And welcome everybody to another episode of smart money circle with me. Today is Rusty Wiley, who's President and chief executive officer at data site. Rossi's a very special guest. I'm very interested in looking forward to today's call of today's conversation. Without further Ado, Rusty. Welcome to the show. All right, Adam. Thank you. It's great to be on the show. I always like to ask for us to. Can You Begin by telling us a little about yourself and the
company? Yeah, those little old me and more about my favorite topic, which would be the company. So, I did it. They decide about Years now is CEO prior to that. I spent most of my professional career at IBM molding jobs, running the Consulting business for financial services. And then later out of China running the global banking and capital markets business for for IBM and I was looking to make a change to a better climate having lived in the Northeast for most of my career.
And so, I took over a company based in Minneapolis, Minnesota. So anyway, yeah, eight years ago. I joined a dating site. It's been a great ride and you can imagine the job. I did selling that on the home front where we're not moving to the southeast, where she's going to move to Minnesota co-ed. There's two seasons in Florida. I always joke around where I live. There's hot and there's hotter and Minnesota. You've got cold and colder with his Holdings, some nice color.
I think one of my person taser was minus 20 degrees and that's the ambient not. So yeah, ouch. So the company tell us a little about dataset if you don't want to know. So they decide is Really a leader, in SAS technology in the MMA world. We do we provide for professionals, like, bankers, lawyers, accountants corporates, Corp, Dev the tools, and the technology platform that in a to enable them to do deals.
So if you think about it, you know, typically there are about forty five to fifty thousand deals that are announced publicly as transactions. There's a much broader Universe of deals that we know our private non-public deals, but we do about last year. We did. 13,000 deals. So we are a substantial portion of the volume of the overall deal market. And what kind of makes us unique is we're there when the deals are happening. So you will use the data site platform at the moment.
You begin thinking about an organizing and working with your Banker or given the Mandate of doing a deal. You start on beta site. So we're right there at the beginning of deal. So we kind of have, you know, sort of a 6 to 9 month view of what's happening in the markets in terms of You know, deal flow across different Industries. Interesting. So what do you see now? Very strong, very strong, local markets.
I mean, we looked on fact, I took another glance that last year this morning before you and I chatted and the deal volume was up over 30 percent last year, the momentum continues. Miss really, you know, I will state things that are pretty, pretty obvious to people who are in the business, but you know, rates on on on money or still artificially low versus history, so, The cost of capital is very cheap.
There's abundance of deals to be done and there's lots of cash, effectively, chasing and trying to be put the work, you know. Looking for you'll be on what you see today in fixed income. So we see that the Old Market or I just being a continuing strong force in terms of the economics of the US and globally. In fact, interesting. So let's talk about data set again just to make sure we understand properly what you're
saying. So let's say I work at a private Equity shop and I'm looking to buy a company. Yes, let you do both public and private deals. Is that correct? So it doesn't matter. The size. Is there a size capacity and you size capacity, but typically will see deals that have something like a hundred million dollars in economic value of up. Okay. Typically The Sweet Spot for the deals that we do and with what do we do last year globally?
Five, trillion and Deals. So there's a high volume of deals that meet that threshold understood. So then some I have a deal. I want to find a company, I find company a, I want to buy it. So I'm going to go on data site, start one side. Identify the company that is go on data site. And then basically can you walk us through the Journey that, you know, me and let me flip it if I can't because it might be easier to follow it, sort of from a
seller's point of view. So let's go from the standpoint of I'm now company. I may be a private Equity owned. I could be a strategic asset in a company. I want to effectively sell that asset. So how that would work is you would reach out to likely a banker to execute the sell side of the transaction.
And, and when that begins in typically, Even before that, you would engage data site and you'd stand up at data site project as we call because some of these, you know, some of the prep work and content for doing a deal particularly now with things like ESG in covid, the amount of content you have to organize to sell a company or sell an asset is pretty significant, right? You would work with data site immediately.
We have a product called Data site prepare and what prepare is is an advanced AI based tool that, you know, to make it simple. Can read thousands of documents and S, tell you what those documents are, tell you, how you should organize them, and put them in an index that you'll ultimately use for sharing the content about that company. Right? So, you've now used a, I prepare you've now organize, what could be thousands of documents in this company that you want to sell?
