A Career Built on Excellence, Empathy, and Entrepreneurship | Kathy Wanner

Michael Burcham: Welcome to Microcap Moments, a podcast from Shore Capital Partners that highlights the stories of founders, investors, and leaders who have taken on the challenge of transforming ideas and small companies into high growth organizations. The journey of building and scaling a business takes one down many unexpected paths. It’s a journey where we learn from our mistakes fall down often, but have the entrepreneurial grit to pick ourselves up and persevere.  

Within this series, we will share these stories of success and failure of the challenges and the rewards. Faced by those who dare to dream big. And through their lessons learned, we hope to inspire others who are on a similar journey of becoming, growing and leading. 

Anderson Williams: In this episode, I talk with Kathy Wanner, Executive Partner at Shore Capital Partners. Kathy has over 30 years of experience investing in ideas and companies, and she talks about the joy and meaning she finds in getting capital in the hands of entrepreneurs. And despite an undergrad detour into pre-med, she shares how at six years old she was already annoying her parents with questions trying to figure out how businesses work.  

As someone who has done countless deals in both venture capital and private equity, Kathy talks about the differences between the two in their philosophy, risk, and expectations of entrepreneurs. She shares the story of how she met Shore Capital and Justin Ishbia. How they stayed in touch over the years, and how the opportunity to support Shore’s investment in searchers is what finally pulled her in.  

Finally, Kathy shares her thoughts and advice. On leading with kindness and how and why you can find success in private equity or anywhere and still stay true to simply being kind to people. 

Kathy Wanner: I’m Kathy Wanner. I’m an Executive Partner here at Shore and I’d like to say thanks for having me and give me the opportunity to share the story.  

Anderson Williams: So you’ve had a remarkable career in finance and you’ve been with Morgan Stanley. You’ve built Adam Street before joining Shore. You’ve got a ton to talk about in your career. I won’t go into the details. I’ll just ask you, what are the highlights in terms of your career in finance?  

Kathy Wanner: Sure, I started off as a young finance professional back in Manhattan, right outta undergrad at Morgan Stanley. It was a cool time. Morgan Stanley had just had an IPO in like March of 86, so I had gotten there just as the culture was transitioning, and it was a really fun place to be. It was growing, it was exciting, people were happy, and I really had this pivotal moment where, it really built the foundation of my career.  

It was my commitment to my work product, my work ethic. It really taught me that know your lane, know your role, and if you’re gonna do your role, do it well. So at that time, I was what, 21, 22 coming out of undergrad and as an analyst, your role is the details. So make sure all the details are right. Build the trust, build the respect that way, and commit to the excellence in your work product. And if you do all those things, you get trust, you build trust, and then you get put on the more interesting assignments, you get more exciting opportunities and that really establish the foundation of my career. 

I met my husband at Morgan Stanley, and back then it was taboo to kind of meet at work, I guess. There were no dating apps back then, so if you spent 16 hours somewhere, you’re gonna find, probably find your partner.  

Anderson Williams: Yeah. 

Kathy Wanner: So we ended up moving back to Chicago and landing in Chicago in the early nineties was kind of a precarious time. The economy wasn’t great, lots of things going on, and so I ended up working at a firm called Brison Partners, which was the predecessor to Adam Street Partners. And as a young person, I was very fortunate to be in Chicago to be at one of the world class investment money managers and learned a lot of lessons there. 

And they themselves were actually a private equity deal. They had received equity capital from Hellman and Friedman. So little did I know back then I was already stepping into a private equity deal. Might have been good foreshadowing per se. So I worked long and hard there. Started off and did my Kellogg MBA in the evening program and really joined the private equity group in 97. 

And this was after we had sold ourselves to the Swiss bank and had gone through transitions and really was formative, but it was really hard being a private equity team inside a bank. And so there were a lot of regulatory issues. So we had this novel idea one day we should spin ourselves off. So all of 2000, we worked on getting a plan in place and working with senior management Switzerland, and we did just that. 

