Craig Patterson: Welcome to the latest edition of Aryaka’s Dreamers and Doers podcast series, where we bring together industry experts and business technology leaders for very candid conversations about technology trends, best practices, and lessons in leadership. By the way, I'm your host, Craig Patterson, Aryaka’s Global Channel Chief, and today I am fired up. Fired up because we have a very special guest on today. He's a Digital Infrastructure and Enterprise Technology Investment expert, he's currently a Partner at Columbia Capital, and serves on the board of many technology companies, including Bluewave, Telarus, and many others. He's a veteran in global technology and telecommunications, he lived in Afghanistan, he's a Channel aficionado, an expert, and, oh, by the way, he's an all-around great guy. Please welcome to the show, Evan DeCorte, to the Dreamers and Doers podcast.
Evan, my man. So, obviously, I just shared a lot about your background. You've done some amazing things as I just described in your introduction, I'm really excited to have you on here today. I think you bring a very interesting perspective on all things Channel, all the investments that are being made. Before we get into all that, I want to learn more about you. Do you mind sharing a little bit about yourself? Tell me a little bit about your background, and what you're dreaming about, and what you're doing at the moment.
Evan DeCorte: So, I'm an investor here at Columbia. I've been here now for a little over a decade. I had a bit of a meandering path to private equity. I started out at a trading desk and spent a couple of years in Afghanistan, that's like a whole separate story, and I've been at Columbia ever since.
And what we do at Columbia is we're a pretty regular weight private equity fund. We're focused on investing in IT services and infrastructure, and so, a lot of what we're doing day-to-day is thinking about: what are the big and transformational technology trends in our world? What are the large secular tailwinds that are powering the IT landscape, and how do we invest behind them? And then, you know, I think we'll talk a little bit about this later, but frankly, the thing that we're most focused on doing is: how do we find really great teams and executives that we can back to build great businesses around the trends that we see powering both the Channel, sort of generally, and telecom services, and infrastructure more broadly?
Craig Patterson: Wow, that's super interesting. And man, what a path, right? To go from the trading desk floor to Afghanistan, and then all of a sudden now to Columbia Capital. Like, what a career path there. Talk to me, what was life like living in Afghanistan? What was your role? I think you worked with Roshan - tell me about that. Tell me about that experience.
Evan DeCorte: Yeah. So, I had sort of an interesting gig. You know, I started with an investment fund, so we were making investments in Central Asia, think about all of the "stans"; so, Pakistan, Tajikistan, Kyrgyzstan, and our goal was to run-- we called it 'double bottom line' investment strategy. So, we were definitely making investments with the idea that we would build businesses that we could profit from, but we also wanted to give back to communities that we were participating in. And so, effectively, we were investing out of a pool of capital that we were growing to make charitable and development donations on projects in the countries in which we operated.
So, we built a power plant in Tajikistan, we had a five-star hotel in Kabul. The business I spent most of my time with was the largest mobile network operator in Afghanistan, they're called Roshan. You know, think of us as the AT&T or Verizon of Afghanistan. But really, the end goal was to either sell those businesses, or take the dividends from them, and go and build development projects in countries.
So, at Roshan, through AKDN, which is the group that we worked with, we were probably the largest non-governmental donor to the country. And so, we built schools, and wells, and telemedicine facilities. You know, it is pretty cool - we effectively rehabilitated all of historical or old Kabul, really trying to bring it back from the war, and all of that was powered by the private enterprises and the businesses that we'd invested in in the country. And so, I think it was a really cool experience - we weren't the military, right? We weren't an NGO there running businesses, but we were also really participating in a meaningful way in the development of the country. It was a very exciting time. It's very different than what we're doing now, but it was very cool.
Craig Patterson: Yeah. That's awesome, man. What a rewarding experience. I mean, for you to be able to be part of that whole rebuild, and just giving back to the community after they had just been destroyed. So, I think that's super awesome. Any cool memories from that timeframe? Anything that stands out as something like, "Man, that was the most unbelievable experience that I had?"
Evan DeCorte: There's no one thing. I mean, there was some incredible travel, I saw a lot of the country, and Afghanistan is just stunningly beautiful. And, you know, were it not for all of its various challenges, both political, and war-related, it would be an unbelievable tourist destination. I mean, it might be one of the most beautiful places on earth. I would say that for me, the biggest thing was, looking at what we accomplished in the country and the people that we worked with, there was a lot of capacity building that happened. And, you know, when I joined Roshan, I would say maybe half or more of the company was being run by expats - there are technical professionals, engineers, that come in from the US, from Canada, from Europe, and it made sense. I mean, when the company was founded after the fall of the Taliban, there just wasn't an enormous amount of capacity in the country to run a big telecommunications infrastructure business. I mean, it didn't really exist, and so, you had to import a lot of that talent. And what happened in the, call it decade or so, that the business had existed before I ended up leaving the country, and really in the couple years that I was there was, we transitioned almost entirely to a company being run by local Afghans.
