Platinum Equity’s Stephanie Barter on swimming outside the usual talent pool

Stephanie Barter: I mean, it’s not like you don’t see it when you sit around a conference room. But there’s something about turning this thing into a quantifiable issue that helps you really drive it home.

Tanya Ott: Thanks for joining us. I’m Tanya Ott and this is the Press Room from Deloitte Insights. Over the last year or so, we’ve been talking to women in the financial [services] industry about their career journeys. Women are underrepresented in the industry, but my guest today says there have been a lot of gains in the last 20 years or so.

Stephanie Barter is a partner with Platinum Equity, a private equity firm based in Beverly Hills, California. She runs the M&A Operations group, a large in-house diligence team that helps inform the firm’s investment decisions about what companies it should or shouldn’t acquire. She also oversees the firm’s ESG working group.

She has a rather unusual background for this kind of work, and that’s where we start our interview.

Tanya Ott: So, I can only imagine when you were an English major back in college, you were just dreaming of M&A, right?

Stephanie Barter: Yeah. As you can imagine, I had no idea what private equity was. And funny enough, I think our firm actually didn’t know what private equity was when we officially got started. Our founder was headed down a very different path and learned about private equity as he realized that the services that we provided were ones that the market needed. So, I think we both learned a lot together.

Tanya Ott: How did you get from that English major all the way to where you are now? What was the career journey?

Stephanie Barter: I am the oldest of six, and as a result, I think I just was born to be the boss. I mean, I was always directing traffic, taking care of people, had responsibility at an early age. And, as a result, I went to work at an early age. I had my first official office job probably at 13, maybe 14, over the course of summers, and I learned business from the bottom. I mean literally in the warehouse, packing boxes, shipping stuff. I moved into customer service, did procurement, and by the time I graduated from college with what today would be viewed as a "who knows why you get that degree" degree, [laughs] I really had a great grasp on the business landscape. It also happened to culminate with the fact that the age of personal computers was starting to be at everyone’s fingertips. I happen to be an avid tech junkie out of the gate. As a result, I got a job out of college working for a software firm which, ironically—as if the world[s] couldn’t collide any better—taught distributors how to use their software. The irony there is that the whole time I was in high school and college, I worked for a distributor, I worked for an industrial distributor. It was almost as if it was bound to be, like this was going to happen because I could read, write, and communicate well, I was deep into tech, and it just so happened that I knew everything about what happened to a distributor.

Tanya Ott: So, you started with a distribution company when you were a teenager. What were you doing exactly?

Stephanie Barter: It was crazy—literally shipping boxes at first, and then, taking cycle counts of the inventory in the warehouse. Then, I moved into answering the phones and by the time I was probably 18, I was on the customer-service desk. I worked full time when I went to school, and I was answering phones and helping sell products to customers. So, I knew a lot about distribution before I actually even stepped into the working world.

Tanya Ott: How has that influenced the way that you look at hiring, for instance?

Stephanie Barter: It influences my hiring decisions a lot. I think one of the [most] beautiful things about working at Platinum Equity is if you were to compare people’s backgrounds in the roles that they have today with maybe the degrees or the paths that you thought they should have taken, you're going to find a lot of anomalies. I have folks in my team who were physical therapists before they ended up becoming consultants, which ultimately led them to private equity. One of the reasons it influences [my hiring] so much is [the fact that] I love difference. The people in the team, the more different they are, the more different their perspectives are, the better they help us to do our jobs. It’s not to say that I don’t have a lot of team members who have a very prescribed sort of background—I do. That does exist in the team, but I try to spice it up as often as I can by finding people who have done something different in their history, because I think they look at the world in a very unique way.

Tanya Ott: So, you obviously approach it from a perspective of being someone who had a sort of different background and is appreciative of those diversities—but what advice would you have for people who are maybe coming with an English major or something nontraditional into a field like yours in terms of how they translate the skills that they do have into how they apply them in this new field?

