In this episode, Bob Carlson, Operating Partner at Shore Capital, and Michael Burcham, Chief of Strategy, Research, and Talent Development, reflect on their experience serving on the board of Point C, a Shore portfolio company that completed a successful recapitalization. They share how the early investment thesis came together, how the founding partner was identified, and how the executive team, board, and M&A strategy evolved over time. Bob and Michael offer insights for first-time board members, including how to engage between meetings and why sharing experience rather than advice matters most. They close by discussing their personal passion for entrepreneurship and how investing in startups sharpens their perspective and fuels innovation across Shore.

Key Takeaways:

• Platform companies succeed when strategy, culture, and execution evolve together through each stage of growth
• Board members drive value by engaging between meetings and sharing hard-earned experience, not just advice
• The best partnerships are built on values alignment, shared purpose, and a clear vision for growth
• Staying close to early-stage entrepreneurship sharpens perspective and drives innovation across the portfolio

Chapters:

• 00:00 - Introduction
• 05:20 - Why the TPA Space Made Strategic Sense
• 08:28 - Launching and Scaling the Point C Platform
• 12:13 - Evolving the M&A Strategy and Partner Fit
• 17:00 - Lessons for First-Time Board Members
• 22:13 - Entrepreneurship, Innovation, and Staying Sharp

Listen to our podcasts at:

https://www.shorecp.university/podcasts

You'll also find other Microcap Moments episodes, alongside our series Everyday Heroes and Bigger. Stronger. Faster., highlighting the people and stories that make the microcap space unique.

Other ways to connect:

Blog: https://www.shorecp.university/blog

Shore Capital University: https://www.shorecp.university/

Shore Capital Partners: https://www.shorecp.com/

LinkedIn: https://www.linkedin.com/company/shore-university

This podcast is the property of Shore Capital Partners LLC. None of the content herein is investment advice, an offer of investment advisory services, or a recommendation or offer relating to any security. See the “Terms of Use” page on the Shore Capital website for other important information.

Michael Burcham: 00:00:18

Welcome to Microcap Moments, a podcast from Shore Capital Partners that highlights the stories of founders, investors, and leaders who have taken on the challenge of transforming ideas and small companies into high growth organizations.

Michael Burcham: 00:00:32

The journey of building and scaling a business takes one down many unexpected paths.

Michael Burcham: 00:00:37

It's a journey where we learn from our mistakes fall down often, but have the entrepreneurial grid to pick ourselves up and persevere.

Michael Burcham: 00:00:45

Within this series, we will share these stories of success and failure of the challenges and the rewards faced by those who dare to dream big and through their lessons learned we hope to inspire others who are on a similar journey of becoming, growing and leading.

Anderson Williams: 00:01:02

In this episode, I talk with Bob Carlson, an Operating Partner at Shore Capital, and Michael Burcham, the Chief of Strategy, Research, and Talent Development about their experiences as board members at Point C, a Shore Capital portfolio company that recently completed a successful recapitalization.

Anderson Williams: 00:01:17

Bob talks about his role not only in clarifying the early investment thesis in the third party administration of benefits space, but in identifying and making the introduction to what would become the founding platform partner.

Anderson Williams: 00:01:28

Bob and Michael, describe how the company, the executive team, and the M&A partnership strategy evolved over the hold period, and how an effective board member must also evolve.

Anderson Williams: 00:01:38

They offer some sage wisdom for first time board members to help them set their executive leaders.

Anderson Williams: 00:01:42

And companies up for success.

Anderson Williams: 00:01:44

Finally, Bob and Michael talk about their passion for entrepreneurship and the messiness and even the innocence of a startup and how they use their coaching board service, and personal investments in early stage companies as a tool to keep their own sword sharp and their insights current.

Anderson Williams: 00:02:00

Well welcome gentlemen, and just to get started, will you just introduce yourselves and say what you do here with Shore?

Anderson Williams: 00:02:05

Bob, maybe you can kick us off.

Bob Carlson: 00:02:07

Yeah, Bob Carlson, I'm an Operating Partner here at Shore.

Michael Burcham: 00:02:09

Michael Burcham, Executive Partner and Chief of Strategy, Research, and Talent Development here at Shore.

Anderson Williams: 00:02:15

So, Bob, will you give us a little bit of your background in healthcare and the employer benefit space?

Anderson Williams: 00:02:20

I know that's part of where you got connected with Shore, but can you just provide a little background?