And so, to see a country sort come out of an extremely brutal and disruptive civil war where almost all infrastructure was demolished, and to take ownership of it and run it, and really just do an incredible, incredible job, and do great work in the country, it was really powerful-
Craig Patterson: That's so cool.
Evan DeCorte: -and you develop a lot of great relationships with folks that in many ways you would've never had an opportunity to meet, and they become life-long friendships. And so, there's no one thing I'd point to say, "That was really cool." But I think taken in its totality, it was an experience and a network of, you know, friends and really family that you develop that it's hard to imagine where else you could make that happen.
Craig Patterson: Man, that's so cool. Thanks for sharing that. I'm sure people really enjoy listening about that. So, shifting gears, talking about your role today at Columbia Capital, you talked about dreaming about these big trends, looking for these big trends that you can invest in, right, in the market. Talk to me about that. You know, obviously, your role at Columbia is to deploy capital, right? To help hyper-accelerate growth with companies that have found a niche or found a market that is growing. So, talk to me about that. Like, what does an ideal investment look like for you? What do you guys look at when you're trying to find your next big thing?
Evan DeCorte: Yeah. So, I think Columbia has maybe a slightly unique perspective on how it goes about investing. I think there are a lot of firms that are looking for great businesses that they can back, and look, clearly, you have to have a great business. And in some ways, that's table stakes. But for us, we maybe start with a more thematic approach. And so, we ask ourselves a question, you know, we look at the market, and we look at our portfolio of businesses where we've made investments: what are the large secular tailwinds driving change and driving growth in our core industries?
And so, what we try and do is develop a theme or a thesis around the specific market, and once we feel like we've gotten conviction around a large transformational trend, an area where we think there's just inherently going to be a lot of growth, we say, "Okay, what's the best way to attack that theme?" Maybe it's services, maybe it's infrastructure, maybe it's software. But I will tell you, a lot of it is driven by - and it's a little cliche - is the team. Fundamentally, we are looking for the best teams and the best executives we can back in markets we really like. And to some extent, if you get the team right and you back really great managers, the rest works itself out. There's lots of ways to make money in growing markets, but you’ve got to back really great teams.
And so, that's the number one question we have is, "Okay, who are the best operators in this space, and how do we figure out ways to partner with them?" And once you can figure that out, a lot of times we'll work with them to develop a business plan, or think about a way to get into a market via acquisition. And once you've got a great team, and you've got a great secular tailwind behind you, the world is your oyster, and you can be very flexible about the way that you invest. And so, as a consequence, we have a pretty wide mandate. We'll do services, we'll do infrastructure, we'll do early-stage investing, we'll do growth equity, we'll do things that look more like traditional private equity investment - we'll buy businesses and change or control transactions, but fundamentally, it starts and stops with, "Do you have a great underlying growing market and do you have a great management team to work with?" And we figure the rest out.
Craig Patterson: I love that. So, let's look at some of those trends. I think you guys made an investment early on like you came into our space as one of the early folks coming in, providing some of that growth capital. You made an investment in Telarus, you made some investments in Bluewave, obviously, both high-growth companies, with the other secret ingredient you just talked about - excellent leadership in place. Obviously, both are doing quite well in the space. So, talk to me about those investments, what got you interested in those companies, and what are your plans? What do you intend to do with both?
Evan DeCorte: Yeah. So, I think the two are very different businesses though they're in the same space, and so maybe it makes sense to break out the underlying themes that drove each of those investments and how we found our way to the sector.
And so, maybe just to start with Telarus; it's interesting, Columbia, maybe a decade ago had spent some time around the TSB market, and we had looked at making an investment. And I think at the time, we ultimately concluded that the market was just still a little too nascent. It was growing, it was an important part of go-to-market for suppliers, but it hadn't quite gotten to the scale yet where it could absorb investment from an outside investment firm.
