Episode Transcript
[00:00:02] Speaker A: Welcome to Align for Impact. I'm your host, Matthew Naylor. I started this podcast because healthcare and leadership both come down to the same thing. Alignment. When people, purpose and performance connect, real impact happens.
On this show, we'll talk with entrepreneurs, brokers and change makers who are challenging what is broken in healthcare and in business and find new ways to make a difference for companies, communities and the people they serve.
So, Rob, welcome to the show. This is where I talk about alignment and impact.
[00:00:45] Speaker B: Thank you. Great to be here.
[00:00:47] Speaker A: Yeah.
Rob Adams, CFO of Chromedale Specialty. I love starting our conversations off by just understanding your journey. You know, where were you? Where are you, like, where are you headed in life? And I love to start really at the beginning. You know, where'd you grow up?
Tell us about, like, where you went to school, the family, and how you started your business career.
[00:01:11] Speaker B: Sure, sure. Well, I grew up around here in Valley Forge, just a few miles from here. So this is familiar space for me.
I went to Malvern Prep like so many of the other crew around here, Jake and Brian and your son Brody as well, although quite a bit ahead of those guys. So Philadelphia School, Philadelphia School, Mountain Prep. And I actually switched to that school from the public school system.
And that was sort of one of the sort of beginning inflection points for my journey into adulthood, was switching from a public co ed school to a private school, private single education school.
[00:01:57] Speaker A: Why that take place?
[00:01:58] Speaker B: Well, the grades weren't up to snuff in the public school, and it was. I looked at a variety of schools in the area and interestingly, I made the choice and I. I had. There was some voice in the back of my head that said, if we remove the other sex from the classroom, things will change for you.
And I went from being a sort of C and D student in public school to being honor roll straight through at Malvern.
[00:02:26] Speaker A: Nice.
And where'd you go to college?
[00:02:30] Speaker B: I went to undergrad at Skidmore College, upstate New York.
[00:02:33] Speaker A: What'd you major in?
[00:02:34] Speaker B: Majored in economics.
[00:02:36] Speaker A: Okay.
[00:02:36] Speaker B: And I was, at that point was clear to me that I was not interested in going on to further my education. Economics, which is what most people do in that field. They go on to a PhD and do research and whatnot and had taken some accounting courses at the school, which was a different department than the economics department. It was the business department.
And accounting made natural sense to me.
Debits and credits sort of were easy for me, and I thought, that's a good base for a business career.
And so I pursued that. And interestingly we talk about grit a lot in life and here at Crumbdale. And that was another seminal moment for me. When it came time to recruit on campus for the big accounting firms, the business department was not interested in me participating in those interview processes because I was an econ major, I was not an accounting major, and they didn't want me to take positions away from the business students.
And so I had to go through a little bit of a fight with the administration to be able to interview with these firms on campus.
And I did.
And ironically, I had more offers with the accounting firms than most of the business students.
[00:03:56] Speaker A: Why do you think that is?
[00:03:57] Speaker B: Well, they appreciated the diverse background that I brought to the table, and they appreciated that I had a econ background and more of a theory background, which econ tends to be.
But I had the accounting requisite classes and they were more attracted to that more diverse student, more diverse experience.
[00:04:19] Speaker A: Where'd you start your career when you came out of college?
[00:04:22] Speaker B: So I was hired by Ernst and Young and I started out in New York City at Ernst and Young. I was lucky enough to be placed into the entrepreneurial Services group, which was largely small, privately owned, emerging growth, many of them venture backed, technology oriented businesses, high growth enterprises. And this is back in the 90s, early 90s, mid-90s, so a lot of telecom and communications related technologies, handful of life sciences companies as well.
And Matt, these were small businesses, so they were not your typical public company.
And we were hired at Ernst and Young to do the audit work and do the taxes. But this was a point in time, pre Enron and pre Anderson, when the accounting firms would get very involved with the companies that they were serving. And so I had the opportunity to really learn and understand those businesses. We would become a consummate business advisor to them.
And it was my first exposure to the entrepreneurial world.
[00:05:33] Speaker A: What did you learn during that chapter of your life?
Interacting with lots of different entrepreneurs.
[00:05:42] Speaker B: I learned a lot about what it takes to be an entrepreneur and what it means to take risk.
I had, as a young individual, I had not had experience with that type of the business world. The business world for me was large companies, established public companies and businesses. And up to that point in time, I did not have a. A sense of the types of risks that individuals were taking and the level of determination and the level of persistence and in some respects, just downright stubbornness to keep their head down and follow their vision and execute.
And it was a great opportunity for me to understand that side of the business world.
And interestingly, that was a point in time when, of course, the entrepreneurs were being very successful taking their companies public or selling them. The venture investors would do well.
The lawyers were actually taking equity in those companies in place of fees back then.
