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Revolutionizing Addiction Treatment with BrightView Health | Chad Smith
This is the first of a three-part series that features CEOs who have successfully exited (or recapitalized) a Shore portfolio company. This episode features Chad Smith, the co-founder and CEO of BrightView Health, a company that operates outpatient addiction treatment clinics. Chad shares how he and his co-founders weren’t initially looking to start a big company, but rather serve the communities with the highest needs. This empathetic approach was an important part of his eventual partnership and alignment with Shore Capital. BrightView now operates over 85 clinics.
BrightView (Cincinnati, OH) is an outpatient addiction medicine practice based on clinical best practices and outcomes measures. Through the use of medical treatment in conjunction with psychological and social services, BrightView delivers the necessary support to help patients meet both their mental and physical goals.
Transcript
Introduction
Michael Burcham: Welcome to Microcap Moments, a podcast from Shore Capital Partners that highlights the stories of founders, investors, and leaders who have taken on the challenge of transforming ideas and small companies into high growth organizations. The journey of building and scaling a business takes one down many unexpected pathways.
It's a journey where we learn from our mistakes, fall down often, but have the entrepreneurial grit to pick ourselves up and persevere. Within this series, we will share these stories of success and failure, of the challenges and the rewards faced by those who dare to dream big, and through their lessons learned, we hope to inspire others who are on a similar journey of becoming, growing, and leading.
In this episode, Anderson Williams and I will be talking to Chad Smith, co-founder, and CEO of BrightView Health, headquartered in Ohio. The company focuses on outpatient addiction treatment service. This includes medication assisted treatment, individual and group counseling, peer recovery support, and wraparound social support services.
Chad is formally trained as an attorney and certified HIPAA security professional who has focused his career on healthcare operations, technology, and compliance. Prior to founding BrightView, Chad co-founded a series of healthcare technology companies where he managed technical and professional service teams, oversaw business development and sales, and acted as the privacy officer.
He serves on the board of advisors for the Northern Kentucky University College of Health Informatics, where he teaches courses focused on the intersection of law and healthcare technology. Chad earned his undergraduate degree from the University of Akron, a Master of Science in Health Informatics from Northern Kentucky University, and his Juris Doctorate from Northern Kentucky University's Chase College of Law.
Chad, thanks for joining us today. Would you take just a few minutes to introduce yourself and your company to our audience?
Chad Smith: Sure. My name is Chad Smith, one of the co-founders and the CEO of BrightView. We're a comprehensive outpatient addiction medicine company focused primarily on opioid use disorder, although we treat all types of substance use disorder.
We have in the mid 80, 85 to 87, depending on how you count the branding, operating locations everywhere from Massachusetts, Arizona, Ohio, Kentucky, into the mid-Atlantic, North Carolina, Maryland, and have been on a pretty strong growth trajectory and now treat well over 20,000 patients every day.
The Early Years
Michael Burcham: You are one of the few founders who has been able to start as a founder, entrepreneur, and actually scale a company to the size yours has scaled to.
Not many people have that ability to do that. Would you first go back to the early years and describe your journey? And then a part two of my question is going to be, how has that changed over time? But let's go back to the early beginnings and let's talk about where your head was while you were doing as a founder and how that evolution has happened for you.
Chad Smith: I think the biggest benefit of BrightView in hindsight is we didn't seek to make it anything big. So, when we sat down to build BrightView, it was really my co-founders and I who saw a problem in our community. One of my co-founders is a physician who was actively practicing in the space and wasn't happy with the way he was seeing patients treated.
And so came to us as his friends more than business colleagues and said, hey, I got to do something about this. And so, the genesis of BrightView was really like, hey, we're going to rent one office. We're going to buy some Ikea furniture and we're going to see what happens and gives you a lot of freedom. In my prior ventures, you know, we had a business plan and a pitch deck, and we were raising money from investors and had TAM and what can we take out of that market?
And for this, we were really just focused on, hey, can we do a good job for this community that we're serving? I had no plans really to like even stay with it long term and I don't think any of the co-founders did. We thought we'd start maybe one or two of these in Cincinnati and be proud of the work that we do, and it'd be Dr. Ryan's doctor's office and that's where it went.
And what it allowed us to do is just focus on the fundamentals really early. I didn't think at all in the first year of BrightView about what it would look like when we had 50 or 80 or 100. All I really cared about was, are we taking great care of the patient?
Can we find and attract talent that want to do this work with us? And so, as I've had the fortunate opportunity to sit on boards or invest in other companies, that's something I try to really drive home to them, which is in hindsight, we just got the fundamentals right at the unit level. Like at the smallest level, we weren't worried at all about like, how do I build 10 more?