And then it really was maybe in 2018, 2019, where we picked up a pencil again and said, "Look, if we look at our portfolio, the Channel is becoming a really important part, a growing part of the go-to-market, powering the sales machine. So, who are the winners and losers there? And ultimately, who is the beneficiary of that underlying core growth?”. Because you have core growth in the product set, so you have more and more products being added to the Channel. It's not just voice and, you know, long distance minutes, like it was in days of yore, it's unified communications, it's contact center, it’s SD-WAN, it's security, it's everything. And those markets are growing, right? So, you’ve got new products and markets that themselves are growing, and then you also, I think, you have an increasing embrace of the Channel as a good market strategy. And you say, "Okay, those are all really compelling themes on their own, they definitely compound and accelerate each other. So, what do you make of that?".
And we spent some more time, we looked at the whole value chain again. We went and talked to all the suppliers, we talked to the TSBs, we talked to selling partners, and I think what became very clear to us was that there was just enormous power in distribution. And that the TSB market would consolidate, it almost had to. You had to get meaningful scale to provide a level of services and support to selling partners, to make sure that you could earn that business day in, day out, because every day you've got to earn it. It's a recurring revenue business, but bookings themselves are not guaranteed. You've got to prove your worth every single day.
On the supplier side, I think we also concluded that scales really matter. You have to be big enough to move the needle for suppliers to help them drive a meaningful go-to-market motion that wasn't just onesie, twosies, and where they could invest real time and energy behind. And so, I said, "Okay, if we think that that's the case, who are the best teams in the space? Who do we think can scale? And who do we think has the platform to build a really meaningful category-defining business? And was it still a growing and pretty early space?” And we went and talked to the whole market, and look, we ultimately concluded that Adam and the team at Telarus just had built an incredible platform. They had an incredible reputation with the supplier ecosystem, incredible reputation and history of performance with their partners, it was a durable franchise. But more than that, they'd just proven that they could grow year in, and year out, and they could scale in a way that we really hadn't seen anywhere else in the industry. And so, I think we were lucky enough that Adam and the team chose to partner with Columbia at the end of 2020.
And from there, I think, you know, we may talk a little bit about what we're doing. Obviously, we've announced a number of acquisitions. We think that just scale matters in this space, you need to be big to provide value. And so, we've invested behind the inorganic growth strategy and we'll continue to do that, but we've also been laser-focused on driving core organic growth; which is, hiring and developing the team required to support that growing business. And the reality is, you really need to invest a lot, provide the systems and support and ecosystem for that platform to flourish. And that's where guys like us come in. We are able to provide the capital and help the teams put fuel on the fire in a way that really, I don't think, was happening in a way before we invested in this space.
So, look, at the end of the day, it's a great business, they're going to keep doing what they're doing. And like I said, it's about backing a great team to build a great platform. And I think what you'll just see from more of those guys is more of the same - which is just providing great service to suppliers, and to their partners.
Craig Patterson: Yeah. That's so cool. I mean, I agree with everything you said. I mean, we're huge fans of Telarus and Bluewave. We've seen significant growth with Telarus, they continue to scale pipeline with us, and, oh, by the way, we just closed an amazing opportunity with them last week. So-
Evan DeCorte: Great.
Craig Patterson: -love seeing the success, and I appreciate you being the piggy bank really to help deploy this investment capital to allow these companies to scale.
So, looking at the other strategy, which is really Bluewave, the super-agent, talk to me about that. How do you see the role of this super-agent continuing to evolve in our marketplace, and where do you see that going? And also, what's different? What's different about a super-agent like Bluewave versus some of these other strategic partners in the marketplace?
Evan DeCorte: Yeah. So, I think it's really important to talk a little bit about the value chain. So, how do we think about value flowing through the ecosystem? And where do each of these parties earn their keep? So, we think about the TSB business or Telarus, fundamentally is about owning and managing the relationship with suppliers, making life easier, and empowering their agents. It's really almost a BPO business. They're outsourcing the blocking and tackling of distributing services. That's very different than the customer-facing business of a sales agent like Bluewave. So, I think for us, we looked out at larger ones like Telarus, we look at the market and we say, "Man, the value proposition of the agency business is an incredible one." You show up, provide true strategic guidance, you can be a trusted advisor to a client, you do a bunch of work for them, and you basically do it for free. So, if you're a customer, you get great advice from someone you trust, and you don't pay for it. Like, what's not to like about that?
And it's funny, you know, as part of our diligence and our market work around both Telarus and Bluewave, we talk to a lot of customers. And I tell the story all the time, because I think it's an important one and informs our view of the market is, when we talk to customers, we ask them, "What was the biggest barrier to buying through the Channel, or buying through an agent, specifically?" And what we heard time and time again was, "Man, it seemed like a stamp. The value prop is too good. I get this great advice and I don't pay for it. Like, how does that make any sense?" And on the one hand, like, look, it's not great - you prefer there be no objections to, you know, taking on client engagement. But the objection is, it seems too good to be true. Like, that's as good as it's going to get.