And of course, the investment bankers were underwriting these deals and making out. But when it came time for the accounts to get paid, we could only get our fees because of the independence rules and the various requirements in the accounting industry. And so it was frustrating for me to see all the success be created and be part of it as one of the service providers, but not be able to participate in it. And that was what was the catalyst and what started my move towards the next sort of stage of my career, which was to transition from the agent side or the service side to the principal side of the business.
[00:07:33] Speaker A: And did you go back to school, Rob? Did you stay at Ernst and Young? Did you, you know, what. What was your journey kind of after Ernst and Young or during the Ernst and Young process for you? And how old were you at this time?
[00:07:49] Speaker B: At this time, I was in my mid-20s.
[00:07:51] Speaker A: Okay.
[00:07:51] Speaker B: And I had made a decision that I wanted to become more operational in the business world rather than as just an accountant serving businesses.
And I had in the back of my mind, this concept of being on the principal side or being on the ownership side. And I made a decision to go back to graduate school, get an mba.
[00:08:15] Speaker A: Where'd you go to graduate school?
[00:08:17] Speaker B: University of Michigan.
[00:08:18] Speaker A: Nice.
[00:08:18] Speaker B: Yes. And I went out there in many respects with an idea to get involved in operating, as I said before, and in particular, I had an interest for manufacturing type of businesses.
[00:08:33] Speaker A: What was it like when you applied to graduate school?
Well, I just speak from my own experience being dyslexic.
I created my MBA program and curated it for myself by getting on lots of public, private, nonprofit boards. YPO did a bunch of things to immerse myself in a executive educational program that I did myself. And the reason I did that was, you know, I didn't think I was going to do very well in the GMATs.
[00:09:04] Speaker B: Yeah.
[00:09:04] Speaker A: And get into the school of my choice.
[00:09:06] Speaker B: Right.
[00:09:07] Speaker A: And so what was that process like for you, going and applying to business school?
[00:09:12] Speaker B: It was a challenge. I had set high aspirations for myself, and I was an average score on the standardized tests. And so I had to find other ways that I could stand out.
And in part, I had the entrepreneurial experience at Ernst and Young, which was uniquely different than many other of the typical accountants or CPAs who were applying to the business programs.
And I also had an opportunity to do a short one year stint in the music and entertainment industry as an accountant. That differentiated myself as well.
But I had, as I mentioned, I had high aspirations to get into a top program. And I had applied to many of the top programs and was accepted to Michigan.
And at that point in time, I had just met the woman who's now my wife and we have begun dating in New York City. She was an accountant as well and worked at the firm.
And so I had a little bit of a sort of inner battle as to whether I wanted to pull up my roots in New York City and move to Ann Arbor or see about this girl and how that was going to go.
And I also had aspirations to get into a top program.
Penn was one in particular that I was interested in. And so I made a decision at that point in time to see about this girl and defer my entrance into graduate school.
[00:10:48] Speaker A: So were you accepted at Michigan?
[00:10:50] Speaker B: I was accepted at Michigan. I hadn't been accepted at Penn, but I thought to myself, okay, I'll take another year and I'll give Penn another shot. Well, interestingly, Michigan said, well, we won't defer you because we don't do that here, but you got in this year, you'll probably get in next year.
And so you'll just have to reapply and it'll be a quicker application process.
So I took the year I worked in the media and entertainment industry, had a great experience, pursued the relationship with Tamra, and reapplied to Michigan. And lo and behold, I got rejected from Michigan.
[00:11:28] Speaker A: The Michigan's admissions department was a little butthurt probably because the first time around.
[00:11:35] Speaker B: Right.
So that was a, a tricky situation. And of course, at the same time, my relationship with Tamara started to get a little rock rocky.
And so I was faced with this dilemma and I had not been admitted into Penn on my second shot at that.
And so as we've discussed here several times, I started a letter writing campaign to the dean of the University of Michigan Business School.
[00:12:04] Speaker A: What. What gave you this idea to start writing letters to the dean of the Michigan Business School? Well, I knew what inspired you to do that.
[00:12:13] Speaker B: I knew I. I knew Michigan was a place for me. At that point in time, it was clear to me that Michigan was the school for me. And I needed to convince them that that was the case and I needed to persuade them that that was the case.
And the best way for me to do this, this is again going back in the mid-90s. So we didn't have email or Social media was to write a letter a week to the dean.
[00:12:37] Speaker A: How many weeks did you write a letter a week for?
[00:12:39] Speaker B: I have those floppy disks in my basement somewhere, and I want to pull them out, but it had to have been 10, 10 to 12.
[00:12:46] Speaker A: You should pull those letters out and, like, frame them.
[00:12:48] Speaker B: Every one of them was different.
[00:12:49] Speaker A: Yeah.
[00:12:50] Speaker B: Everyone had a different angle on Rob Adams and who he was and why you wanted him in your school.
[00:12:55] Speaker A: That's so cool.
[00:12:56] Speaker B: And so this all culminated with me being in Detroit for business for a period of time, and I coordinated to meet in person.