Then the next stage is typically, you want to reach out to potential buyers, right? So we create a product. I'm sorry. This feels very product Centric but it helps me walk through kind of will go for it. Yeah, this is very helpful. Paul datacite Outreach. That we launched last year, one of the three products we last launch during the pandemic here that allows you to reach out to.
It could be a dozen buyers. It could be 500 potential buyers and they could be private Equity buyers, you know, they could be corporate buyers. So is 60 is how you make that initial reach out and you share a teaser about your company, right? And you figure out who's interested in seeing more about the company.
And we use the Outreach product to walk through every stage of that, from sending a teaser to getting the Nda's and placed actually sharing the SIM for the company, which is the more room more robust content, all the way through managing to getting to the bids for the company and in supporting that is the data site
diligence product. And what diligence is it is the you know highly secure platform that you can control access for, you know, dozens or hundreds of users to that since the content that's part of the deal, part of the company you're selling. So financial information, kpis HR information. Interaction, information, all of that, that you need to be able to do diligence on gets done on our platform.
And that platform, you can read that content as an example because you might not want certain content to be available to certain people that are accessing information. Your company. We have an advanced q. A capability that allows you to do streams of Q&A with the participants in the process. So now I can flip it to be the buyer. We have a product called a choir of the Mary's and works will with diligence.
And that is the buyers version so that private Equity Firm wants to go through and I'll have, you know, happened isn't it doesn't work streams from Financial, diligence to ESG, diligence to, you know, HR diligence to Legal diligence to all the things you have to go through to figure out what you think. The right value is for the company right in today post covid. There's also an enormous amount of energy being trying to
assess. What is the post transaction value because covid material, Executive eyes of companies, particularly companies that are tied to supply chains, without going deeply into that. And he is Gee presents opportunities in risk for companies that don't have really tight ESG programs within an Enterprise, or might have climate exposure. Right? So those data rooms as we call them, are expansive. And that diligence work is pretty detailed.
So, acquire allows you to work, all of us dreams allows you to do Q&A and in the ultimately get to the point where we're ready to close on the transaction. And we support that as well when you're going through. So it is, it's an in Deal platform that you can bring in buyers. You can bring in sellers. You can bring an advisors, from the very beginning, all the way through closing. The transaction is what we think of when we talk about the data side platform. Well, I love that.
Thank you explanation. I have a lot of a large audience of private Equity investors that have been on the show, but also listen to the show and I've been involved with private deals. Before with the MMA space. This is a place that's close to my heart because I have actual experience in it. I'm always, you know, Looking for New Deals and I just, it's part of my world. So I love that. What are the some of the big things Rusty?
You see with respect that are all registered impacting the m&a market. Yeah, I think a couple things, one of them is adoption technology. One of these we saw because we like a lot of companies went from and, you know, a thousand people in our officers to everybody being a remote, no matter of 30 days and warnings. We saw at the, of the arms and the pandemic that is persisted through. The pandemic is a different work style, right? A lot less travel as an example,
a lot. A lot of what we're doing today, which is video conversations versus in-person conversations, but beneath that we seen adoption of new technologies occur, much more rapidly than we would have seen in the past. So, I talked about the product prepare that we launched right around the pandemic. Beginning. We were, we were, we were on those rare companies and innovated launched, three points, three new products in the middle of a pandemic and changing Brandon a decide,
right? We want some products like prepare like Outreach like a choir that you Tag use AI to really automate if you will and speed the process of doing deals run. So just a data point. I went to look today of the 13,000 deals. We did last year, 4,500 of those deals are now using new Automation and AI technology to do deals. And that was 0 the year before, so fully more than a third of the deals are now using advanced technology.
I think the other thing that we're seeing which is which is really interesting to watch, is we track the duration of A deal, right. So from the time, you open our project and they decide to the point where you close the project beta site, and for, I don't know for seven years that's been about 10 to 11 months, 10 and a half to 11 months, and it stayed pretty consistent. So, with the new work change in terms of remote work, accompanied by some of the advanced technology.
We've talked about today in terms of facilitating getting deals done faster, right? You're seeing Mills go now to nine nine and a half months, so 10 to 15% reduction. In the cycle, time of what it takes to get a deal done. Now, you can say there's the abundance of cash and cheap, you know, she lending effects that which is true, but as evidenced by the percentage of deals using AI Tech today to speak deals. We think that's a fundamental change.