I was part of the founding team there and it was really an incredible experience. And our CEO at the time thought it was really important for everyone to own a piece of the company. Like we have to be owned, but you have to pay your way in, right? Like you just can’t be given the equity. You have to earn it. 

So I remember coming home telling my husband, we gotta remortgage our house because I gotta buy this equity at my work that’s supposed to be paying me, but now I’m gonna be paying them and we’re gonna spin this off. And oh, by the way, I’m about three months pregnant at this point with my second child. And so he just looked at me and said, say that again.  

And so we established in January of 2001, everybody contributed. It was important to have a very egalitarian distribution and everybody was an owner in the business. And I think that was a really pivotal time. It was a time where I really believed in the governance around private ownership, the incentives that you could put in place for a privately owned company, and we are off to the races. And that was the beginning of my love for providing capital to entrepreneurs.  

And so. I would say the next pivotal part in sort of that journey at Adam Street was as we grew globally, I had to learn how to be open to receiving views from different cultures and different ways of doing things, and I just love building things and setting up process. 

So it was a really great learning opportunity for me in that time period and we really, our growth exploded and it was a really phenomenal time. I had some great colleagues. It was a great opportunity to really build a business and get, most importantly, get capital in the hands of general partners so they could turn around and get capital into the hands of entrepreneurs and we really, really were excited by our work doing that around the world. 

It was really a fascinating time and the business has evolved so much since then, but really created my love for entrepreneurship and entrepreneurialism and being a student of what makes a great firm, what makes a great company.  

Anderson Williams: Did you always know as you were coming out of college that you wanted to be in the finance and investing space, or was this just like a job that was there and you were interested in right outta college? 

Kathy Wanner: No, my mom will tell you like starting at six or seven, I would ask her, so how do you think that company makes money mom? And she’s like what you’re like six years old. What are you talking about? And so I always was fascinated and I think I drive my family crazy now because I’m always pushing on the business levers of things I see and the processes if we’re going to a museum or a restaurant. 

And so I think I drive everyone nuts with my fanaticism around understanding business models and unit economics and how to make things better. And my mind really never turned off. And I think it started a love of that when I was really young. But with that being said, I was pre-med when I went into college and not sure why I took that detour, but I did and I had to. And it turned out not to be a great place for me and ended up pivoting to the school of management and my undergrad. And so that’s when I, my love of finance and business really, really, really truly began.  

Anderson Williams: And talk about that joy that you were describing before of investing in entrepreneurs. Say more about what that, from your perspective, having done it so long, in so many different ways in different places, say more about that experience and why it’s so meaningful. 

Kathy Wanner: Yeah. So we did venture, we did special situations. We did, you know, anything you can think of we did. And so it was really, really interesting to see the different approaches, but really, really what stuck with me is that an idea is just an idea. Unless you execute on an idea, it doesn’t really go anywhere. And so I really enjoyed getting capital into the hands of people that had different and new ideas. 

We’ve seen a lot of companies evolve from idea to multi-billion, if not hundreds of billions of dollars in size today. And so that was a lot of fun. And on the private equity side. So that’s more the venture side. You know, look, I followed the life science space and venture for a long time, so I was fascinated by how drugs were developed and science was innovated and the whole ecosystem around getting that done to like private equity. 

Where you’re trying to make operational improvements on underlying companies, trying to effectively bring great talent, changing the governance structure a little, and the economics and the incentives to get really people rowing in the same direction. So it was a real fascinating 30 years of kind of watching and observing the evolution of both innovation and then trying to grow companies. 

It was such a vast exposure to, you know, the world of, I guess, business.  

Anderson Williams: No, it sounds amazing. I would love to hear you talk about from your seat, the differences in how you thought about, or your experiences with the VC side of investment versus private equity versus any of the others. Any thoughts on the distinctions between those? 

Kathy Wanner: Oh, so different.  

Anderson Williams: Yeah.  

Kathy Wanner: And there you go. So is a big word. Used a lot.  

No, but in reality it was a very different approach. You know, fundamentally, they’re all trying to achieve the same thing, right? Build great companies that last. And it’s just so happens that on the venture side, they’re willing to push further on innovating and thinking about new ways to do things or new ideas. 

