Leadership + People:
Episode 04 - Alex Dunn - Part 2 of 2
- The benefits of building a company culture where team members don’t have to hide their weaknesses. [4:34]
- Building a strategy and execution to increase business value. [7:09]
- The importance of focusing on the execution and proper inputs for desired outcomes. [10:15]
- How focus on the right things can get you through the ups and downs. [12:00]
- How to not mistake movement as progress in building value in your business. [16:57]
- An account of how a multi billion dollar sale ended with low stock prices and no closing. [20:32]
- How to use the apprehensions of others in investing in your business to better create a plan to mitigate risks. [26:32]
- None of Note
This episode of Leadership and People
was originally released on:
September 20, 2017
Welcome to Leadership and People. This is a series that pulls back the curtain on leadership by interviewing CEOs, Senior Executives and entrepreneurs who had large exits. We ask these experts about how they built trusted networks to rapidly build their companies. And what advice they wish they knew if they could do it all again.
VIVINT PRESIDENT, ALEX DUNN: “And so you have to have enough self awareness and have a kernel of truth.Then I think you have to have the the courage of your conviction, and, kind of be okay, with people saying no to you. I have actually found that usually the best opportunities are not ones that everybody sees.”
HOST – JESS LARSEN: Today we’ve got Alex Dunn. He’s the President of Vivint. Alex thanks for making time.
GUEST – ALEX DUNN: Thanks for having me here.
00:51 JL: So for everybody who doesn’t know Vivint, across the country who might be listening to this, tell us about Vivint.
What is Vivint?
ALEX DUNN: So there’s really two Vivints. We spun out a solar business. so there is Vivint Solar; that we took public. And then the business that we will be talking about today is Vivint Smart Home. And it’s a nationwide smart home business and we really bring smart home technologies to the masses. And so things like security and cameras and thermostats, and door locks and garage door openers, and then having that all work on a platform through one app. And then kind of the next generation for us is bring AI into that so the home can start to sense what’s going on and really help you manage your home better.
1:49 JL: Like what would be an example of that?
ALEX DUNN: So we just recently rolled out our Sky Service which really is essentially with the sensors in your home. We can sense some different states. Things like, we can sense we know if you’re going to sleep or waking up. The home knows if you’re there or if you’re not. Or, you are on vacation. Because we are connected to things like thermostats and door locks and the security sensors and to garage door openers and other things like that; we can sense, the home can sense- hey you are on vacation and either your thermostat is cranking or your front door is unlocked or your garage door is open. And so, Sky can start to make suggestions to you on things that you could do to maybe manage your home more efficiently or make it more safe.
So that’s where we’re using some of that AI to help people kind of manage their homes. So you can see a world in the future where most people who own a home, have a nightly ritual they go through before they go to sleep. You know lock the doors, turn this on or off. Kind of check everything. We think what you should do in a smart home is just go to sleep. And when your home sees when you’re doing that, then it kind of shuts the house to the level you would do that. So now you don’t really have to have the burden of having to manage that process every night
3:26 JL: One of the things I think would be fun to talk about is, people who haven’t been apart of large transactions or maybe working with some of the bigger finance companies in the world.
Can you talk a little bit about first bringing equity in like the Goldman Sachs and the Peterson Partners and what that was like?
ALEX DUNN: Yeah, so we did a deal twelve years ago, the company was really small at the time, where we did two things. We sold 50% of the equity in our business. We sold that to Goldman Sachs, Peterson Partners and Jupiter Partners. Peterson is a private equity group in Salt Lake and jupiter is a group out in New York. And I think everybody knows Goldman. So we sold 50% equity in the business. We also put in place at that time a credit facility, that would allow us to grow our business. We …part of our business model is to make it affordable, the solutions affordable, to the consumer. We subsidize a lot of the cost up front. And then we’re getting kind of contractual recurring revenue over the long term. And so in order to do that and… keep those customers, you have to have money upfront. And so the best way to do that typically is to borrow that money. And so that really, when we did the transaction with Goldman, and Peterson and Jupiter we sold 50% equity in the business we also put in place a credit facility that allowed us to help transform the business – from the time before that transaction, we were essentially selling alarm contracts for other companies like ADT or Monitronics. So we were a dealer and then the investment thesis around having that equity brought in and the credit facility was that we would transform into a full service company and keep the customers ourselves. And so you know we- it actually took a really long time to get the equity. I headed up that process. And in fact that was outside of the company. And was – I was working with Mitt Romney when he was governor of Massachusetts and that for me, I had done two high tech start ups before that and I was with him for about three years and it was always intended that that was just a little bit of a detour for me.
