Sam: They know change is coming at that moment, and so you kind of have to jump on it. If you wait a little bit too long and let the cement settle, it's really, really hard to then go 12 months later, like, Hey, now we're gonna do some big change and, you know, rebrand everything, et cetera, et cetera.

Ward: Ever wonder what it takes to yank a bleeding Baker Hughes division out of the mothership in the middle of COVID, flip it to profit in four months, then aim the same playbook at nuclear energy. Meet Sam Veselka, corporate insider turned private equity sharpshooter who runs toward chaos, scales founder run firms, and proves culture beats capital every time. Buckle up, change just got weaponized. Let's jump in. Thank you so much for joining us today on our podcast of Rethink Change. We love having you here. It's gonna be really exciting 'cause you've had a career of managing change and navigating change.

Sam: That's right.

Ward: So, uh, we're looking forward to digging into learn more about it.

Matt: Why, why don't we start out spending the first two minutes giving us a, a CliffsNotes of your background.

Sam: Excellent. Yeah. Sam Veselka, currently managing director at Pelican. Born and raised in Houston. Uh, went to school at the University of Colorado. Got an economics degree there. Then I really had my first entrance into to business management. I worked for a really small window door manufacturing company back here in Houston. It was me and the owner, the only two with college degree. Did that for three years. Loved it. Was clearly not gonna be my long-term career. So went back to business school at Rice. And then joined Cameron, uh, for seven years.

Uh, during that time, all sorts of different roles: business development, sales, marketing. I, I ran marketing for one of the divisions for a period, and then ultimately was a P and L owner or in managing, uh, an operation here in North America. Berger came and bought Cameron, uh, which made me rethink my, uh, long-term, uh, goals and was able to find Pelican Energy Partners private equity group here in Houston.

Joined them in 2018, and I've been there for, uh, seven years. The Pelican was a hyper-focused private equity group that would be, uh, very sector focused specifically, uh, and ran three OFS focused funds and then now launching our nuclear energy services fund.

Ward: So in your role, you go out and find and talk with business owners who are in the middle of transition. Kind of, can you give us a sense of where they sit and what they're facing?

Sam: Yeah. Lots of different scenarios, right? Uh, and that's one of the core competencies of Pelican is, is to sort of run towards challenges or opportunities the way we would put it, um, when we're looking at different companies in a transition point. Often, the classic example is a aging entrepreneur looking for a transition. They don't have a family to pass down to. Uh, and they haven't really thought about how they take their business from point B to point C. They've done a great job of going from point A to point B, and they sort of hit a cap. They know the opportunities out there, their product, their service, whatever it is that they're providing has a great opportunity to expand.

Ward: So if I'm a business owner and I've reached that inflection point where I gotta figure out either, either close the door or sell and move on or whatever those...

Sam: Right, whatever those options are. Yeah.

Ward: There are a lot of people I can go to to talk to about this. So what do you bring to the table that would is different that would appeal to me?

Sam: Yeah, so Pelican is very clear with that value proposition. What you'll see in all of our backgrounds is very little investment banking, nothing against investment bankers. They're wonderful people. They're, they, they provide a service by all means. Uh, but we view ourselves as operators first.

So we've walked in their shoes, uh, we've been in their positions, whether it's a division president, a CEO, a CFO, we've, we've dealt with managing a business, the people issues associated with it, waking up every day trying to figure out how we're gonna succeed rather than just looking at a plan or a budget and just being a financial capital provider.

Matt: Have you seen any, seen any parallels as far as the types of struggles or the type of change initiatives that these entrepreneurs have dealt with when you get them into your portfolio?

Sam: Oh, yes. Same problems every single time. Often these companies are founded by the true expert in whatever the space is or field, whether it's a product they're making or a service they're providing. And they've been so capable of delivering that, that message, that story, and that service directly by themselves, they've usually not done a very good job of building a team around them, uh, and delegating those responsibilities.

And so that's usually the number one thing we're looking at is stepping in and supplementing that, you know, amazing entrepreneur that's done, you know, absolutely wonders all by himself, usually working a hundred hour weeks and God knows what, to try to build a team around them so that they can actually start to offload some of that, those efforts, professionalization, and organization systems to put in place that just simply have been done in their own head, uh, up until you know that point of transition.

Ward: So you've seen this where it's worked incredibly well, and you've probably come in and seen where it didn't work at all. What are some of the things that you look for that tell you this is gonna be one that'll work?