Bob Carlson: 00:02:24

Sure, in the late nineties, I was fortunate to be on the founding team of a healthcare tech startup called Healthx, where we built, uh, member portals and provider portals to bring information from the payer to their constituents.

Bob Carlson: 00:02:36

And to build that business, we had to learn the needs of a broker and an employer and a member of a health plan and a provider for their information.

Bob Carlson: 00:02:43

So it forced me to kind of understand all the different aspects and over time we then gathered the data from all those payers, initially TPAs, then also health plans, and many vendors came to us wanting that claims and eligibility data.

Bob Carlson: 00:02:56

So I also was able to understand a lot of the vendor ecosystem in employer benefits.

Bob Carlson: 00:03:01

But one thing I always enjoyed was the entrepreneurial spirit of A TPA owner.

Bob Carlson: 00:03:04

It was always fun for me.

Michael Burcham: 00:03:06

And Michael, is that how you guys got connected, initially?

Michael Burcham: 00:03:08

It was a former colleague of mine and the founder of Healthx had been partners in an earlier business.

Michael Burcham: 00:03:15

And when Healthx was beginning to scale, I was asked to come in and facilitate a strategy and growth session with Bob and the team.

Michael Burcham: 00:03:22

And I won't date us too much, but that was more than a few decades ago and we've remained friends ever since.

Anderson Williams: 00:03:27

And how, Bob, did you come to connect with Shore?

Anderson Williams: 00:03:30

You were obviously in the tech space and that's not Shore's, bread and butter.

Anderson Williams: 00:03:34

How did you get connected with Shore?

Bob Carlson: 00:03:35

So Greg Bell, who started Healthx, was on the Navi board at Shore, and Ryan Kelly reached out to Greg and said Shore was looking at the uh, medical benefits thesis.

Bob Carlson: 00:03:45

Was there anybody that Greg knew that might know that space?

Bob Carlson: 00:03:48

And Greg suggested me and we connected and that's how I found Shore.

Michael Burcham: 00:03:51

Many of these TPAs, Anderson, worked in a very regional, local way and often were started by business colleagues helping other business colleagues.

Michael Burcham: 00:04:01

So it's a community centric type of business and we, I think we realized as we began working on this thesis at Shore is that we could help connect many of these smaller regional businesses to create something that would operate much better at scale.

Michael Burcham: 00:04:15

And Bob had known so many of these smaller TPAs that he was a natural fit on the board and opened the door to many introductions for us in the early years of the company.

Anderson Williams: 00:04:24

And you knew those two TPAs as prior clients are part of that, your Healthx experience.

Bob Carlson: 00:04:28

They were clients of ours at Healthx, and one of the things I observed was many of these TPAs had a specialty in a given area, and then weaknesses in other areas.

Bob Carlson: 00:04:39

It's a operationally complex business, so being able to kind of combine some of those different levels of expertise and strengths and weaknesses was attractive, I felt, to building a great overall business.

Anderson Williams: 00:04:49

And one of those was in Eau Claire, Wisconsin, and that partner ended up becoming the founding partner of Point C, will you just talk about what it was about that business and why that seemed like a good opportunity to start this new platform?

Bob Carlson: 00:05:02

Yeah, so Ryan Kelly and I were looking at different opportunities for the platform investment and Ryan called me one day and said, had I had heard of BPA in Eau Claire and I said they had been a client of ours for several years at Healthx.

Bob Carlson: 00:05:12

So Ryan and I made a trip up to Eau Claire and the discussions progressed from there and it turned out to be a great partnership with the team there.

Anderson Williams: 00:05:20

What is it about this space?

Anderson Williams: 00:05:21

Michael, maybe you first, and then Bob, you can add what you like, but what makes this an interesting space for Shore, from an investment perspective?

Michael Burcham: 00:05:28

Well, I think three or four aspects I would highlight and then Bob, feel free to add.

Michael Burcham: 00:05:32

One, it is a recurring revenue model business, meaning there's usually a monthly subscription tied to the work, and that is a very attractive business model for investors, particularly in private equity to look at.

Michael Burcham: 00:05:45

Second, is the relationships are actually rather sticky when you are serving an employer and their employees.

Michael Burcham: 00:05:50

Well, no one wants to disrupt that process.

Michael Burcham: 00:05:53

So once you get a business relationship and you serve it well, it's yours to lose by not paying attention to your customer, but if you serve them well, you get to keep the customer for years at a time, which was also very attractive.

Michael Burcham: 00:06:06

I think the third I would bring up before I turn this over to Bob is, Bob mentioned earlier, it's an operationally complex business.