So I wanted to get back into business and ideally find a company to buy. So I had some… private equity groups that I had known that said they would fund a deal if I found it. And so I went and found, back then it was apex, and brought them the deal and they actually turned it down. So then I actually had a decision I said either I gotta just… this is done or go find some other kind of equity sponsors to do the deal. And so i did that and got a lot a lot of people. I mean I think I, it was over a dozen… groups that I got to like investment committee process which is pretty far along the process that came back and said no.
One of the big problems back then was, the company hadn’t kept any of if its customers. So there was some risk around- can you build up the infrastructure to bill and service and do those things, and kind of what happens, what the attrition profile of the customer would be like. And so It took a long time. It took like, about a year to find anybody who wanted to kinda take a chance. The good thing is is that we you know for all three of those groups we delivered kinda one of the best returns on any deal they had ever ever done. And even for Goldman, i think that when we sold the business to Blackstone and those original investors cashed out we were a really big chunk of Goldman’s net income for that quarter for the whole bank. So we did well for the people who took a bet on us early. But that’s kind of how that worked.
8:10 JL: Any advice for someone who’s looking at a process like that or what you wish you would have known going into it?
Thinking Through Processes
ALEX DUNN: Yea I mean the truth is when you go into a process like that I think initially I thought what I had to do was position kind of the investment in a way that would be attractive to, the people I was pitching to. And what I’ve found, what I’ve quickly found, and has been reinforced kinda through my career now, is that everybody has like really different opinions. And you can go in and kind of give a pitch to somebody and they can think that you’re stupid and it’s the worst investment they have ever heard of. You can go give that same pitch to somebody else the next day and they think you are the smartest person they have ever listened to and it’s the best investment that they’ve ever heard. So I think what’s really important is you have to have a really strong perspective on what you – what you think. And what you think the opportunity is, what you think the investment thesis is, and you have to have kinda the courage of your convictions around that. And if you do that, then- and you’re… there are also has to be a kernel of truth but I hate saying this to people and then they tell me hey I have this idea to you know an anti gravity machine or whatever. And they’re like i have the courage of my convictions and i am like I don’t know if there is even a kernel of truth in what your idea is.
You have to have enough self awareness to know hey- one there is a lot of risk and it may not work. But two there’s some kernel of truth in what it is you are trying to accomplish. Even if it’s a big, you know kind of outrageous idea that, there’s still some- you know I think you’ve got Elon Musk who dreams big. And you know but there’s kind of kernels of truth in everything he’s trying to do. And he is able to do at least in some measure start to deliver on that; launching rocket ships and he’s doing it. And so You have to have enough self awareness and have a kernel of truth. Then I think you have to the courage of your conviction and kind of… be okay with people saying no to you. I have actually found that usually the best opportunities are not one’s that everybody sees. And if you have too many people agreeing with you, my guess is there’s not going to be as much opportunity because, it’s more apparent and lots of people are going to be doing that. And so I had a really strong kind of courage of my conviction and the investment thesis around this company… And after a lot of Nos I was able to get a yes and parlay that into multiple Yes’s and then able to get the deal done.
11:45 JL: Thinking about this concept you have brought up a couple times there about self awareness you know, I think anybody getting into entrepreneurship obviously has to ignore statistics to some degree [laughs]…. To be willing to get in…Right? So most people who are out in charge- you know out in front. They’re in charge, they’re a leader, they’re an entrepreneur. There is probably a lot of them who have a pretty good courage of the conviction. But as far as, what if someone was wanting to foster more self awareness. Do you have any ideas for how can you build a habit towards self awareness. I mean telling myself to be more self aware probably is not going to get it done.