What I didn't know what I was doing at the time with my co-founders was we were just building a really solid foundation. So, A block one that you set. One of our founders had a really good friend who was our contractor who's since scaled with us as well and builds a bunch of our centers out and when he and I talked the other day he was like hey this reminds me a lot of like what they teach you in architect which is like the thing I measure the most is the very first thing I set.
The very first block on a skyscraper is like this can't be off by a millimeter because it sets every other measurement we're going to do and so we had that benefit for sure.
Michael Burcham: In the following segment, Chad shares some 'aha' moments, especially as he went from one location and the challenges of that location to how he discovered this business was something that was highly scalable.
So, what was the 'aha' moment in those early years with that much freedom and starting with a location or so that you thought, you know, this may be actually bigger than I even thought, or there's something more here than just getting up an office and doing something. What was that defining moment you said there's more here?
Chad Smith: Yeah, there were probably a couple. I think, I don't remember, maybe 30 days in, the sheer demand for the services was a little bit overwhelming. And we always tell the story, but about a month in, we didn't have a phone system. We just had a phone. And we got to the point where like, when we wanted to have a team meeting, we would take the phone off the hook for 30 minutes because we just, it just rang.
And so, I think we knew at that time, okay, this is a, we knew there was demand out there. We just didn't know, you know, we were doing things a little bit differently from a clinical perspective, from a financial perspective and taking insurance, which created some complexities. We just didn't know how the market would respond.
I think just the sheer patient demand for us was like a holy moly, we're doing something right here for the patient, which was most important to us. And the other limiting factor, opening location one was very difficult, so we had a ton of problems with the community we were going into. We went to that community because the health department in that county was like, this is where you should go, like, this is where we're having all of our problems.
Quickly learned that the leaders of that community that's not like a badge they like to wear right it's like, hey, I'm here because local health officials say you guys are a hotbed for addiction and we had a ton of challenge to the point where we almost had to like sue to open like we were getting a ton of what I would say are like informal delay.
So, hey, how long does it take to get our certificate of occupancy? 48 hours. It's like 45 days later, we're like, it feels like we're being treated differently. Can you help us out here? And so, we actually had to have the health department, a board member of the local hospital, reach out to this municipality and say, these guys are trying to do the right thing here.
Let's partner up. What that created then was like a, I don't know how you'd ever do this at scale if you have to fist fight everybody. And look, I understand like it's our patients are in a tough spot. Not everybody wants them in their backyard, as they say. And so, the second site, the township administrator of another area of Cincinnati got wind of what we were doing, came, he happened to be the police chief prior, which is honestly one of our most tenuous relationships.
Police want to police. So, our patients often have a lot of interaction with criminal justice, so they almost can't help themselves but to be around our center sometimes, which isn't great for our patients. And that person who became the township administrator was the police chief, saw what we were doing, came to us and said, hey, I want a BrightView in my community.
And I would say we went and met with some folks who were like, they want us less than the first place did. We're still close to him today. And he said, no, we're going to open. And the day you open, I'll stand out front and I'll take every community member, all my friends who are in the police department, all fire, like, if you have any problems, they're going to run through me.
And so that it was an 'aha' moment where I was like, okay, well, not only do the patients want us, but there are people who appreciate this that actually give us an ability to be successful. And to his word, Dan was there. When we do an open house, a lot of time it's just like community relations, right?
It's like the neighbors coming by. They always hear about it when we're building it out. You know, once we start filing permits and putting up signs and Dan stood out front with us and we even had a few challenges along the way and he was like, hey, no. This is what we need. And then since then has been a really big advocate for us when we've had more preliminary conversations with where we want to go.
And so those two combined things were, hey, the patients really like what we're doing. And there's an opportunity to actually partner with communities. I think we were so singed on the first experience, like opening day was more of like a, man, we just got beat up in the first time. And so just getting that feeling of like, oh, you want to be wanted.
That was really important to our team.
Deep Empathy
Michael Burcham: Next, Anderson and I talked with Chad about how showing empathy has helped him better understand those he is serving in his business and how his relationships with the community and building trust with the community has helped the business grow.
I would imagine those examples you just gave really helped you and your team experience pretty deep empathy for your patients because your own story of trying to open seems a lot like a patient's perspective where they're really trying to find someone who can understand and help. And they're in a community where they're almost the stigma that no one wants to talk about, and you were trying to bridge that gap a bit it seems like.
Chad Smith: Absolutely, yeah it was eye opening to feel we're almost like the secondary stigma. Like I'm very fortunate I haven't struggled with any of these issues.
Everyone has somebody in their life who has, but when we adopted that as our brand, and then would go into these sessions feeling like, well, we don't want you here. I came from healthcare technology. My partner came from nonprofit healthcare. Another partner came from the lab space. We would talk about that.