[00:13:08] Speaker A: Would you just, Joe White call the dean of the school and say, I'm going to show up and have a meeting with you?
[00:13:12] Speaker B: Pretty much. I called them and said, I'm going to be in town. I want to have a meeting with Joe White.
[00:13:16] Speaker A: Yeah, I don't think Joe Waite's taking your meeting, by the way.
[00:13:18] Speaker B: It took some calls and some persistence, but I got on his calendar.
[00:13:22] Speaker A: Really?
[00:13:23] Speaker B: And I'll never forget the day, sitting in his office. He had clearly had a long day. He was a little disheveled. He was clearly tired. It was at the end of the day, and I made my case, and he looked back at me and acknowledged everything I had said. And he had the sort of stack or the file of letters on his desk, and he said, you know, there are so many individuals like you who are qualified to be here in Michigan. So it's a very difficult process, and it's a very difficult decision for us, and we'll see what we can do. And I left without an answer.
[00:14:03] Speaker A: At that point, it's a very opaque. Thank you for coming, but have a nice day.
[00:14:07] Speaker B: It was. And I was.
[00:14:09] Speaker A: How did that make you feel when you walked out of there?
[00:14:11] Speaker B: A little defeated. A little defeated.
But in a matter of weeks, that acceptance letter showed up.
[00:14:16] Speaker A: Man, that must have been.
[00:14:18] Speaker B: That was life changing.
[00:14:19] Speaker A: Yeah, life changing.
What did you do after your mba?
[00:14:26] Speaker B: So during the process of my graduate education at Michigan became two things became clear to me. One is the thoughts of going into operations in the exposure that I was having at Michigan were not an optimal business choice for me. I was surrounded at Michigan by so many engineers, many of them from the automotive industry, because naturally from Detroit, they go to Michigan and those local schools. And it was clear to me that those individuals with an engineering training were more qualified for an operational role in business than perhaps I might be.
But I could fall back on my financial training as a cpa, and I could certainly think back to my experience with the younger entrepreneurial companies and my drive and desire to want to be on the principal side of that business.
So again, this is the mid-90s.
This is not a point in time in the American economy when venture capital was as big as it was now. But I made a decision to get into the venture capital industry and I did a lot of research.
And at that point in time, VC was largely concentrated, of course, on the West Coast.
[00:15:47] Speaker A: What is venture capital?
[00:15:49] Speaker B: Venture capital is essentially deploying private capital into private businesses that are not profitable, that are very promising in terms of a product or a service or a technology, but they need capital in advance of the realization of their success.
And so the venture capitalists deploy funds into these businesses to fund losses, essentially to fund investment in R and D research, to fund human capital and to fund the initial revenue drive for those businesses.
[00:16:27] Speaker A: Sounds risky.
[00:16:28] Speaker B: Very risky, Very risky.
So I made a decision to pursue that and I ended up securing some opportunities out on the West Coast.
And this was again a point in time when it was a different paradigm than we know in the venture world today. And I came home for spring break and of that first year of the two year program and I declared to my parents that I was getting into the venture capital and the private equity industry.
[00:17:03] Speaker A: How'd that conversation go?
[00:17:05] Speaker B: It was an interesting conversation because my father was an engineer by training and had worked for a company for 35 straight years that was self funded and a profitable business.
But he said, you know what, if you're going to get into that business, you ought to go see Pete Musser and this company, Safeguard Scientifics, and see what they're about because they're doing a lot of similar things in venture capital.
[00:17:35] Speaker A: Who was Pete Muser?
[00:17:36] Speaker B: I didn't know who he was. And I said to my dad, well, that's great. Do you know him or do you know somebody there? I'm going to go out to the west coast for a round of interviews. And he said, no, no, no, he's just over here in Wayne, Wayne, Pennsylvania. And I said, no, no, dad, you don't understand. I'm going to get into venture capital, I'm going to go out to Silicon Valley and I'm going to sort of pursue my dreams out there. And luckily I wasn't so stubborn that I didn't listen to that suggestion. And I literally knocked on the door at Safeguard and dropped off a resume and said, I grew up in the area, I'd like to learn more about what the company's doing and I'd like to spend some Time with. With Pete Musser.
[00:18:17] Speaker A: There's a pattern here, Rob, by the way, you write a lot of letters, drop letters off at doors. Very persistent, lots of grit.
[00:18:25] Speaker B: Yeah. You have to be your own, your own advocate.
[00:18:27] Speaker A: Yeah. Really great stories.
[00:18:29] Speaker B: Yeah.
[00:18:30] Speaker A: So go ahead and continue about this. Dropping the letter off with Pete.
[00:18:33] Speaker B: So I received a call back and an invitation to sit down with Pete Musser. And as you know, Pete Musser was an icon in the area. He was a very unique entrepreneur, an individual who built a very successful publicly traded venture capital business from nothing.
