Terry Hess: Strategic Capital for Real-World Business Success

Intro: Broadcasting live from the Business RadioX studios in Houston, Texas. It’s time for Houston Business Radio. Now, here’s your host.

Trisha Stetzel: Hello, Houston. Trisha Stetzel here bringing you another episode of Houston Business Radio. Today’s guest is Terry Hess, principal at Trident Capital Holdings, a strategic investor and capital partner dedicated to unlocking growth in small and midsize companies. With more than 20 years of leadership experience as a CEO, CFO and investor, Terry has helped businesses scale profitably while managing risk building systems and driving enterprise value at. Terry and his team. Invest in companies with revenues between 30 to 100 million, providing not just capital, but the strategic and operational horsepower to help those businesses reach their full potential. From leading turnarounds to structuring over 1.1 billion in transactions, Terry brings a hands on, disciplined approach to growth, helping business owners turn vision into measurable. Terry, welcome to the show.

Terry Hess: Thank you. Trisha. Very nice to be here. Thank you.

Trisha Stetzel: Nice. Nice to have you today. So tell us a little bit more about Terry.

Terry Hess: Um, well, I, uh, start off with this sort of a similar introduction. I’m a mutt. Uh, my background does not make a lot of sense, but, uh. Yeah, I majored in finance, went to Wall Street, uh, was on Wall Street for four years selling European equities. I was actually terrible at it. Um, what sort of, you know, put me into a different area, but, uh, so then I went and moved on to a, uh, a hotel brokerage firm in Manhattan where we were, uh, brokering, uh, either the sale of an asset or equity or debt financing for trophy assets, mostly in Manhattan and Chicago. Um, I, uh, shifted from that, actually, to take, uh, control over a family business, uh, down here in Atlanta and got into the secondary education space. So after high school, it was a skilled trade company. Uh, ran that for about nine years as the CEO. And, uh, after when that ended, then became a consultant to, I don’t know, it’s probably 30 plus companies across various industries. Again, I get back to I’m a mutt.

Trisha Stetzel: So, you know, these days, Terry, we don’t call them mutts. We call them designer. I’m just saying.

Terry Hess: Work with that. Even better.

Trisha Stetzel: Sounds fancier. Right. Uh, let’s talk a little bit about, um, Trident Capital Holdings. I know I, uh, gave a lot of surrounding information around, but what would you like for the audience to know about? Ach.

Terry Hess: Yeah. So TSH got really. It’s, uh, impetus was I work, you know, when I got into those advisory roles for the 30 plus companies, uh, you know, inevitably you get surrounded by other advisors, and most of us are in the sort of fractional space. So fractional CFOs, chief operating officers, uh, VP of sales, HR, etc., so any, any folks on the C-suite level. And, um, there was a common frustration that we shared, which was, uh, not 100% of the time, but in many cases, we would get into these companies, provide this professional management and leadership and watch them be successful. And, um, so, you know, there’s a compensation structure with that. We got paid. Well, uh, but in many cases we wanted to, you know, get a further a bigger stake in the upside of those companies. So Trident, um, we got a lot of our interest, if you will, from these advisors. And, you know, myself and my colleagues were part of several advisory networks, but that’s the idea. You know, these folks are in companies. A lot of these companies are at various stages of growth. And, you know, they either need additional capital to kind of scale and grow and, you know, fulfill their vision. Um, and so that’s how we got started. So we’re trying to, you know, bring not only capital to the to the table to help these companies grow and scale, but also the advisory piece of it.

Trisha Stetzel: Okay. Interesting. So tell me more about the companies you support.