It's like, I've never walked into a room and the people are like, what are you doing in my town? I was like, what? Oh, no, I thought we're here to help people. And I, so yeah, absolutely. It was really great perspective to think about how hard it would be if I was a patient and actually had the problem that everyone seemingly so scared of.
So yeah, it was a really good moment.
Anderson Williams: Can you just say more while we're on this topic about how now that you've grown as much as you've grown, those are some pretty unique relationships that you're building with police departments, with communities, with the courts. How has that scaled?
Chad Smith: We've invested a lot of honestly just manpower into the challenge.
And so, what we looked at was an opportunity. Our industry doesn't do a good job in general with those folks. So, like, many communities have the appropriate reaction at first blush, because when I say to someone, hey, you know, we have some of our centers do methadone, when you hear a methadone center, what you think about in your head, isn't what a BrightView is. So, people think like, oh, it's just it's in a strip mall somewhere and it's got 200 people standing outside at 6am smoking cigarettes and eating pizzas and we don't want that.
And so, we've had to invest our time and energy into educating people around like, no, this looks and, if I would always tell people my goal, was that if I blindfolded you and dropped you in a lobby of a BrightView, you'd open your eyes and think, oh, I'm at the doctor's office. So, we had to invest a lot of energy.
We have an entire team that's dedicated to your one of your questions. Just a criminal justice reporting. How can we make sure our patients, that's one of their most important relationships that they find themselves in that situation, is like we want to keep them on the right track there. And otherwise, we have a team we refer to as our outreach team, and they're really managing those community relationships.
We've since pushed that process to like pre-launch. So, we actually now, because fortunately some of the stigma has died down is we do a lot of that pre-launch to make sure it is going to be a warm reception or we're not going to put our team in that tough spot. And so that team maintains that works with local leadership on, hey, there's a drug court.
Here's what they want to see. Can we meet their needs? Hey, there's an emergency department. And so, our outreach team quarterbacks that and then their centralized resource, like our criminal justice reporting team that sort of helps them and the patients make sure we're delivering on our promises to those partners. Because again they're appropriately skeptical of what we are just given some of the challenges from our industry and so it's we take it on as our duty to like educate, like we want to change that. When we walk into the community or that stakeholder I tell our teams all the time, like we're starting from a position of like, we have to win their trust.
It's not like a, hey, you should trust us, what's wrong with you? It's like, no, no, it's okay. Like there, a lot of these, especially the smaller communities have not had great experience. So yeah, really important to us.
Michael Burcham: So, what you described is your team's absolute desire to go earn the trust, not assume it should be there.
Chad Smith: Yeah. And that's something that I think is just a little bit unique for this part of health care. When we bring people from outside of this industry, if you're open at cardiology practice, you don't have to go in the hospital and be like, no, cardiology is good for these people. They're just like, oh, okay.
Thanks. Like, can you get somebody in the next day? Yes. All right. We'll sling you some patients. And so, yeah, it's definitely been a learning curve, but something our team has taken a lot of pride in for sure.
Scale And Growth
Michael Burcham: In the following segment, Chad shares how he and his team went from two locations to thinking about scale and growth. This led to the need to identify an investment partner to help make that happen. He describes how ultimately Shore became that partner and his interactions with Shore Capital in the early days of the company.
When we started this conversation, you described that unlike some of your previous work, there was no business plan or pitch deck.
You just saw a community need and a group of you as friends got together to solve it. When did you decide, you know, we probably should think about maybe having an investor or two around to help us with this. Where in the journey was that? And what was the thought that said we probably might need to think about some outside capital or something to help you a bit?
Chad Smith: I think we only had two locations, but both of them were full. We wanted to grow more. I tell the joke all the time, internally, I'm sure my team's tired of hearing it, but for the founders, at some point, you get tired of going home and asking your spouse to like sign guarantees on documents that when they're like, what happens if this goes wrong?
It's like, no big deal. We just have to sell the house. There is definitely pressure on the underlying business was doing fine as we saw more communities coming to us, which really flipped for us. So, when Dan came and we opened our second site and then we started to getting a little bit more recognition and people are coming through, it was really at the state level.
We started to see that there was more communities that wanted us. And as we looked down the horizon, like, hey, we can't just self-fund building out the centers. You know, we're typically rehabbing a distressed asset in a tougher part of a community. And so that takes dollars and you have to pay them up front.
We were fortunate that Shore alongside a few different groups sort of actively came calling. And so again, unlike my old life where I was constantly fundraising and begging for money. In the venture world, we had enough demand for our services on the institutional capital side as well. And so, we were able to do a pretty low lift.