And he did it here in the suburbs of Philadelphia, which was very unique in and of itself.
And over the years, Safeguard became a juggernaut in the east coast private capital industry in particular, but on a national basis as well.
And it was unique in the sense that it was a publicly traded business.
And the unique proposition for Safeguard was that they would take their investments public through a rights offering to their shareholders.
So if you own stock in Safeguard, you and I could participate in those IPOs of these venture backed private technology companies. And there was otherwise, at that point in time, very few avenues for individual investors to participate in that type of arena.
[00:19:51] Speaker A: What year was this when you joined Safeguard?
[00:19:54] Speaker B: I joined safeguard in 1997.
[00:19:56] Speaker A: Wow.
[00:19:57] Speaker B: Yeah, just before the.com or the Internet boom. The first wave of the Internet boom.
[00:20:04] Speaker A: How long did that last?
[00:20:06] Speaker B: That lasted two years.
[00:20:07] Speaker A: Okay.
[00:20:08] Speaker B: And it was a race to the moon, and then it was a race back down to get your feet back planted on earth very solidly.
[00:20:17] Speaker A: What did you learn most in that 2, 3, 4 year process at Safeguard?
[00:20:22] Speaker B: Well, I learned just about everything I learned in business. And during that time, I learned on the back end of my tenure there, which was when things weren't going well, when the bubble burst and we had to go to the companies that we invested in and we had to tell them that capital wasn't endless and that they needed to rationalize their business and they needed to make changes if they were going to survive.
And those were very difficult conversations to have.
When you are an investor, an owner or a part owner of a business, but you're not operating it, but you control the purse strings. And you have to sit down with a founder who this is their baby, this is their life. And you have to tell them that there's not enough money or they're not the right person, or we need to make changes if we're going to survive. Those were very difficult situations. And you have to have your ducks lined up when you do that. You have to know what's going on with the business and understand why these decisions have to be made so you can persuade that individual hopefully to see the situation the way that you're seeing it as an investor and bring it along and hope the company survives.
So it was a difficult period, but I always say I learned just about everything about venture capital during those downtimes where you had to make hard decisions. When the markets were going up and the IPOs were flowing, you felt like a million bucks and everything was great and it was easy. But the difficulty came when times were tough and resources were restricted.
[00:22:11] Speaker A: What did you do next, Rob in your journey after Safeguarding?
[00:22:18] Speaker B: So at that point in time, there was a lot of change going on at Safeguard and there was a change in management there. And despite feeling at that point in time when I joined that this was a company that I could spend a career with, it was clear to me there wasn't the company that I had joined in existence anymore. And so I made a determination to strike out on my own. With several other partners, I raised a venture capital fund which I ran for about 10 or 15 years.
And we invested in seed and early stage technology and life sciences business businesses here in the Mid Atlantic region.
And that was my first experience as an entrepreneur.
So I had spent a career on the outside looking in at entrepreneurs operating right as an investor, whereas an accountant serving these types of businesses.
But what I did in raising a fund, in building my own venture capital business with two other partners was I switched from that sort of outside side to the entrepreneur side. And that was my really my first taste and baptism at running a business and being an entrepreneur.
[00:23:39] Speaker A: And what was that experience like for you over that 10 year period?
[00:23:43] Speaker B: It was exciting and it was challenging. It's raising capital and being a steward of other people's money is a true honor and an obligation.
And it's a challenge because you have to answer to those investors and at the same time you have another job, which is to put that capital to work and to monitor the success of that capital as you're deploying it and as you're growing it.
And like any other portfolio, you're going to have an array of successful businesses and other businesses that aren't successful.
And what truly crystallized for me during that period was that as a venture investor, you tend to spend a chunk of your time on the investor relationship side, which I just mentioned is talking to your limited partner investors and communicating with them.
You spend another chunk of time sourcing the new investments so you can put the capital to work and then you spend another third of that time managing the portfolio of investments that you have.
And in that portfolio, you're going to have successes and you're going to have failures. And you're always gravitated to for better or for worse, towards the failures because you want to preserve or you want to reverse those trends.
And I got to a point over the years where I sort of felt as though I was kind of a workout guy. I was spending more time with the troubled companies, and the successful ones were doing well, and they were kind of like, oh, you're a board member, we're doing fine. We don't need you over here.
And it kind of takes me to the next level of my career iteration where I thought to myself, I want to get operational. I want to get involved in these businesses. I don't want to sit on the sidelines anymore and watch them grow or only jump in and be operational when times are difficult.
And I thought to myself, over a period of time, I want to identify with a group of individuals and a team that are going to be successful and that are going to motivate me. And I had observed those in all the successes I had been involved in over the years. In venture capital, you can't help but admire the teams that are doing well, and you can't help but admire how those individuals, the leaders or the founders, are particularly adept at attracting talent, retaining talent, and motivating talent.
