436 Deploying $750 Million into Established Businesses w/ Stephen Gurgovits of Tecum Capital

7/6/2020

Stephen Gurgovits is the Managing Partner and co-founder of Tecum Capital, a $750+ million private investment firm based in Pittsburgh, PA. Tecum’s committed capital is deployed as mezzanine debt, subordinated notes, and private equity into lower middle market businesses across the US.

During his career, Stephen has been directly involved in over $1 billion of aggregate financial transactions, both public and private.

Prior to spinning Tecum Capital out of First National Bank, he was President and CEO of F.N.B. Capital Corporation, a wholly-owned merchant banking subsidiary of FNB.

Stephen currently serves on the board of directors for Western Allegheny Capital, Gibraltar Cable Barriers, Uncle Charley’s Sausage Company, Auburn Gear, Inc., Oberg Industries, and the Pittsburgh Chapter of the Association of Corporate Growth.

In this podcast, Aaron and Stephen discuss launching the firm, how they allocate debt and equity investments, and Stephen’s interpretation of current market dynamics.

Stephen Gurgovits’s Challenge; Make your bed and read the Wall Street Journal every day.

Connect with Stephen Gurgovits

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Tecum Capital Website

If you liked this interview, check out episode 269 with Brent Beshore where we discuss private equity investing in the lower middle market.

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Watson: Steven. Thanks for coming on the podcast. I'm excited to be talking with you.
Gurgovits: Thanks for having me here. I appreciate it.
Watson: So I want to talk about this private equity fund that you are the co-founder, the managing director of, and a little bit about its origins and there's kind of two. Major plot points in the origin story.
The one is the idea itself, or the kind of the catalyst itself, to start this type of investing. And then the point after about six years of doing that within First National bank that led to and catalyzed you to spin this company out of that much larger bank.
Gurgovits: Sure. Yeah. Appreciate the opportunity to speak.
That's a long winded question. That could be a very long answer, but I'll try to be reasonably brief. You know, I started to get interested in investing in the late nineties during the tech bubble, when everybody was making money on anything that had a .com after its name, and was fortunate to complete my MBA at the university of Pittsburgh and land a job with First National bank, actually FMB Corp, the parent company in their wealth management group.
And it was really a great opportunity to get my foot in the door, into investing other people's money. And we were, you know, a traditional trust company and registered investment advisor buying publicly traded stocks, bonds, some mutual funds ETFs were kind of coming on the scene at the time and a chance to build and handle money for both high net worth individuals and institutional investors.
But frankly, as you may recall, when the tech bubble burst the markets, you know, struggled for a couple of years in the early 2000s. And, you know, I got a little bit disenfranchised sitting across from a, let's say a 60 year old lady who we were managing her trust, and talking about how our portfolio was only down 20% when the market was down 23 and what a great job we did. Right. And so started to explore two things, really the concept of absolute returns and to alternative investments and was fortunate to partner with my mentor, gentleman named John Rose, who was on the board of FNB and had a long history of doing both investing in banks and some bank buyouts, as well as venture capital and private equity.
And John and I worked together to craft a plan that we presented to the board of FNB about creating some type of private equity fund within FNBs wealth management. Number one, because I wanted to get into the space. But number two, I thought we could differentiate ourselves from maybe other bank trust companies or wealth managers that were out there.
And long story short, it took a little over a year to convince the board it was a right thing to do, but the board justifiably thought without a track record, as a fiduciary, that we probably shouldn't solicit money from our clients to, to a new venture. Fortunately with the bank's blessing, we became a startup company inside the bank.
It was technically called a merchant bank, not to be confused with credit card processing, but essentially the bank agreed to fund us to do private equity deals on a deal by deal basis. And so there's probably a whole nother interview and podcast around doing a startup inside a highly regulated, publicly traded bank, but that's how we got into the business.
And under that umbrella, we ended up investing about $60 million in 17 different companies from our launch date in late '05 until the end of 2012. Getting to your question about the spin-out. What happened during the '08/'09 financial crisis was a lot of regulations came out under the Dodd-Frank legislation.
In particular, there was one subset called the Volcker Rule and the Volcker Rule really, you know, one of the fallouts of that was they didn't want banks investing in private equity. I don't know why that is. I mean, private equity didn't necessarily cause a financial crisis. You know, it was more mortgage related and lending related, but at the end of the day, that's the rule.
