your money. You know,

it's still your name and reputation on the line. It's

still a race to be won. But now, chances are somebody else is

driving it, and you don't get to steer, which means that a lot of

the tools that you would have gone to choose from, especially

when things get tough, are no longer at your disposal. So how

is it that we win here in level six? Well, you don't need to

take it from me. We've got a much better expert available for

us here today, and that is Eric Wiklendt, who is a managing

director at Spaceside Equity, where he's responsible for

sourcing, executing, managing, and exiting investments. Before

joining Spaceydequity, Eric was president and CEO of Keylux Heat

Transfer Systems. Prior to that, he held leadership roles at

Eaton and Hilti Corporation, where he oversaw M and A

activities, established a manufacturing plant in Mexico,

managed a large marketing team, and directed industrial sales

operations. He's a graduate of University of Notre Dame and

obtained his MBA from Wharton School at the University of

Pennsylvania. And he's here with us today, Eric. I'm excited to

have you on. It can be tough to get guests who are great at

level six of this journey because we're talking to

founders all the time, and so having had my own kind of

dabbling in this and watching several others go through the

process, success in level five, like as a CEO, as a business

owner, is no guarantee of success in level six as an

investor. What are some of the biggest mistakes that you see

founders and other executive type leaders make after the sale

when they jump into this investor game?

Yeah, I'd say in a sentence, being able to manage

through people, processes, and systems. So you know. Said

differently, scalability and repeatability relative to

managing the investment and creating returns. So, to your

point, I liked your analogy about hands on the wheel. It's

it's a really good one. And when when you get to I guess what you

would call level six, it's more like you're in the back seat

telling somebody who's got their hands on the wheel what to do,

but without without trying to be like the annoying little kid

who's asking, "Are we there yet? Right, which is is hard to do.

Honestly, that's so you know you ask, "Okay, what's hard about

it? That's probably the hardest part because you know how you

would do it, and you need to like understand that you're

going to manage through people, processes, and and systems, and

they're not going to do it exactly the way that you would

do it. So you're going to need to you know accept 80 to 90% of

how you would do it result, right? And by the way, sometimes

it goes way better, but it's it's a little bit uncomfortable

because you don't have your hands on the wheel, and you know

you've probably steered out of some ditches in the past or

breaked in some heavy snow in the past, and know how that

goes. And watching somebody else can do it is a little bit

terrifying. It's like teaching your 15 year old kid to drive in

sitting in the driver's seat.

I'm sitting here like having hot flashes

because that's exactly what's going on in life right now. I'm

teaching my 15 year old how to drive, and I can tell you, no

matter how hard I push, my brake pedal on the right side has not

worked yet. Like I don't, I don't know what's wrong with

that. And and you saying sitting in the back seat's a whole whole

nother level because at least in the front seat I can reach for

the wheel and avoid the curb, but in the back seat, you just

don't have the options. Here, I see a lot of folks, and this

isn't just true of you know level five to level six, but any

one of these transitions forward, we kind of romanticize

the next level. We have a tendency to think about what

happens when it works, but lack the skill to deal with it when

it doesn't, and so I like that you brought up that it's not

going to be done the way that you do. Having done this for

some time now, having you know been around successful

endeavors, you've probably seen some that weren't as successful

and needed turning around. What are. Skills that allow investors

to to recognize those problems and and see their solutions

without being able to just grab the wheel themselves.

So, in my my opinion, it's having appropriate feedback

mechanisms in the business and being able to like read those

feedback mechanisms. So in our businesses, we do a couple. You

know, we do board meetings every month. But part of what those

board meetings entail is the team, the management team,

reporting on a couple key, well, few key items. The first thing

we have is a deal thesis scorecard, which is a scorecard

that lays out how the business is creating equity value, and

then the next thing is an operational scorecard. So the

first one is a results scorecard. Then the second one

is what I would call a diagnostics and activity

scorecard. So like one is okay, what results are you getting?

And then the next one is, are you getting the results the

right way? That's kind of diagnostic part. And then

there's there's two other things, which are it's basically

key projects for the year that we'll review. Usually, we'll

pick somewhere between one and seven key projects for a

business, depending on what's going on and what's important

and how big you know the a project may or may not be, and

then there's a there's a fourth thing which I guess is always a

key project. So if there are no other key projects and

initiatives, we're always doing continuous and process

improvement. So that that project's always there. That's

why it's not zero to seven; it's it's one to seven, because

that's that's that, and it really comes that that

methodology comes from the strategy deployment process.