And as an individual who aspired to be operational and be in that mode, I thought to myself, I want to identify with that team. I want to find that team. And what I also want to do is move away from the teams that are unsuccessful. That as a fiduciary, as an investor, unfortunately, I have to spend time with.
And those are teams that are sort of the opposite side, that they don't attract good people or they don't have the ability to retain the good people that they attract, and they're not as good at motivating the teams that are around them. And so I set out on that journey at that point, and I made a personal decision to move away from the venture capital industry. And not many people do that, but because it's a very lucrative business managing money.
And I set very simple goals and aspirations for myself, which was to identify an individual or a group of individuals that I felt would motivate me and would drive me and would provide me, of course, the opportunity to be operational.
And for me, Matt, at that point, it was about becoming a CFO at the end of the Day because I had the accounting and the CPA background. I had been in that position in the workout situations that I was in as a venture investor, and now I wanted to do it in a positive situation.
[00:27:51] Speaker A: How'd you end up at Chromedale?
[00:27:56] Speaker B: So I was fortunate enough to know Brian McTeer, our president, who was a lawyer at Blank Rome during those days when I was at a venture capitalist here in the Philadelphia region. And I came to know Brian through the deal community.
And as you know, Brian introduced us in 2011 timeframe and around the same time, Jamie Fitzgerald at Goldman Sachs, who was a very good friend of mine for many years here in Philadelphia, who you knew well, had introduced me to you as well.
And so we had a fateful meeting in 2011. This predates my determination or my decision to move into the operational world where I was raising a venture fund. And I had the opportunity to pitch you for that.
[00:28:48] Speaker A: I remember that meeting.
[00:28:49] Speaker B: Do you remember that? Do you remember the outcome of that?
[00:28:50] Speaker A: I do remember the outcome of that meeting, Rob, Yes.
[00:28:55] Speaker B: But we knew each other just a little bit from that. And of course you knew Jerry Johnson at Safeguard, and Jerry was one of my bosses and a mentor of mine. And when I had mentioned to Jerry that I knew you, he had had amazing things to say about you. And that just sort of tucked away in the back of my head.
And then roll the clock forward to 2016 17, after I had made a decision to pursue an operational career. And I was sort of scouring the countryside looking at companies to invest in and become operational in or partner with.
And Brian McTeer called me up and said, hey, I'm working on this insurance opportunity and wondering if you have some time to take a look at it and help us out.
And I said, sure, I'd be happy to look at it. And when the material came across, it had your name on it. And I thought, okay, that makes sense. Brian had introduced us before and we spent a good three or four month period getting to know each other, you and I and Brian and Jake was involved at that point in time.
And it was pretty clear to me early on that you were the type of individual that I had built my criteria around. In a lot of respects, you were an individual who could motivate me and others.
And you were an individual who was interested in attracting talent and building a team.
And all that being said, I knew very little about the insurance industry or the health insurance industry. Right. I had only ever consumed it as an individual or a business owner.
So it was an education for me during that period and as I studied the industry that we were planning to enter, you were planning to enter, I became infatuated with it. And I drew a lot of parallels between the, the business that we were looking at and the businesses I had been investing in for a 15 or 20 year period as an investor.
And those were mostly software businesses.
Right. And a software business is characteristic of subscription type of revenue, very sticky revenue, good retention rates and a very high operating leverage. Once you sell that software solution, it doesn't cost a lot to deliver that revenue.
But that software industry has one very big expense associated with it, which is R and D, research and development, software engineers developing code.
And that's a big capital item on the balance sheet for those businesses.
Look at the health insurance industry, a lot of the similar characteristics. High recurring revenue run rate, very sticky revenue, good retention rates, high operating leverage. But it didn't have that big nut that you had to invest in in software, R and D. And so it was a more attractive and more profitable profile than industry.
And I remember sitting at home at the kitchen table going through the financial modeling that we were doing at that point in time and just going over and over again those models and thinking, how are these numbers making sense? And as I studied it and studied the public companies that are out there, it became clear to me that this is a really attractive business from all dimensions. Right. The brokers, our broker partners have a very attractive financial model.
The wholesalers, the program administrators, all the way up the chain to the risk takers.
[00:32:59] Speaker A: What year was that, Rob, when you started to consult and think about joining Chromedale?
[00:33:07] Speaker B: So that was 2017, when we first started.
April 17, when we first started to do some consulting work.
[00:33:14] Speaker A: Okay, so almost 10 years.
[00:33:16] Speaker B: Almost 10 years, yeah.
[00:33:18] Speaker A: Wow.
[00:33:18] Speaker B: Long time.
[00:33:20] Speaker A: How has, you know, being innovative, being creative, being disruptive, thinking differently, having different standards, trying to reimagine not what was, but what can be.
How much has that impacted you over the last 10 years in this part of your journey? You know, with Cromdale Specialty, it's had a massive impact.