I would describe them more as like fireside chats, you know, as John Hennegan and Ryan Kelley flying into town and having lunch and me saying, look, man, I don't have time. I'm not hiring anyone. I don't have time. I'll give you this limited information set. We got to work in like really round figures here.
Like, are you interested in where we're going? Yes. Okay. That's where we want to go to. Let's make a partnership happen. And so, over the span, we were involved with Shore from a relationship perspective for probably a year before we did the initial partnership. And we were courted by other partners, John makes me remind everyone we signed an LOI with someone else.
And then I don't know if that's a point of pride for him because we came crawling back or maybe he was crawling, but we were ultimately able to get a deal done. Very early days, capital is really important to go build those sites. But also, I look at my team today. Some of my strongest players came as part of the Shore network.
And that was the other thing we were really struggling with. I think when I met John, I was technically a CEO, but I was a 29-year-old guy who was a lawyer by trade who was running to outpatient practices. There wasn't a lot of CEO work going on. There was just a lot of like, go to the sites and help out.
Michael Burcham: A lot of day-to-day execution going on.
Chad Smith: Absolutely. And so, when I looked at Shore in a partnership with a group like that, the ability to attract talent that was just not going to be available to me, being a two-site practice was one of the biggest draws with Shore, like hey, let's go build a team.
Michael Burcham: Let's spend just a bit more time there because the space that you are serving in healthcare, I think most every investor in the country recognized the need.
You'd likely had choices of partners. And regardless of the time it took, you've actually formed a relationship first with Shore before anything. Of the choices you had, what really was the draw that you said, okay, I think Shore is ultimately going to be the right partner here. Cause you had choices, and it was on again, off again.
What was that final moment? You said, okay, this is probably the right partner here.
Chad Smith: Yeah, I mean, I didn't know all these terms at the time, but on the micro-cap side, what I really learned was you have to have a really good relationship with your financial partner. And the other LOI that we signed, it was pretty clear early on that we just had some thematic differences around like where we wanted the business to go.
But what I learned in that was, hey, this is going to be really hard. We're going to go really fast. And if I can't build a really strong report with you, that's probably not going to work. And so, I think John and I especially hit it off really well. And part of that for me was I didn't have the confidence to like come in and be like, well, I'm going to be the CEO of this thing.
You know, forever. I've done this five times. I've worked with five different private equity groups. And so, I think John approached us with sort of an intellectual curiosity, like a genuine curiosity. Like, what are you doing? Like, how does this work and how can we be helpful? As opposed to a feeling of, hey, we've done this before.
Like we've done 10 of these. This is how it's done. Here's the playbook, go run it. And we're going to, you know, bring in a bunch of people we already trust. We really appreciated the amount of time Shore spent, even prior to meeting us. When I met John, he was three years into our world, like industry conferences, research.
They wanted to be a part of this industry. They wanted to be partners with us. And we really got that sense. And generally speaking, even way back then in 2017, like track record was strong as well. And so that was, I think the biggest draw for us. There's a lot of generalists out there, and that's not what we needed.
We needed someone who could understand healthcare and the stage we were at, and not just say, here's a check, Chad, you know, Sean, Ray.
Michael Burcham: You actually needed a partner to help you build a company.
Chad Smith: Yes, absolutely. No, when I look back at things like the 100-day plan and the at that time, it was just the SRT, not the COEs yet, but like a Sarah Hirsch and the SRT team.
I didn't have a dashboard when we partnered with Shore the first time. I was like, what do I need a dashboard for? Like, I go to both of the sites, all four every other day. Like, I know exactly what's going on. It's like, how's it going to work when you have 10? It's like, I don't know. I never thought about it.
So, all the infrastructure that comes alongside and how fast you can get access to those with really smart people, I mean, invaluable when you're at that scale.
How The Work Evolves
Michael Burcham: In the upcoming segment, Chad describes how he has personally grown and how his leadership style has changed and evolved as the company has grown.
He describes how his confidence, early on, was built around the product or the service, but he also describes how he learned to trust his board to help him think about growth and scale. He also describes how he's learned the importance of developing his team, reading the data, and not simply trying to fix every issue or problem by himself.
Anderson Williams: I'd love to go back to something you said earlier, cause I think it's important as we think about the value of these conversations for our new CEOs or potential CEOs who may be listening. You said something earlier about there wasn't a lot of CEO work going on in those early days. And I'm just curious about that evolution and the honesty of any perceptions of what a CEO is supposed to be doing in a micro-cap stage.
But now you're significantly bigger. How has that evolved? And how have you evolved to keep up with that?
Chad Smith: Still working on it every day. I think John knows I'm famous for saying, you know, I'm running the largest company I ever have every morning. Like every day I wake up and I go a little bit bigger first time at this too.