Sam: At the end of the day, it's people. And what we found time and time again, the intellectual side of that individual is fully bought on with bringing on a partner. They know they've hit a, a ceiling or they know they want to transition or find sort of the path to, you know, down, down the road to transition out of this sort of crazy, hectic work, uh, environment. But the reality is once you sort of jump in, close the deal, start to partner, and start to drive change, those individuals really, really struggle with their heart in terms of handing over a lot of that, that workload.

We have been shocked by some individuals where we found that where we really didn't think it would be a problem, uh, and vice versa. Others where we thought it was gonna be a very, very challenging issue, and you can just see the weight come off their shoulders almost immediately and they're happy to pass off and, and start to build sort of a team around them.

Ward: So a lot of what you do is managing help, helping these owners manage their change.

Sam: That's exactly right. Help them manage their change. They can come to the conclusion that, okay, at some point I have to do something. It's really what is that next step that's so challenging. And then finding someone that they can truly trust, you know, and respect to come in and help them make that very challenging emotional change, uh, is what we attempt to do.

Uh, and like you said, everybody reacts to it differently once that change actually starts to occur, and that's where we have a very soft touch in terms of working with these management teams. You know that that individual is the heart and core of that business. So we don't take it lightly. If things are going south, we're gonna spend the extra time, the extra effort, uh, to try to get them over the hurdle to make things, uh, successful, uh, you know, as best we can.

But some are, are, are truly incapable of letting go. I mean, it's just, uh, it's, they've succeeded their entire life. Some of these guys have been running these businesses for 30, 40 years, and at the end of the day it's just really hard to let go, even to their own detriment sometimes.

Matt: How do, how do you approach that? How do you approach helping them finally let go? And I know some people never can.

Sam: It it, so it just completely depends on the individual. Often the pitch is, I, if you don't go through this transition, you will have nothing left to pass on to your family to pass on. You know, you if you wait until you have a health event, if you wait until, God forbid, you pass away, if you wait until you're just not able to keep up with the business, the value of the business basically goes to zero. And that's a very, very challenging realization that they have to meet is that I, who have been the like sole reason this thing has any value today actually become a detriment to this business.

That's, again, cannot be told directly, has to be told softly and through these conversations and having people like our managing partner Bill, Bill Chiles, who sort of been there truly all the way through to, you know, to retirement here recently, even at Pelican. You know, to be able to say, look, I, I understand that feeling, but this is the right decision for you and your family.

Ward: So we worked with you on a project that was not a small one man show, but a company that did a spinoff. Can you talk a little bit about that?

Sam: Yeah. So very, very different scenario. So we looked at a division within a division of Baker Hughes. It was a business line that Baker Hughes was looking to carve out and spin off as they were sort of transitioning to more of a tech-focused business, uh, you know, through the COVID transition.

So here we have a team of 30, 40 year large company Baker Hughes employees, some GE, some Baker Hughes that are all of a sudden being ripped outta the business and we're gonna try to stand it up on its own with its own identity, its own brand, its own ERP system, its own IT systems, its own everything, right?

Ward: Its own culture.

Sam: Its own culture, its, its, you name it. So when we took a look at that business initially, you know, the first thing you look at is what that, you know, who's on that team, what are their backgrounds, and do we think those can actually be, you know, small company entrepreneur individuals, and can they create a culture of success outside of the mothership.

To be pretty frank, our initial assessment, not assessment, I would say, but our assumption, is that absolutely these are gonna be the wrong people. We're gonna have to replace everybody. And so we went through a long journey with them to try to figure out, you know, whether they're gonna be, you know, the right team to manage that carveout.

And again, testament to Pelican is we don't make rash decisions, right? So we give people a chance. Uh, we let them have the opportunity to show that they can be the right folks for that role. And the team just absolutely shined, and it would've been a disaster had we come in and brought a new team in there, which would've probably driven change faster. There could have been a culture and a brand and all that, you know, put together on a piece of paper a lot quicker than the team that we had. But there would've been so much damage to the core legacy of the business that I think we would've massively regretted that decision.

Matt: What was the biggest challenge with that whole carve out initiative? Was it getting the employees to shift their mentality from this theory of abundance to a more entrepreneurial, or was it just other aspects of coming from such a large organization to basically starting something from nothing?

Sam: Um, it, so it depends on the timeframe. So day one, it was purely logistical, which actually I think helped them sort of break their mindset a little bit. The whole focus of physically carving out the business from Baker Hughes, all the facilities were shared facilities, you know, all the IT infrastructure and systems, ERP, their whole, you know, engineering system was a big data lake in Baker Hughes that they had to try to piece out.

