Marketing on the Clock: In Private Equity, Everybody Has an Expiration DateMarketing on the Clock: In Private Equity, Everybody Has an Expiration Date

Marketing on the Clock: In Private Equity, Everybody Has an Expiration Date Transcript:

Jeff White: Welcome to The Kula Ring, a podcast for manufacturing marketers brought to you by Kula Partners. My name is Jeff White, and joining me today is Carman Pirie. Carman, how you doing, mate?

Carman Pirie: All is well. I’m excited for today’s show, Jeff. I think, um, you know, it’s nice to till some new soil in the show after so many episodes. So, uh, couldn’t be more excited for it. I think it’s kind of always fun when you get to do that,

Jeff White: Yeah. And I, I think it’s a topic that, and a guest that’s gonna bring a unique perspective to something that I think a lot of manufacturing marketers may be, um, de- not dealing with sounds like a negative, but, working within the constraints of these kinds of, uh, arrangements, with private equity and, and other types of, uh, ownership structures like that.

Carman Pirie: Yeah, I suppose — uh, you know, it’s important not to be pejorative, I suppose, of it all. But it is, y-y- I think you’re quite right. There’s a number of marketers that navigate these situations, whether they’re, they find themselves working in a manufacturing enterprise that was recently purchased, uh, by PE and is maybe being established as a platform company or they’re going on a big M&A run.

Uh, we’ve had lots of people –  great guests on this show talking about how they, um, think about M&A, uh, from a, a brand integration perspective. But yeah, we’ve never had a CEO on this show from the, the, talking about it from the point of view of, yeah, this is how a CEO thinks about the marketing decisions along that PE path, as it were.

Jeff White: Yeah, I think should be illuminating some interesting perspectives for sure. So joining us today is Paul Olesh. Paul is the CEO of Magneto Movement. Welcome to “The Kula Ring”, Paul.

Paul Olesh: Thank you. Happy to be here.

Carman Pirie: Paul, it’s, wonderful to have you on the show. Thank you for joining us. I’d love to, uh, introduce our listeners just, briefly to what Magneto Movement is. Like, what is the firm? What do y’all do? If folks haven’t heard of you, uh, can you give us that, elevator, pitch, if you would?

Paul Olesh: Sure. So Magneto Movement is a specialty motion control company. So I oftentimes say we try to make products and vehicles move better. So whether it’s a wiper system on light rail or a school bus or a boat, uh, whether it’s a positioning device for the solar industry whether it’s a motor that grinds the coffee that you get to drink every day at Starbucks or McDonald’s, it’s all about controlled motion, making things move better.

Carman Pirie: Better operating, uh, espresso bean grinders are near and dear to our heart here at Kula.

Paul Olesh: There you have it.

Carman Pirie: I appreciate this. Um, Paul, can you — uh, and how long have you been CEO there?

Paul Olesh: Uh, nearly four years. It’ll be four years next month.

Carman Pirie: Okay, cool. And since I was bringing in that kind of, uh, PE background and nuance of, of this, uh, discussion, can you It might be helpful for our listeners to understand kind of a little bit of that path. When was the company acquired? When, I guess when did PE come into the picture at Magneto?

Paul Olesh: So Ilion Capital Partners formed Magneto Movement in 2021 with its first acquisition of AM Equipment in Jefferson, Oregon. And AM Equipment is a manufacturer of wiper systems and other motion control products for specialty transportation. So step vans, last mile delivery, light rail, school buses, the RV industry, et cetera. I joined the company in July of 2022, and in November of 2023, we acquired DumoreCorporation, which includes Dumore Motors and Grove Die Casting, which is an aluminum die caster outside of Milwaukee. And the concept behind Magneto Movement is that to be a leader in specialty controlled motion, we need, um, three legs for our stool.

The first being motors, because all controlled motion needs a motor. Second is actuation, what the motors move. And third is control systems. So Dumore Motors is our center for motor manufacturing. AM Equipment is our center for actuation, wiper systems and other movement. And then regarding controls, we partner with a network of technology companies since every control is specific to the application.

We’ll continue to grow, uh, the platform as the investors see opportunities, and we all see opportunities. Um, I think what makes, a PE play different for a company and especially for marketing, is that in the world of private equity, everybody has an expiration date. You know, the, the whole concept between private equity is to invest in companies, improve their performance, grow their sales, and then sell them for a profit. So I often liken it to people that buy homes and renovate them and then flip them. So that’s the world of private equity. So what that means is there’s never enough time, and everything we do has to be done quickly. We have to be very efficient and effective. We’re measured on sales growth, profit growth, cash flow maximization.