In the weight deals are getting done allowing firms to do more deals right than they could previously do before. And with a lot of constraints in terms of ability to add head count in the deal-making community. It's a real place to be able to work deals more. Rapidly with more automation. So it's kind of burst. I think the other is frankly, you know Adam the the data rooms are getting very very large. Yeah, it's we've seen the
average deal size now. Going up for multiple years in a row at twenty to thirty percent a year. In terms of the size of the data rows, some of that you can attribute to just more sophisticated diligence, right? People can smarter. They're better at doing diligence. Some of the new tools, create more contents of I've got redacted versions versus not
redacted. Asians, they get bigger, but a big chunk of it is just the, the new, the new categories of ESG as well as what we see in terms of a broader post covid, diligence and Public's, right. So we did a survey of foreign
deal professionals. You have a copy of that you have the data and I'm not going to quote a whole bunch of percentages in that but what I was really interested me want to write it that about two-thirds of the 400 dealmakers said that ESG could be one of the biggest deal Killers. Oh wow. In the marketplace, right?
And they included in that, by the way, like you would think the impacts of things like climate change on the supply chains, but it's also things about social graph, social and governance, that impact the value of companies post transaction. So what we're seeing is, you know, those items continue to increase the size and complexity
of data rooms. Because when you get to the, as we sit earlier to the close the transaction, you want, some Surety in terms of what that three or five your model looks like as an investor. Make sure you're not going to have a surprise on the downside with what you've chosen, you know, to pursue require. So I think Automation and Ai and I think the size of the rooms and the quality of diligence or things that I'm seeing to be the most most different over the
course of the last two years. Well, I love that and it kind of fits perfect segue to my next question. I was gonna ask you what role does ESG play in the MAA space. Yeah. It's interesting because I know and again, quotes in this will tell you that about 95% of those surveyed said it's moved to the top. The priority list in terms of how companies prepare for the sale and obviously the diligent. So it's gone from something that
you would say. Certainly corporate governance has been part of doing diligence for quite awhile. Right? If you don't have good corporate governance and Good Financial governance, you know, you're going to struggle to be able to transact with a buyer or even to due diligence with multiple buyers. So that's always been. It's been strengthened has been automated, but really I think what is, what is very new is
companies have prioritized. To the top of the list that we have, not only to give lip service to BSG, but it's got to be real, you have to have leadership. You have to have real programs. You have to have real kpis. You have to be able to produce the content rapidly that mitigates what a buyer might see in terms of the risk of buying your asset. Right? So all of that is very, very new and it's not just limited to
climate change. Its climate change is also the full full social and governance aspects of the issue as well. Interesting. So there's a CEO by the way, yeah. In the middle of it, you know, in terms of having leadership and data site in terms of building in our programs. I mean, our footprint from a carbon perspective is fairly small because we're a tech company. Yeah, right, but ESG is certainly not limited to that. So it's at the Forefront of what we do with our owners today as well.
And in fact, if you look at my monthly CEO top sheet that you can either celebrate or you get, you get inspected every month. Mine. One of our core components of that is ESG for the company. Got it. I love that. So, okay. Rusty few things, you brought up a lot of really Good points here. So somebody's into the MAA space whether they're new or they're seasoned or their professional. They can use data site from A to Z. It's a fantastic SAS based tool which is fantastic.
Let's talk about some of the mistakes. You see people make with respect to buyers buying, excuse me, Acquisitions, and mergers, and how do you avoid them? Yeah, I think probably the greatest mistake that we see in some of it is created by the energy in the market right now and the active pursuit of assets. So everybody right now, we'll You most companies will tell you if they're at or near a point in their cycle with their owners of doing a transaction. They're trying to get the
market. I mean, it's pretty straightforward with the amount of cash pursuing assets and artificially low interest rates. It is a really fertile time to do deals. Having said that what we see tends to be hate to use the word Rush. Adam, put the level of preparedness, even before you engage the sell-side banker with a mandate in terms of your content. It's sometimes not robust enough. Sometimes you haven't gotten the financial content is organized as it should be.