These are, I think-- okay, you have this incredible market opportunity, this great service. Okay, so what do you do with that? And I think we look around the market and the reality is, there are a lot of agents out there. I think because of the time it takes to scale a recurring revenue business; it's just taken a long time for many of those businesses to mature. And so, we looked at it and we said, "Okay, we look at the players in the market, we see some folks who've built some incredible businesses. If you could build an agency from scratch, what would it look like? And I think our view is that it would have a lot of the characteristics of many of the businesses that already exist in the market. But a really key component would be providing a more consultative service where you can act like an Accenture or a McKinsey or a Deloitte, and be a real partner over a very long period of time to enterprise or midmarket customers.
And it would look less like a broker, and more like a true consulting partner. And so, for us, I think there's like this term super-agent that gets thrown around in the context of all the consolidation that is happening in the market, but I think our view is to build something that looks maybe a little bit different than traditional agency, and is more of a consulting service or a consulting business whose revenue model is derived from the Channel. So, I think this question is so like what do we want to build, and how's it different than others? I think fundamentally, we just think there's an opportunity to build a large and consolidated business that is going to define the industry and redefine the way that customers consume and procure services through the Channel.
And what that means is you've got to have largely a single go-to-market. We think it's a cohesive and integrated management team, and it's investing significant capital behind the operating expense in the resources required, expertise in house, right? And it's hard. I mean, if it was easy, I think everybody would do it. It takes time, and it takes a lot of capital, and it takes commitment to, you know, making sure that we're always asking ourselves a question like, "What are we investing in, does it make our clients' life better? Are we providing better advice?" And the answer to that question always has to be, "yes". And I think it's the same thing as it relates to acquisitions.
So, you know, it would be probably not fair for me to comment on other strategies that we're seeing emerging, what I would say is that for us at Bluewave, the goal is not to become some sort of quasi-master agent where you sort of buy businesses, and it's a financial arbitrage - you try to jam a bunch of stuff together and you flip it for a higher price. But fundamentally, it's a bunch of businesses running independently, underneath an umbrella, underneath like a holding company umbrella. That's just not that interesting to us, because you sort of say to a business that's thinking about joining the platform, "So how's your life going to be different? What more can you do for a customer? If you're not really working together, how could it possibly be better?"
And so, we take the view just like in our organic investments, on the inorganic side, before we do a deal, or before we partner with a company to sort of have them join the Bluewave platform, we sort of ask ourselves like, "Will our existing customers and the customers of the businesses that we're acquiring, are they going to be better off as a result of this deal?" And a lot of times the answer is, "no" - there's maybe a cultural mismatch, there's a mismatch amongst the team around what they want to do and what they want to build, and if you can't get conviction that everyone's going to be way better off, but importantly, our customers - starting with a customer-centric approach - if the customers aren't going to be better off, there's no deal to be done. It doesn't make any sense. So, to me everyday is empowering a broader strategy to drive organic growth and to drive our desire to build a true consultative telecom expense management and procurement service, it's not just to buy to buy.
Craig Patterson: No, I love that vision. That's super interesting. A lot to sort of unpack there on just different comments you said. I love the strategy around building a practice area that doesn't exist in the marketplace. I love the idea of like just really resourcing in a way to go attack the market, because when I look at the opportunities we're seeing, and I think where the market is going, I mean, the Channel is in the most strategic and complicated opportunities that exist. I mean, we're penetrating Fortune50 accounts, as you are aware. And so, I think you really need that sophisticated partner that has the resource behind them, and the sophistication to go have those various strategic conversations with those customers, and have a brand behind them that makes them credible. Right? And so, I love the notion of where you're going around that, and I love the idea that you're going to go change perception in the market. You mentioned one of the things you heard is, "it's too good to be true, and it's a scam," Well, we need your help to change that perception because that's good for our entire marketplace. We want the majority of customers always leveraging a Channel partner, whether they're small, mid-market, large, very large, or global. Like, we want the majority of customers buying from a third party.
So, a couple of thoughts here, share some predictions. Like, where do you think the market is going to go around consolidation? You know, obviously, it's been bonkers. The multiples people are getting are insane, the consolidation that's happening; where do you think that's going to go? And then, do you think when you're looking at these big trends, are you looking global? Are you starting to see Channels starting to become more mature in EMEA and APAC? What are your thoughts there?