That's kind of well known. Some people know it as like the X

matrix that's used, and it's about breaking down things into

smaller tasks and monitoring them, and that's the way we

choose to monitor them, and it works pretty well. And then that

way you can kind of take a step back, and you know, for me

personally, like all the portfolio companies I'm

responsible for, you know, every month, you know, I get those

reports, and I can tell in about probably 10 minutes how that

business did for the month, and how they're doing for the year,

and it becomes like I kind of then like know like okay what do

I what do I really need to focus on here and how do I manage by

exception right because then that way if you're just managing

by exception you you're not that annoying little kid in the back

the car you know being a micromanager, asking if you're

there yet, and you you really just focus on the things where

the management team may need help. And what I kind of explain

as the chairman of the board, my job is kind of the chief

impediment removal guy.

Yeah, I love that. So, founders in

particular, which is a lot of folks on who listen to the show,

tend to be visionary in nature, right? They they see

opportunities, and especially later in in their time inside of

an organization, being able to see those opportunities and kind

of hand them off to a team that executes them tends to be a

skill that they start to develop. Is that the same game

in in the investor space? Are you looking for opportunities in

in the same way, or is there a better approach?

Yeah, great question. So, in the way that we do

private equity at Spayside, 100% yes. And the reason why is that

we tend to be looking for things that we can improve, and in one

of two ways: either operationally, in which case

we'll improve the EBITDA margins or the profitability of the

business, or growth, like grow the top line of the business,

either through acquisitive bolt-on acquisitions or

organically. And so we tend to have a very you know structured

approach to how we do that, and it it ends up in what's called a

three to five year value creation plan, which to your

point is kind of the vision for the business, and then we'll

we'll think about how to execute that in the business with the

human resources, the human capital that we have, and a lot

of that is about very strong and appropriate delegation. The

challenge that a lot of people have, right, with those sorts of

things is that they're not great delegators, frankly. Number one,

because either a they don't have a vision, or b they don't really

know how to get from point A to point B, and or C, they don't

have the skill set to delegate. They just outsource it, kind of

like they just like pitch it over the fence and like hope

somebody else like gets it done. And the reality, I don't know.

In my my view, the world is business is like 1% strategy and

99% execution. Like strategy is actually pretty easy. The

hardest part about strategy and vision is deciding what not to

do, more so than deciding what to do. But like once you decide

what to do, you should be able to lay that all out on pretty

much one piece of paper, right, to explain what the three to

five year vision is, and then to execute it. You know, the 99%

execution should be a big project plan, which you break

break down into yearly chunks and monthly, quarterly chunks

and monthly chunks, and then appropriately delegate. And I

feel like most people in the world, you find very very few

people that can do both vision and execution, strategy and

execution, so strategy and tactics. It's it's extremely

rare, right? Most people are good at one or the other, not

both. But when you find somebody who can be good at both, they

tend to be the people that you know build unicorns or have you

know really strong return on investment and things like that,

and it's not easy. Sometimes, sometimes one comes naturally

and the other doesn't. You got to learn the other. For some

people, they both come naturally, but that's pretty

rare.

Yeah, one of the advantages of operating

inside of a company, at least a mature one, is that your team is

relatively well defined-not perfectly, but but you kind of

have an idea, and and hopefully by level five you have people

who will challenge you when you have a harebrained idea. It's

not always a given, but hopefully that's the case. Well,

when you let's say you leave that team behind to a successor,

or you sell that business outright, and and you're you

know you're on your own, if you will, how do you how how do you

keep from making those harebrained decisions by

yourself? What does what does making investing a team sport

look like?

Yeah, so I I did not know this. I was entertainingly

enough. I was watching a a TikTok about this the other day,

but apparently metacognition is a rare thing, which is where you

think about how you think. So that, though, I think is a good

skill to learn, and because it it makes you like take a step

back and be like, okay, this is how I'm thinking about

something. Am I thinking about it right? And the other thing

too is like I don't know, like the way I think about most

things or like have experienced things is like I'll come up with

a framework or a model in in my head, or sometimes I'll even

write it down, and then I'll push as much data through the or

data or data points through the model or the framework as

possible, with the idea that hey, I'm going to be willing to

change the output of you know the the model right. If you

think about it as an equation, you know y equals you know alpha

plus mx blah blah blah whatever, right? Well, as you push more

data through the right side of the equation, your y may change.

