REES Capital: What Angel Investors are REALLY Looking For

REES Capital:  What Angel Investors are REALLY Looking For

REES Capital (www.REESCapital.com), based in South Jordan, UT, is an angel investment and mentor capital firm that works in close collaboration with entrepreneurs and their investors and board members to drive company growth and maximize equity value through strategic direction and influence.  Managing Partner Amy Rees Anderson (@AmyReesAnderson) took some time to chat with Ascent Advisor (@AscentAdvisor).

Ascent Advisor – Paul Savage: REES Capital officially opened its doors on January 4th at your new headquarters.  What is your vision for what REES can become?Amy Rees Anderson

Amy Rees Anderson:  We started REES Capital after we sold MediConnect Global. We — myself and several of the executives who joined me — really felt we wanted to take everything we had learned and help other people do what we did. Our vision is to mentor entrepreneurs and find some key companies that we want to invest in as angel investors and that we can help guide to a successful outcome.

Ascent Advisor:  You sold your last company, MediConnect Global, for $377 million one year ago.  What did you learn from selling a company you built?

Amy Rees Anderson:  It’s a lot of work to sell a company.  The process is probably more difficult than you expect because it is so intense going through due diligence, documentation, negotiating the deal, and all of that.  It gets bad before it gets good.  We were very thoughtful about the choice we made – it was a tough one. The company was doing incredibly well, so there was always that battle of, “Do I sell?  Do I hang on to it and keep growing it?”  It was a very careful decision on all of our parts to decide this was the right time to do it.

It’s also definitely an adjustment period. You go through a lot of different emotions as you are selling your business. There were days that I thought I maybe shouldn’t sell it. It’s like your kid growing up and leaving the house, and it’s an emotional thing to go through.  Overall, it was a good experience, and we felt like we did the right thing.

Ascent Advisor:  How much emphasis did you put on who was going to purchase the company?  How important was that in your decision making?

Amy Rees Anderson:  It was very important.  We wanted someone who was a good fit –someone whose vision for what they wanted to achieve in healthcare was the same as ours.  That was very critical to us.  There is never going to be a perfect situation in any acquisition in the sense that the cultures are always going to be different; so you have to look for the best match you can get. In our situation, we got acquired by a public company that owned a lot of different independent companies. They were going through their own process of merging companies together and consolidating businesses. It was challenging that all these different cultures were being melded together, but I think it’s important to do the best you can to find someone who can carry out the vision, protect your customers, try to provide the same level of service that you did, and provide good opportunities for your employees going forward.

Ascent Advisor:  All the partners at REES were members of your executive team at MediConnect.  What do you look for in business partners and executive team members?

https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcTIiS8f_1DS9YmRC43qbhBR5G1NRvqBhWHeKRw5yKiDPXjEtFKrAmy Rees Anderson:  For me the most important thing was having the same set of values. Integrity was really key to all of us.  Integrity is our core, and we wanted partners that felt that same way, that would place integrity over success, money or any other choice.  Hopefully it never does come down to that choice, but if it did you need to know where they are going to stand.  That was critical.

When I build an executive team, I am always looking for people who have different skill sets than I do.  I have always found if I can surround myself with people that are smarter than I am in their own respect, it’s going to make me do better. I always look for people who know their stuff, that are amazing at what they do and that are hardworking without the arrogance or attitude of thinking they are better than anyone else.  I have been blessed to have a team that really is grounded, highly intelligent and highly successful in what they’ve done, but they don’t let it go to their head.  They stay humble and excited about life, and we all have an attitude of being grateful for the things we have. It’s really made for a good team.

Ascent Advisor:  Do you have any stories or experiences that you can relate, where the value of integrity came to the forefront?

Amy Rees Anderson:  You always face opportunities where you can take shortcuts in your business.  You see competitors do it; they will lie, cheat and steal to get ahead.  You see other companies do it and there is always that temptation of getting there faster if you are willing to cut a corner or go into the gray a little bit.  We all made the decision that is not something we were willing to do, so it made it very easy for us in those situations, even when it would have been better financially. Money can come and go, but our integrity is going to stay with us.

Ascent Advisor:  You’ve won many awards for your efforts as CEO, including Entrepreneur of the Year from both Ernst and Young and BYU’s Rollins Center for Entrepreneurship.  What makes a great CEO?

Amy Rees Anderson: I think you have to love the people you lead.  You have to be willing to live what you believe.  I think that is critical.  As a leader, people follow you just by virtue of your title and position.  If you are not willing to uphold it and act out the things you say, then your impact will immediately be diminished.

You really have to be willing to take feedback and learn to let your people tell you where they think you need to improve.   None of us like to hear our weaknesses, but you have to be willing to.  It’s always nice when you are an employee and you have a mentor or a boss that will take you under their wing.  As the boss, you are taking care of everyone else and you forget to take care of yourself.  You aren’t going to get that day- to-day feedback from people above you like the board of directors. The best feedback is going to come from the people you are leading.  It takes someone willing to listen to that feedback–really take it to heart and figure out what to change.

I don’t think you have to be perfect to be a good CEO. I don’t think you need to be the smartest person in the room to be a good CEO. You don’t have to know every answer to every question; you just need to be willing to try your best, do the right things, be willing to seek out help from others and listen to those around you.

If you take everyone’s opinions, mix them together, and listen to all of them, you’ll figure out the right things to do.  It’s important to get a lot of feedback from a lot of different sources: otherwise you can make the wrong choices.