And so the, the core early focus was just how do we physically like separate, you know, from the mothership. And it allowed them to realize sort of the complications of the big organization with everything sort of just jumbled together. And I think that helped us sort of, you know, move through that initial phase before really taking on the, okay, who are we and what are we, you know, on a go forward basis, um, that was the real challenge, right?

I mean, that, that is the, you know, what is, what makes what you know became Vault. Vault. Right. You know, what makes me an employee of Vault and not an employee of Baker Hughes or Cameron or whoever one of the other competitors were. And I think the big, the number one challenge through all that is you've got a, a group of people that have never had to look at a blank sheet of paper, have never had to come up with a, you know, a culture or a strategy because it was spoonfed to them.

That was the number one culture shift and break to how do we empower all of these employees to make the right decision all the way through the organization from the top all the way down, and feel excited about showing up at work every day, and feel excited about trying to step up and treat each, not only the business as an entrepreneurial mindset, but even each individual branch, each individual location of how do I kind of manage and run my P and L? And we want you to take chances. Like we want you to actually, you know, try to do what you think is right and be rewarded when you can, when you can do that.

Matt: How big of a lift was it to get the employees to buy in that we are Vault as opposed to, you know, I've been at Baker Hughes for 40 years.

Sam: Um, hugely challenging and, uh, ultimately time, right, because it has to have a, you have to have a feedback loop, right? It can't just be, Hey, we all went in a room. We decided we're now Vault and this is what that stands for. Live it. So really the focus was after the painstaking efforts, you know, to try to figure out what is the brand, what is the message, it's really about how you reward and reprimand if you will, you know, with the carrot and the stick to, to provide that feedback look loop, to actually change the culture within the organization. That was a lot of work, which I think is the most surprising to people, the amount of effort you need to put on internal marketing versus external marketing is often overlooked.

Uh, and if you want to drive that culture and ultimately have that permeate into your customers, is you have to have the employees own it and embody it every day. Um, so instead of doing a bunch of advertising and doing a bunch of external marketing, really the focus was internal.

Matt: So you faced almost a twofold challenge because here you are, you've carve out, carved out an organization and have rebranded it to be an entirely different company. But when you rolled it out, it was in the middle of COVID, there wasn't a, Hey, everybody's in the office receiving it. It was a virtual rollout. Can you talk about the whole process and really how it was initially received by the employees?

Sam: Yeah. Uh, very challenging. Um, the original plan was to physically have somebody at every single location, uh, for the big kickoff, hand out a bunch of hats and shirts, and do all these kind of, you know, Hey, rah rah, you're a part of this team now. Couldn't really do that during COVID. So it became very, very challenging. Refocusing efforts towards digital was really the only path. And then trying to, because not only internal, but then also trying to get, you know, the name out there and the information out there externally became very, very challenging. And so that was another big challenge in terms of a dichotomy of, you know, we're different, we're not Baker Hughes, but we're still from that legacy as well.

Ward: How'd you manage your communications with, with customers? Because if the, if the employees aren't singing from the same hymnal that the customers are gonna see that what we're hearing is just marketing it's not really true. What's going on over there? How did you manage that?

Sam: Really branch by branch. In our life and world, so many, the, the customers are very compartmentalized by basin and where they're actually operating and working. So there's not as much of a communication with sort of the, the, the big corporate office.

And so we tried to take it as local as we possibly can. And again, those sort of employee promotion, employee highlights that we were using internally, we were sharing externally with those customers as well to provide those case studies of us actually acting and operating differently than. What they're used to with their, uh, uh, with the legacy businesses that they're used to working with.

Matt: Starting a company from scratch obviously was a big shift from where the legacy employees came from and how they thought about the value that they provided. How big of a lift, or can you talk about just the process of helping the sales organization within Vault clearly define and articulate who they are and how they're different from their competition, how they're different from Cactus Wellhead, etc.

Sam: Yeah, a lot of time and effort, uh, with you guys. So having to sit and go through kind of step by step in seeing what makes us different and what actually drives the customer to choose one provider over another in the space, specifically the wellhead space at Vault. It was pretty much considered all top, the top four or five players kind of all had the same offering. So it's more of a customer preference that you were sort of delivering. And so I think that's where looking at sort of the competitive landscape, spending a lot of time thinking about Cactus and Cameron and Baker Hughes and Weir and some of these other top tier players.