Michael Burcham: 00:06:12

Not everyone can do every facet well, but a number of the partners we brought in did one thing well and someone else did something else well.

Michael Burcham: 00:06:19

And when you put those best practices together, we could create a very strong business that had many points of difference, not just one or two, and could be a really strong, formidable competitor in the space.

Bob Carlson: 00:06:31

I'd say also, Anderson, one of the things I found being a vendor serving this space was it was very expensive for us to serve each of these individual businesses who all did things slightly differently.

Bob Carlson: 00:06:41

And as we would see some of those businesses combined, it was more efficient for us to deal with a larger organization.

Bob Carlson: 00:06:47

And so those scales of economy that you get and better pricing also that comes along with that for the vendors, just builds a better relationship between the vendor and the customer.

Bob Carlson: 00:06:56

In this case, the TPA being the customer.

Anderson Williams: 00:06:58

I wanna go back to that conversation initially about BPA in Eau Claire, and just curious, from your recollection, what made that seem like the right partner?

Anderson Williams: 00:07:07

What was it?

Anderson Williams: 00:07:08

You knew a bunch of different teams around the country, people you'd worked with in a lot of different ways.

Anderson Williams: 00:07:13

Why did that one stand out to you?

Bob Carlson: 00:07:15

I felt, uh, BPA was representative of the localized TPAs and benefits often in these employers from 50 to several hundred lives.

Bob Carlson: 00:07:27

It's a very local business.

Bob Carlson: 00:07:28

The local hospitals, they usually have one location in that, or two locations in that geography.

Bob Carlson: 00:07:33

So I felt BPA was representative of what many other TPAs were in different geographies.

Bob Carlson: 00:07:38

Also BPA had some unique assets I felt in a relationship with the Mayo Clinic over in Minnesota in a certain county.

Bob Carlson: 00:07:44

So there were a couple things that they did I felt were a little different that we could learn from and leverage potentially as we would find other TPA partners in the industry.

Michael Burcham: 00:07:54

I think also we discovered that BPA was looking to grow and recognized that they needed some skills and expertise beyond what they had cultivated themselves.

Michael Burcham: 00:08:05

So it wasn't a resistance.

Michael Burcham: 00:08:06

Great, just like we are.

Michael Burcham: 00:08:08

It was a recognition that the employer space was increasingly becoming more complex, and in order to compete effectively, BPA would need to up their game with better process, better technology, smarter ways of working, and, uh, that openness to try new things and to scale really made them an attractive way to start Point C.

Anderson Williams: 00:08:28

So just to maybe elaborate on that a little bit, Michael, when you think about that transition from BPA to the founding platform of Point C to that first year of platform at Point C, talk a little bit about what that first year is like in launching a new platform, and particularly at Point C.

Michael Burcham: 00:08:45

So in Shore style when we launch a platform, the management team is relatively small.

Michael Burcham: 00:08:51

It includes the founders from BPA and three or four folks that we have brought in.

Michael Burcham: 00:08:56

Usually someone managing finance, we brought in a CXO or a Chief of Staff, Mark Larson, who probably wore eight different hats that first year.

Michael Burcham: 00:09:04

Putting things together.

Michael Burcham: 00:09:05

It took a bit to get the right CEO hired.

Michael Burcham: 00:09:08

So I'd say the first year was really about mapping out the journey of what we wanted to achieve.

Michael Burcham: 00:09:14

This platform closed and at the height of COVID, we all went to Eau Claire did all the social distancing.

Michael Burcham: 00:09:20

We were in a ballroom setting, six and eight feet apart.

Michael Burcham: 00:09:23

I remember working on where we wanted to take this company, but it was very aspirational that first year, and everyone was working hard on the very basics to get the infrastructure put together.

Michael Burcham: 00:09:34

As the company scaled over the next three or four years and more partners came on, the management team grew specificity and really knowing how to expand products.

Michael Burcham: 00:09:43

We got much smarter about how we managed data.

Michael Burcham: 00:09:46

We got better at how we identified a single best practice, and all began doing it that way.

Michael Burcham: 00:09:52

So rather than having seven partners with seven versions of ways of working.

Michael Burcham: 00:09:56

We were able to begin to identify one best way of working.

Michael Burcham: 00:09:59

And that brought not only massive efficiency, but terrific expertise to each site that they'd not really had before.

Michael Burcham: 00:10:06

And that collaborative spirit helped other partners learn from one another.