Fortunately, under that rule, there was one exemption and that is if our team could obtain a license from the SBA called an SBIC or small business investment company license, that license was an exemption under the Volcker Rule that would allow FNB and frankly, other banks. To invest into a pooled fund that we could then go manage and continue forward with our strategy under an independent umbrella. And so that's how that came about.
As it relates to our strategy, you know, what we saw, particularly in the bank's footprint at the time, was there was a lot of family owned businesses where patriarchs were getting up in age. And they were facing succession issues, whether they recognize it or not, they needed to think through what was going to happen to their business when they weren't around or not capable of running that business anymore.
And part of the idea and the pitch Def and B is having a dedicated capital source. To help facilitate those transitions would allow us not only to make a return on our capital, but hopefully facilitate keeping those businesses within the geographic and economic footprint of the bank. And so that's a long back wind away of how we became Tecum Capital back in 2013 when we spun out.
Watson: And it's really tied to some kind of multitude of significant macro events.
So there is the 2008 recession, Dodd-Frank legislation, and then this other kind of macro environment of this cohort this basically the boomer generation that is disproportionately larger that have, you know, nurtured, cultivated, built businesses over their careers, approaching retirement. And whether they want to hand off the reins to someone or just the liquidity, so they can go enjoy themselves and retire or whatever the motivation may be, there's an opportunity for capital to come in and kind of, you know, Provide a service of sorts to them. But also realize an opportunity where if this is a healthy business, it's not necessarily like you referenced venture capital, gonna go, you know, 2X your money in some sort of two year window, but it's going to have that kind of stability and value that you can otherwise realize.
Gurgovits: Yeah. And when we position ourselves, we want to be different than sort of private equity, which sometimes gets a bad name. You know, acquiring a business, sort of gutting it, rightsizing it and flipping it. Yeah. Our plan was to recognize a lot of business owners, particularly in the Midwest. And you think Pennsylvania, Ohio in particular, you know, it's more than just about maximizing value.
When they do go to transition or sell their business, there's usually an affinity, it's their baby, it's their legacy. And they often care greatly about the employees and what will happen to them under new ownership or new management. And so, you know, we recognize that early on that we wanted those transitions to be both comfortable for the seller, but also for the existing employee base.
And I think that's been a differentiator to our team as a whole, going back to our days inside the bank.
Watson: So another piece of advice, and it kind of ties into to that concept is also the notion of if you want to become wealthy, you want to be really concentrated. Maybe not over like a long-term, but if you're trying to get wealthy, you concentrate yourself in building a business or making kind of a very specific bet.
But if you want to stay wealthy, which you know, these types of firms that you might be investing, it's lower mid markets. We're talking multiple millions in revenue and size and type of deal. There is also a risk to not having a lot of their wealth is concentrated in that asset that has built their capacity to even move those assets into other things in order to kind of protect that wealth.
It's another part of their equation.
Gurgovits: Yes. You said another way, a diversification strategy, right? Usually those privately owned businesses are not only a concentration of wealth, but they're oftentimes highly dependent on that owner or that family that's in charge. And so you're really double-dipping in terms of the risk profile. And how can they take some chips off the table and maybe preserve or protect future retirement, without having to take additional risks, you know, keeping that capital in the business.
Watson: So when you spun out of First National Bank, they were one of the. Anchor investors in the first fund that you brought out. Can you talk about the, so you talked about the 17 investments, $60 million over about six or seven years while you were still within the bank. How did your rate of activity or just the kind of expression of that investing change upon leaving the confines of the bank and being that independent entity?
Gurgovits: Yeah. I think we as a team grew independently as we left the bank, right. I mean, working under a bank and it's not meant to be negative to first national bank or any other bank, but it's a highly regulated entity. And those entities became even more regulated after the '08/'09 funding the great recession, right. They got clamped down. So in terms of getting things done, whether it's getting a, an investment approved and keeping in mind, the types of investments we make are certainly going to be more risky than let's say a traditional commercial loan that might be occurring within the commercial bank.
So, you know, it's hard to get the credit culture of the bank comfortable with taking riskier investments coming out of a financial crisis. So in other words, it's hard to get things done. By going out on our own independently it gave us the entrepreneurial freedom to discover what the market would bear in terms of where we fit in that market.