You know your your output, and that's fine. Then the question

is like metacognition helps you with should you actually change

like the model or the framework, right? Is the stuff to the right

actually the right part of the equation, and can you know do

you change that as you go? And I think you really got to force

yourself to do that, based on like being honest with yourself.

Like, what are you trying to achieve, and then also like

being honest with yourself, like, what don't you really

know, right? So, what part of the like equations or the

equation set, like, are you like, I think it's like this,

but maybe I should go ask an expert if I'm really getting

that part of the framework right. I do that a lot, and so

you said like, how do you do it by yourself? And the answer is

partially like, hey, go go find some new people to bounce ideas

off, and then also just be critical of your own, you know,

your own your own framework and your own output, and be willing

to change with new information. Don't get, don't don't don't

become a victim of your own biases. That's hard to say. Like

we're all humans, right? Like so, we're going to have some

biases, and and that's okay. But try to realize what they may be,

and then try to think about that as you think through the the

problem, and try to avoid them.

Yeah, it's it's one of those things that's

easy to say on a podcast, can be challenging to do in the real

world. So yeah, I love this idea of of really having the humility

to bring in experts. I I think that's so important for this

stage, Eric. There's this question that I have for you.

It's a question I ask all my guests. I'm interested to see

what you have to say, and the question is this: What is the

biggest secret you wish wasn't a secret at all? What's that one

thing you wish every founder watching or listening today

knew?

Hmm. I I guess I would say, well, as it relates to me

personally, as a guy that buys and sells businesses, and some

of those businesses I would like to buy, is basically be

realistic about what a selling process looks like. You know, I

wish everybody knew it takes. It's a little harder. It takes a

little bit longer. Your baby's not as beautiful as you think it

is to the outside world. That that would be one thing that

like sometimes in private equity world is a little bit

frustrating when you're you know buying a business from somebody

who's never sold a business before, first time exit, you

know, person. If I were to go back though, in like, you know,

20 years or something, and like give myself some advice and

probably some things that I would give like newer founders

or younger folks advice on would be like be a little bit patient

and try to be a little more patient than you think you have

the ability to be, and then like also like maybe don't don't be

so self critical. Like not everything is going to go

perfectly. It it just never does. It's you know that's life.

God oftentimes, or karma, whatever you want it, or the

universe, however you want to think about it, laughs at your

plans and gives you a new path, and that's okay. That's how

things go. Don't don't get so worked up about it if it

happens. It's it's just it's just how it is. So yeah, those

those would be the two two big things, I think.

Fantastic, fantastic, Eric. If someone is

either wanting to sell their business or or succeed in this

this investor stage, or if they just want to know more about

you, the work that you and your team do, where can they learn

more about you? Where can they find out more?

Yeah, they can find me on LinkedIn. It's just my. If

you just look at my name, I think I'm the only guy in the

world that has it because my last name is spelled somewhat

uniquely. And so I'm on LinkedIn. You can you can get my

cell phone number and email there, or if you go onto our

spaceside equity.com website, you can find my information

there. Happy to yeah chat with anybody that wants some help

thinking about you know investing in businesses or

selling businesses or whatnot. I was happy to do that. And if you

got any folks out there that have any really good Industry

4.0 businesses that are looking for customers in the

manufacturing space definitely hit me up on that as well. We're

looking for good partners in that space to fuel our LBO

investments and make them better.

Excellent, it's a lot going on. A lot of

exciting opportunity. Highly recommend checking them out.

Eric, thank you so much for being on the show. Really was a

privilege and honor having you here today. And for those of you

watching and listening, you know your time and attention mean the

world to us. I hope you got as much out of this conversation as

I know I did, and I cannot wait to see you next time. Take care.

Hey everyone, Scott Ritzheimer here. Thank you so much for

listening to the Start Scale and Succeed podcast. I hope this

episode gave you exactly what you need for the level you're in

right now. If you want to discover what level you're in,

take our 10 question Founders Evolution Quiz for free at

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exactly where you are, and give you tailored tips to move

forward and reach that next level in your journey as a

founder. If you got something out of today's episode, don't

forget to subscribe, rate, or review. It helps us reach more

founders like you, and let's be honest, it means a ton to me, my

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