Sometimes your kpis and the duration of kpis you track is not sufficient for going through sale process. We commented earlier about some time your kind of flat on your feet other than a couple of PowerPoint chart. Somebody s g. So it it really is you know, it really is getting ready before you launch your deal and and the sell-side bankers and advisers are tremendous and helping you do that, but the prep work before you get That Banker is
super important. I think the other is inefficiency in deal-making, and I break that into kind of two categories. I break it into one of companies are pretty busy. Not, many of us have a lot of Cycles lying around that we just are looking to apply. And a lot of times if you're not really smart about the targeting, I talked about our Outreach product. One of the things, an Outreach that our users can do is kind of get better Insight in terms of what buyers might be the best
buyers for a particular asset. All right. What are they looking for? What are they interested in Based on data? So I think one of the things that is is not sometimes great. Is that the inefficiency of reaching out the buyers who are not the right buyers or don't intend to transact, because every one of those buyers you engage with, take cycle from the leadership and from the functional leaders of a business. So there's just inefficiency there in terms of how you spend
time with buyers. And then I think you know absolute the right technology things. I talked about like you a things like, you know, redaction things in the Platform that really allow you to speed. Answers to questions, right, buyers? Doing diligence. Right, right. Shorten the cycle time. So, what I see is there are a lot of this is a, this is a fully employed for data site at about. There are a lot of platforms that don't have a level of sophistication to conduct rapid
diligence with a lot of buyers. Boosted. What's the topic? Yeah, that's that's tragic. It is all of those things, you know, being prepared. Where'd you know, ahead of engaging, you know, getting to the right buyers and then having a platform that allows you to rapidly due diligence and that by the way, is a seller of an asset. And to my point earlier in the choirs. That is a buyer of an asset. Right? Those are things I see, you
know, tend to delay deals. And again, I hate to make the point again, but ESG is clearly one that of late has certain that I know of some specific examples where it was sort of a lightweight PowerPoint and the buyers are looking for a lot more depth. And I've seen that since I get pitched a lot. So, I've seen that too. It's like what do you think is the way the deal, right? Yeah. Okay. So on the other side, those are mistakes. What about some Timeless lessons?
You've learned along the way that you'd like to share with the audience. Yeah, I mean specific to deal-making or two companies and wherever you want to go with the rusty, could be all over the board person in a deal, making a dating site, you know, we could spend the afternoon this, but we want, I would say really in terms of the And I said, I came here eight years ago, great passion for what we did, and
what we were able to create. And I think the view of data site is it's really gets simple and everybody's got, you know, ideas about how to companies perform. Well what makes company successful and it's actually not that not that complicated it's hard to do but not that complicated described and I think thatís itís really through things one is we every day get up thinking about how to be
essential to clients, right? If you begin with and if you look at the way we do, Thing we do from our customer service experience, which we have record. Net promoter scores. I'm not promoter scores are 76 at the Give an example. Now what our services team does, but if you get up every day and you organize the company around, being essential to clients, what do you do for that client?
That allows them to be more productive more effective right in our case to do more deals to do, more deals rapidly to do better deals, right? You can Orient the company in a way that it energizes the company. So you begin there and the second is so straightforward and So hard right now, by the way, which is having the best smartest, put engaged, employees.
You have to have employees that are passionate about what they do in a dating site, you know, every quarter we survey, we do a net promoter, score for employees. We call it an NPS, very simple, you know, would you recommend the company you work for to your friends, your colleagues, your family, we even put family in there as part of the conversation and we get consistently above 80 on that. We says our employees like the company, right?
They are passionate about what they do then accompany to Or they would recommend it. And then, the last bit is boy, even the context of the pandemic and working remotely and building, new communication structures and new ways to energize and collaborate. It better innovate. Well, you better find a way to produce new functions, new products rapidly, or you will fall behind in your comment earlier, you know, we put three groundbreaking technology products out in the middle of a pandemic.
You could argue that might not be the best time to do it, but that's the cold. Oh sure of the company because we knew, by the way, during the pandemic, some things. We were working on around automating, organizing content automating, reaching out to buyers. That weren't going to physically be in a room, right?