Michael Burcham: 00:10:10

And that really, as we began to think about a recap, made this company an ideal target for a next wave of growth because they had really shown how to both identify points of difference, build in best practices, and prepare themselves really for massive growth.

Anderson Williams: 00:10:25

And Bob, as you think about Point C's, growth and success, you were there from the beginning all the way through recap.

Anderson Williams: 00:10:32

How would you summarize the secret to their success?

Anderson Williams: 00:10:35

Especially as you think about the Shore portfolio?

Bob Carlson: 00:10:37

Yeah.

Anderson Williams: 00:10:37

Which you're familiar with.

Anderson Williams: 00:10:38

What's the secret to Point C's success.

Bob Carlson: 00:10:40

We had great owners who stayed with the business for many years.

Bob Carlson: 00:10:44

We also then over the years, built a great corporate team who I felt was able to scale that business in every aspect of the business.

Bob Carlson: 00:10:51

And then we built a strong M&A motion that was always looking for an A team.

Bob Carlson: 00:10:56

They're identifying new opportunities for partnerships in this space.

Bob Carlson: 00:11:00

And I'd say one of the exciting things for me as a first time board member at Shore was seeing that Shore playbook unfold over those years and how methodical, starting with the strategy work that Michael and the team did leading then through building the corporate team and each function.

Bob Carlson: 00:11:14

And it was fun to watch.

Michael Burcham: 00:11:15

Anderson, also something Bob and I got to witness firsthand at the board is that many of the companies when they were independent and smaller, would outsource functions 'cause they had neither the time nor expertise to do them.

Michael Burcham: 00:11:28

From reporting to technology to care management, utilization review.

Michael Burcham: 00:11:33

As we grew, we were able to bring those different outsource services in-house so that we could be more directly engaged with the customer in all aspects of their job and our early CXO, Mark Larson grew into our Chief Operating Officer role, but what was most impressive is he really helped us bring those products in house.

Michael Burcham: 00:11:54

Expanded the margin, which was wonderful, but I think more importantly allowed us to really serve the customer from every dimension of need without hoping we knew what the vendor partner was doing.

Michael Burcham: 00:12:05

We knew exactly what was going with the customer, 'cause our own team was doing it.

Michael Burcham: 00:12:09

And I think that really positioned the company well for scale and success.

Anderson Williams: 00:12:13

I'm curious for either of you who can jump in on this, but how did, from those early partners through the hold period, and then toward recap, how did the thinking about new partners change?

Anderson Williams: 00:12:25

Or did it change in terms of what made the right partner, what made the right next acquisition?

Anderson Williams: 00:12:30

Just any thought on the evolution of that from your perspective.

Bob Carlson: 00:12:34

Yeah, I would say initially, and I'm fortunate, John Vujovich, who leads the M&A team for Point C is in Indianapolis with me.

Bob Carlson: 00:12:40

So John and I get to talk, uh, almost every day.

Bob Carlson: 00:12:42

And in the early days, we were known as we were buying the small TPAs in the industry and compared to other private equity firms who were in the space and as Point C grew, our reputation grew.

Bob Carlson: 00:12:53

And our ability, and now after the recap, the ability to do larger and larger businesses is, I think really it's been fun to see that evolution as the sophistication of Point C has grown and our ability, but still the ability to do a small business, so can kind of meet people where they are and being able to, uh, do a transaction.

Michael Burcham: 00:13:13

I think also Anderson, the story of Point C as we evolve, the company attracted different kind of partners.

Michael Burcham: 00:13:21

Even starting with the name, you know the name Point C is derived from the fact that most TPAs help an employer go from point A to point B. We go one step further to Point C.

Michael Burcham: 00:13:31

That resonates with individual partners.

Michael Burcham: 00:13:34

When we talk about how we really want to be serving our customers and providing that employer and their employees along with their broker exceptional experiences, knowing that was our why and having really great values, allowed us to really interview particular partners that we were looking at to how well those values matched their values and when that alignment happened, it was an easy call.

Michael Burcham: 00:13:57

Early on, we set out three to five key strategic initiatives we wanted to accomplish.

Michael Burcham: 00:14:02

Every new partner heard about those initiatives before they joined us, and they knew what they were signing up for.

Michael Burcham: 00:14:07

And if that didn't resonate, they weren't going to be a good fit and if it did resonate, they'd be a great fit for us.

Michael Burcham: 00:14:13

And we never departed from those strategic initiatives.

Michael Burcham: 00:14:16

And it.