Terry Hess: Um, so I guess, uh, so it is across the map. Um, I’ll just kind of share some of the stuff that Trident in particular has, has spent some time on. So we’ve worked with, uh, underground utility rehabilitation companies. Um, we’ve worked with transportation companies that are sort of advising, advising municipalities and state Dot’s. Um, there are several companies within that purview that, you know, could use, could could come together, if you will. Uh, we look we look at distressed commercial real estate? Uh, a commercial laundry operation that that’s very disruptive to the way that the industry is currently done. Um, we look at petroleum refinery carbon credits, uh, farming in Colombia. It’s all across the map. Um, of those that I just mentioned, I should say that it really took us evaluating about 80 plus projects to kind of whittle it down to those that we, you know, we see an ongoing interest, if you will. Okay. Um, yeah.

Trisha Stetzel: Okay. Uh, so pretty broad. Do they all have some common challenge or challenges in common? And the reason why they’re, uh, interested in working with you?

Terry Hess: Yeah, the common thread is all of these folks, we vet those 80, 80 down to this is that they have a viable, um, entity that, you know, has a significant growth opportunity. And, um, many of these projects, um, you know, so in the publicly traded world, there’s a, you know, risk reward, the higher return, the higher the risk, if you will. In our case, many of these things are, you know, we try to de-risk them as much as possible. And also we retain those that, you know, are going to generate above average returns. Um, typically that means that there’s some sort of, uh, collateral component that’s tied to it. And if it’s not for that specific investment, when we combine all these together, there’s a collateralization benefit to the portfolio as a whole. Sure.

Trisha Stetzel: Okay. Totally makes sense. So, uh, you guys go way beyond just simply investing capital. I know you’re often embedding leadership. You talked about fractional positions at some somewhere along the journey and probably internal to teach as well. Um, so embedding leadership strategy and systems post investment. So can you unpack that model and what active ownership looks like in practice?

Terry Hess: Yeah, absolutely. That’s an excellent question. And I should preface this. This also ties back to your original question. The other common thread is this every investment that we look at, there’s someone in that that’s, you know, bringing this idea to the table and there’s significant expertise in that vein. We can’t get comfortable unless somebody, you know, there’s been a career with with that individual, their team. And again, we it helps us to gain visibility into the future uh, future picture relatively quickly. So it all starts there. You know, we our team we’re not trying to deploy advisory. That’s not the mission. The mission is to support the folks that are, you know, bringing these investments to the table. And they have the vision, and they can convince us that if they pair with us and we put capital to it basically afterwards, once we deploy the capital, we’re just trying to keep the train on the tracks. Um, it’s a very, very supportive role. Um, and so, you know, they they may need us. So a fractional visor for six months or 12 and then they go with a permanent solution. Um, so we’re, they’re able to pull a lot of levers to, again, just keep the train on the tracks.

Trisha Stetzel: Yeah, absolutely. So through that, um, you know, through the, the turnarounds or the rapid growth or growth or even, like cultural rebuilding in these businesses. Um, when you step in, how do you because you’re in an advisory role as well, how do you identify which levers to pull first? You know, we’ve got people, processes and even product in some cases.

Terry Hess: Yeah. So in any in any of these ventures, um, uh, really there’s never been less than probably a year to three years of either them or us, you know, really having a lot of conversations. And, you know, it all starts with sort of underwriting or putting a projection together. And frankly, we go back and forth and test that, you know, we try to poke holes in it. And, you know, we add our other ideas, they come up with ideas, etc. so it’s a very iterative process to gain that level of comfort. Um, and really that’s where where it all starts. And, and then in that process there’s also assessment of, hey, what are your needs? Um, and then the other side of the coin, I think this is not uncommon. It’s what a lot of investment firms do. But we also bake in a lot of, you know, just sort of there’s unknown risks, right. Whenever our plan is never no plan ever goes the way that anybody ever intended. So, you know, provided that you put in sufficient, uh, you know, resources so that, hey, when a mistake does happen, we’re not all trying to go raise another round of money. We’ve got, you know, substantial capital on hand that we can sort of correct and fix a problem or spend additional money or what have you.

Trisha Stetzel: Yeah, absolutely. So tell me more about the the values or guiding principles, if you will, around your due diligence to mitigate as much of that risk as you can.