In venture, we saw really two different approaches, right? Trying to either improve what already existed by making it faster, better, cheaper, or coming up with ways to really disrupt a business in new technologies or new ways of thinking about markets. And we really, really focused on the early stages and we were really excited to get capital in the hands of folks that did those things. And quite frankly, no one model worked best, right? It was really dependent on the underlying team, the underlying skill bases and where, where their portfolios would go.  

On the private equity side. It was just a different approach. And so. Some firms will do financial engineering, they’ll think about the balance sheet. They’ll think about how to provide an optimal capital structure and really, I don’t wanna say that’s it, but you know, sort of that was their main goal and that worked for some, and then there were others that really intensified the operational contribution to the underlying management team, much like Shore. 

Shore is incredible in that way. In terms of the vast amount of. Operating partners that it brings to these smaller, lower middle market companies. And so lots of different models work and it really was fascinating to see the differences in venture one, you didn’t wear your suit to the West coast. Well now we go East a lot. 

Anderson Williams: Yeah.  

Kathy Wanner: But, and you know, it was just a different culture.  

Anderson Williams: Yeah.  

Kathy Wanner: Very different culture on both sides. And you really had to be, as an investor, you had to find a way to build the relationship so that you connect and can relate to the opportunity that you were investing in.  

Anderson Williams: So given all of your experience what drew you to Shore and how did you get connected with Shore and why did this feel like a good opportunity for you? 

Kathy Wanner: Oh, I love Shore. I had first gotten a call back in, God, I don’t remember when it was, might have been 12 or 13 from Justin. I was running the Chicago team at Adam Street that does fund investing and he said, you know, a friend of mine gave me your name and he said I should reach out and that you would meet with me and talk about possibly Adam Street investing and Shore. 

I said, great, love to, and I think I met him at their offices, which were really small, and he was really a genuine, authentic person. And I said, you know, we don’t do fund ones a lot. You know, by this time we were very well established. We had a very significant portfolio, but I really enjoyed meeting him and I could see that early career energy and I could see that he was gonna be really successful despite what anyone told him. 

And so we stayed in touch and we stayed in touch. I attended a couple operating partners summits and he would call me from time to time if he had a question about how to handle an LP or whatever. And I made him a lot of introductions to some of my LP friends back then. And so we just stayed in touch. 

You know, we’re both local here in Chicago and then we were having lunch one day and he said, you know, I’m doing this searcher fund. You wanna come see a presentation, like right from lunch where we were having lunch upstairs. And I was like, sure, that sounds fascinating . Love the searcher concept, love getting capital into the hands of young professionals. 

I think it’s an amazing strategy and I got the sense from him that he was very passionate about it because it’s really modeled his career. So I went, you know, who does that? Goes to lunch, goes up to the meeting where he’s speaking to a room full of, I think it was the first cohort of searchers. And from that day on, I just was involved with Shore and was helping with the search fund. 

I don’t really know if there was a specific point in time, but it just was really an exciting place to be and the enthusiasm in the room amongst the cohort and the searchers was really contagious.  

Anderson Williams: When you think about that search cohort and your experience. What are some of the key lessons learned that, I mean, they’re starting buying their first company, first time in that position. 

They’re starting with a blank slate and reaching out and doing all of the legwork. Any thoughts from your experience as broad and deep as it’s been that really apply to that stage of this journey?  

Kathy Wanner: Yes, I have a ton of bruises from picking people early in their career of managing funds, and this to me felt like that only it was a little different and a little more unique in that they’re buying a company. 

I would typically give capital to somebody who is investing in multiple companies. These young professionals are really going after one company and trying to accelerate their sort of C-level experience, right? Step in as CEO and kind of run the show. And so there are definitely key attributes in my view that I’ve seen over the course of, you know, three decades and pattern recognition, that you have to have some fundamental characteristics as an individual to be able to kind of embark on that journey  

You’ve got have the ability to tell yourself that I can grind through anything. So grit is huge. And that ability to run through a brick wall no matter what you wanna do and not give up and be doing it for that reason, like that, you want to do that. If you’re doing it because you don’t have another job opportunity or you don’t want to go into consulting or you don’t want to be an investment bank, that’s just not the right reason. 