Understanding Self Awareness
ALEX DUNN: Actually the funny thing is that telling yourself to be more self aware- you probably are self aware. And I have actually had this conversation with some of my friends and people here. It seems to me-self awareness – you either have it or you don’t have it, and if you don’t have it you don’t know you don’t have it…it’s a little…
In fact Matt Eyring, our chief stratagen and innovation officer, said there was a research study done on how…some research done on how to like develop self awareness. And the results were; it, you kind of have to have it and if you don’t have it, you don’t know you don’t have it. That’s kind of the nature of being self aware. And so I’m not sure… I can give advice on, you know. on being.. I think the one thing I would say is that there has to be, and the way I would try to describe is that there has to be some kernel of truth in what you’re trying to accomplish, right? You know. I see, I mean people come to me and pitch, Todd and I invest in companies and… sometimes people don’t, are not really aware that what they’re pitching is either not realistic at all or it’s not the way its position, the way they’re positioning themselves in the market is not unique, or…And so it would be hard for me to say to them, hey you know you just need to have the courage of your conviction. ‘Cause you know I would be like, “I think they are just going to keep hitting their head against the wall and…never get where they want to go because there is no kernel of truth in what they are trying to accomplish”.
But I also tell people on the flip side, I am sure there were people, especially early in my career when I was raising that capital, that maybe thought the same thing about me. Ultimately you have to kind of live and be your authentic self and if you feel strongly you need to go chase a dream that other people think is crazy you – then should do it. But you should at least understand why people maybe think it’s crazy and how you’re going to do what they think can’t be done or shouldn’t be done or won’t be done. Not just like “ well it’s going to happen”. For me I knew exactly why people were not investing in the company and I knew that I could overcome…that risk. Which back then was, they hadn’t kept customers and, could you, can you build a full service company around the ability to keep customers. And I knew for me I knew that was something I could do and was not I did not view as big risk but other people did. And so you know it’s very hard and ultimately I think it’s about kinda being authentic to who you are and going and you know trying to accomplish what it is that you want to accomplish and being as self aware as you can be but also you know if I would have listened to what every body told me; I wouldn’t have done really anything that I have done in my career.
The Value of Being Authentic
16:00 JL: You think about this concept about being authentic, trying to be our real selves. Why do you think there is a temptation not to be.
ALEX DUNN: So at least for me, and I can only speak for me, I had a perception early in my career that successful people where a certain way. And when I would look at people and say- okay this person is successful because they’ve done this and they’re a certain way. They have these personality traits. It would cause me like a ton of stress…‘cause that’s not really me and I mean that’s not really how I am and that’s not my strength or I don’t know if I can be that way. And so I think the false narrative that was in my head, early, was that I had to be like somebody else in order to be successful. And I think again as I have matured and had lots of experience- Now what I have realized is that the most successful people- and this is you know something that I believe pretty strongly is: they strengthen their strengths and not their weaknesses. And so that to me is being authentic to yourself because you kinda realize- here’s what I’m good at. And many times it’s not even a conscious thing. It’s not like people saying ok i’m good at this. It’s what they’re passionate about. It’s what they gravitate towards. And so they become really good at those things and that’s what leads to much of their success.
And so, if, you know, i’m looking at a person like that and it just happens that my strengths or the things I’m interested in or good at, are not those same things, the worst thing I can tell someone to do is to try and emulate that. Because if you’re, you know trying to like, if you’re trying to turn your weaknesses into something stronger than someone’s strengths- It’s really hard.
And so I would say to someone; try to be true to who you are. Right? If maybe, I think, you look at different kinds of business leaders; Mark Zuckerberg obviously very successful guy – doesn’t seem to be the most personable person. And even, you know, detail oriented and… but he has brought in people who that have helped fill that. But he has played a really super important, critical role in getting Facebook to where it’s at. If you look at different, you know, entrepreneurial leaders, they are very different. They are much more outgoing, They are charismatic and but I think typically.. they, those were traits that were kinda came naturally and were strong to begin with. And then they built their success around those instead of saying “Oh this is what I need in order to be successful so I am going to, you know, create it”.