What is it that we can deliver that was different than all of them? And that was that pure, overarching customer experience from sort of beginning to end that you can't deliver in a bureaucratic system. Now very lean organization, very quick decision making operation. We felt that was the space or that was the value that we could bring to the table to be, you know, again, still top tier product line, still equal, you know, technology. But now with that really on the ground customer experience that you just can't experience in a, in a, you know, going to one of those larger providers.

Ward: And when you showcase these great success stories, mm-hmm, how quickly was it going through your organization that they go, ah, so that's what I'm supposed to be doing? Was it faster than you thought? Slower than you thought?

Sam: It's very fast. I mean, and, and, and, and, and it didn't take a big sophisticated system. It's really just email, right? I mean, you've got a organization that's not small, but you know, it's 450, I think we're 550 employees now. Really just through email blast to get that information and communication out.

The, you know, CEO would, would travel to each one of the locations and would, when, when would do, so when he would do so, he would highlight whatever that success story or case study was, whether it's one that he's taking around to everybody or each individual location, whoever the success story was. And then we utilize compensation, you know, and to, to say that this is sort of, uh, the reward, uh, in a bonus structure that's not based on a lot of KPIs that they can't really directly control. And sort of shifting that compensation package to be focused around what is the very individual actions I want this individual to take, uh, and set their bonus plan associated with that.

And so I think that got people excited and surprised and shocked versus the very traditional, large corporate annual bonus that's based on Baker Hughes stock or you know, something that they, you know, they're a very tiny piece of, uh, at the end of the day. So we were surprised at how quick that was able to, to permeate. I think the other piece that we actually kind of underestimated, good employees want to serve their customer. And I think what we realized is there's a lot of folks within the organization that really felt handcuffed, you know, in their prior organization to deliver what they knew was right for their customer.

Now some can be wild west and you need to make sure that there's still, you know, some controls around that. But at the end of the day, you know, they want to do a good job. They want their customer to be happy with the, the service that's being provided. And so really what we felt a lot of what we're doing is just sort of unleashing them.

Ward: When you did this transaction and as you were leading up to the transaction is probably the biggest you'd ever done.

Sam: It was the scariest, that's for sure.

Matt: Middle of a pandemic.

Sam: Oc, oc, end of October, 2020, buying an oilfield services company, that was a scary moment.

Matt: Price of oil was negative.

Sam: Yeah, yeah, yeah, exactly.

Ward: So you had done your planning in terms of we think we'll make this kind of profit this, this, the kind of sales, this is the kind of profit that we're gonna make over the next three, five years. What turned out to be the case?

Sam: So, yeah, the, the way we viewed it, the business had been losing, I won't give you a number, a large sum of money up until when we did the transaction. So the goal for the first year was, here's the amount of money we have to spend on losses and set up. We can't go a penny over that. That was really the, the hardest, you know, piece in that first 12 months.

Within four months, so we were hoping that by the end of a year we would be break even on sort of a last 12 month, uh, you know, view. Very much adjusted all the one-time expenses were gonna have to be, uh, you know, associated with it. Within four months we were on a brand new ERP system and we, we had our first month of positive EBITDA. So it was, it was shocking in terms of how fast we were able to get sort of EBITDA positive, uh, was one thing. And then basically since then we've exceeded all expectations in terms of growth. We were not expecting as much market share gain as we were able to to capture, especially coming through COVID and especially coming out of a really tough time in the industry. And I think it just showed people were begging for somebody that, that was putting the customer first rather than sort of the, the behemoths who were sort of like, well, look, if you don't come to me, who are you gonna go to type of mentality.

Matt: Uh, there, there were so many memorables memorable moments of working together given that it was COVID given that there was such a dynamic going on. I don't know if you remember, but when we actually met to help establish your differentiation and who you are, we rented out a ballroom, if you remember, because of, of, uh, social distancing. Yeah. And so it was this massive, massive room with, you know, a dozen or so of your team and executives. We went through this process. Were there any sort of aha moments that changed the way that you thought about communication or you thought about the value that this new company would be providing?

Sam: What I think the, the aha moment was, the act of everybody coming in every day into this special, you know, ballroom set up, seeing the effort, the focus, the care from the Pelican team, from the individual team brought that team together in a way I don't think you ever could have done, you know, in sort of a remote setting. I think a lot of the things when we started to really work with, with, with Pennebaker to, to build the culture and the strategy kind of came out of that environment of, you know, look, it's just us in this room trying to figure it out.

Every day you don't know what's gonna get thrown at you. You don't know what the challenge is gonna be. If you have the right partners, if you have the right support system to be there alongside you, you know, you can get through it and really thrive, you know, within it.