Michael Burcham: 00:14:16

Every board meeting they were reported on where we were, how we were progressing, what we had learned from the market about that, that might need a small adjustment, but we never deviated from that original vision of creating a full service TPA deeply grounded in expertise that served equally well, the broker, the employer, and the employees and their families.

Anderson Williams: 00:14:37

How would you guys, aside from EBITDA and just scale or headcount, how would you describe the difference for anybody listening who may be in an early stage company, how would you describe the difference between that first year version of Point C and that ready for recapitalization version of Point C?

Anderson Williams: 00:14:55

Again, aside from EBITDA and the obvious things that have changed, what are some insights between that early stage and that more mature, ready to recap company?

Bob Carlson: 00:15:04

I would say the level of sophistication in our processes and building centers of excellence within the organization so that you can really leverage the talent among the teams.

Bob Carlson: 00:15:16

You know, we would find among those functions within the individual TPA strong employees who knew that, and being able to share those best practices across the organization.

Bob Carlson: 00:15:26

And then over time, having a corporate team that could facilitate that.

Bob Carlson: 00:15:29

'cause all those people are busy doing their day job.

Bob Carlson: 00:15:31

But I also did wanna mention, I think in the early days, the resources that Shore was able to bring to support us was, I think very, very helpful and really stood out to me having worked for other private equity firms in their portfolio companies, that I felt was a difference maker to kind of have you those, those people assisting you in various functions of the business who had done that before, and who understood Shore's Playbook as opposed to being an outside consultant coming in but we were able to help us with that.

Michael Burcham: 00:15:58

You know, Anderson's scale and readiness to scale comes from having the right people, the right processes, and really powerful enabling technologies.

Michael Burcham: 00:16:07

I would say one of the things that really stood out is Point C leveraged the entire Shore playbook.

Michael Burcham: 00:16:14

From how we did acquisitions to how we added products to how we thought about this sales funnel, I was super privileged to serve as a Lead Independent Director for the board.

Michael Burcham: 00:16:24

And so even as board members, we were able to lean in and offer our own insights and lessons learned that would help the team scale quickly without repeating the stakes we had all made in the industry.

Michael Burcham: 00:16:34

And I think that made a massive difference because the board was deeply engaged in the success of the company, not just at the board meeting, but almost on a weekly basis, interacting with the management team, helping with introductions, helping share, here's what I've learned.

Michael Burcham: 00:16:47

Don't repeat my mistake, go make a new one.

Michael Burcham: 00:16:49

Here's a new technology I've seen that might be helpful.

Michael Burcham: 00:16:52

And all those things together in a collaborative environment, it just screams success.

Anderson Williams: 00:16:56

And given that Michael, and then Bob, I want you to think about this as well.

Anderson Williams: 00:17:00

What advice then, would you give a first time board member in an early stage company to build toward that kind of success, to support that kind of early stage reality and that evolution over a five year hold period?

Anderson Williams: 00:17:13

Any advice you would offer a a first time board member?

Michael Burcham: 00:17:16

Oh my gosh, yes.

Michael Burcham: 00:17:17

So let's begin with this.

Anderson Williams: 00:17:19

Another podcast we'll say,

Michael Burcham: 00:17:21

or a whole book.

Michael Burcham: 00:17:22

Um, everyone in that room management, the Shore team, other board members have stories and expertise.

Michael Burcham: 00:17:29

Never assume, get to know everyone that's gonna be in that board meeting, what expertise they bring their stories.

Michael Burcham: 00:17:35

By really understanding your colleagues in the room and what they bring to the party, you really get the network effect that Shore talks about so often because it's not just about what you know, it's putting together what you know with everyone else's knowledge in the room.

Michael Burcham: 00:17:49

That creates a really powerful combination.

Michael Burcham: 00:17:52

I say the second advice I would give a first time board is lean in and listen.

Michael Burcham: 00:17:56

Understand the problems from the customer point of view or the stakeholder point of view.

Michael Burcham: 00:18:01

In this case, the broker, the employer, the employee, the employee's families and interpret what you wanna bring to the party through the lens of those stakeholders.

Michael Burcham: 00:18:10

Rather than simply giving advice, offer insights from your own lessons learned that could really help us provide the absolute best experience for each of those stakeholders.

Michael Burcham: 00:18:19

I think if first time board members do that and avoid advice giving and just focus on experience share that helps stakeholder engagement, you win every time.

Anderson Williams: 00:18:28

Anything you'd add, Bob?

