During the Oct. 2022 Mountains, Capital and Commerce conference, Tadpull Co-founder and CEO Jake Cook sat down with Lexia Schwartz, Managing Director for Canaccord Genuity to learn more about her background, her passion for her work and how strong relationships are at the heart of driving outstanding business outcomes.

Canaccord Genuity is an independent investment bank with offices around the world, its expertise lies in investment banking, equity research and sales, and trading services. Schwartz has been with Canaccord Genuity for nearly a decade and has completed transactions and advised a diverse group of companies on mergers and acquisitions, capital raising, and strategic advisory assignments.

Listen to this article

‍

Cook: Lexia, thanks for joining us. Let's talk about your background. How did you get into doing this type of work to begin with?

Schwartz: I studied finance at [Georgetown University] and kind of knew that I would always wind up somewhere in the broader financial community. I actually started on the trading floor but figured out very quickly, it was not for me. Short-term decisions under high pressure are not where I thrive. So I thought, “You know, more project-based work, a corporate structure and capital advisory would be a much better role for me.” Which has led me to where I am today, and it’s been fantastic, particularly being aligned in a tech segment has been great because of the tailwinds. It's definitely kept me not just excited about finance, but excited about the industries we cover.

Cook: And growing up, were you always into numbers? Did you like numbers? 

Schwartz: Funny question! I think I was more into problem solving, and my interest has been more about people. I’m a people person and being in an environment where you're constantly meeting new companies, new leaders, and really getting to engage with them has been a joy. To be an important part in their professional trajectory, has been really motivating. So, I wouldn't say I was always a numbers person, but it was more of the overall environment that attracted me to the space.

Cook: What do you find the most fun about your work right now?

Schwartz: It’s not only fun, it’s very inspiring. I get to meet new leaders all the time. It takes a lot of ambition to start your own business, and I enjoy understanding their stories and what it took for them to make that jump. I love to learn about them as people and their lives. That, coupled with the team that we've built together. It’s just a great culture and great human beings. I’m very proud of that.

Cook: You meet founders at an interesting part of their journey. They have put in years of their lives, blood, sweat, and tears, and I would imagine that comes with some emotions. Can you walk us through a little bit of that experience? 

Schwartz: I can't even put into words how much effort, work and ambition it takes to get to where these folks are, when we meet them.We are truly seeking to find the right home for their company and we make sure that we're not just optimizing for economics and legality, but also the long-term vision of its people. 

I think what it really takes is establishing trust with them. As soon as we make the leap from being viewed as trusted advisors to really being viewed as partner, we can achieve some tremendous outcomes. Once we have that alignment and trust, our clients thrive, and we thrive. Really, we’re all motivated by the same thing: that’s outcomes.

Cook: Walk us through how you get to that point of trust with the founders.

Schwartz: We are very selective about how we pick teams to work with certain companies.

Our group has a lot of domain expertise, which we're able to transfer to quickly become advocates for their business. We never claim to know more than they do. That would be a huge failure on our part.

But, I do think trust is earned from our expertise, our professional experience, and by sharing our references. Also, just by spending time with them as human beings. We do a ton of  back-and-forth and really get to know each other, and each other’s work styles. Through that process, we can clearly see how their team should be delegated and make sure that we're working inside the parameters that they themselves are comfortable with. All of these things combined, is what sets us up for a great outcome.

Cook: So it truly is a matchmaking experience where there's a technical component, but there's also the relationship piece?

Schwartz: Absolutely, I mean, the amount of time that founders or sellers wind up spending with us, is probably more than they spend with their significant others or children or whoever else might be close to them in their lives for a little while there. So it's definitely a relationship that has to work.

Cook: In your time doing this work, are there traits you have noticed among great leaders, whether it's in eCommerce or just tech in general? 

Schwartz: I think the great leaders really think about the folks that are in the room around them. They've built out management teams with no obvious holes, and we constantly see them investing in those people and having them in positions long enough to actually be ready for the process, not just from a business understanding, but a strategic understanding. 

I think from a metrics perspective, a lot of people, especially in tech, want to rely on the platform because they love the platform so much. And they want to say, “Hey, the results speak for themselves.” And oftentimes they do in a case-study format. But, a lot of what investors and strategics are looking at are the underlying metrics. 

• What are the KPIs of the client data? 
• What are the KPIs of the financial data? 
• What are the KPIs of utilization in the organization? 

All things that we're picking apart and really analyzing in advance. But companies that have better data and better tracking are always better prepared for the market.