Stephanie Barter: Tanya, I don’t have a lot of free time, and when I do, the one thing that I am doing today on a volunteer basis is I work with my university—I went to the University of Rhode Island—and I’m one of the advisory members in the College of Arts and Sciences. One of the reasons I chose to spend some of my free time doing that is because I’d like to work with folks like myself who were smart, talented, hardworking people, but they have the “wrong words” on their resume when they get out of school. I’d like to help find a course forward for people who have all the capabilities or the tools that they need, [but] perhaps they just didn’t get the right classes that [would have] landed them in the right place. One of the things that we talk about in that university circle, [and] is one of my benefits, was not just my work experience. I think internships and finding opportunities to get into the workforce as quickly as you can in whatever capacity you can is hugely important, so I’m a big supporter of interns and internship programs because I think that’s a way for people to get their feet wet and learn a little bit about what’s out there. The other thing is, and I think this is a school issue, that I think the colleges can do a better job helping people end up with liberal arts degrees that are still better rounded than they would be if you just let a student run through a random path. And what I mean by that is, I really wanted to be in business, and I knew that when I was working at 16, 17, 18, and [I was] in school—I just didn't know what degree I was supposed to get. My dad was a blue-collar guy, and he just wasn’t particularly finessed around what the right path was in education. He knew you had to go to school, but what degree you had to get, there just wasn’t a whole lot of guidance on that point. So, I took a ton of business classes. Even though I graduated with a degree that says English on it, [I] still took economics and accounting and just a bunch of things like that. That’s what we talk about a lot in this advisor circle—that the College of Arts and Sciences at a liberal arts school, if they round these kids out with economics and computer science and the other building blocks, that makes these folks much more attractive, even though their degree might have been English.

And at the end of the day, I still argue, and I’ve had the embarrassing story of doing this, that I’ve had to terminate people in our organization that were extraordinarily pedigreed, but they couldn’t write a book report. If you can’t synthesize the world and be able to absorb information quickly and summarize it and then turn it into a compelling argument to convince somebody of your perspective, [it] doesn’t matter how well pedigreed you are, you still end up with some impediments in your ability to progress in a career like this. It’s less about the degree and it’s more about the rounding [off] of the toolkit.

Tanya Ott: You are kind of leading me [in] the direction I wanted to go in, which is the business argument for having that diversity of points of view and experience and training at the table. Maybe put a finer point on it. What do you think is so important about that from a business standpoint?

Stephanie Barter: I suspect every business, Tanya, would answer this question a little differently. I think in private equity it hits home just so much more, much louder than it might in a different job. But let me explain why. Platinum Equity is an agnostic private equity firm. That means that we look at a ton of businesses across all industries, across the globe. And because we do that—I kid about this, but it’s a true statement—in the morning, somebody could be reviewing a dog-food business, in the afternoon, they could be looking at a pharmaceuticals business. What matters most is not that you had a history in a particular industry—It’s your ability to size up a situation, know what you don’t know, figure out how to get help and make good business decisions as a result of all of the inputs that you received during that process. At the end of the day, there is no training that you can get that says, “Here's how you become that well-rounded individual.” What matters here is the toolkit point and then also the perspective that the person has. When I think about diversity, for me, it has so many different meanings. It’s obviously somebody’s gender and ethnic demographics. That matters. But it’s also their age, their hobbies, their locations, their upbringings. All of that comes into play as we evaluate whether or not this is a good business. I love when somebody says to me, “No one does this like this anymore.” They have a different view because they’re of a different age or they tackle things a different way, when they say that and we’re in the middle of a deal looking to buy a business that does whatever that thing is, it makes you pause. It makes you realize [that] the world has changed, and [that] this company’s addressable market may not be what they think it is in the next five years.

Tanya Ott: Where do you find your purpose at work? What is it that really gets you jazzed about what you do?

Stephanie Barter: Purpose at work has evolved, as you can imagine. I’m embarrassed to say that aging is clearly a huge part of it, but when I first went to work, my only goal and objective was [being] very tactical. It was a lot about me and what I could learn. I was such a knowledge junkie that all I wanted was a new experience and to learn a new thing. When I wasn’t doing that, it was a ton of beat-the-clock stuff. How could I get this project in faster or on time and budget? Those are the things that I really cared about. In the past five or so years, I can feel my energy changing dramatically. Today, what I would say to you about purpose is [that] it’s very focused on the well-being of my team. I care about my team and their families. I care about our firm and its reputation and how we position ourselves in the market. I also recognize the impact that our firm has on the communities in our ecosystem. I think there’s something that is very heavy about knowing that that we have almost 200,000 people that work in the Platinum Equity ecosystem and having our touch on that community be a good one is really important.

Tanya Ott: Speaking of the ecosystem, of course, ESG is significant within most industries now, and I’m wondering how your focus on ESG translates within the company.

Stephanie Barter: It really touches everything that we do these days, Tanya. I can’t think of a part of how we think about an asset that now doesn’t include the qualitative elements or the softer side of a company’s impact. Every day, all the time ... It’s just [that] the world may have been very P&L- and balance sheet–focused, and I’m not suggesting that that’s not still the goal of an organization to earn money, but these days, that qualitative piece can wreck a business—It’s front and center for us all the time.

Tanya Ott: How do you balance that focus on ESG values with the recognition that P&L is still very important?