Terry Hess: Yeah. Um. I think the, uh, in my position and I think for a lot of my partners, the guiding principle is really the relationship. Mhm. Um, the reason I say that is this is, you know, we’re not doing we’re not we’re not reinventing anything. It’s, it’s putting money to work. Right. Um, but I think that one of our gifts, if you will, is being able to have what many people perceive to be uncomfortable conversations quickly upfront to try to gain and establish a level of trust so that they see, hey, listen, you know, we’re not just here to put money to work, walk away and make make money again. Like I get back to keeping the train of the tracks. A lot of people come up with wonderful ideas, and then when they get $30 million in their bank account to move forward, it’s not not everybody, but some people get an ego or this big boost of confidence. And again, we’re here to say, you know, don’t we? There’s another day that we gotta, you know, wake up and do the right thing. And so, yeah, not a lot has changed. Like everything you said, everything we’ve been talking about and trying to work for, uh, we just, you know, stay on the path. Obviously, we make adjustments and trajectory changes along the way, but, um, it’s a relationship guided, uh, endeavor. That’s the key. That’s the principles that all of our advisors have as well. And that’s how we’ve been able to get work with so many different clients across many different industries and maintain them. And so, yeah, relationship is the driving principle.

Trisha Stetzel: Yeah, absolutely. Well, we share that in common too. It really is about relationships and, you know, knowing and understanding people and sharing values, sharing guiding principles for sure. I know people are already interested in getting to know more about you or having a conversation. So, um, Terry, tell me the best way for folks to connect with you.

Terry Hess: Yeah, the, uh, I’d say the easiest way is just through email, which it’s a tea or it’s Terry Hess. Sorry, Terry. At Trident. Com. And just to avoid confusion, Terry is t e r r y at Trident. Com. Yeah.

Trisha Stetzel: Perfect. Thank you. Terry. And if you guys are looking for him anywhere else, his last name is spelled h e s. Of course, I’ll put this in the show notes. So if you’re in front of your computer, you can just point and click and connect directly with Terry. Um, you have such a diverse background, how it sounds like you’re using all of the skills that you’ve learned over the course of many years in the work that you do with teach. But what are some of the the real standouts for you from experience and expertise perspective that play into what you’re doing with teach?

Terry Hess: Um, trusting people. And, you know, I have a lot of us have a wealth or a body of knowledge. We can’t do it all. There’s not enough even there’s. Even though the skill sets. There’s not enough time in the day. So it’s really, you know, building strong relationships and, you know, putting people in place that can that can help. Um, again, I get back to the relationships. People have to feel comfortable and confident that you don’t always have their back in good times. But, you know, we anticipate that, you know, and frankly, not only do we anticipate that bad things are going to happen, we also try to anticipate, okay, we know the bad things are going to happen. What might those be okay. And when you can plan for those when they do come or some version of them comes, everybody’s that much more comfortable and calm and and it just breeds helps to breed success and you know, stay on the path.

Trisha Stetzel: Yeah, absolutely. So I’m sure that you’ve got all kinds of deep relationships with the people that you work with or you bring into, uh, an engagement that you trust. How do you go about building the relationship with your clients? You talked a lot about relationships. So how do you go about building that trust and relationship with them?

Terry Hess: Yeah. Um, for me, because we we do the same. It’s we have to be comfortable being candid with each other. Just very open, very honest. Um, I’m particularly interested in what are your raw emotions? I don’t need them polished or or. Okay. I don’t need them clean or unclean. I just need to know where you’re at. Um, again, it’s much of this stuff to me is just sort of touchy feely, if you will. Um, and I think that that kind of gets right back into the relationships. You gotta know where people are at. And, uh, I’m sorry to keep harping on that. It may sound. No.