[00:33:42] Speaker B: Yeah, it's, you know, if you think about the insurance industry, it's been around forever. It's a state industry.
And one of the things I loved about what you were doing and what you stood for was to not accept the status quo.
And it became clear to me early on in our relationship that you're the type of person, if somebody says this is how, how it's done, because it's how it's always been done, you're going to take that as a challenge and say, well, we're going to do it differently and we're going to do it better.
We're going to do it more efficiently, we're going to do it for a better outcome for our clients, we're going to do it more profitably or all the above.
And in any industry, insurance included, if you have that mindset and you think that way, you have a set of opportunities that are way beyond what a typical player in the industry has, because you're willing to take those risks, you're willing to break those rules, those traditions, and you're going to see opportunity as a result of it. That was one of the things that really has been impactful for me in sort of learning how to take those risks and how to process those risks and manage those risks that are foundational for what we do here at Crumdale.
[00:34:58] Speaker A: Yeah. So Crumbdale. Rob, in those early days, we started the business at my kitchen table.
Today we have, you know, hundreds of customers, if not thousands of customers and hundreds of teammates.
How has that journey been for you? Like the scaling, the growing, the inflection points of the stages of building a business with, you know, real people, real process, real systems, real governance. How is that, in your own words, has unfolded for you?
[00:35:32] Speaker B: Yeah, it's been massively satisfying, if you think about the story that I just told.
A lot of my professional career, I would characterize as sitting on the sideline and watching these things happen as an investor or a board member or an advisor in an accounting firm.
But in the last nine years or so that we've been together, witnessing that from a front row seat and being part of that growth and those inflection points, and there are many of them, has been hugely satisfying. And there are many aspects to it, and there are many stages when it was just the four or five or six of us sitting around the farm and meeting occasionally and going through financial iterations and figuring out who the first clients are going to be and what the first revenue dollars would look like.
That was a raw and exciting time for all of us.
And then we started to make some hires. We had some resources available to us.
We were all risk takers, right, because we were all essentially working for nothing.
But we would reinvest whatever money we had made in the business back into the business so we could hire some of the earlier employees, people like Buzz, people like Ivana.
And those are investments that we made that paid off. And that was super exciting to see that. And as a team started to come Together.
And we were really a company. Right? We were a business. People were coming into the office every day.
It was a community. It was a family that was being built.
Super exciting to be part of.
[00:37:20] Speaker A: Really cool. Rob, I want to play the Crumbdale specialty card game with you for a little minute here. Okay. And we can use this mainly for our team and maybe for our partners, whether it's a trading partner, a broker, consultant, an agent for people to get to know us a little bit better.
And it's a. It's a fun process, but I like to, you know, run you through it and ask you a bunch of questions. Sound good?
[00:37:51] Speaker B: Let's do it.
[00:37:52] Speaker A: Okay.
So what is something about our team that outsiders may not realize?
What is something about our team that outsiders may not realize?
[00:38:07] Speaker B: I think there's a common thread throughout the organization.
We articulate it differently over the years. But one way that sticks with me is work hard, do the right thing, and help each other out.
Thinking back to those days when it was a handful of people and we all had to do a lot of things that maybe weren't in our particular area of expertise or responsibility, we build a sense and a feeling that really, we didn't realize it maybe at the time, but it was woven into the.
The genetic code of the company, and that is that we're here as a family and we all have a common goal and a common cause, and we all are willing to put our pencils down and help somebody else out with something, because maybe we think we can add a different perspective or we just know that somebody is overloaded or struggling and we can help out. And that happened early on, and it still happens today. And the neat thing today is it happens across departments. So we have people on my team that will help out the account management team, vice versa, people on the PBM team will help out. Folks on my team when we're trying to put some level of model or information together.
And I'm not sure that's observable immediately from the outside. I think our trading partners, our broker partners, and our groups observe it over time, but it may not be readily observable.
[00:39:41] Speaker A: How do or how would someone spot a Crumdale person when they meet them for the first time?
[00:39:50] Speaker B: I think folks who work at Crumbdale describe when they're asked about, well, what do you do?
What's your job? What's your work?
I think those people are going to lead more with the company that they work for than what they do.
If people ask me what I do, rather than Say, oh, I'm a cfo, or I'm a part owner of an insurance business. I tell them about this company that I'm involved in and why it's so unique. And then at the end of the day, I can tell them I'm a CFO or I'm one of the.
The owners of the business.
And I think you'll find that people at Crumbdale lead with, oh, I work for. For Chromedale Partners. And this is a very unique business, and here's why.
[00:40:40] Speaker A: You know, we have 200 teammates. There's lots of people that contribute to our success. There's not one.
But over the last nine or ten years, Rob, what are one or two hires could even be partners that you think totally changed the game for us.
[00:40:59] Speaker B: Well, one that comes to mind so frequently is Jim Andrews.