And I think in the earliest of days, you have a lot of confidence just around your product, right? Like I had a lot of confidence that we were going to deliver really good patient care. And so, I centered myself around to some of the materials we've reviewed, like, I was a producer. I could make our centers run better.
I could make our staff's lives better and easier, and that translated to the patient. And then, what served me really well was, I was just incredibly transparent, I felt like. And so was John around, hey, you haven't done this before, which I hadn't. And if you want to, like, we'll have a bunch of resources for you.
So, my lead independent director, Ned Murphy, had been to the top of the mountain five times already and built companies and I had Shore. And what I really got comfortable with early on was, it's going to be way faster if I'm genuine about my curiosity of I don't exactly know if I'm doing what I'm supposed to be doing every day.
And so, I trusted Ned and John and my other board members to give me really good course correction on like, I know that made sense for you at this time, but we really need you doing this now. It's the relationship side that you have to trust. As you scale, obviously, expectations change, everything else.
But in the early days, I found Shore to be incredibly flexible. I'm like, they don't expect you to know what to do. That's not who they're looking for in a microcap environment. They want an expert on the thing that they really like. And it's easier to teach you how to run a dashboard and bring on a BI tool than it is to say, hey, we need somebody who can really do the product well.
And so, they got me really comfortable and confident in that very fast, which is like, we know you don't know, right? It's like, it's okay. We know, you know, so let's work on this together. But we know that you're really good at this thing or it wouldn't exist. And we wouldn't have wanted to be your partner.
Michael Burcham: So, at the risk of sounding like a stereotype, most attorneys are pretty detail focused. I'm sure your leadership style and methods of inspiring and growing your team had to shift both inside your head and your heart as this thing grew. Can you just talk about your own personal growth through this and the things you had to really work on and change and improve?
And go back to school on for yourself as this thing went from two locations to the size you are today.
Chad Smith: I think there's two things that I still work on, I still struggle with, have to get better at. One is I think when you're an entrepreneur and you have a small asset, you just want to do everything. Like you're going to be better at it than most of the people.
And so, one thing I've really had to work on is patience with new people. Brad, my CFO, joined me through Shore and Brad knows this. I think for the first six months I was calling John like, you got to get this guy out of here. Like, he doesn't know healthcare. He's never been a CFO before. I need somebody who can run revenue cycle, accounting, and finance.
And Brad's done none of those three things, which is like, but he's really smart. And if you give him time and reps, he'll figure it out. And I think you have a natural tendency, because you can, to just go fix everything. But if you don't give the people the reps when you are at a size that you can fix it, by the time you're at the size you can't anymore, it really breaks.
And I've definitely probably overstepped and like underdeveloped people because of that. And then the second part is, I think I mentioned this earlier, as you scale, you have to get comfortable with like reading the data. Whatever your data is, because there's going to get to a stage where you just can't get in front of whatever it is you want to on a consistent basis.
And I was definitely more of a feel field leader in the early days. Like I said, I would check certain metrics that I could get my hands on our EMR or basic financial metrics. But for the most part, like I was managing off of like, how does it feel in here? What's the flow like? How do my people seem? Man, she seems really upset today.
I got to solve that. And as we've grown, I've just had to get really comfortable, like, hey, we're going to have to look at some things that then maybe drive those behaviors. Where do I go is now dictated on like, all right, we looked at 87 locations. These are the four that are seemingly struggling on this problem.
That's how we deploy. But I think giving your people the space to develop, even though you want to go, that's not exactly how I would have done it. And I would have made it 1 percent better A, and then B, you just have to get comfortable. Like you're going to scale. When you do that management style of just like, I got it, like I can feel it.
I can see the matrix just doesn't work anymore when you can't get in front of the problems as quickly.
Culture And Communication
Michael Burcham: Next, I asked Chad to comment on culture and communication as the company grew. I also asked him what advice he might have for other young CEOs on these important topics.
As we scale companies, two things I commonly hear from CEOs that they think about, worry about, try to work on is, A, how do I communicate and almost over communicate in my mind because it takes a while for people to get the message and things that I think are kind of obvious, you almost have to keep saying, and then secondly, protecting the culture as you grow so that the feeling of what caused people to show up still remains even when you're four and five and 10 times the size.
How do you think today in hindsight about communication and culture and maybe even what kind of advice would you give younger CEOs who are younger in the journey of growing a company to think about the culture and communication as they grow?
Chad Smith: I think the word you used is perfect and something I got wrong and we're getting better at, but still probably improve.
And that is if you don't feel like you're grossly over communicating, you're not even close to doing it. And so, when I look back on it, it's like, hey, the way I carried culture was spending authentic time with people. So, it's like buying pizza and staying late and knowing everybody's kids names. And when you can do that, that's the best way to do it.