19:15 JL: I feel like, there’ s a lot of truth in what you said. To me it’s kind of like the, Michael Jordan didn’t make a lot of money playing baseball, principal.
ALEX DUNN: Yea exactly.
19:25 JL: So why not spend a lot of time figuring out what your basketball is? Even though Nolan Ryan made a ton of money playing baseball, but why don’t you spend time figuring out what your basketball is?
ALEX DUNN: Yea that’s right. And i’ve actually found that typically the things we’re good at we actually value the least. And I have many people that I’ve worked with at vivint and my other companies that who are exceptionally good at certain things but they look at other people and I don’t have this or I wish I was better at this. I’m like but you’re the best in our company at x you’re the best you know product manager, And they’re like I wish I was more technical and or so and so has. And I think it’s because typically the things we are best at come a little bit easier to us if we are good at it interested in it or maybe we have some innate abilities. That stuff kinda comes easily. And we don’t actually have to exerte as much effort to be really good or better than most people. But then you see the things you’re not very good at and you look at other people and say I wish… And again my advice in those situations has always been – look strengthen your strengths . LIke become doubly good at what you’re the best at and you will be way more successful than picking something that may be really hard for you. Now I would also say you have to neutralize your weaknesses. So if you weaknesses are like, pulling you down, then it’s maybe hard to get to where you want to go. So you need to neutralize those but I don’t think you need to necessarily make them your strengths.
21:24 JL: Especially in organizations though, maybe you can hire someone to cover that or maybe you can get programs or something structurally to take care of that, right?
ALEX DUNN: Hundred percent. And when you’re building teams and you’re a leader and you’re an entrepreneur, you need to- Again you need to, I think you need to have self awareness on – Hey what am I good at and what am I not? And then, you know, fill in those, fill in those gaps with people that have strengths that are complimentary. You know, this is – there are tons of analogies with this if you want to go back to sports. I mean if you’re going to have a team of all centers or in basketball or guards you’re probably not going to be as good of a team that maybe has complementary pieces that play off of eachother.
The Harm of Comparison
22:15 JL: You know, we are closing in on the end of part one of the interview here. But I feel like kind of like what you’re saying is; I feel like you’re identifying how unhelpful comparison can be. Of like, you know, instead of focusing on ourselves and figuring out what our basketball is, when we start going around and are like success people have that, look I must try and figure that out even though it’s not my basketball.
ALEX DUNN: For sure, And it caused me a lot of anxt early on. ‘Cause I would be like i’m not sure I can be like that. And the false narrative in my head was -if I’m not like that i can’t be successful because that person’s successful. And as I got exposed to a more broad set of people that I would have kinda characterized as successful in their chosen careers. I realized; one they were all different, and many times they were actually not what you would consider a well rounded person. They had some really flat, you know, sides to their personalities and to their character and to you know their abilities. And it started to help me, have more confidence that maybe you know, if I was authentic to who I was, that I had somethings that I felt were strong, that I could kind of hang on to and could start to develop. that then would lead me down a path that would hopefully allow me to achieve, you know, the same kind of success I had seen those other people achieve.
23:54 JL: I love it. It’s kind of like recognizing they’re a little lopsided makes it okay for me to be a lopsided uh?
ALEX DUNN: Yeah and the truth is you know again, as I get more experience under my belt i realize that they are actually pretty lopsided. I mean most people are pretty lopsided. And so…it’s.. it’s ok to be lopsided. And so that must mean, you know, at least on all our data points we have, and experience, is that you don’t actually have to be like a perfectly rounded person to achieve success. You can actually have weaknesses and not be good at things. And actually still, you know, achieve a high level of success.
24:48 JL: I love it. Well let’s end part here for part one. Make sure to tune into our next episode. We are going to ask Alex about doing 2 billion dollar transactions with Blackstone, and some of this examples of treating people.