Bob Carlson: 00:18:29

The time I spent between board meetings with the team was always very helpful for me to then add value in the board meetings.

Bob Carlson: 00:18:37

And even if someone like me had spent that time in the sector, every business is different, every team is different.

Bob Carlson: 00:18:42

So that really was beneficial as I felt, uh, I interacted with the team.

Bob Carlson: 00:18:46

The other thing I found is at Point C, we didn't build, we didn't add an IT corporate function or an HR corporate function till years into that hold period.

Bob Carlson: 00:18:56

So I think where a board member has a specific functional expertise too, it gives you an opportunity to help the revenue side or the operations side, or the HR or the technology side of a business.

Bob Carlson: 00:19:08

So I think that's another way a board member can, uh, contribute.

Anderson Williams: 00:19:11

Certainly being a little bit more hands-on than one might think early in the hold.

Bob Carlson: 00:19:15

That's what I felt.

Michael Burcham: 00:19:16

Right.

Michael Burcham: 00:19:16

I would say the final thing for a first time board member at Shore, particularly to really understand is Shore has a 15 year history of processes and playbooks and how the work gets done.

Michael Burcham: 00:19:27

Get to know that Shore process really well and then fuse that with your knowledge, because if you follow what we know is a proven model at Shore and infuse your expertise into that process.

Michael Burcham: 00:19:38

The outcome will be so much better than if you simply offer advice or insight in a vacuum without understanding the 15 years of experience across over 20 exits we've had at Shore.

Anderson Williams: 00:19:50

So when you all look at Point C today and really look at the broader industry, what's your outlook on the sector, whether that's for Point C or broadening the opportunities for Shore?

Michael Burcham: 00:20:01

Sure, I think the outlook is very strong because employers recognize that the relationship with their team has to be more than a job.

Michael Burcham: 00:20:11

And one of the ways you show your team, they are valued is how you support them and their families, particularly in times of crisis.

Michael Burcham: 00:20:19

And one of the most powerful ways to do that is through health benefits.

Michael Burcham: 00:20:23

Knowing that employers also recognize that costs are escalating, so finding ways they can offer really great benefits for their workforce, but in a way that they can afford is tailor made for a TPA environment because it allows organizations like Point C to design and almost a custom way what that employer and their workforce needs, depending if they're hiring younger, 20, 30 year olds, or if their workforce happens to be an older generation of 50 to 60 pre-retirement age.

Michael Burcham: 00:20:53

Those two groups need things that are fundamentally different.

Michael Burcham: 00:20:56

There's no one size fit all and health benefits.

Michael Burcham: 00:20:59

And I think the outlook is strong because groups like Point C allow an employer to tailor a benefit to the workforce they are looking to attract.

Anderson Williams: 00:21:07

Anything you'd add, Bob, just in terms of Outlook.

Bob Carlson: 00:21:09

In healthcare, as we all know, it's very complex and expensive to all the participants.

Bob Carlson: 00:21:15

So the ability for these third party administrators to be able to provide that tailored experience at the member level, those employees of that employer, giving them that often brings a lot of value and helps them make better decisions, helps 'em spend their money more wisely.

Bob Carlson: 00:21:30

I think that's one of the things that is a bright spot in the industry.

Michael Burcham: 00:21:34

And Anderson Bob's comments are backed up by the last several years of market data trends where we see the number of self-funded employers growing exponentially, and the number of employers simply looking to buy insurance from an insurers actually shrinking as a percent.

Michael Burcham: 00:21:51

So there's a very bright outlook for this sector of healthcare.

Anderson Williams: 00:21:54

Well, I can't help but think about as listening to Bob, you summarizing what you were saying is, you know, it's simplified, it's better choices and it's a better experience and for the consumer on the other side of that, and if my employer enables that, that's a powerful reason to stay committed or engaged with an employer.

Michael Burcham: 00:22:12

Absolutely so true.

Anderson Williams: 00:22:13

So both of you all are also investors in early stage startups and, and Bob, early in the conversation you mentioned how you love the entrepreneurial space.

Anderson Williams: 00:22:21

You've been an entrepreneur, obviously in your tech experience as well.

Anderson Williams: 00:22:25

Talk to me a little bit about that drive and that spirit and that enjoyment of the early stage messy entrepreneur experience.

Bob Carlson: 00:22:34

I started my career at IBM, and after 10 years in the mid nineties, I went to work for a startup in Chicago.

Bob Carlson: 00:22:40

I remember after two years there, I came to my wife and said, boy, you know, we went through our money.