Who's thing. You're going to become really important essential to Applause. So innovating, you know, just makes it go. And I think the last bit is grow, you know, don't work for a company, doesn't grow if you're in a company. And I worked in one for a decade that didn't grow. It's not your jaws and it's not fun, right? So make sure Are you grow? And keep a sense of humor? I told a story to my team and it's it's a quick one. So early in my career kind of my
first promotion at IBM. I went to work for a lady who is a phenomenal executive and I you know, so excited. I've gotten this new job. I was running a business inside of IBM and sales organization and I came in for my 6 month for you. And I'm going in going, you know, I think great write-up doing all the right stuff. I'm checking all the boxes and she said, how see she said? What happened? And to you and I was like, this
is not what I thought I was going to be. - are you telling me that I was really good at what I was doing? And she said, you know, you're doing good stuff. You're doing the right stuff. Where's your sense of humor? We have promoted. You was because I knew you could do the work, right but you gotta maintain a sense of energy and sense of humor. For the people that you lead me people, you work with because some of these days get kind of
long. So the lesson I learned there is an addition to, you know, essential in The Talented. Being engaged and also being Innovative. And in terms of a company is man, you got to figure out. F fun stuff hundred percent. Yeah. I think those would be the things I would say. Because at this point, we all know employees are choosing where they want to go work in this industry today. Right? Right. And they have an abundance of choices.
We have to be that best choice. If we want to continue to do what we do for our clients. Yeah. I couldn't agree with you more Rusty. I love that. Having fun is so critical to everything. I do my life. It's even with the kids or whatever it is. That's what the wife with. Everything is just enjoy, just relax. Take a breath, you know, and enjoy it. I love it. Okay, so that those are the mistakes. Those are the lessons. Let's talk about some advice.
What's the best piece of advice? You can go back to your 30 year old suffer? You know, that you'd like to share with the audience from a business standpoint or personal standpoint of both doesn't matter.
I mean, I mean the personal standpoint is I'll say what everybody who would everybody says, which is figure out a strike, a balance in, everybody's got different bounce, some might argue that Pandemic has created a new balance and how much time they spend with their family and their kids and maybe they're looking to to switch that a little bit as we now come out of the out of the pandemic and move into the endemic. So, you know, make sure you do
that and you do it early. Don't wait for a time in your career where you feel like by the way, if I get to the next level that I'm going to spend time with my family, I get to the next level then I'm going to take the vacation that I've talked about taking don't don't delay those things doing it before and 15 or 20 years ago. I don't need all that.
Stuff. And I should have been doing it all along Because by the way, doing those things and spending time reflecting and enjoying the company of friends and colleagues and and and family, really energizes you to be more creative. So one is don't Delight. Do those things right? Bigger job, but do those things don't delay them. I'd go back to you. Don't always do work, the work that you want to do. And this is something that I think is tough to explain.
Is that the job that you're going to start with? It might be the work you want to do. You might not want to be doing the particular role. You have that's fine. You're going to do some of those jobs. I've done plenty of them out and you've done plenty of them over the years, do things. Well that you might not like, doing as long as you do them for a company or for business, or for cost that you're passionate
about, right? And again, I've talked about before things that companies that believe in being essential companies, that grow because growing companies create opportunity, right? So, I think, I think do stuff sometimes. It's not your favorite to do, do it. Well, but do it in the context of a company that you love to work for.
And I think maybe the last piece of advice and I clearly didn't give it to myself because I work for IBM for, you know, a quarter, 25 years change will change every three months or six months. But you know, if in fact once you understand the environment, they're operating in, and if you go back to that is it energizing is an essential as a growth. Is it something? You know, that you agree with the purpose? Of that business.
Because again, you have to have purpose and you have to tap that has to resonate, give it time, give it sufficient time. Right? But move do different things. We're in an operating environment now, where it is very easy, and in fact expected to change and by the way, don't limit it to changing from a company in the exact industry that you are today doing exactly what you do today, right?
Racial diversity in terms of your experiences, because that diversity of industry and role in the diversity of people, you Work with will create a foundation that you'll use later in your career, that will prepare you for things that you don't know. You need to be prepared for it to you get tool. So I think those are the things I would say. It's kind of as kind of balance work for companies with purpose. Sometimes do work.