So that's where, you know, we say all the time, you know, if, if the management team sort of holds their problems to themselves, they're their problems. But if they bring the problems to us, it's our problem and we can work together to try to fix it. And I think again, this sort of, I, you know, crazy environment that, that we kicked Vault off in really showed that we were living those values and that they could see the success of all working together, very fast paced, making quick decisions, and again, in that real time feedback of being rewarded for making those quick decisions.

But at the end of the day, you guys had a bunch of people in a room that has never gone through a proper strategy session, has never had to go through, you know, what does my brand mean to me, and, you know what, what gets me up in the morning other than I have a job and I have to go to it, right? This is down and dirty oilfield folk that just sort of show up and go to work. 'Cause that's what they're supposed to do. Right. Trying to get them to embrace, you know, the emotional side of what they do is so critical and I think is something that's usually lacking, especially in sort of the oilfield.

Uh, I think on the nuclear side it can be exact same. The, you know, uh, uh, a view. It's a bunch of engineers that just, I got a job to do and that's why I show up and I do my job and they pay me to do it. Right. And that's basically it. Um, and so, uh, what you end up with in that scenario is cost plus business that makes low margins and sort of delivers a product and. You know, if somebody can deliver a slightly better product or convinces 'em otherwise, you know, there's just no stickiness associated with the business whatsoever, the service that's being provided.

And so in order to try to find a way to actually differentiate yourself in what is often viewed as sort of an undifferentiated sector, you have to take the time, effort, and hard work of asking the real challenging questions of why do they actually purchase this from and what makes them come back the next time. And then, beyond that, how do I actually demand a higher value for my service because they get the value on the other side, and how do we communicate that? Those are the really challenging, and that's how you get out of the, there's just the, the death spiral of a cost war, you know, or price war, you know, with your competition 'cause you don't take that time to go through it.

So it's easy for us. And the, what we we often say is when you do a transaction, don't let the cement solidify or, or harden, you know, like they know change is coming at that moment, and so you kind of have to jump on it. If you wait a little bit too long and let the cement settle, it's really, really hard to then go 12 months later, be like, Hey, now we're gonna do some big change and you know, rebrand everything, et cetera, et cetera.

Matt: Based on all the organizations that you've dealt with, you've dealt with a ton of entrepreneurs, what advice would you give to entrepreneurial listeners on their own company, how they can help best position themselves for growth or for an exit, yeah, of some sort.

Sam: I think the, the number one thing people need to realize is there's a maturity to every business, and I think you cannot run a business the same way depending on what phase you are in that, in that business. So a lot of these folks are incredible at starting with absolutely nothing, coming up with an idea, capturing those first few customers, growing the business, but they're doing everything themselves. And so I think every entrepreneur needs to take that step back, whether it's every year, six months, three months, three years, whatever it may be, to say, where is my company in its sort of maturity cycle and what does it need to sort of go to the next level.

And there's a lot more capital that's involved, there's a lot more infrastructure you have to buy, you know, bring in, et cetera. So sort of knowing what you are really good at, knowing what values you can create, and when you start to realize that you're either busting at the seams or you're having a challenge going to that next level, that's when you need to start thinking about, it's not my fault, it's not, you know, I'm not capable. I need additional support and structure to help take me to sort of that next level. But a lot of times it's just, I've hit a ceiling. I, I don't, I'm at 5 million of EBITDA and I can't get beyond that. I don't, I don't understand why. You know, and you come in and it's like, well, you go out on sales calls and you bring in a bunch of work, then you realize you have to execute it. So you stop going on sales calls and, you know, yeah, you're gonna be capped at a certain number forever.

Ward: Do you have instances where you've gone in and talked to some entrepreneurwho's in that very position, and they, they say, I can't get past this ceiling. And you talk to them and say, here are some of the things you need to do, and here's some of the things we can help you with, and they respond, well, I think, let me try it myself first.

Sam: Yes, absolutely. And actually we embrace that because that means they're listening, they're learning. That's somebody that if they go out and execute on a few of those things and they see the success, they're gonna be coming back and talking to us.

And at some point there is a separate personal conversation of, look, there's a risk component here, but we have seen multiple times and some of, sometimes it's the business is too early stage for us, and so we're saying, look, we're very interested, love the product, love you, but you really need to do X, Y, Z before we could look at it as sort of a private equity investment. They go out and execute.

