Bo Bartholomew is both an investor and an operator, leading Rockmont Partners as managing partner and EvidenceCare as chairman and CEO. As an investor investing in software businesses, he says his emphasis is on people.
“All software can be fixed. All software breaks. But it's the people that operate it. It's the people that fix it,” Bartholomew said at the Nashville Smart Business Dealmakers Conference. “It's the vision, the purpose of the entity, that lasts. And if you don't have that, and don't start with that, you can have the best software, the best business model in the world, but it will fall apart.”
Because of that belief, their criteria early on include every founder and investor writing checks.
“As my partners like to say, we want your grandmother, your mother, your cousin, everybody you know to write a check, because that holds you accountable at Thanksgiving, Christmas, etc. Those become board meetings,” he says. “And you will stay focused and stay dedicated. If founders do not write a check, we won't write a check.”
Another area where, as an investor, he needs to have confidence is in the leadership. To that end, one trait they look for in a leader is humility — a willingness to learn the things they didn’t already know.
“If entrepreneurs come to the table and they think they have all the answers, then that's a red flag,” he says. “No one has all the answers.”
As an operator, he emphasizes a specific aspect of people and that’s values.
“The first day every employee starts, I sit down and we talk about the values of the company,” he says. “And I explain if you live according to these values and you're not performing, it's on us — we haven't equipped you. If you're not performing and you're not living to the values, then this is not the right company for you. And we're going to be the first ones to help you find another company you can go work at. And it takes all the personal, performance, everything off the table because if you clearly define who you are at the beginning, and they know who they are, then you can get a good match, and the company's goals, the individual’s goals, can align. Because if you mess that up, you spend a lot of time on churn, and HR issues. The last thing anyone wants, whether you're an investor, board member or operator, is to deal with HR documentation and firings and hirings. If you can get rid of that, you create a lot efficiency and you create a lot of value.”
A personal philosophy he says that they maintain is “no surprises.”
“The board doesn't want surprises, banks don't want surprises, businesses, employees, people don't want surprises,” he says.
Something he says he employs is the traction methodology, which he says forces a rhythm or an operating system to companies that offers a lot of transparency.
“The companies we've invested in that have had the fastest growth, both top line bottom line and with people, all had a methodology, many of them with traction, where everybody in the company knew what was going on,” he says. “They knew the company's performance, they knew the financials, they knew the goals for the year. And I think when you have that rhythm and that transparency, you build credibility.”
He says what employees often don’t realize when talk about M&A begins is there's an immediate fear of change and fear of the unknown. But in reality, transactions always benefit employees, especially the top performers.
“The big mega deals in your early-stage growth and in your growth equity, if you've got employees that are performing, they are going to get paid more, they're going to have more equity, it's going to be a good thing,” he says. “But they don't know that.”
For anyone running a company or starting a company, one piece of advice he offers is to find ways to have fun.
“You get to pick your partners,” Bartholomew says. “You get to pick your bankers. You get to pick your private equity group. Are they fun? Do you like them? Are they high integrity? That goes a long way, just as much as your people.”
He also suggests finding reasons to celebrate the people in the business every day.
“Whether it's a birth of a child, the closing of the contract, launching the software, those are the things that mean the most that we often forget when we get lost in the pro formas and the financials,” he says.