And then the levity to kind of move up and down the balance sheet in the different investments we were making, we had a lot more flexibility to how we approach the market.
Watson: And one of the things that remained consistent is you were making investments, both for equity in the businesses, and then also offering mezzanine debt.
Can you just talk maybe at a high level about how those types of decisions get made in terms of what you're comfortable offering to a business that comes to you, and simultaneously how they're evaluating, where their needs are?
Gurgovits: Yeah. So inside the bank, we're probably skewed more towards mezzanine debt, which is really a derivative, another layer of sort of traditional commercial lending.
It's subordinated to a traditional senior bank, but it's above the equity and the balance sheet. That's where it gets the mezzanine. It's a bridge capital sort of structure. And so it made a lot of sense to do a lot of mez inside the bank because of the credit culture. As we spun out, we had certain handcuffs of how much equity we could do inside the bank. That went away when we went into our independent SBIC platform at Tecum capital.
So what we discovered was, yeah, there's a real need for mezzanine and transactions, but a lot of times there's a need for equity. And so what we often do is partner with family offices or what I'll call independent sponsors or operators. It might be a couple individuals with an operating background who want to go buy a business, and they may not have the personal net worth or the network to bring all the equity to the table.
So they're looking not only for a financing partner who can provide something like mezzanine debt, but also an equity partner who can kind of help close the capital stack. And so, yeah. We really view ourselves as a true partner in the financing world. We sort of lead with our equity capabilities, with an opportunity to provide financing for those situations.
Watson: Gotcha. Now, in the instances where you are pursuing that equity, can you talk about the time horizon or the window with which you're evaluating holding that equity? Because part of the reason for the bad rap, or the bad reputation of private equity is they have these kinds of terms that they have a compressed window in which to execute that return.
So the reason that they default to something that is so short-term like loading up a company with debt or slashing headcount is because it's almost like the presumed incentives or structure of the way they're built.
Gurgovits: That is true. And I, and maybe circling back to your question, when people approach us, is it equities or debt? It really depends on the individual situation, right? And so a lot of times, and at a portfolio level, we manage our fund to be about 75% debt, 20 - 25% equity. Most of the time our equity is going to be a minority equity position. So oftentimes even though we have a fund that has a defined life, in our case 10 years, which is pretty consistent with other private equity funds, we're often in a position where as the company grows or cashflow improves, they're paying down that debt. It may be step one in our ultimate exit is a refinancing of the debt, or you can bring in some lower costs, senior debt that takes our mezzanine back off the table. And then that second bite of the Apple is maybe another refinancing event to buy out our equity.
And so w what's nice about our strategy is we don't necessarily have to put a for sale sign up on the company and say, okay, now you have to sell so we can get paid. We usually model and build out different mechanisms over the course of say a three to seven year period where we can get out. Which may be a multiple of events like refinancing versus ana outright sale.
Gotcha. Makes sense.
Watson: I'm always interested in the way that momentum translates into the growth of a business. And so we were talking a little bit beforehand about how the success of a first fund for an investment firm begets the second fund, then the third fund and they kind of work into this cadence of however many years they go to their limited partners. They talk about how the first, the most recent fund is executed and translate that. Can you talk about a little bit about how that's-?
Gurgovits: Yeah, I mean, honestly, we had a big advantage having built a portfolio and a track record inside the bank. That was extremely helpful.
But look, I wouldn't wish somebody, you know, your worst enemy, to go raise a fund. It's a challenge. And you know, the first one's the hardest one. Fortunately, as I said, the bank had supported us so we had a track record to present to the market. Where we are today ironically is, is we're about 75% through our second SBIC fund.
And so probably later this year and early next, we'll be thinking about raising the next one. And that'll be both off our FNB track record, our fund one track record, and now are established a second fund track record. And so the more funds you do clearly, you know, you become more experienced. The returns are usually, you know, demonstrateable of that experience.
And it's just a lot easier to raise, you know, your second, third or fourth fund versus that very first one. The other thing is you get a lot of reups, right? So people that you did get in fund one, They like what you did, they liked the lessons learned, they want to come in for fund two. So it's a lot easier because you have a list of current LPs and say, Hey, do you want to, you want to do this again with us?