But when you get to the point that you have a bunch of sites and a thousand employees and you can't do it that way anymore, in my mind, I mistakenly thought that you couldn't be authentic and really structured in that. So, I hated the like, you know, John Hennigan saying, dude, you got to do a video. Like people want to hear from you do a video.
And you know, I have a great production team and a studio at our office. And I still would roll my eyes and say, I do not want to do a two-minute video on how BrightView is doing. Like, I just want to talk to people. And again, if I could wake up every day and spend 15 minutes with everybody that works there and like really authentically engage with them, that'd be my preference.
Knowing that's not an option. And I think for my team, especially those who haven't come from health care, we're very fortunate to have a mission centric workforce. And so, my internal edict has been communicate until you feel you're over communicating and then probably double it. So, if it feels like, gosh, we've already told him this twice, like still haven't heard it.
Let's work on it again. And then, you know, the term I use with our production team is, as I sit in my seat, if I don't feel almost like cringeworthy with like the amount of intensity or like how like almost corny it feels of like, ah, are people really going to resonate with this?
We're not close. I'm sure you can literally do too much, but I haven't found it yet.
The Oil Tanker
Michael Burcham: Chad and I discussed his journey and how the work is different now as more of a mid-market company than when he began in a more venture mindset with only one or two locations. I think you'll enjoy the metaphor he uses, going from driving a jet ski to maneuvering an oil tanker.
Chad shares how his view of managing and leading has changed as the company has grown, how he plans for upcoming board meetings, and how his overall relationship with his board of directors has evolved, moving from tactical to strategic conversations.
Let's talk about where you are today. We've talked about starting with one and two clinics and almost a bootstrap startup venture mindset.
And then your partnership with Shore and more micro-cap, which grew into more, almost not quite traditional PE, but much more like PE. And now you're at a place where you're in a mid-market situation, not really a micro-cap. How is the work different for you as a CEO at this stage when you've had a recapitalization?
Beyond this initial micro-cap partnership with Shore, as I'm sure the pressures you feel, the day-to-day responsibilities you feel, and the work ahead, feels a little different than it did five years ago.
So, could you talk to us a little bit about on the horizon where you are today and looking out over the next few years, what's on your mind leading something at this scale?
Chad Smith: Sure. Yeah, I think the best advice I got from a board member as we were going through this transition and heading into what we refer to as BrightView 2.0, he said, 'You're used to driving a jet ski. At some point, this is going to be an oil tanker. So, if you want to turn, you got to think about it at, you know, on a oil tanker, like a day ahead of time. And Chad, I know how your brain works. You're used to just like yanking the wheel. And going not happy, go this direction.'
And so, I've had to really focus in on how to handle change within the organization and how to communicate effectively, both up and out to your board and down to the rest of your team. When you're growing this fast, I don't know what the average tenure of my executive team is, but I can think of four, three people have been here a while, but four people have been here less than a year.
And so, a lot of what my time is spent on today is making sure I'm putting people in a chance for them to be successful and really working on the layers within the organization of, hey, do we have the right talent? Do they have the right resources? And probably will perpetually frustrate me how much more difficult it takes longer when you're larger.
I always told myself, when I get big, we're not going to be up bureaucracy. We're not going to take all this. And then you get bigger, like, okay, you actually need some of these steps and layers to protect the company. But the biggest difference is if I want to make a meaningful change in the business today, it's probably at least six months away.
Or when I had seven sites, I could bring everybody together on a Friday and say, hey, on Monday, we're doing this. And like six pizzas later, 45 people were on the same page. Like you're good, you're good. Call me this weekend if you need it. But on Monday, we're changing this process. And so, I think a lot more about trying to help our teams and being patient around change management.
Like there's a process and we have to map out what the impact is. And when you're larger, there's just also a lot more at stake. If I flick a card out of the stack and everything falls down for my team, they're just a lot harder for them to pull back together. And then I would say, I feel like the larger you get, the more time you spend like managing out as well.
So, yeah, I think a lot more strategically about what a board meeting is going to be like and how to prep appropriately. In the early days was like, hey, we got to pull some deck together, but it's really like copying our KPIs into a slide and saying, we're going to try to do more. You know, we're figuring it out, and fortunately, with Shore's model, we have the benefit of a large board with a lot of external independent directors who bring a lot of value, but not unless you go get it from them, and so, as I've scaled, I've found a lot more value in what they have, but I have to call it out of them.
I have to create the relationships and the environments. So that when we do have a board meeting, which is super important for my team, it's their opportunity to get external reassurance that we know what we're doing. And hey, Chad's not leading us down a path, you know, that where they're going to get their heads lopped off.