Stephanie Barter: Hmm … Listen, at the end of the day, the first thing we have to do is buy a business that potentially can generate returns for us and for our investors. That’s why we go to work. That’s what they ask of us. But the reality is [that] the way a firm’s reputation is perceived in the market could influence whether or not their customers buy from them. The way a firm treats their employees will influence whether or not somebody wants to work there. We just recognize that, at the end of the day, if it’s solely numbers-focused, you miss some of those attributes that, if you’re not smart about them, could actually affect the P&L on the balance sheet. We try to put it all on the table and look at it collectively. First thing is [that] this a business that makes sense, that it has a reason to exist, and ultimately, we think we could generate a profit from our investment in it. But then, second, and as importantly, will this business exist [as-is] or do we have to improve it in order for it to continue to be successful in our ecosystem? Sometimes, those improvements are the way it treats its employees or the way it interacts with its customers, which are very ESG-focused.

Tanya Ott: A moment ago, you said you were an information junkie. I’m an information junkie as well. And I find there are like two kinds of us. There’s the kind of information junkie that just wants to be armed with everything possible in order to do the job they want to do. Then, there are those that are trying to avoid any risky situations. You know, it’s more defensive in nature. I’d love to get your sense of the risk-taking that you take and how comfortable you are outside your comfort zone.

Stephanie Barter: As I think about that question and how does information affect risk-taking, I think it has a lot to do with it. You want to understand where you are in the spectrum of the decision that you’re about to take and sort of how far forward you might be leaning. I definitely will ingest as much information as I can to ultimately know what kind of risk I’m taking. That being said, I suspect you probably fight the same battle—that in today’s world, information can just be overwhelming. I try to step back and keep it at a material level so that when I’m collecting the five or 10 data points that matter as you make a decision, they are something that is material to my calculation. Once I’ve got that put together and I really understand how far forward I’m stepping, for me, taking a risk was never something that I shied away from. I took lots of risks in my life. I think part of the reason that I’m here today is because I said yes to a lot of things, especially things that were bigger than what I was currently capable of. I stepped into lots of roles that once I stepped into them, I looked back and said, “Um … [laughs] can I actually do this job?” I was comfortable doing that. My risk decision has always been about understanding what that downside is. What do I have to lose in this equation? I use that same sort of decisioning process in buying companies or doing something new in my life or doing something new in my career. And for most of the time that I was taking a decision that was considered [to be] particularly risky, I had to bet on either myself or my team. In both of those cases, I always end up with a high degree of confidence that I won’t fail myself and that, more importantly these days, my team really knows what it’s doing. That’s always very helpful, that I’ve built the confidence of the people that are around me in such a way that I know that when we’re taking a decision, we’ve done our work. [The] last thing on this point, I also think that everything in life is about course correction. When it comes to course, we screw up, we’re going to redirect, learn from it, and fix it. That’s how I’ve used risk in what I would call a moderate way, in my history and on my journey.

Tanya Ott: Earlier you mentioned diversity and you talked just real briefly on gender and race. There’s also LGBTQ+ [status], [and] economic background. You talked about coming from a working-class background. There are all kinds of diversity. And sometimes it can feel like when a company starts to venture into diversity-building, it becomes sort of a stand-alone, nice-to-have sort of add-on. So, I’m interested to hear about your thoughts about really embedding inclusion and diversity into business efforts, so it’s not just this, oh, look, here we have this program.

Stephanie Barter: It’s a great question and one that we’re in the thick of today at Platinum. As I mentioned, our firm is actually made up of these really diverse people. They came from legal backgrounds, they came from operator backgrounds, [and many more]. If you looked at the hodgepodge of people that make up Platinum, they really came from a very diverse slate. But, at the end of the day, when you count up all the numbers and you count up the tallies, you’ll realize—no surprise—that it’s a less-than-optimal gender and ethnic mix. As a firm, we decided that that is something that matters to us, that it is a thing that we would like to improve on. As we think about how we tackle that, first thing that we had to do was really treat it like any other business problem. You have to decide that you want to move the needle, that you care about this subject, and you can start to work towards some better place.

For us, it started with measurements. The first thing we had to do is to figure out what our demographics are and, more importantly, to help the managers of the different departments understand what their teams look like—and I say look in air quotes, because it’s all the demographics that you talked about—and whether or not they are highly underrepresented in any particular dimension. Once you know that stat and you really look at it … I mean, it’s not like you don’t see it when you sit around a conference room. But there’s something about turning this thing into a quantifiable issue that helps you really drive it home. [It’s] not just the demographic of the second, it’s the demographic over time. Who’s in your interview pool? Who did you hire? Who left the firm? Who got promoted? All of those bits and pieces, as you start to watch the firm's behavior, you can really see where you might have issues and the issue might be just the plain old, [after all] people hire what they know. As hard as we want to deny that fact, it just feels comfortable when you hire somebody that’s a whole lot like you. In the financial services space, it’s even worse for us because we all start from a pool of candidates that are trained at the same institutions—our investment banks, our consulting houses. So, our inbound pool is relatively undiversified.