Ascent Advisor:  A lot of companies have a culture where people are afraid to give feedback to the CEO; they don’t want to make a career limiting comment.  What do you do to foster that feedback mechanism in your company?

Amy Rees Anderson: I implemented something several years back to foster feedback. We went from 70 people to over 1500 and I needed them to know who I was and what I stood for, so I started writing a daily blog to my employees. Every single night, before I went to bed, I would write this blog about what I was learning, what I was doing, what mistakes I was making, being very open about what I as the boss was learning every day.  The employees could respond back to those blogs with questions or comments and they could respond back with their name or anonymously.  It was a way to open up and let them help me. By sharing that feedback, I felt I could count on them to help me be better, and they could count on me to help them get better.  It takes a tremendous amount of communication and you can’t do it halfway or people won’t trust you.  I knew I had to write that thing every single day, five days a week, no matter what.  It was hard.  I still do it to this day, even after I sold the company. I promised them I would keep writing, and I have not missed a day in over 3 ½ years.  It was probably the most impactful thing I ever did as a leader.  It didn’t cost money, just time and dedication.

Ascent Advisor:  MediConnect Global had over 1600 employees and 1500% growth from 2004 to the point of sale – what were the biggest challenges you faced?

Amy Rees Anderson:  Maintaining the culture, like I said, was a huge one.  Learning how to maintain that culture was a big hardship.

Also important was learning to hire the right people. Hiring is not fun.  Interviewing is not fun.  We did some unique things that were helpful, like a speed-dating type of interview where we would give people two minutes to sell us on why they should work for our company.  We learned to use testing and personality profiling to help us zero in on the right candidates.  We looked for their values first, because we learned that you can train a skill, but you cannot train a core value.  Either they have integrity or they don’t.  You can’t fix that.

Ascent Advisor:  With REES Capital, you are mentoring, advising, and angel investing.  What are the characteristics of a company you consider when you are looking for potential companies to invest time and capital in?

Amy Rees Anderson:  The first, and most important thing, is going to be the leadership team.  You can take a great idea, give it to a bad team, and they will destroy it.  You can take a bad idea, give it to a good team, and chances are they will find a way to make it succeed.  So the people on the team are a critical factor for us.  We look for teams that are teachable. One of the things that makes you become an entrepreneur is your confidence.  One of the things that can get you in trouble is if that confidence becomes arrogance because you are not teachable.  It is very important to find a team that is teachable.

It is also important to find leaders who are surrounding themselves with the right people as opposed to friends and family.  It could be that friends and family are the right choice, but it needs to be for the right reasons.  Is this person going to bring skills to the table that you don’t possess?

We also look for technology that is different and not overly complex, but that represents a paradigm shift – something very unique that is hard to compete against or replicate.  It is really important that the company is going after a huge market.  We don’t want a company to go after a market that is so small they have to own the majority to be successful.  We try to find companies that only need a tiny piece of the market to make it a big success.

Ascent Advisor: How do you determine if an executive team is teachable?

Amy Rees Anderson:  We can tell very quickly based on how they take feedback in our sessions.

First we have a mentoring session where they pitch their company to us, and we try to give them a few elements of feedback that we noticed throughout the process.  You can literally see it on their faces if they are excited for the feedback and if they appreciate it. If they are defensive, it tells you they won’t be as teachable as someone else might be.

The biggest thing for entrepreneurs is to realize they don’t have to come in and say, “No one has ever done this before, or no one could ever compete against me,” because it’s just not true.  Chances are we saw someone last week doing the same thing but they just don’t know it yet!  I think sometimes they think they have to oversell to get us interested and that is just not the case.  With entrepreneurs, it is better to say, “We realize that others can compete against us, we have thought about it, and this is what we are doing to stay ahead of that concern.”  As an investor you can then say, “OK, they are thinking about it the right way,” so it gives you a level of comfort.

Ascent Advisor: Any other parting words of wisdom our readers should know?

Amy Rees Anderson:  There is no such thing as a stupid idea, or dumb idea.  What is great about entrepreneurs is their willingness to try and learn new things as they go.  Most of the time, the ideas they start out with are going to morph before they become the amazing idea they want.  Be willing to try, work hard, and be flexible, and as you start seeing better progression or better paths, it’s OK to pivot and take those paths and try new areas.

They should surround themselves with the right people.  I have had amazing mentors and amazing advisors in my life. My board of directors was unprecedented in Utah.  I had Jim Sorenson, Alan Hall, Dinesh Patel, Scott Parker and Charlie Johnson – these are the “Wows!” of local business.  I listened; I was hungry to learn what they had to say.  I was always smart enough to listen to the people who knew more than I did, but then to use my own instincts to figure out what was right for me.  I think that entrepreneurs need to find the right people to surround themselves with and not be defensive. Try to learn from everybody you talk to, even if someone is negative towards you.  Try to learn from that and grow from that – there are always a few pearls of wisdom.

Also, don’t give up.  You’ll figure it out.  If I could do what I did, anybody could do it.  I was not formally trained to do it, and I wasn’t the smartest girl in the room. I was a single mom with two kids, so I had a big reason to get out there and work – it was good motivation for me.  I think that if you just keep trying and surround yourself with the right people and listen, it is going to eventually get where it needs to go.  Just don’t ever cut corners to get there.