And so, my job is to create the best environment for that to happen in both by preparing us to be ready and preparing the board as much as I can, to be in the right headspace, to be helpful for us. In hindsight, like first year of the partnership, it's like I would think about the board meeting. Shore would help me build the deck and it'd be like the day before I'm scribbling notes like, oh gosh, I got to make sure I talk about this.
And now I'm constantly thinking about more of that, hey, where are we going strategically? How can I make sure my team is in a good spot? The board is well aligned. And that's just a big shift you have to make.
Anderson Williams: So, Chad, you mentioned this idea of managing in versus managing out and how that's evolved over time and specifically as it relates to your board.
Can you just give us a little bit more color as to sort of that primary role the board played early in the journey and maybe now the primary role as things, as you mentioned, shifting the tanker and planning ahead and thinking strategically, how has that relationship and the way you've leaned on your board changed over this last several years?
Chad Smith: Yeah, I would say pretty dramatically. I'm thankful that I have a really strong board who could go on that journey with us. I think in the early days, you're looking for, uh, candidly, just a lot of like tactical advice. Like who should I hire next? What do I do? What system should I pick? Yes, or no? Should we open this one site?
And it's important to do it that way early on because you build confidence in your decisions and they build confidence in your decision-making process as you mature, you know, I'm not going to the board meeting and saying we have these 19 locations that we want to say yes to. Let's go through them one by one, and the way we used to.
And so, what I've gone to them more so with is like, hey, let's make sure that because we're on this journey that the tanker takes longer to turn. I want to make sure that I'm showing them the course that I'm setting because the earlier I can get feedback on, hey, Chad, we're a little nervous that when you say this is the direction you're headed, like give us more clarity.
And so, what we're really doing, especially in conjunction with Shore is like charting more of that. We have a slide in our board deck. It's the first slide we go through every time called our North Star slide, and it really just has like macro environmental year over year goals. Very little detail, but the number of patients, live serve, locations, markets we want to be in, financial performance.
And so, I spend a lot of time like on that slide with my board saying really basic things when I sort of was in the middle of 1.0. And I don't know where this came from in hindsight. And I'm thankful to have a board. For whatever reason, it became very important to me to be in a lot of states. So suddenly, you know, it's just my brain went like, we're going to run out of room, therefore we have to plant a lot of flags.
And over time, and going into 2.0, board's really good, has been to the top of the mountain before, they're like, there's so much room where you already are, and there's so much complexity, and we listen to how mired down you guys get every time you go into a new market. A lot of those problems are binary.
Like when we enter a new state, my RevCycle team's work is the same whether I have one site there or 40 because I got to go get all the contracts and learn how to bill and everything else. So that's a really great example for me where they really pulled me back and were like, hey, tell us why are you working on this so intently?
And I was like, well, I think two and three years from now, this is what we're going to need. And the board was awesome to pull me back and say, look, you have plenty of headspace and we've done acquisitions and there are other ways to do this. We think you're like creating a bigger problem for yourself than you need to.
And that was a really great example for me. It's like, okay, backed it off now, 12 months from now. I don't plan to be in any more states than I am today. I just plan to grow in the ones that I have. Again, in hindsight, you know, when I talk to the board, it's like, I don't really even understand where it came from.
No one came to me like, Chad, you have to be in 10 states, but in my mind, I was like, yeah, we're only in two. We really should be in eight. Even though, like, when I go back to my North Star slide, it's like, hey, what we really care about is like patient. How many patients can we impact? And in fact, getting more complex state by state distracts us.
And we're probably going to impact less total patients, but like a broader geography. That was a good example for me of like, hey, over time they go from stop using QuickBooks and use Sage to, hey Chad, we see you might be setting yourself up for a tougher 2024, 2025. Then we need you to walk us through the logic here and then give us enough time and myself to kind of walk back some of those strategic decisions.
Time Limited Game
Michael Burcham: In this final segment, Chad offers insights to younger CEOs and entrepreneurs looking to make a similar journey. He warns about romanticizing the growth and instead focusing on the fundamentals that make the business work. He also reminds our listeners that building a private equity backed company is a time limited game with performance expectations.
So, know what you're signing up for. Finally, he reminds the entrepreneurs in our listening audience that it's okay to be vulnerable, to ask questions of the board, and to lean on their insights. My favorite line in this segment was this, 'Chad, your board knows you don't know. Ask the questions.'
So, Chad, our final question that I'd like you to address is we have a lot of listeners who are young entrepreneurs are very early stage founders that maybe even daydream about the kind of investment partner they want or wanting to be a private equity relationship type partner CEO.
What advice would you give a really young founder entrepreneur given the hindsight of where you've been and the things they need to think about, the tradeoffs they're likely going to need to make, and how they should really think about that before they try to charge ahead, I guess, with that idea.