A lot of what Dr. Fader has talked about at the conference, including cohort data that applies to any end-client base, not just a consumer on an eCommerce platform. For example, it very much applies to marketing-services companies, all their clients and their performance, their spend trends and how they keep them engaged and sticky. I mean, these are all things that we're looking at with a high level of attention.

Cook:  What have you found makes your job easier? 

Schwartz:  

I mean, we can definitely tell right off the bat from the reporting that's given to us in our early due-diligence stage, where the companies are and how easy or hard it's going to be to prepare for the market. 

But, there's not really a situation that we shy away from. If there's a business and a team that we really believe in, we will figure out a way to prepare them for the market. It may require bringing in more third-party advisors. But, sometimes those situations are where we learn the most ahead of time. And so it's hard for us to shy away if we ultimately like the opportunity.

‍

Cook: Let's talk about trends. If you read the front page of the newspaper these days, you'll see some not-so-positive views including inflation and down markets. How do you approach long-term hedges and how are you all viewing the trend outlooks? 

Schwartz:  Yeah, I mean, we can't have 2021 forever in the [mergers-and-acquisitions] world, although we wish we could. 

You know, for us right now, what we're seeing is that volume has actually remained in transaction activity, the size of overall transactions has come down fairly significantly, for financing purposes and other reasons. 

But, as we react and think about companies that we will look to represent in the future, these types of times in their life cycles, and how they perform through them, can actually set them up for a much better exit down the road. 

When there's a tried-and-tested fact pattern historically, right? Five to 10 years ago, people were asking us, “What happened in 2008-09.” Now, people are asking us, “What happened in 2020, during COVID.” This time period will be another data point that for best-in-class organizations, understanding how they performed, will actually enhance their exit value. 

But, we're being thoughtful and careful around the folks that we're engaging with and more importantly, the advice that we're giving them. We think that you can't time the market, you can only time the right time for the business. We're staying optimistic in the spaces that we cover, particularly the digital transformation space. 

Cook: We spent a lot of time in eCommerce. We see customer data as a moat for mid-market companies in particular, as Amazon and Apple continue to shut that off. Are there any kind of moats you're seeing? 

Schwartz: 

Yeah, I think data has been an interesting theme. Importantly, because there's been an explosion of data. So for us, it's understanding actually, not if they have the right data source anymore, but actually if they know how to activate the data. Otherwise, they're inundated with information that ultimately never makes the leap to where it needs to be. 

• So data is absolutely a moat. 
• Execution is a moat. 
• I think people, the way businesses approach their culture and their headcount strategies is definitely a moat.

And then diversification of the client base, people are always thinking about enterprise vs. [small business]. What are the benefits? What is our portfolio strategy? How do we make sure that areas of the economy that are more susceptible to downturns are mitigated in our own portfolio? I think these are all things that our clients are thinking really heavily about.

Cook: If I'm a private equity investor and I'm thinking of buying something in the digital space or the eCommerce space, what are one or two things you would have them keep in mind for the next 12 to 18 months? 

Schwartz: With eCommerce, there's a lot of point solutions that have a very specific role. And when building a platform, people have to think about the solution continuum. As we think about flowcharts, and the complexities of getting a product sold all the way through, having the thesis around, okay, how do we pick an investment where we can actually build capabilities [around what we are buying] is really important. 

Cook:  And what would you say for the entrepreneur or leadership team that's trying to build toward an exit right now?

Schwartz:

Long-term thinking is hard to do. Especially when you're in the moment, you're thinking about how to optimize “the now.” But thinking about where the industry is going, and how to figure out how to be there before the industry gets there are typically the folks that just have the best outcomes, right? Because they've committed to where the industry is going, “the ball is ahead” of them. And by the time they get there, they can really be a leader. So it's hard to be forward looking all the time, especially in the climate that we're in right now. But we encourage people to think long term.

Cook: How has the Mountains, Capital, and Commerce event been for you? You get to go to all sorts of interesting places, what's it been like coming to a smaller, hyper-focused event?

Schwartz: It's been fantastic. Having a boutique-style event actually really promotes a great learning environment. In a setting like this, you will actually remember the people that you met. Sometimes you can go to a conference, and it can be overwhelming and you're [retrospectively] looking for business cards and trying to jog your memory.

The intimacy of this [conference] has been a really great learning experience and networking experience. I also think that the caliber of the folks that are here, and what they're able to educate on is really, really important and impressive. It does not hurt that we are in beautiful Montana, where I don't know that most of us have the opportunity to always get to. The overall thoughtfulness of the agenda, the topics and the right mixture of having social networking time, but also an educational component has been really well done.

Interested in attending the 2023 conference? Request an invite here.

‍