Bob Carlson: 00:22:46

I think I'm gonna be out of a job.

Bob Carlson: 00:22:47

And I was expecting her to kind of be upset.

Bob Carlson: 00:22:49

Why would you leave the safety of IBM?

Bob Carlson: 00:22:51

But she knew I love that job.

Bob Carlson: 00:22:53

And she said to me, you only get two more of these.

Bob Carlson: 00:22:56

And so to this day, she still denies saying that, but so that's, you know, kind of why I've been on this journey, uh, hanging out with, uh, those smaller businesses.

Bob Carlson: 00:23:04

And when we were at Healthx, when we grew from a few employees up to over a hundred, the thing that really enabled that growth in that scale were two subsequent private equity partnerships.

Bob Carlson: 00:23:13

So I saw the.

Bob Carlson: 00:23:14

Value that private equity could build in partnering with a business.

Bob Carlson: 00:23:18

But I also enjoyed those early days.

Bob Carlson: 00:23:20

So these days, in addition to my work with the teams at Shore, I also am a partner in a early stage angel network called Start Something Ventures and then do some board and advisory work.

Anderson Williams: 00:23:30

What about you, Michael?

Anderson Williams: 00:23:31

What do you like about the entrepreneurial journey?

Anderson Williams: 00:23:33

You obviously have done it yourself, you coach a lot of people, you invest in a lot of people.

Anderson Williams: 00:23:37

Just talk a little bit about that for you.

Michael Burcham: 00:23:39

So Anderson, I love the absolute innocence of startup culture where anything is possible.

Michael Burcham: 00:23:46

No one's saying, we tried that before and it didn't work.

Michael Burcham: 00:23:49

They're looking to disrupt a marketplace.

Michael Burcham: 00:23:51

They bring new ideas, new ways of thinking, new technologies, some of which I've never heard of.

Michael Burcham: 00:23:57

And all that insight helps me be a better investor, a better board member, a better leader at Shore, because at the scale and size of companies we work with, making changes like that can be harder and slower.

Michael Burcham: 00:24:11

So it feeds the innovation side of my brain to see what younger companies are doing.

Michael Burcham: 00:24:16

I get to bring that back to Shore, and while we can't do everything we see in hear, it really begins to seed some thoughts for us about what we might do instead.

Michael Burcham: 00:24:25

When we started Shore, we stayed away from anything that smelled too much like technology.

Michael Burcham: 00:24:30

We wanted to play pure service.

Michael Burcham: 00:24:32

Today, we're deeply immersed in tech enabled services and how our companies can use ai.

Michael Burcham: 00:24:37

That transformation didn't happen because we were insular and sticking with what we'd always done.

Michael Burcham: 00:24:42

It was because we looked outside at younger companies.

Michael Burcham: 00:24:45

Saw what they were doing and the traction they were getting and saw how to bring that inside Shore.

Michael Burcham: 00:24:50

I think that's one of the reasons we started our search fund.

Michael Burcham: 00:24:53

It's a group of younger, brighter, thoughtful entrepreneurs who aren't afraid of failure or excited to try something new, and they offer a laboratory of learning for us at Shore that I think helps differentiate us from other PE firms that don't have that.

Michael Burcham: 00:25:07

So.

Michael Burcham: 00:25:08

I've invested in startups for probably 25 years.

Michael Burcham: 00:25:11

I don't think that's going to change.

Michael Burcham: 00:25:13

Is it?

Michael Burcham: 00:25:13

High risk?

Michael Burcham: 00:25:14

Sure.

Michael Burcham: 00:25:15

But I will tell you it's super high reward because the relationships I build, the insights I gain, and the occasional win is an adrenaline rush.

Michael Burcham: 00:25:22

Like nothing I ever experienced in any other facet of investing.

Anderson Williams: 00:25:26

So just to wrap up, I wanna bring a couple of these threads together.

Anderson Williams: 00:25:29

You guys have described, uh, your own interest and engagement in the entrepreneurship space, the risk and reward, the messiness, the innocence.

Anderson Williams: 00:25:38

So just to wrap up, any thoughts on how your entrepreneurial experience may be fits with the microcap space in ways that people aren't necessarily thinking about it?

Bob Carlson: 00:25:47

Well, a couple weeks ago I was at an event in Indianapolis and somebody came up to me and said, Bob, I hear you're involved in private equity.

Bob Carlson: 00:25:53

I've known you from startups.

Bob Carlson: 00:25:54

You know, what's the real difference?