Our number one return business out of fund two, Gordon, who's a MWD business, was exactly that. We had met with the entrepreneur two years prior to then doing the deal. And Mike Scott, our founding partner, was like, look, love it. If you're able to do what you say you can do, you know, we're all in, but, you know, you need to be down hole for X number of time before we can even remotely feel that, you know, there's confidence in this product. Okay, they just needed the support from people like us to actually get them over the hurdle to go, to go hit those next steps. Or, or, or is the person's, you know, personality not going to allow them to actually sort of take the help and take the support to go to the next level.

Ward: So part of that's denial...

Sam: Yeah. Yes.

Ward: that they have a problem. Yeah. And how do you, how do you navigate that denial until you can reach the, the bifurcation of, I'm gonna work with 'em or I'm not?

Sam: If I had a black and white way to, to assess that, we'd be a lot more successful. Lemme put it that way. So much of it's interpersonal time. Uh, so I mean, the, the way for us to decide it and what we always say, more data points will help you make a better decision. When we've got a challenging individual that we're uncertain, you know, whether they're gonna really be on board, what they say sounds great, but are they really gonna act, et cetera, we, we spend more time physically onsite in person, having those conversations. Once we've done a deal, then it's, it's very reactive, real time feedback of, you know, Hey, we said we're gonna do this. You're pushing back, you know, confronting them directly. Nicely. Right? You know, I mean, not threateningly, uh, or anything along those lines, but having those sort of very direct conversations of, look, we said we need to do A, B, and C.

We're trying to tackle a and you're putting a wall in front of it. Do you realize that you're doing that Right. You know, I mean that, that's where it's a lot of this self-awareness. They just go back to their mode of go grit and go get it done and I'm gonna do it myself. And, you know, I used to do it on a piece of paper and now you want me to put it in the system? No, it's a waste of my time. It's, it's gonna take me longer to do that.

Matt: What would you say are the biggest characteristics of a client from Hell? For, for, for Pelican, if you're going out and looking at a company, they could have a great balance sheet, great books, are there any characteristics that are just total red flags?

Sam: Yes. I think probably there, there, there's probably a number of different ones. I think the, the number one consistent failure that we found going across is when we come across, I don't know if it's right word or not, a narcissist. I mean, literally someone that thinks they can do no wrong and that they are always gonna succeed.

We see this a lot in what we call promoters, folks that are really, really good about pitching and selling and talking what they can do. I'm not so focused on what they have done. And those are tough to, because you want it commercially minded. You want high, entrepreneurs are to a fault, you know, you know optimistic individuals, right? I mean, they, and they have to be a little crazy to sort of go out and take the risk that they're, they're taking, uh, to succeed. So we've had a few big mistakes of usually earlier stage investments with individuals that talked a really big game, that had a few red flags that we sort of, you know, highlighted in terms of their willingness to sort of take advice, their willingness to sort of, you know, take accountability when they didn't hit a certain number or this, rather than just talking their way around it.

I think that's where we found the, you know, few failures we've had in terms of investments, had been an individual that ultimately found was not a very good person, wasn't very, you know, accountable and basically, you know, thought they could sort of talk their way out of everything. And so that's hard to, to tell if they're just divisionary and passionate or delusional, uh, if you will. And so, so we've had multiple, and those are very painful because that's the entrepreneur that you're working with, and to have to part ways with that individual. Now you're truly starting with a blank sheet of paper.

Ward: What, in your view is a prospect from Heaven for a company to buy

Sam: Prospect from Heaven for a company to buy?

Ward: Yeah. For you to go in and take over.

Sam: Oh, oh, sorry. Yeah. For us, for, to, to require. Yeah.

Ward: Yeah.

Sam: Um, ah, man, it just really depends. For us, we are looking for someone that needs help. Which I think is very, very different than a lot of the private equity groups. So a company from Heaven actually was a recent one that we just did, which was a public company that we took private.

So finding a scenario where there's clear value destruction that we can see and pinpoint, and then have the sort of fortitude or whatever you wanna call it, to say that's scary 'cause it's not running well and running properly. And it's hard to see what that looks like when it is running properly. But to go in and say I can quantify very specifically value that we can create and underwriting that more so than I want a nice, perfectly humming running business. And look, it's been growing for three years. Honestly, those scare us away.

Ward: So you're bringing all of your lessons learned from the oil patch. Into nuclear. Do you see clearly business is business.

Sam: Yeah.

Ward: Do you see anything that's special in nuclear that is like, yeah, business is business, but?

Sam: So it has been shocking how similar the two industries are. Uh, the challenges, challenges and problems that these companies are having, are the exact same challenges and problems they were having in the oilfield. There are dynamics that are similar. There's only so many drilling rigs out there. There's only so many nuclear reactors. It's a very small customer base, so there's high customer concentration.