And some, you know, most say yes and some have reasons where they don't and then you go out and try to replace them. But there is clearly to your point, a momentum as you go from your first fund to future funds and assuming you perform.
Watson: Yeah, you gotta be able to execute on the ground, but that's also just kind of a trope of sales of it's much easier to get the second, third or fourth sale from someone after the first one and try to build that relationship from the ground up.
And also I'm probably sure there's people that you're talking to that like may invest at some point down the line, but they just still haven't necessarily decided to make a move.
Gurgovits: You know, that's an interesting point you make, Aaron. We're always fundraising, right? I mean, you know, we don't have to say, okay, now it's official. We're officially fundraising. You're always having discussion and dialogue with folks either that are in a current fund or a prospective investor that maybe didn't come in that first fund for whatever reason. But you stay in touch knowing they have enough interest to stay in the communication pipeline and see if you can convert them into the being a future limited partner.
Watson: I, as an outsider, but someone who is very interested, try to read a lot of financial headlines, try to, you know, at the most rudimentary level evaluate, like, what is this policy that was just enacted by the department of the treasury or the federal reserve or what have you.
And one of the kind of narrative that pops up is this enormous growth in the amount of corporate debt that is on the balance sheet of these companies. And these, you know, one of the things is the zombie companies that have these enormous debt loads and, you know, profit margins that are exceeded by the payments that they're making on that debt.
From your vantage point as someone who, like you said, 75% of the fund is involved in making some of these debt offerings. How does this environment compare to even, you know, back around the great financial crisis? And that the challenges, or maybe the, the appetites that these companies have to add more liabilities to their balance sheet?
Gurgovits: Yeah. I mean, these things come in cycles, and clearly back to '08/'09, you know, rates were even back then, you know, historically low and people were getting bullish, and the animal spirits take over and leverage eventually creeps up and eventually it comes home to roost. When there's a downturn, be it from an exogenous event, like a pandemic out of nowhere or back in '08/'09, sort of the real estate crisis that that blew up or bubble that blew up.
So they always come and ways, but it is interesting, you know, the past 30 years' rates have generally just gone to zero, right? And now given where we are in this pandemic and the feds made it pretty clear that they have no intent on raising rates over the next two years, as we start to try and recover economically, it's going to inevitably lead to more barring both at the government level, but the corporate level. And I think there's a lot of positives in the middle of this, you know, call it healthcare crisis initially. But when companies were able to access the debt markets and the fed made sure that would happen and could happen, and that markets were effectively working, that was pretty critical because when you're talking about shutting down the economy for what ends up being what? Two to three months, depending where you are, geographically companies are going to need liquidity to get through that. And I think the steps the government has taken both the federal reserve, from a monetary policy with rates low and some of their other stimulus, and then even at the congressional level with fiscal policy and the PPP loans. Those were, those were important to just keep everybody sorta semi alive, to hopefully we can get back to this reopening and get things started.
So I think every, you know, '08/'09 today, they're all there, you know, unique circumstances. But the bottom line is when rates fall it becomes cheap capital and people are going to use it.
Watson: And we saw a lot of headlines where these different kinds of larger corporations were discovered or found to have applied for a PPP loan.
And people are like, yo, that's not meant for you. And a ton of firms went in and sent it back. But kind of the space that you play in at the lower end of the market is. Very much who those loans were intended for. Those loans were intended for that the classic main street businesses. And so I'm curious how that affects you at like the firm specifically that you're now in a way competing with the capital that the government has allocated for that type of debt.
Gurgovits: Yeah. It's interesting. We helped every one of our outstanding portfolio companies get a PPP loan. I mean, almost all of them needed it at some level.
They're generally smaller loans, but enough to provide some essentially payroll capital for the periods where they were either going to be shut down, or at least, you know, operating at a very low level. And now this, this next program is sort of rolling out the main street lending program, which isn't forgivable like PPP, but it is cheap financing, if you will. I think, you know, talking three or 4%. And so yeah, all of a sudden now it does compete a little bit, you know, in terms of new opportunities, but it's also really, you know, of course, I don't know yet because the rules are still to be written and they will likely change.
Right? It's not really meant to be acquisition financing. Which is where we typically play it's more or less to be working capital, where maybe a company's, you know, underwater with the bank. And we'll need some help to get the bank comfortable that they can make it and buy them time. And similar to the PPP type program, the main street lending generally for, you know, small middle market businesses to again, provide liquidity until things can get back close to whatever the new normal will look like.