So you can really kind of filter folks out once you sit down and talk about their motivations, their why. And I think there’s a lot of humility that comes with the territory of being a searcher, you have to kind of know what you don’t know and really lean in on learning, and lean in on being patient and understanding the marketplace. 

I mean, an average search takes between, you know, nine and 24 months. So I would say grit, humility, and the ability to be flexible and adaptable to change. I mean, you might have a thesis, it might be going well, you might be six, seven months into it and not finding anything. And you might need to have that ability to pivot to the next thing. If you really want to get it done. So there’s a lot of traits, I think. 

Anderson Williams: Yeah.  

Kathy Wanner: That lend themselves well to being a searcher.  

Anderson Williams: And when you think about that process, what have you learned about building something that lasts, building something that can grow that is helpful at that time? I mean, I’m sure you’ve seen just countless businesses, countless good investments, probably your fair share of bad investments when you’re thinking about their finding that company to buy.  

How do you help them think about and stay focused on finding the right thing?  

Kathy Wanner: When I was younger, I probably would’ve told them how, but as I’ve matured and had experiences, I probably would ask them a lot of questions, things that they should be thinking about, lead the witness, if you will, and make them aware of things that potentially they haven’t thought about. 

Rather than saying, you haven’t thought about this, you didn’t do this. You know, trying to be helpful in sort of a brainstorming sense as opposed to, I know it all. I’ve been doing this for 30 years. Let me tell you.  

Anderson Williams: Obviously you know, you’ve met one private equity company, you’ve met one private equity company, but I’m just curious if anybody’s listening and wondering how this all makes sense and some of the things they might think about private equity or I’ve heard about or read about private equity. How would you summarize the difference in this environment from what a lot of those stereotypes are about?  

Kathy Wanner: Yeah, certainly I, well, I think private equity gets a really bad rap in the media, and I think it has negative connotations over the last five, six years or maybe even longer than that. 

But really when you sit down and think about it, it’s really an ability to leverage your company by having a capital provider who is knowledgeable in the sector that you wanna grow in, bottom line. And so if you lean in on those resources, you might be able to accomplish things as a company owner that you wouldn’t have been able to do on your own. 

So I think you have to go in with a mindset. I think most people have a mindset. Okay, private equity, they buy me they slash costs, they turn around, they sell me, so they slash and burn. They just wanna make money. They don’t really care about my business. And it is totally a misconception. If you take that negative tone away from the marketplace, it’s really a positive situation to have these private equity investors alongside you, right? 

They can allow you to do things that you otherwise wouldn’t be able to do on your own. And so I don’t know. If I was sitting there as a business owner and I didn’t know anything about private equity, I probably would wanna do a little research. And I think Shore has done a good job, and I think that’s important to be friendly with the founders and friendly with the management teams. 

It’s a virtuous cycle. Once you are with one, then they tell their friends, and then you have to really walk the walk and talk the talk. If you really want to be a founder friendly, private equity firm, and I think at this size your probably most important resources, the reference of other company founders or owners or entrepreneurs. 

Anderson Williams: When you think about your career and the range of roles you’ve played, what do you think is the biggest challenge that you’ve faced and had to overcome?  

Kathy Wanner: Well, one is probably being a woman in finance. You know, I never let that stop me, though. I don’t know that I can point to a specific, oh, this happened or that happened. I do off the record, later on, maybe I could tell you a lot of stories. Not appropriate for this, that different podcast, podcast. That might be a different podcast, but you know, it’s important to just make sure that you know your stuff and you walk in with confidence. And I do a lot of mentoring of women in finance at various organizations, and my most precious advice is just be the unique you, like you’re sitting there because it’s you. 