So there are not abundant resources for things like marketing, but marketing’s at the core of all business growth. So it kind of works both ways, and we’ve got to find a way to be fast and quick and smart

Jeff White: What are, what are some of the things that you’re thinking of in terms of how you make marketing more efficient and effective in that kind of environment where you never have enough time to, to truly, uh, explore maybe all the options you might want to.

Paul Olesh: Yeah. So, the good news is that the business development principles in the world of private equity are the same as in any industry. Um, and fortunately, I’ve been able to take experiences from the past and bring them to a very agile, nimble, small sales and marketing team, uh, who learn quickly, are open-minded, and are willing to take risks.

And we have — I’m very proud to say we have created a great marketing machine here at Magneto Movement in a short amount of time.

Carman Pirie: I think that’s, um, kind of tough where to go with this. I, I could — I feel like I could take the whole episode talking about this notion of expiration date, to be honest. But, uh, you know, I, I guess, you know, I, I appreciate, like, there is an expiration date. Everything has to move fast.

We’re moving to an exit here at some point, which of course is always more of a compelling value proposition or, or mission for maybe leadership and investors sometimes than it is for others. There, you know, it’s, it’s maybe hard for people working inside the organization to think of themselves as maybe having an expiration date.

But I guess th-that, that kind of urgency, do you feel that it, it butts up against the notion of long-term value creation in some way?

Paul Olesh: Um, yeah, yes and no. So for example, the average private equity platform is held for six to seven years. We are faced with a fairly long sales cycle of anywhere from 18 to 30 months from initial connection with a potential customer on a project to serial production. So when you think of it from that perspective, we have to move quickly, we have to continually grow a sales funnel, we have to have ongoing outreach, both analog, digital, face-to-face in the marketplace, and we can’t be afraid to s- continue pushing forward

Carman Pirie: It’s, um And I, I, I’m, I’m thinking it — that pushing forward also drives you to consolidate the brand presence more quickly as well. Um, and I’m trying not to color it with too much of my own experience, but I, I’ve found that there’s less patience in, in private equity for longer brand integrations. There’s obviously more interest in making that happen sooner.

Ha-have you, uh, has that been the a-approach at Magneto to when, when you’ve done these acquisitions that you mentioned earlier, that they were incorporated into the mothership fairly quickly, or have they maintained, uh, some level of distinct identities?

Paul Olesh: So we do both. We focus on marketing and presenting Magneto Movement as a complete solution provider to controlled motion problems. In that way, we can focus on the three pillars of motion control. At the same time, when a customer is very specific that, um, they only wish a motor solution or they only wish an actuator or movement solution, then we highlight the individual brands.

As well what we have done is to maintain the brands under the m-mother platform and allow those brands to grow and focus on their historical strengths and place in their respective segment.

Jeff White: Did you explore, when, when you were bringing these brands together, d- and I’m not sure if you’re familiar with the house of brands versus branded house, um, strategies of, of organizing entities with multiple brands. Um, did you look at that at all or consider how you might either roll everything up under a, under a single brand that becomes dominant or, or continue to use the others.

Paul Olesh: So the framework, uh, that we followed is one based on Procter & Gamble, right? Procter & Gamble is the promise of the brand for every brand within it. Magneto Movement is the promise for every brand and every company we have within Magneto.

Carman Pirie: It’s interesting, I wouldn’t have, um, you know, I would’ve considered the, you know, P&G is certainly a bit of a classic hou- house of brands model in that those brands are very strong underneath of them, and there’s not a whole lot of marketing, uh, investment put into making sure you know who P&G is, right?

Paul Olesh: Uh, agree. If you look at the typical Procter & Gamble product, what you’ll find is the brand of the product, um, and you’ll only find the Procter & Gamble promise on the side panel. But it’s that overarching promise that holds together, uh, just about everything we use at home, right? And so we take the same approach with Magneto Movement.

We highlight all of our individual brands, but it’s all held together by the Magneto promise

Carman Pirie: I think, I gotta think you mentioned it being a bit of a, not in s- I don’t wanna say customer-led, although that’s certainly not a bad thing, but it, it was in some way customer-led. You’re looking at it, you’re suggesting, um, customers they know these brands or they maybe only maybe they’re just a dedicated motor customer as an ex- as an example.

So that, that totally makes sense to me. I would think it would have some benefits on the, uh, employee/culture side as well versus if you were ripping those brands completely away and trying to make everybody sing from the same song sheet. Did that factor into your consideration?

Paul Olesh: Um, absolutely. So for each location, as I said, we celebrate the local brand. So for example, at Dumore Motors, uh, when we talk to the members at an all-hands meeting or we do any community outreach, certainly Dumore is out in front. If we have a company T-shirts, uh, for the Dumore members, Dumore is across the front, Magneto Movement and the rest of the brands in the family are on the backside.

And that’s what we do. So we don’t want to take away the individual history or legacy of those brands or the members that represent those brands.