Watson: And it makes sense that you would assist with the PPP loans or like in my case, the bank for my company, like reached out to me. He's like, Hey, here's exactly how you apply and what have you, because sure there was like a real business model to the banks, you know, issuing those loans, getting accredited in their kind of servicing fees associated with it, but also the fact that they want their companies to persist and survive and be healthy.
So you want your portfolio of companies to be able to make it through this.
Gurgovits: Yeah. I mean, the banks took a little bit a headline risk, but you can't blame them. Their primary goal was to help their existing customers. Right? And so certainly as this program gets stood up very quickly, there's no question about it.
They were going to go to their incumbent clients and try to get them the liquidity they need. But I think banks still deserve a lot more credit because they help stand the program up. And many of them went beyond their existing clients and reached out and found some of these small businesses to help.
And some banks did better than others. But I think collectively, when you think about the whole program, both at the government level and the SBA all the way through the banks, look, it's not perfect, but it was pretty amazing. What, what got stood up in a real short period of time and provided a lot of capital across the market.
Watson: Yeah. So another part of valuing companies, and it's much more tangible in public markets, but there's kind of through lines in both public and private companies, is this notion that I look at Amazon, you know, in March or April in the midst of the pandemic, at least here in the United States and you know, things are terrible right now.
How are they still so valuable? And it's the fact that this is a company that's valued. We're not just buying them because of what they're doing this month. We're buying them what they're going to do over the next 5, 10, 15 months, depending on your time horizon as an investor and your expectations for the company.
And so when you're looking at different companies, say now in the midst of, you know, who knows the severity or how long prolonged this kind of economic correction will be, that's a very different investing climate than say three, four years ago when you're you know, coming up a cycle or back in 2008, when you were going through your last one. How does that change the types of companies or the industries that you and your team are most interested in deploying capital?
Gurgovits: Yeah, that's an interesting question. I'm not sure the strategy for us has really changed. We skew towards, I'll say manufacturing, distribution, business services. And I don't see that going away. We're not tech investors per se. We don't do a lot in healthcare. We don't do any venture. We're not permitted under our license with the SBA.
So, you know, we're going to stick to what we're good at and understand, but I think you do have to look at the individual investment opportunities in the context of what is going on. It may be a macro economic level. I mean, clearly, you know, leisure travel, I mean, those things have been hit. They've been hit hard.
And I think it's going to be a long road back. I think you look at maybe manufacturing or those that are supplying some of those online platforms. Some of them didn't miss a beat and some of them, like we have an investment in Uncle Charlie Sausage, they can't make enough sausage. I mean, there was such a run on meat there when, when everybody was at home, you know, getting groceries, ordering groceries. So there's some dislocations, but you know, you got to look through the noise and understand sort of the fundamentals. The other thing, this is such a unique economic downturn.
It's so fast and furious. We never really seen anything like it. I mean, a lot of recessions sort of play out over a number of quarters and then it happens. And then sometimes you look back and you say, Well, yeah, it happened. You didn't realize it happened until after it was over. I think everybody knew this was going to happen and it happened quick.
And the markets, you know, kind of show that back in March and now they've rebounded and we haven't seen a lot of dislocation in the, in our portfolio. So it's generally been, you know, cautiously optimistic. It's been good news. Again I do think there are certain sectors though. You know, whether it's, you know, commercial real estate, you know, office space, hotels, restaurants, you know that that's, that's going to be a little bit of a struggle until people are confident that this virus is handled or under control to go back and, you know, live like we were doing six months ago.
Watson: But a lot of the other things I've been reading is about this like fragility of a global supply chain. And the fact that everything is kind of just in time, the fact that you are involved in manufacturing, distribution companies that are located on shore in the world's largest economy is a pretty good position to be.
Gurgovits: Well, we think positively things are going to come our way. There's two things, you know, it's always a great time to invest, you know, coming out of a recession and clearly we're in one right now here in second quarter. There's there's no denying it. It's, you know, how fast and when we come out, nobody really knows, but it's a great time to have a pool of capital to deploy.
And to your point, because of where we skew both geographically and from a manufacturing distribution standpoint, I do think there'll be, you know, how big the move will be, but there'll be a move to onshore. I think people will be, you know the playbook isn't okay we immediately have to go to Asia and set up operations.