Bob Carlson: 00:25:55

And you know, they had had some kind of negative connotations about private equity from other people they knew.

Bob Carlson: 00:26:01

And I said, the best way for me to look at the microcap private equity space.

Bob Carlson: 00:26:05

Or really there as a growth partner is, think of it as a co-founder.

Bob Carlson: 00:26:08

You know, we're there alongside you helping you in that business.

Bob Carlson: 00:26:11

And actually the benefit with somebody like Shore in the playbooks is you have 10, 20, 30 co-founders each with a different expertise.

Bob Carlson: 00:26:19

Usually co-founders, which most investors like to have multiple founders in a business, you know, kind of adds to, uh, the breadth of knowledge, but here you're able to really do that on a larger scale.

Bob Carlson: 00:26:30

So that's one of the ways I look at it.

Michael Burcham: 00:26:32

So Anderson, here's how I would relate it most directly to Shore's microcap space.

Michael Burcham: 00:26:37

Almost every founder we partner with at some point in their past was a startup.

Michael Burcham: 00:26:43

They believed in a vision, they had passion, and they muscle their way through with perseverance and grit.

Michael Burcham: 00:26:49

To create the company they have, and when we first meet a company that's a partner candidate, for sure, my first emotion is just overwhelming respect because I've done that journey.

Michael Burcham: 00:27:00

I know how hard it is, their entire identity is wrapped up in that company.

Michael Burcham: 00:27:05

So it's a big decision.

Michael Burcham: 00:27:06

I think because so many of us at Shore have walked that same journey, even at Shore, we did the same journey.

Michael Burcham: 00:27:12

I mean, we started with four young men who had a vision of creating a private equity firm that most people thought they would absolutely fail.

Michael Burcham: 00:27:20

And so even the journey of Shore is a startup of itself.

Michael Burcham: 00:27:23

I think because we have such respect for the founder and what they've created, we immediately connect and resonate on a scale that probably other private equity firms do not, and I think it's why we've been voted the most founder friendly firm for over five years in a row, is we never forget the work it took that founder to get where they are.

Michael Burcham: 00:27:43

So we are deeply respectful of that process.

Michael Burcham: 00:27:46

So when we partner, it's not about being dismissive of a founder, but being additive to and rather than building with continued just muscle and grit, we look at how we can help them scale their vision to be more than they ever imagined it could possibly be.

Michael Burcham: 00:28:00

With process, with technology, with people, with advisors and ideas that they've not even seen, that we bring from another industry for them to consider.

Michael Burcham: 00:28:09

And that collaborative environment that happens in a boardroom when you have the founder, the Shore team and outside board members all sharing insight and knowledge together.

Michael Burcham: 00:28:20

It's an exciting cauldron of opportunity.

Michael Burcham: 00:28:22

And I think sometimes our bigger risk is not what's possible.

Michael Burcham: 00:28:26

It's learning what to say no to.

Michael Burcham: 00:28:28

So we pick a growth path that we can all achieve, and I find that to be an extremely exciting environment to work in.

Michael Burcham: 00:28:34

And it's why I'm still here at Shore after 15 years on the job.

Anderson Williams: 00:28:44

If you enjoyed this episode, check out our other Microcap Moments episodes at www.shorecp.university/podcasts or anywhere you get your podcasts.

Anderson Williams: 00:28:53

Here you will also find our Bigger.

Anderson Williams: 00:28:55

Stronger.

Anderson Williams: 00:28:55

Faster.

Anderson Williams: 00:28:55

and Everyday Heroes

Anderson Williams: 00:28:57

series, each highlighting the people and stories that make investing in the lower middle market unique.

Anderson Williams: 00:29:02

This podcast was produced by Shore Capital Partners and recorded in the Andrew Malone Podcast studio with Story and narration by Anderson Williams.

Anderson Williams: 00:29:09

Recording by Austin Johnson.

Anderson Williams: 00:29:11

Editing by Reel Audiobooks.

Anderson Williams: 00:29:13

Sound design, mixing, and mastering by Mark Galup of Reel Audiobooks.

Anderson Williams: 00:29:17

Special thanks to Bob Carlson and Michael Burcham.

Anderson Williams: 00:29:20

This podcast is the Property of Shore Capital Partners, LLC.

Anderson Williams: 00:29:24

None of the content herein is investment advice, an offer of investment advisory services, nor a recommendation or offer relating to any security.

Anderson Williams: 00:29:32

See the Terms of Use page on the Shore Capital website for other important information.