This is not a consumer good with, you know, unlimited sort of access. Trying to find ways to grow a business in sort of a very specific sector is kind of a unique challenge, right? The focus is more kind of wallet share of customers rather than how many more customers can I go tack on. So we're pretty well equipped to try to help sort of guide them down that path.

Also very similar entrepreneur. A lot of these are businesses that weren't founded out of their garage necessarily, but were sort of started up overnight a long time ago. And they've just sort of hit this point of, okay, how do I scale and grow beyond this now that sort of the nuclear sector has taken off?

And so I, I hate the term, but you know, we're finding ourselves a little bit in a rollup strategy where you've got a lot of different product lines that are all selling to the same customer, and that customer wants a different product depending on what day it is and what their need is that day. That should all really be branded together.

And so that's sort of the next phase that we're looking at. We're gonna be acquiring probably 50 to 80 companies. And the goal is to make that eight to 10 platforms. How do you manage those brands, right? I mean, are they, is it a, you know, a corporate umbrella and then each one of them keeps their own brands? Is it all going into one brand? And that answer is gonna be different for every single one of the companies.

Ward: And how do you merge cultures...

Sam: And then cultures, right?

Ward: 80 different cultures.

Sam: Right? Well, and, and, and, exactly. And none of these are, you know, cost synergy opportunities. You know, they all have a different vendor base. It's really their, the customer is the same customer. And it's the same person within that customer that's even, you know, acquiring these products or services. And so it's really about sort of bundling the packages, delivering the same message. Uh, these, these power plants are very hard to actually get into, uh, and find the right person to talk to.

And so if we can have one company that has an in on that customer and this company has an in on this customer, that's where the real value sort of gets, gets added. And so it's, you know, these are gonna be disparate plants and, you know, uh, businesses that are sort of put together. And so to that point, how do you create a culture if it's not all, you know, one organization in one location like we had sort of with Vault, uh, if you will.

Ward: Have you had experience with, in the oil and gas side, where you've bought a, a business and it turns out that they had grown by acquisition and you find out that they had done nothing to integrate those pieces?

Sam: All the time. All the time. Which is why when we sort of went into this endeavor on the nuclear side, it says, okay, we may find ourselves in a roll up scenario, but remember, we're all operators. Right? We're not doing that just to slap a, a package together and a sim together. And we were so, our, our reaction to the concept of a rollup, we just have a visceral negative reaction to it 'cause it, it had been done properly in the eighties, but it had been completely overused of just smashing these oilfield companies together, cutting costs. You know, trying to get EBITDA to a certain number to just take it public even though they have no actual synergies together, uh, or any real value that they share across. If there's opportunity, you know, and those entrepreneurs agree and are driving and say, Hey, these four should really be together and we could do better together, then we will take that slow approach, uh, to do that correctly in order to, to show there's real value across the, the four sort of interacting and working together. The oilfield is ripe with a bunch of businesses that have been smashed together that should never have been together.

Ward: So when, if you've come across those companies that have, you've had the smash together, and things don't belong, how have you addressed that where you, have you come in and said, we've gotta merge this culture, or we gotta get rid of some of this and integrate some of this in the back office?

Sam: Well, so thankfully for us on the oilfield side, we, we didn't do any of that, right? And so we've never really done any of the smash cos that a lot of the folks have done in the oilfield. So often we've sort of sold into them, but we've kept all of our investments sort of separate. Now we've got a few here recently. So we just recently, you know, uh, Q2 Quinn Pumps just recently acquired their number one competitor, Lovekin, the founder and partner of ours, uh, Doug Quinn, uh, Q2 actually founded the original Quinn Pumps, which he sold to Lufkin, which then Lufkin sold to GE. We just basically bought that business back out. So it's his original, you know, business. So we're putting Quinn pumps and Quinn pumps two back together again, you know, to consolidate.

Those are clear, obvious consolidation. All needs to be back to one culture. All needs to be driven the same way, same KPIs, et cetera. That's the sort of consolidation we're comfortable doing in the oilfield. We are less comfortable with sort of, here's one service, let's add the three other services to the side of it, even if they're actually managed and run a different way. You know, a lot of people make a mistake of putting a product manufacturer with a service provider together, or they think, just 'cause we do work with drilling with this customer, we will be able to get their completions work completely different teams within the customer base.

And so we've just, we've been in it too long that we just haven't dealt with sort of the smash co problem, right, on the oilfield side.