Chad Smith: I would say, you know, hindsight's 20/20.
And so, looking back, one of the best things we did was make sure that we got the first one right. So, when I think about setting the foundation, we were fortunate, again, not to have huge aspirations for this when we started. And now, I look back and I think, if I would have been mired in like, you know, I want to make it 100 locations and everything else.
I wouldn't have spent as much detailed time on, we spent time designing, like, what scent we were going to put in the facilities, like, because we thought we'd have one, like, my partner came back to me, he's a physician, he's like, research, he's like, lavender makes people calm. Oh, okay, and I look back on it now, it's like, that was an embodiment of how much we just cared about that one thing being really good.
And I think oftentimes you can get really like excitable about the romanticizing the growth and everything else. And if you don't build a really good product and a foundation, that's one of the most important things we did, even though we didn't do it for this reason. The other thing I would say specifically around private equity is you just have to know what you're signing up for.
Private equity is a time limited game with a scoreboard. So, I grew up playing sports. I love sports. I actually enjoyed the difference between being an entrepreneur with sort of like, we could do this forever, but also maybe not and how fast or slow. So, I appreciated the guardrails that when you sign up, like, hey, we have a timeframe.
In the next four to five years this is what we want to go get done. But for some of my folks, my third co-founder listened to that meeting. We made the decision together and he was like, awesome. I'm going to go. You guys have fun with that. And these guys from Chicago and worked out really well for all of us. But you have to know what you're signing up for.
This is a time limited game with performance expectations. And my final piece of advice on that is, despite all that, I would just, especially in the micro-cap environment, it's okay to be vulnerable early on. They know that you don't know what you're doing in a lot of cases, or you wouldn't be a micro-cap business.
If you could scale to 80 sites by yourself, you would've. And so, it took me a little while. But John and my lead independent director got me very comfortable quickly on like, hey, we want to help you. The easiest way for us to help you is to communicate about what you're feeling. So, I got really comfortable early on calling Ned up and basically just saying like, I'm not sure I know what I'm supposed to be doing now compared to when we had, we have eight now and I have a CFO and a Chief Development Officer.
What should I be doing with my hands? Where should I be? And the resources that you have, if you partner with Shore especially, the board that they're going to build for you is there for you to use. And it took me a while to understand that as a board member, it's my job to engage you. So as the CEO, my board is very willing to help me, but typically doesn't want to overwhelm me.
So I have to set the tone and the stakes for the first six months. I was very like, yeah, I go to the board meetings. Like I didn't ask much, you know, whatever else. And then my lead independent director was like, hey, do you know, like Look around the table. You know, I have a board member that grew the biggest, what is now the biggest company in the world that does what we do.
He was part of growing it. I have a board member who took a behavioral health business all the way through being public. He's like, you can ask us, like, we're not going to tell on you. And I definitely had this feeling in the early days of like, but if I ask these dumb questions, they're going to know, I don't know what I'm talking about.
And Ned Murphy looked at me earlier on and was like, you're 30 years old. You have four locations, we know you don't know what you're talking about, like that's what our expectation is. So, we're more nervous if you're acting like you know what you're doing. And not everybody's in that space and a lot of the Shore CEOs now come from bigger and different jobs.
And like I said, it was shocking to me. I remember telling a few friends of mine like the day after Ned said that to me, it was a genuine epiphany for me. It's like, oh gosh, they know. They know that I feel like I don't know what I'm doing right now, and they're okay with it. And that's why they invested in me.
And suddenly, you know, the freedom on like Monday was like, okay, I'm going to go make mistakes and it's going to be okay. And as long as I'm evolving fast enough, I'm going to stick around and keep this job that I really want. So that was a really big learning for me.
Michael Burcham: It's that same authenticity you said you need to show with your team that you have to be with your board as well.
You have to authentically be who you are, what you know, what you don't, or they can't really help you. Chad, this has been a fantastic interview and a discussion. Thank you so much for giving us your time and for helping our listeners really see what you see and benefit from the hindsight of all your wisdom and learnings.
Chad Smith: No, I appreciate the opportunity and always happy to help.
Michael Burcham: Thank you.
This podcast was produced by Shore Capital Partners with story and narration by Michael Burcham. Recording and editing by Andrew Malone. Editing by Reel Audiobooks. Sound design, mixing, and mastering by Mark Galup of Reel Audiobooks.
Special thanks to Chad Smith and Anderson Williams for joining me for today's discussion.
This podcast is the property of Shore Capital Partners, LLC. None of the content herein is investment advice, an offer of investment advisory services, nor a recommendation or offer relating to any security. See the terms of use page on the Shore Capital website for other important information.