You don't love for companies of purpose but be willing to be flexible and change that sense of humor. So I just published a new book. It's called psychological analysis, and it's number one on Amazon. Thank you very much. And in it, I talk about a lot of what you're sharing here. But I have a we have a I guess it's similar frequency here on how we and Outlook so to speak. How do you handle losing or fear or rejection or just not being able to close that deal? You want to close?
And in general, when you deal with your, your team, or you deal with yourself and then wanting to win, but overcoming those inevitable obstacles that get in your way? How do you handle all that? Yeah.
Oh, yeah, I would like to Tell you that these things are easy, you know, generally the way I'm always focused on on failure or the fact that you didn't see it. So you in a particular deal or particular, Endeavor is everything you do and sometimes it's more painful than pleasurable, is a less than terms of your learning something, right. So what I what I have always told the team is point. Number one, bad news doesn't get better with age, right?
So make sure if something happened deal with it in our table, It's understated point to. What did you learn from it and answers you to learn anything from it. You need to take another look at it because if you weren't successful, there was a reason for that. And by the way, not always external factors that are the reason that you weren't successful in a particular Endeavor, a deal, or a program or what have you. And I think the other boot is you got a lot of arrows to shoot.
You have to be able to step back and some of that is you have to have leaders who have enough breath and experience that you can take people and you really nurture people as they come up through the ranks. I joke about this, by the way, somebody says, what's a great place to start in your organization to great places. Starting our organization is in customer service and an inside sales, right? Because both of them, you have a high degree of success and a
high degree of failure, right? So to get very comfortable with that, you're going to take a lot of shots. Right? Right, and I'm not using the baseball analogy because everybody is the baseball analogy, but, but accept the fact that Going to fail, expose them Lauren for them and farther like shot as quickly as you can and shoot better than next time based on what you learn. Again. I you you know it as well as I
do there. It's not magical stuff is it's basic but it's really hard in the context of how fast and how hard we're running every day to do the basic stuff. But that's the way I've always thought about in terms of developing leaders, you know Rusty. That's really powerful because in the book actually say it's simple, but it's not easy. So if you look at moving wait for Sample. Because we can all relate to
that. It's calories in versus calories out, simple in theory, but most people are overweight because it's not easy. So, the same thing with winning or being successful. I like this is really, really, really enjoyable for me. So, final question, I have for you today Rusty's leadership. Let's talk about that. What makes a good leader in your opinion. I think L have an enormous amount of responsibility to set
vision and direction. I think probably the one thing that separates a great leader from an average leader is All executives are senior people are pretty capable of executing, right? That you didn't get to the position of being a leader. If you can demonstrate a track record that you couldn't want up a plan and execute a plan and produce predictable. As all right?
What makes a great leader is someone who actually can Inspire, right design and articulate a purpose for the direction at whatever level you are in an organization. This is not a CEO comment. This is the report of an organization that your In right? You're gonna find that great leader is how do I, how do I put this directly?
If you have a vision in a direction you want to take your business and you're excited about it and you're energized about it. People will get excited about it. People will execute people will follow. If all you do is a leader is manage execution. I can guarantee you're going to have an average business. You can have a growth. Right? I think the other bit is really good. Leaders can set that Vision can
set that. Shouldn't get energized people around where they're going and why they're going there. You can hold the metrics, the kpi's, the management structure in a sport that can hire the right Talent, right? What would change? Just look at it? And if you look at it on Monday, you might have looked at the last money and said we're going there because I know we should go there and you have to keep every every avenue in new information flowing. If the next Monday you go.
That's not right. Be willing to adapt, be willing to move but always reset your team with we're moving. I'm from here to here, but reset them with the, why not just the removing, right? Because if your team understands and is passionate about the direction, as you, make course, Corrections and changes. If you lead with, why are on mobile, if you, if you make changes constantly, you'll lose the core capability of your team.
So, I think, I think, I think vision and focus on being essential and, and compelling direction is the thing that's most missing in the Years hiding. Hey, we've got an entire country of effective Educators. We got a lot of number of people who said Direction, 100% agree. Obviously. This has been absolutely fantastic. What is the best way or the website of the best way people get in touch with you? So we're focused their website is perfect. That is like that, calm, beautiful.
Well, thank you so much for joining me and I will now read your thoughts. It was so well done, by the way. It's great to catch up with you. Thank you very much. Appreciate, and hope you will. Having a have you on again soon. Bye. For now.