Ward: Interesting you mentioned Lufkin. I remember when Lufkin was bought by GE and there was a sense in the oil patch that here was a really strong cultural brand of service going into GE and just getting gobbled up and, yep disappeared. Now that's been reacquired, what do you find is, has changed with Lufkin and it has to be rebuilt?

Sam: Yeah, it's the exact opposite of what happened with Vault. Right? So it got go, Lufkin got gobbled by GE. The brand disappeared. Uh, they wanted to promote GE and not Lufkin. The restrictions and controls put around the individuals actually providing the services, prevented them from providing a decent product and service to their customers.

So you saw a business crumble within GE. It got them bought out by a private equity group here recently who were generalists that loved the legacy and the brand and the concept, but knew nothing about the oilfield. So they bought it, carved it out, immediately started to fall apart 'cause there was no core. They, they brought in a new CEO out of nowhere that didn't know the business, that was a great manager, you know, on paper, but didn't live and embody sort of the oilfield and, and rod pump specifically, which was that product. Right. And it started to crumble.

So what was their solution? Oh, we'll go buy Schlumberger. We're just gonna consolidate another one and smash those together. And so to us that's where you have, the only way to sort of abruptly shift that type of culture is to have a figure like Doug Quinn, the around, original founder, to be able to step back in and say, let me show you how this is done. This is a culture that you should be living by to try to change that.

Uh, we lost a lot of people through all those pieces though. Right. So the hardest part, I think right now is how do you actually re rebuild the workforce and find those folks that left when it went to GE and then left when it came outta GE? And you know, you name it.

Matt: What a fascinating position to be.

Sam: Yeah. Oh yeah. Yeah. It's, it's remarkable.

Ward: Is there anything that when you came in, you thought we should ask that we didn't?

Sam: Oh, wow. That's a good question. I mean, I guess one, one just what do I wish we had done with Vault that we didn't. I, and I, I don't think I have a good answer to that, but that was the question I was afraid of.

Um, you know, what should we have done that we, that we didn't through the sort of the Vault carve out process? And I think the one thing I would say is, you know, that was our first real scaled carve out. And I think we had some internal dynamics that were challenging for us that actually drove a bit of a wedge with the management team and some people at Pelican.

And that took about a year or so to work through and figure out the people you put in charge and the people you put in responsibilities for such a challenging endeavor. You know, need to have checks and balances as well throughout the process. You can't have a all powerful, if you will, in sort of those uh, structures and organizations.

That means it gets messy, right? Because, you know, there's not sort of just one voice all the way through. But I think in the end it always works out better where you have a transparent environment, open environment for people to speak up, voice their challenges, work through those and say, this is why that's, we don't think that's the case or, or, yes, that's correct, but these pros outweigh those cons or whatever so that they can embrace sort of the ultimate decision and get on board.

Matt: So what's in store for the future Pelican?

Sam: So we have just recently launched a new fund closed last, uh, October of, uh, 24. We're in 2025 now. So we, we were able to double in size a four $50 million fund. Uh, and we, we transitioned by utilizing sort of the skillset of working with small entrepreneurs in sort of the oilfield, uh, service space.

We've now transitioned over to a nuclear energy services fund, um, that is very similar type businesses. So, these are service providers, engineering consultancy companies, many product manufacturers, but they just, you know, their widget goes into a nuclear reactor rather than, you know, to the drilling rig, right.

And so very similar in individuals, uh, and people. It's sort of a sector that's been forgotten and sort of left to its side, but mature. And so what we found in the nuclear sector is it's very much a downstream industrial services business. They just happen to focus on, you know, or have the clearances and the the accreditations in order to work inside a nuclear reactor rather than a refinery or petro plant or anything along those lines.

So for Pelican, it's been a big shift. We've doubled in size now 'cause the fund doubled. We're having to research and learn an entire new sector. And then now we're really, you know, what is Pelican is a little bit of a conversation now 'cause it was just pure oilfield. That's what we are, that's where we all came from. And you know, if you were to ask, okay, well what's the next fund? I don't know.

Ward: Thank you so much for your time. This has been a just engaging conversation and I'm sure that we'll be getting lots of comments back and we'll come to you and say,

Hey, what about this?

Sam: Well, that's wonderful. This has been a lot of fun.

Thank you. Thank you.

Matt: Thanks so much, Sam.

Sam: Awesome.

Matt: Thanks for listening to Rethink Change. If you enjoyed this episode, please share it and be sure to follow the show so you don't miss a single episode. If you're a disruptor looking to challenge a status quo and don't know where to start or what to do next.

Penn Baker can help find out more at pennbaker.com.