I don't think that's going away, but I do think there'll be opportunities hopefully. And particularly when it comes to maybe, you know, technology enabled manufacturing to set up operations here. And I think there'll be a slow migration and we'll start to see some of that. And we think our fund will be in a good spot to take advantage of that as a source of capital.
Watson: Yeah. So, another part of building a firm like this is leadership is running the business and cultivating talent, right? The way that you're able to scale yourself, you're able to improve deal flow, make better decisions is by training a cadre of brains to make those decisions. So when you and your business partners look at bringing new talent into the firm and filling out this office, How do you think not so much about who to bring in, but how to train and cultivate that talent once they are within your team?
Gurgovits: Yeah. That's a great question. That's been my number one challenge. And if I look back personally in my career, since we started this inside the bank, I was probably not as prepared for that side of the business.
I wanted to do deals. I like investing. I like learning about companies, meeting people, meeting management teams and putting structures together. Given how much growth we've had over the last seven years as an independent firm, and I spend now more of my time either working and communicating with our investors or prospective investors or running our business.
And that means acquiring and training talent. And so, you know, that that's been my number one, got to get up to speed and do that better. And I think we've done a pretty good job. The most important thing for us, aside assuming you have some level of analytical skill, I mean, you can't be a complete novice, but it's gotta be a cultural fit.
And where I think we differ maybe from some other private equity firms is we generally don't sorta knock on the doors of the big B schools. You know, the Ivy league schools, which a lot of private equity firms do. And there's certainly nothing wrong with that, but we recognize that our team's got to stand in front of a business owner, an entrepreneur who may be less financially savvy.
But, you know, built a business usually from the ground up, or it's been family owned for a long time. And so I'm looking for individuals that can stand in front of that business owner and sort of speak the same language, you know, a little bit of grit, a little bit of entrepreneurial-ism and a, a little bit of a I'll call it realism.
Not that, Hey, I got a degree from this great university I'm smarter than anybody here. You know, I'm not, not really looking for those kinds of folks, people that are, you know, if you hire for attitude, You can train for, for the knowledge base. And that's been our approach we built from the ground up. So we've taken a lot of quality, talented individuals who are very raw, and sorta shaped them in our culture and our way of doing business and then allow them to help put their stamp on what we do here is they grow and mature in their careers and it's worked really well.
Watson: So you talked about wanting to do deals like in DTS. That's what kind of attracted you in the first place?
What about, basically almost like the, I think this is like a universal human thing like that, the feeling of need for control. So whether you're running a small restaurant and you need to control the plate appearance of everything that goes out and sits in front of one of your, one of your customers to deploying hundreds of millions of dollars of capital, like every single business, there's this paradox of you're starting this thing because you want the kind of control and autonomy that is granted to someone entrepreneurial. And at the same time, you're making this balancing act of kind of letting go of the reins and releasing that and giving that trust to these other people.
Gurgovits: Yeah, I think that's so true. And that's when we sit across from these business owners who are thinking about selling their business, or perhaps transacting with us, you know, we can relate.
Because they have the same issues that I do. And I think it is hard. I'm a type A person in general, fairly neat and organized. And it's, you know, you come to a realization, you can't control everything. And most importantly, the old adage, Hey, if you hire good talent and then trust them, right.
Trust, but verify, turn these folks loose, let them do what they're good at. Let them come to you. And I always tell the crew, Hey, come to me with your problems, but come with a solution. You know, don't, I'm not going to sit here and solve everybody's problem. You know, if you want to talk through a problem, give me a recommendation or two of how you think we ought to approach it or solve it.
And then, you know, 90% of the time, probably more, I'm going to agree with you. And that's, that's been my approach to giving up the reins at some level, but I also have come to realize, as you do that, you also empower the people around you, and those technically, you know, beneath you, and it gives them an opportunity to grow in their career and contribute to the success of the firm and take a team-based approach.
Watson: Right on that's about all the questions I got before we ask our standard last two.
Anything else you were hoping to share today about vesting private equity or Tecum that I didn't give you a chance to?
Gurgovits: No. Yeah, there's, there's a lot of information out on our website and I think, you know, the history is kind of laid out there, but I really am proud of our team what they've been able to accomplish. It's a young team, but they all work hard and we've been able to transition during this pandemic to semi remote working.