Evan DeCorte: Yeah. So, I would say maybe just on what's going to happen with the M&A landscape. We sort of start there. I think in the TSB space, you've seen a wave of consolidation. I would think that that's largely run its course. There's probably some additional M&A that will happen, but for the most part, I think we're seeing the space mature. I think you have a couple of platforms that have gotten to real scale that will largely be able to provide a level of service that will be unmatched by smaller players, so, I think you're going to see the market calm a bit. As it relates to maybe the former partner or agency side, I think we're still in the very early endings of the maturation of the market. And a lot of what we're doing here is helping change the perception around the Channel, and repositioning it as the obvious place to get strategic advice for your business.
I think there’s been a lot of great businesses that have done that and have positioned themselves that way, but there are also a lot of folks who have run more transactional businesses, and so, my guess is you're going to see a handful of super agents, or for larger scaled agents, merge in the coming years, but it's going to be a much longer time horizon. And my guess is, there's been a flurry of activity, but that also will slow a bit as the market slips into something that looks more like a sort of steady state acquisition cadence..
On EMEA and APAC, it's an interesting question. We thought a lot about it here at Columbia, and I think in general, those markets are a little less-developed and more fragmented than most people think. It's easy to look at Europe or APAC and say, "Man, those are just really big markets on the other side of the pond or the other side of the world, and they should act just like the US. If only they understood how things worked here, we could export the model. It'd be great." And I think that's just like wildly naive. I think we are lucky, in the US, we have a massive market with a common regulatory framework, people generally do business in pretty similar ways. It's something that I think is frequently taken for granted. You’ve got Europe, like, the reality is it's a bunch of different countries, many of which are about the same size as states in the US, people speak different languages, there are different cultural expectations, there are different ways to approach business, there are different market structures that have merged.
And so, I think that the Channels we think about in the US where sort of referral commission-based revenue model is gaining traction in those markets, but I think we're a long way from it maturing the way that it has in the US. I think it should be growing faster than it is, but my guess, it will take time.
Craig Patterson: Yeah. No, I hear you there. It's definitely quite a bit different, although I would tell you we're starting to see things accelerate a bit faster than I think previously. You know, you look at some of the investments coming in from the large North American TSBs, I think there's a certain whole phase in the initial timeframe, which is all about education, explaining how the model is different, and then explaining it again, and then explaining it again. And then finally, it started to resonate, right? These businesses start to emerge, opportunities start to happen. But we're definitely following that trend as well, definitely keeping our finger on the pulse as it relates to our global Channel. We're going to be rolling out a very specific global holistic approach in terms of how we face the Channel community across the different regions.
But I appreciate all the knowledge you shared here today. All the trends, it's fascinating, I think things continue to evolve. I think you're on to a very interesting topic around the super-agent and the sophistication that's happening in our marketplace. So, we'll continue to watch for that trend to emerge. Any last thoughts or final thoughts that you want to share with the community? Any other feedback or advice you'd like to give?
Evan DeCorte: I think the one thing I would offer up is that I think we've had a number of conversations with the way Columbia invests and our view on the market. I think investors are not, we're not monolithic and we're not a homogeneous bunch. Everyone's got their own investment thesis, and they have their own way that they invest and build businesses. I think it is important for folks as they think about how do they interact with guys like us on the private equity side. Your investment-- make sure you're being thoughtful about what you want to build, how that aligns with a vision for your partner, and to what extent does the return that you're going to generate for yourself and your family and your investors, how much of it is driven by growth and building a truly sustainable business versus something that looks a little bit more like financial engineering?
One of the common misconceptions in the Channel, in my experience, has been that all investors and all investment strategies are pretty similar. And I think the reality is many of them are very, very different. And you've got to make sure that when you pick a partner, you're picking someone that looks at the world the same way that you do, and wants to create value in the same way that you do, and wants to build like a legacy and durable business in the same way that you do.
Craig Patterson: Very valid, my friend. Well, thanks for sharing that. Thanks for sharing everything else, and thanks for being on this podcast. I've really enjoyed my time with you-
Evan DeCorte: Thanks for having me.
Craig Patterson: -everybody, Evan DeCorte, the guy who spent two years in Afghanistan, has some amazing experiences, and he's the guy that is putting the 'perception challenge' on his back. He's driving the change in the marketplace, and we appreciate all that you're doing, my friend. Thank you so much.
Evan DeCorte: Thank you.