And as you well know, and I'll divert here a little bit, one of the things that I found very impressive about you early on was that you were always willing to put on a suit and a tie and hop in the car and drive up to North Jersey or drive down to Maryland to pitch some business.
And as you remember for years, I
[00:41:28] Speaker A: call it taking your little pan and shaking for pennies.
[00:41:31] Speaker B: That's right.
[00:41:32] Speaker A: That's my thing I've done for 30 years.
[00:41:35] Speaker B: And you're still willing to do it today, which is great.
But it was clear to me in looking at the growth prospects for our business two or three years in, that we had a bigger opportunity than you and Brian and Jake could service. Right. And back then, it was the three of you who were making the rain for the business.
And Joe and I would talk amongst ourselves and we would all talk as a partnership that this doesn't scale.
And so that process of identifying the need for Chief Revenue officer and then going through the process of identifying Jim as the finalist was a real big inflection point for our company.
And it was a very satisfying hire, I think, that we made. And it's made a big imprint on the business for sure.
[00:42:33] Speaker A: Really great, Rob. I love it.
The why behind Crumbdale. That's our next set of cards here.
[00:42:42] Speaker B: Okay.
[00:42:44] Speaker A: We say we're a people business first. I talk about our moat all the time. I talk about culture and people.
We talk about the benefits of that. Second, when did the people part of what I said really start to click for you? At what point?
[00:43:08] Speaker B: Well, I think it was early on, Matt. I identified you straight off the bat. And again, remember, I was coming out of a role that I had been in for 10 plus years where I spent my days and nights assessing people like you as a prospect for investment.
And so I just hearken back to that criteria we talked about earlier. When I made that decision to move out of the venture industry and I was looking for a team, I didn't care what industry or what domain it was.
And it was clear to me at that point in time that you were an individual who could attract good people and motivate good people. And you expressed a desire to do that. You had plans to build a business. You weren't just looking to create a successful insurance product and then flip it and sell it.
You remember, we would sit around the table and you say, guys, I'm not doing this to turn around and sell it in two or three years. I want to build something that's sustainable and that lasts.
And to do that, you have to have the right people. And it was clear to me you had the orientation to do it.
[00:44:24] Speaker A: You know, so my podcast, Rob, is about alignment and impact.
I talk about culture over strategy all the time.
What does that mean to you specifically?
[00:44:38] Speaker B: Oh, that's an easy one. And it's a similar theme here. It's all about the people. I think we used to say in venture, you could invest in the best technology or the best product, but if you don't have the right team, you're going to end up having a B or a C result.
But on the flip side, you could invest in a B or C technology and product, and if you have an A team, you're going to end up with an A result.
And that's an easy one, Matt. It's really about the people, and that's what makes the difference and makes the impact.
[00:45:11] Speaker A: What did you see, Rob, in the market, or what did you think Cromdale saw in the market that nobody else really saw?
[00:45:21] Speaker B: Well, I think that evolved over time.
I think when we first got together and we had a business plan that was dramatically different than where we are today.
I think, again, this is spoken more as an outsider or an uneducated, because I didn't have the insurance experience that you did. But you heard me say this before. I felt like you and the team that we were assembling had the ability and still have the ability to sort of look around the corners and envision what was coming. And that kind of feathers with the resistance to accept the status quo and the desire to make changes and make changes for the better.
And so the ability for us to understand that helped us sort of see those opportunities and evolve the business and Build it into sort of where we are today. Right. And we could see those pieces slowly coming together, some of us slower than others. I know there were times when I thought, oh, I understand what we're doing now. I know why we're making this move.
And here we are ten years later, and we still have a ways to go. But it makes good sense to me now.
[00:46:41] Speaker A: When did you first realize, Rob, this Chromedale specialty is going to be bigger than what you originally thought?
You know, I'm sure when you joined the company, you were thinking, ah, it'll be nice. We'll do X, Y and Z.
When did you figure it out? Like, you were like, wow, this is going to be something a lot bigger than I originally thought.
[00:47:09] Speaker B: Yeah, I think it was in 2020. 2021 coincided with the pandemic.
We, as so many other businesses, were going through a dramatic shift and upheaval in how we conducted ourselves and we conducted business.
But if you remember back that year, 2020 in particular was a great year for the business.
And it was at that point in time where we were starting to lay the seeds to build a distribution engine that was scalable beyond the founders.
And that's what led to us bringing Jim on board.
And at that point in time, it was clear to me, as it remains today, that the market opportunity out there for innovators in this segment in particular, who can bring solutions that benefit the members and benefit the groups the way our solutions do that the sky's the limit for us, and it continues to be. So. It was around that point in time that it was clear to me we had a much bigger opportunity on our hands than.
At least at that point in time, I was giving myself and our company
[00:48:23] Speaker A: credit for what changed the most and what has stayed the exact same over the last 10 years.
[00:48:34] Speaker B: Well, the company has changed so dramatically over that time, with us approaching the 200 employee mark and having so many different faces in the area, but also on a national basis, we have folks spread out throughout the country.