As we were shut down here in Pennsylvania, we're just now starting to bring some folks back and, you know, they really did a great job working remote, working through these PPP loans and all the details and helping all these companies out. During the crisis, we were having weekly town halls with our CEOs across the portfolio, we have 33 active investments.
Somehow in the last call, we had 275 people. So, you know, the word must have been getting out that we knew what we were doing and talking people through not only the details of say a PPP process, but just in general, what's going on in the pandemic. And sometimes the folks running these companies, you know, the old adage goes, it gets lonely at the top.
I think a lot of them just neede to know that we had their back, that we're here to help and support them and be a good partner, even if it's just the shoulder to sort of lean on, and a couple of cases even cry on. I mean, the things were, things were a little, little hairy there in March and April at certain companies.
And I think everybody was, was apprehensive and hopefully we helped them that our part to get through this and we can all come out the other side, both healthy and financially better off.
Watson: Beautiful. Given that you get to touch all these different, whether it's Charlie's Sausage or manufacturing, distribution centers, or cybersecurity, these other firms that you involved in, like, what are some of the things that you've taken away from getting to, you know, maybe in a more traditional banking side, like walk the floor with these owners and also just kind of like actually get to walk around inside the business?
Gurgovits: Yeah. You know, I think the biggest, first of all, I love meeting the people and learning about all these businesses. And then you forget sometimes in your daily life that, whether you see a product or a food item in a grocery store, you know, comes from somewhere, right. And there's a whole process for it to get there.
And it's always fascinating to occasionally step back and revisit, 'wow, you know, that, that's where that comes from?' Right? But, you know, I think the biggest takeaway is, you know, we try to invest in people as much as businesses, right. Because if you've got a good management team and an average business it's going to do well.
If you've got a great business, but a bad management team, there's a chance that that could go sideways. And so it really comes down to relationship based investing and the people that you're partnering with going forward. And that's pretty critical to our process.
Watson: If folks want to learn more about you, follow along on the company, all that you're up to what digital coordinates can we provide people to check out?
Gurgovits: Yeah, in terms of, of Tecum Capital, you know, we keep our website pretty active. We also have both a Twitter and LinkedIn page at the company level. Me personally, not a big social media guy, but I am on LinkedIn and try to broadcast different news items and keep it professional in there.
Watson: Right on. That's the place to keep it professional. Yep. Get into some trouble elsewhere. We're going to link all that. It's in the show notes where you're probably listening to this right now in your podcast player or at goingdeepwithaaron.com/podcast for this and every episode of the show. But before I let you go, Stephen, I want to give you the mic one final time to issue an actionable personal challenge for the audience.
Gurgovits: Yeah. You know, there's a lot I could think of, but somebody told me once to go out buy the Wall Street Journal and read it every day. And I'd never done that until B school. And you know, when you first start doing it, if you're not as familiar with finance or business, you know, it it's truly quality reporting.
I'm not on their payroll. I don't get a commission, but, they take afairly objective approach. Certainly politically they leave the politics to the editorial page, and go deep, do some really deep. I have reporting on business and economic issues and even world issues. I think it's a great way for folks to get educated because at the end of the day, and certainly when we see and acknowledge what's going on in our country today, I think one of the things that is critical for young people's education regardless of your background, your race, those opportunities. And we as a country, I think need to do a better job of making sure we're providing those opportunities evenly for everybody at every socioeconomic level throughout the country. Because that that's really the foundation for future success, no matter what you want to be, whether you want to get into business or go to medical school or being an attorney or start your own business, or be a reporterer or podcaster, education is where it all starts.
And so, you know, I think a good chore that you can get up and do is two things. Get up every morning and make your bed so you accomplish something, and go buy the Wall Street Journal and read it, you know, front to cover when you can, and learn as much as you can about what's going on in our world.
Watson: I love it. I'm a reader of the Wall Street Journal and the degree to which it helps has helped me make sense of how these deals even get done. You know, you're not getting every sort of like line item or the contract, but that capacity by which the motivations and how these decisions get made is really fascinating.
Okay, cool. Stephen, thank you so much for coming on the podcast.
Gurgovits: Glad to help. Enjoyed it.
Watson: We just went deep with Stephen Gurgovits. Hope everyone out there has a fantastic day.

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