Jeff White: As you’ve brought on new brands and additional legs to the stool, as it were, um, how have you thought about bringing those newer offerings or other capabilities to existing customers that may only be buying fr- currently from Dumore or only be buying currently from Magneto? Like, what’s the cross-selling strategy that you have to kind of introduce folks to your renewed capabilities as you grow?

Paul Olesh: Yeah, that’s a great question. So for example, um, when we entered the marine industry, uh, we were very lucky that, um, for many, many years AM Equipment has had a presence in the marine industry, and so has Dumore Motors. So when we reach out to new customers in the marine industry, we approach them as Magneto with an entire suite of controlled motion solutions for this industry, and through that experience, we highlight the products of AM Equipment and Dumore and vice versa.

Carman Pirie: Jeff, I, I hear what you’re… I think I-I — Knocking on the door of what you’re saying a little bit more, I think, is that, you know, w-we — One, one thing that we, we’ve noticed is it’s one — It’s, it’s a little easier for the marketing to, um, communicate that more holistic value proposition sometimes than it is for the sales organization.

Sometimes the sales folks are a little bit more stick to their knitting and a little bit more protective of their customers and things of that sort. Have you been able to kind p-push past some of those inclinations as you undertake this transition, Paul?

How do you help the sales team cross-sell? It’s one thing to market the difference, especially if you’re marketing it into a new vertical. It’s another thing to tell some — a salesperson who’s been making a commission off of an account for the last 10 years that they need to, uh, talk to them about this other leg of the stool.

So I’m just wondering if you’ve facilitated that in any way.

Paul Olesh: Um, at first it has its natural challenges but the way we overcame it was to focus on solution selling. So I’ve always coached the sales organization, before you mention a product, let’s spend enough time understanding the problem the customer has and how we’re going to solve it, and then we can pull in the Dumore product or the Grove Die product or the AM Equipment product.

And that’s worked well with our sales organization. It’s also helped our team to learn each other’s products and it, it really helps the customer to talk about a problem more so than a product. The product will ultimately get there.

Carman Pirie: I thought that, that made sense to me. That notion that focusing on, on, on the problem that, that customers have, not only, eliminates some of the brand tension, but, accelerates the learning from the people that are having to learn about the, for, as you say, the other legs to that stool.

Paul Olesh: Sure. And it, it’s a great motivator for our salespeople, right? Because the more they sell, the more successful they are, the better their total compensation. And if they have a customer and that customer is satisfied with, let’s say, the motors that we sell them, and our sales member’s having a challenge growing that account, now there’s a motivation to bring in all these new products from the other companies.

And that’s also motivated our sales organization and allowed us to become more successful in the marketplace.

Carman Pirie: K-Kind of the question I wanna ask is what’s the one thing you wish marketers knew? Or marketers understood? Because my guess is, you know, I don’t, you know, that, that, you know, CEOs probably, you know, d- and I don’t want to paint all CEOs with the same brush, of course, but, you know, I, I’m just kind of curious, like, like, is, are you sitting there, are you thinking, “Look, every marketing person I’ve dealt with kind of has this, uh, firmly held belief that is completely flawed, and I wish they would get it.”

Like, I don’t, I don’t know. I’m just gonna open that up and see what you can tell us here. What should we know?

Paul Olesh: So, um, from my perspective, what’s important for marketers to know is that marketing is only e- is only as successful as the ultimate sales that we generate and create. And especially in an industry like ours where the sales cycle is quite long, we can’t say that we’re successful with our marketing purely through building awareness or purely through building leads, or purely by having a great experience at a trade show.

But we need our marketing to follow through all the way until we receive the purchase order from the customer, and that’s when I say our marketing’s truly effective

Carman Pirie: Tough business though, right? I mean, if you’re talking about you have 18, 30 months of a sales cycle, as a marketer, you did something to generate awareness and it and you did that two years ago potentially, and the cash register’s just ringing now.

Paul Olesh: Yeah. Agreed. It’s a challenge. Um, all the more reason to have a marketing team that understands, like, the total business model and what we’re trying to accomplish and to develop people that can have that same perspective on success

Jeff White: To that end, what as a leader, what do you want to see from your marketers? What sorts of metrics do you find most important that you want to see shared, and, and how, how frequently do you wanna be updated on that kind of thing?

Paul Olesh: Yeah. Um, it’s a tough one to measure, but I would say there’s three. One is to develop a deep understanding of the market, to develop a deep understanding of our customers, and to develop a deep understanding of our product solutions. Because the most effective marketing will bring all three of those elements together, and that’s a hard one.