And they want your opinion and they want you to contribute your strengths, and they want you to work in a way that you’ve demonstrated you can. So don’t forget that when you walk in a room, and you might be, you know, two women out of a hundred, never had a line in an annual meeting in the early days. So, you know, I think it’s important to just know what you know and know what you don’t know, and have confidence to contribute in a way that you feel comfortable and that you feel knowledgeable. 

Anderson Williams: And kind of on the flip side of that, as you look at your career, what are one or two things that you feel most proud of?  

Kathy Wanner: I would say the way we built the team at Adam Street, we started with a small team and we ended up, by the time I retired and transitioned out, we ended up with an amazing team, a global team around the world. 

And I would say my proudest moment is working with the team, and particularly the young and mid-level people and watching where they are today, sort of like how they’ve evolved. What they’ve accomplished in their career. And I think that speaks to why I am doing what I’m doing now. I just love helping others succeed in what they’re setting out to do. 

Anderson Williams: Yeah.  

Kathy Wanner: It’s just I get a lot of joy and gratitude, or satisfaction, I guess, for lack of a better word, in watching and helping them help themselves to achieve what their goals are.  

Anderson Williams: Yeah. What’s the best advice you ever got along the way?  

Kathy Wanner: Mine. You know, we had this one guiding principle at one of the firms I was at prior. 

That execution supersedes intention.  

And so always show up and do what you say you’re gonna do and mean it and do it with pride, I would say is the most important thing. And I would say another was know what you don’t know. And it takes a long time to build the trust. And if you don’t know something and you make it up and you’re wrong, it took you about 30 seconds to destroy that trust. 

And so be prepared. But also know your space and don’t overstep or get over your skis on something you may not know.  

Anderson Williams: What is your next growth curve? What are you looking to learn? What are you still working on? What’s your next learning edge?  

Kathy Wanner: Mine patience. I am the most impatient person I know, and I don’t think it’s ever gonna go away. 

But finally, I’m at a point in my career where I can be calm. I’m not worried about the next goal that I’m going to achieve or the next position I wanna get. I literally can just be in the moment and help, which is a very peaceful place to be. And so I’m hoping with that backdrop, that that maybe allows me to become a more patient person. 

I wanna win, but I wanna win now. And so you have to tone that down a little bit, and I’m hoping that version 2.0, maybe I’m 3.0 and I don’t know, maybe I’m just in a calmer space where I can kind of grow in a way that makes me a more patient person.  

Anderson Williams: What haven’t I asked that I should have asked you about? Your career, your lessons learned, the things you’re working on now. Anything.  

Kathy Wanner: I think the one thing I would say is that you haven’t asked is the one thing that’s forgotten about a lot is to lead with kindness. I mean, you don’t have to have sharp elbows and be competitive to win in private equity.  

Yeah, you have to be technically sound, you have to be relationship driven. You have to be savvy with your financial engineering, but you can do it with kindness. And I think quite frankly, when I think about why am I at Shore? Because I’ve never seen, and everyone here has asked me how can I help? How can I collaborate? 

What can I do to make your job easier? They’re just so kind. But at the same time, I’ve never seen a more competitive group of people that wanna win. And so I’m like, this is kind of perplexing, but wonderful. And I think that is one thing that drew me to Shore. And I think it starts with Justin. Just leads with kindness and you know, you can certainly be in a competitive situation and win leading with kindness. 

Anderson Williams: If you enjoyed this episode, check out our other Microcap Moments episodes at www.shorecp.university/podcast or anywhere you get your podcasts. Here you’ll also find our Bigger. Stronger. Faster. and Everyday Heroes series, each highlighting the people and stories that make investing in the lower middle market unique.  

This podcast was produced by Shore Capital Partners with story and narration by Anderson Williams. Recording by Austin Johnson. Editing by Reel Audiobooks. Sound design, mixing, and mastering by Mark Galup of Reel Audiobooks.  

Special thanks to Kathy Wanner.  

This episode is The Property of Shore Capital Partners LLC. None of the content herein is investment advice, an offer of investment advisory services, nor a recommendation or offer relating to any security. See the Terms of Use page on the Shore Capital website for other important information.