That's changed dramatically. And that continues to be a challenge for us to keep that culture that we've built intact. Right. Every individual that we hire has the opportunity to consolidate and fortify that culture. But at the same time, there's always a risk that that individual or those groups of individuals might dilute the culture a little bit. So that's a challenge for us to keep that intact. And I view that for our team, as the partners, as our number one challenge going forward. In addition, of course, to continuing to grow the business but what has stayed the same, I think the Crumbdale culture has really stayed the same throughout it. And we've done a good job up to this point of keeping that intact. And we've had to learn to communicate more effectively more frequently and more directly, either as a group or on an individual one, on one basis. We've had to learn to train the team in the ways that we feel make Crumbdale successful.
And that sort of goes hand in hand with what I said before. It's a challenge for us to keep doing that. And as long as we have that foundation in place, it's going to be a significant benefit for us and a significant advantage for us in the market.
[00:50:20] Speaker A: Rob, what do you, when you look at over the next five, 10 years, what are you most excited about?
[00:50:29] Speaker B: I'm excited for us to keep innovating. I'm excited for us to keep bringing solutions to the market and to the clients that we serve today. I'm excited to keep evolving the business.
We are operating in a super exciting market.
It's immensely satisfying for all of us to deliver the services and the solutions that we do and to see the groups, to see the members, to see the employees benefit from the solutions that we bring to the market.
And as I said before, the sky's the limit. It's a massive, massive opportunity. Healthcare is front and center for everybody, whether it's at home, on the couch with the family, whether it's at work for an employee or for an employer who's running a business and providing that benefit to their employees.
[00:51:20] Speaker A: You know, Rob, as a founder and as a CEO and as an entrepreneur, I try to think differently. I try to set different standards. You know, when you think about alignment and impact, everyone in our company has synthetic equity. People have direct equity. We have an outside board of directors.
You know, we've built the Crumbdale Lab and Learning Center. We've built a technology stack both internally and externally.
And, you know, we built a recruiting and development department. We've done a lot. I think we punch way above our weight, I think, is what I'm trying to say.
How do you think that has positioned us in a positive way to accept the growth that's about to come?
[00:51:59] Speaker B: Yeah, I think it's. It's a. It's a sign of our willingness and our ability to invest in the business and invest in the growth of the business and support that. And that's going to serve us in a. In a massive way as we approach the bigger opportunities that we're setting out to Tackle, as you mentioned, building a talent acquisition team, building the technology infrastructure that we're investing in and just making the right hires that we need to make.
Putting process, putting method, putting discipline in place is all foundational for the business to continue to address the market opportunity that's before us.
And as long as we do that and continue to innovate, which is in our genetic code, and we will do that, we're going to be a leader and we're going to be a unique opportunity for employers and brokers alike.
[00:52:59] Speaker A: And sometimes when you punch above the weight as a company and you're investing the way you're investing, sometimes you have to go slow to go fast, for sure.
What does the go slow to go fast strategy mean to you? Because as a founder, as an entrepreneur, as a CEO, I'm very intentional, very methodical, very strategic about we are here at this moment in time.
This is great. But we need a, you know, I would say maybe pause some things.
[00:53:30] Speaker B: Yes.
[00:53:31] Speaker A: Reinvest in some other areas so that, you know, maybe not today, but maybe 12 months from the day or 24 months from the day. We have the people, the process, the systems, the infrastructure to then go faster.
How has that shown up for you over the last 10 years?
[00:53:49] Speaker B: Yeah, it's.
It's a unique attribute for us. And I think it, you know, it starts with the leadership. It starts with you and your willingness to do that when you're in an entrepreneurial setting.
The mindset so frequently is charge hard, charge fast, and we'll figure it out later, we'll figure it out down the road. And there are times where that's appropriate. There are times where we have pursued that strategy, but we have also shown a willingness to be patient and to not jump to conclusions or not jump to investments or jump to solutions and to try things out.
And that is core to our entrepreneurial sort of genetic makeup here at Crumbdale.
And our willingness to be patient and our ability to do that, to have the resources behind us, to have not just the financial resources, but to have the team and the individuals who understand that approach and understand that strategy and are willing to allow others on the team or allow leadership to make some mistakes, to test some opportunities, to test some products or markets, is critically important to us. And that's unique. You don't see that willingness to sort of tap the brakes. And we're going to sort of observe and see how things go very frequently.
[00:55:19] Speaker A: Rob, I've loved the conversation. I've appreciated the time, and obviously I've enjoyed our relationship immensely.
[00:55:26] Speaker B: I have as well.
[00:55:27] Speaker A: Many, many years. So thanks.
[00:55:28] Speaker B: It's been great. It's been great to be here with you. Thanks, Matt.
[00:55:31] Speaker A: Cool.
This is Matthew Naylor. You've been listening to Aligned.