How would I measure it? Honestly it’s the world of private equity. We’re kind of scrappy at times. It’s just watching the marketing team in the products that they make. Uh, it’s watching them at trade shows. It’s watching them communicate and ask questions. And over time, when we’re successful with growing our sales, the organization understands a lot of it has to do with our marketing and our outreach.

Jeff White: Yeah. Are they providing you with any sort of dashboards that show any, any volume of leads coming in through different channels or anything like that?

Paul Olesh: We do. Our CRM system, uh, measures and provides many metrics all along the way from initial opportunity capture all the way through final shipment and post-sales management.

Carman Pirie: So those kind of leading indicators are certainly on your radar, but to your point, they don’t, they, they’re not what pays the bills at the end of the day.

Paul Olesh: True.

Jeff White: I’m wondering what does your, you know, across these different brands, what does the marketing team look like? Do you have a central kind of administration, uh, of that and then different folks from the, uh, from the brands themselves?

Or are you pulling together a team to kind of lead and integrate as you go?

Paul Olesh: So, um, when we started buying and acquiring businesses at Magneto Movement, we decided that certain functions would be centralized at the Magneto level and others would remain local to the historical brands and operations. So, at the centralized level, it’s basically all functions that are market-facing.

So we have one sales organization, we have one marketing organization that works across the entire business, and that group of sales and marketers is actually quite small. We all work together. There’s a total of five of us, including me. But the nice thing about being a small team is we can move quickly, and especially in the world of private equity where everybody has an expiration date, we can’t be slow.

So the tighter we are as a team, the more consistent our work is, the more we go out into the marketplace together, the more effective we are, and it’s shown in the results.

Carman Pirie: I think there’s some real wisdom in that. Like, the, uh, I love the way you’ve done that and this notion of any- anything that’s market-facing, let’s consolidate it because otherwise you’re — I can just imagine the turf wars erupting across a variety of market-facing functions.

Paul Olesh: It was a great unifier, and it actually allows us to tell our story even better since each of the individual companies make up only one pillar of the total motion control stool.

Carman Pirie: I appreciate the marketing and sales func- you know, we’re not talking about a 400-person team here or what have you. I, I appreciate that. But, um, even two-person teams where you have one marketer and one salesperson, sometimes they don’t speak to each other, and sometimes they’re joined at the hip.

You know, I’m, I’m curious how you’ve thought about marketing and sales integration and, um, the extent to which those functions need to stick to their knitting versus the extent to which they need to be cooperative in order to get you to where you’re going.

Paul Olesh: Yeah, that’s a good question. So the sales and marketing members work as a single team. As I said, there’s only five of us. On the sales side, they need to focus on the actual market opportunity that we have, potential customers, potential projects, and then the marketing team does the creative work to create the tools and the collateral and the support we need to communicate our message and our methods. So for example, uh, when we talk about Magneto Movement and how we solve problems, we have marketing tools that focus on our five steps to solving a customer problem from initial inquiry through product solution. All of our brand imagery is consistent. Everything feeds together. And that’s the best way I’ve found to keep the balance between salespeople who wanna go out and get sales and marketers who want everything to look amazing, and I’ve gotta get two different value sets to come together and, “All right, everybody, we’re gonna win some projects together and, and ship some product.”

Carman Pirie: Hmm.

Jeff White: Did you plan this from the outset that, that you would create those systems early on? Or, or was there some learning there that pointed you in this direction after some early experiences?

Paul Olesh: So I’ve been fortunate in that most of my market opportunities and experiences in my own career have been, uh, very tightly connected between sales and marketing. So I used my experiences from the past. I brought them into the reality of private equity, where time is short and resources are slim, so we all need to work quickly together, and I don’t know which came first, but it works well

Carman Pirie: You know, Paul, I, I think you could, you could answer this as say — by saying, “I’ve already answered this question, Carman, and the answer is expiration date.” So I’m fine with that if that is the answer. But as we wrap up today’s conversation, I’m more curious as a leader of a platform PE play, w-what’s the single biggest market-facing challenge that you think an organization undertaking this type of strategy has to navigate?

Paul Olesh: So in our situation, it’s brand awareness and company awareness since our individual markets are quite small, specialty controlled motion. So we’re not an international player in this. We’re a small specialty player, and we have to work hard at building our brand awareness, our company awareness, and our capabilities.

Carman Pirie: Hmm. Yeah, building that niche awareness is, uh, tough ‘cause you’re trying to do it fast. You don’t have time. You got the expiration date, and you also are suggesting it’s not like you’ve got unlimited resources to dump at it.

I appreciate you taking the time, Paul, to jump into this conversation with us and help us, as marketers better understand, your world and what you navigate.

I think our listeners, predominantly marketers, will really appreciate your insights as well. I thank you for joining us on the show.

Paul Olesh: Thank you. Thank you for the privilege.

Jeff White: It’s been wonderful to have you. Thanks.