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As an entrepreneur, the hardships and challenges encountered in the journey are what hones his skills. Marcos Rodriguez, the Founder, Chairman, and CEO of Palladium, has had a remarkable journey. During the Castro Revolution, Marcos’s family fled from Cuba to New York and spent his childhood in upper Manhattan. Marcos’ father worked as a waiter in the Plaza Hotel and his mother was a pharmacist at Columbia-Presbyterian. Like other immigrant families, Marcos’ parents worked hard and sacrificed to provide access to the education and opportunity that the U.S. offered their children. Marcos followed his parents’ example and worked his way up from Washington Heights to an outstanding career in private equity.
Prior to launching his private equity career, Marcos worked in operations for General Electric Company in the U.S., Mexico, and France, and graduated from GE’s Manufacturing Management Program. In 1989, Marcos began his private equity career at Joseph Littlejohn & Levy as an associate and later became a partner of the firm. He left the firm in 1997 and laid the foundation of Palladium. “I had both carried and realized the aspiration of creating a better future for my family in my journey from Cuba to my founding of Palladium over 25 years ago,” said Marcos.
In our quest to understand the ground reality and current scenario of private equity, we recently interviewed Marcos Rodriguez, Founder, Chairman & CEO of Palladium. He was kind enough to lend some time and have a brief chat about the company and its day-to-day work. We also discussed various other interesting topics.
Below is the complete interview with Marcos Rodriguez.
Having worked in private equity for over three decades, I can say that innovation is only growing in importance. We operate in an increasingly global, complex, and competitive environment marked by rapid change, which has been further accelerated by the COVID-19 pandemic. At Palladium, we seek to be proactive to changes that impact our industry, firms, and companies and work to remain agile in today’s dynamic and ever-changing world.
To drive innovation at Palladium, we organize our Firm, team, and portfolio company objectives through the “Objectives and Key Results” framework, as described in John Doerr’s book, Measure What Matters. It’s been transformative for us and has allowed us to create a system of accountability, transparency, and alignment throughout the organization. As a unified team, we set measurable, aspirational team goals that ultimately support the Firm’s overall objectives, and track our performance. We set our goals quarterly, leveraging learnings for continuous improvement.
Over the last 32 years, I have seen private equity mature from a cottage industry to a competitive, institutional market. In the last several years, buoyed by low-interest rates, we have seen valuation multiples increase and process dynamics become more competitive. Significant dry powder is pursuing a limited number of opportunities. At Palladium, we’ve bolstered our deal sourcing efforts to ensure we are made aware of transactions in our sector areas early.
Since inception, one of our main competitive advantages has been the diversity of our team. Today, 64% of the Management Committee, 70% of the senior team, and 74% of all employees at Palladium are diverse or female. This has been intentional and taken us decades. We believe this has generated a diversity of thought, perspective, and approach, and consequently, spurred innovation at Palladium and across our portfolio companies.
Our vision is to be a trusted asset manager recognized for delivering outstanding returns to all of our stakeholders, catalyzed by the human element. Our goal is to achieve this vision while fostering a culture of collaboration, integrity, and positive impact. We have always pursued opportunities we believe would provide a path to value creation for our stakeholders including, of course, our investors, but also assessing and seeking to generate great outcomes for our communities, our portfolio company employees, among others. We have also passed on investments that we believe would have resulted in a negative impact on our stakeholders. Today, the industry refers to this approach as integrating “ESG” into our investment approach, but we have always just thought about it as doing the right thing and doing business the right way. We refer to this mindset and process as doing business “the Palladium Way.”
We are proud to be one of the oldest and largest minority-owned private equity firms in the industry. We actively work to ensure that professionals from diverse backgrounds and experiences have a place on our team because it is who we are and always have been. We take great pride in the fact that our team has the privilege of serving as stewards of the investments made by those who serve millions of public employees – including teachers, firefighters, police officers, and others – who similarly reflect backgrounds as diverse as our team’s, and who depend on us to help ensure they can enjoy a secure retirement. We work for our investors, and we believe our strength in diversity, equity, and inclusion has facilitated better decisions made on their behalf, ultimately driving strong outcomes as a firm.
Today, we believe there is a lack of meaningful diversity at the highest levels of the private equity industry, which has led to investment decisions being made by like-minded executives with similar backgrounds and experiences. Based on hard data that has been available for years, we and our investors recognize that companies with greater diversity in their leadership ranks are more likely to outperform industry averages than companies with non-diverse leadership. We believe that a focus on diversity is another lever for unlocking stakeholder value creation as well as improving financial performance, outperforming peer firms (or peer portfolio companies), and attracting talent. We believe we have proven through our track record that performance and diversity are not mutually exclusive, which has, in turn, garnered our investors’ support resulting in billions of dollars of investments. We have been doing this for almost a quarter-century.
Throughout our firm history, Palladium has ensured that diversity is made a priority at each of its portfolio companies, which is reflected in the board of directors and executive leadership teams. We believe that stating our objectives and disclosing these types of diversity metrics to our investors shows Palladium’s transparency and responsibility, so that they, too, can be apprised of the Firm’s progress. We believe accountability and transparency are critical in solving for underrepresentation and inequality in our industry.
A leader’s mindset is critical to the success of a company. The tone is set from the top. At Palladium, we understand that we are responsible for delivering outstanding returns to the millions of beneficiaries – the hard-working women and men whom our Limited Partners represent. We also work with and for the entrepreneurs with whom we partner and the more than 12,000 employees who work at our 16 portfolio companies. We want to generate great outcomes and give back to the communities where our employees work.
This responsibility is significant, and it is not something we take lightly at Palladium. In order to drive optimal results for all of our stakeholders, every member of our team must maintain a mindset of service and commitment. It’s how we do business the Palladium Way.
Diversity at Palladium has cultivated an inclusive environment open to varied thought, bolsters our investment strategy, and strengthens our commitment to creating value and fulfilling our mission on behalf of the 3 million hard-working beneficiaries who have placed a portion of their hard-earned retirement funds in our trust.
Palladium has also been at the vanguard of hiring and developing diverse private equity professionals. Our intentional, robust and successful process for finding and hiring diverse talent has helped launch and promote the private equity careers of numerous diverse alumni, many of whom have gone on to become partners in private equity firms from startups to bulge bracket financial firms.