Once we’ve got it sorted out as a problem, and it’s something we know we want to address, and we can kind of point our fingers at where, then for us, it’s about stepping back and starting to think about what we do differently. Right now, we’re in the midst of that. We’re in the midst of talking about how we source talent differently, how we invest in talent differently, how we train people to perhaps interview differently so as to not overbias in a particular topic. But it's a long process and it’s a long journey. I know the question that you asked is how do you make this to not be a plus thing, like an added check-the-box, but I think where we are at the moment, it’s still fluid enough that it needs to be a step. It needs to be something that we’re inherently concentrating on. I would like to think that at some point, [maybe] 10, 20 years from now, maybe not even that long, ideally shorter if we could, but at some point in the near future, you’ve developed these better habits and patterns, and with the awareness of the statistics that I talked about, you can really keep your eye on things and see if it’s gone off course and then it’s a nonissue. It just happens naturally because that’s how everybody’s been trained to hire and to cultivate their workforce.

Tanya Ott: You talked about recruitment and selection, but I’m wondering about pipeline, because the pipeline can really get jammed up in terms of getting women and racial minorities and other groups into the pipeline. What sorts of changes would you like to see there?

Stephanie Barter: There’s no question that the source of this is definitely at the pipeline. In the financial services space, particularly in private equity, we all happen to hire from a couple of pools that are relatively small. It’s just a tough pipeline. For us, I think there are two pieces. First, it comes all the way back to that school point that I was making, which is let’s continue to work with our universities that are bringing kids into the workforce and trying to ensure that even folks with different degrees are still better rounded [off] so that they’re attractive to our industry, which I think ultimately means that we have to change our minds on what degree, what title, what the words are on a piece of paper that fit this job. There’s some evolution on our front, some evolution on the academia front. The secondary piece is [that] you have to potentially source from different places. I definitely wouldn’t have gotten hired at a private equity firm in any traditional fashion if I hadn’t met the team where I did 25 years ago. I just don’t think I would have. And yet, I sit here in a partner seat in our firm and believe that I’ve made an impact on our organization. So how [do you] make sure that you have those connection points in the future? I don’t want it to be that it was just that Platinum Equity was a super young company and in demand for talent. I’d like to have it be that we put ourselves in position to find that raw talent that might not be perfectly pedigreed and find ways to bring them into the organization.

Tanya Ott: What do you hope the conversation around gender equity in your industry is going to look like, say, in a decade or two?

Stephanie Barter: So now I think in an ideal world, we’re not having it. It’s just not a conversation. I think at the end of the day, the demographic equilibrium will eliminate that this topic actually matters. What’s interesting is [that] I see so much shift in the past 25 years, which is how long I’ve been with Platinum, in particular in financial services, that it’s unbelievable. I can remember being in my twenties and being the only female in the room who wasn’t part of the support team. I can remember horrible questions in my early twenties where folks asked me, “Does my husband allow me to travel so much?” I mean, just ridiculous statements that nobody would say today. I look around our rooms today, I look at our team, I look at our firm, I look at deal processes that we engage in, and the percentage of women sitting across the table from me is so different. It’s just not even comparable to what we looked like 20 years ago. I’m not suggesting that it’s perfectly on par with country demographics, right? It’s not 50-50 in every single discussion, but it’s very different. That gives me optimism to think that we are continuing to head toward a place where we don’t have to talk about gender as a part of the demographic. What I’d rather be talking about is all the other attributes, in addition to gender, that help bring [a different] perspective to conversations.

Tanya Ott: Stephanie Barter is partner with Platinum Equity—a private equity firm based in California. She runs the mergers and acquisitions operations team and also the ESG program for the firm. Our conversation is part of [a] series of talks we’re having [with] the women leaders on the front lines of the financial services industry.

I talked with the chief governance officer and senior VP at Prudential about how to handle hard times …

And we’ve got a great conversation with the head of operational risk and control for Citi’s Global Consumer Bank about the critical difference between saying “no” and “not now.” She says it was a career-changer.

Also, the CFO of T. Rowe Price explains what you must do within the first seven minutes of any meeting.

You can find those conversations and more at deloitte.com/insights.

The Press Room podcast is available where[ver] you get your podcasts, online at deloitteinsights.com and on Twitter at @deloitteinsight (no “S”). I’m on Twitter at @tanyaott1. Thanks for joining us today. I’m Tanya Ott and we’ll be back here again in two weeks.

This podcast is produced by Deloitte. The views and opinions expressed by podcast speakers and guests are solely their own and do not reflect the opinions of Deloitte. This podcast provides general information only and is not intended to constitute advice or services of any kind. For additional information about Deloitte, go to Deloitte.com/about.