Trisha Stetzel: No, it’s it’s good. And I think that some of us do get a gut feeling, and sometimes we don’t listen to our gut, which is like our second brain. Right. And we really do need to listen to it. And, uh, the people that, uh, we feel good about, typically we can build a relationship with them, uh, so long as they’re not faking too hard. Right? Yes.

Terry Hess: Absolutely. Yes. Which we all do to some degree.

Trisha Stetzel: Sometimes. Sometimes we fake it a little bit. Uh, if you don’t mind, I’d love to talk about your hobby just for a second, because I. I think it is a really cool hobby. So will you, uh, just I we talked about it before we started the show today, but something that you do for downtime, we talked about that we all have to step away from work at some point. So what do you do to relax or step away?

Terry Hess: Yeah. Uh, so I love woodworking. Um, and I’ll sort of share with you why I think that I like it so much. Um, I get back. So at one point, my career, I was the CEO, CEO of this, uh, the trade school. And you got to bear in mind our product was students. Okay. And so when you walk into any one of our buildings in any given day, you are literally surrounded by up to 500 different people. And guess what? Every single day, without fail, those 500 people each have their own individual set of emotions and experiences and motivations and intentions, etc. and to try to get all those people to go down, you know, a certain lane, if you will. You know, one is always stepping off it and then you have all these employees. Woodworking is there’s nobody chiming in. It’s just you and the wood. So all the mistakes that I make, which I make, I’ve made every single one you can think of. But all the mistakes, it’s up to me and you know, and time to correct them. It’s just. It’s peace and calm, if that makes sense. No. No drama.

Trisha Stetzel: Yeah, I love it. I think, you know, we just spent all this time talking about relationships and now you have relationship with wood. It’s okay. Right? It’s okay. It’s just you and the wood. Uh, I shared with you that I like to garden, so it’s just me and the plants, and it’s fine, right? I don’t need anybody to help me with that. Uh, good. Thanks for. Thanks for sharing that. Um, just circling back and thinking about how, Um, we’re in or you are in installing leadership disciplines. So, yes, there’s a leader in the business where you, uh, go and assist and you bring all of the people that you know and love and trust and to make this work. How do you build lasting capacity inside of those portfolio companies?

Terry Hess: Excellent question. So, um, there are many different leadership and management systems. Um, from my perspective, you know, 80% of them are saying 80% of their material. I should say 80% of the body of the work is saying about the same thing as any other system. So, um, you know, one of the ones that we use pretty regularly is called EOS, which stands for Entrepreneurial Organization Systems. And again, it’s basically just this apparatus. It comes with books, materials, forms, consultancy, uh, to instill how does this company train and sort of keep a platform for its leadership and management. Um, so again, like I would argue, I would argue that we’re agnostic, but you do have to have some system. Um, and again, you know, that’s sort of a, a good vetting point as well. So, you know, can we be candid, can we develop a relationship and then you, the founder or leader, are you open, you know, sort of take an extreme picture. Can I help you to understand that, to do the next step, it’s in the realm of possibility that you are going to your body of knowledge, and your impact is going to be you as an individual. It’s going to be much, much less. So how do we extend you and your brain and your knowledge to the rest of the group in a, uh, in a managed fashion? And it’s not an overnight solution. It’s a process for us in particular, they they sort of advise all their folks that it’s a two year endeavor to fully implement the US system. So, um, so but yeah, just it’s important to have a system in place.

Trisha Stetzel: Absolutely. And, you know, I’m just thinking about change. Change is hard for everyone. And although there’s a leader with a vision, change still has to happen with them and their team as you’re integrating. You talk a little bit about change in these businesses.

Terry Hess: Yeah. Um. I’m trying to think of how I could collapse that into a, uh, a good how would I advise on that? Okay, so I guess let me say there’s sort of two extremes. There’s companies that, um, that do adopt the change. Um, typically, um, it is because those companies and the leaders have, you know, beat their head up against the wall. They’ve tried their method or their ego. And, you know, Frank, thankfully there’s been enough money in the business, has had enough success. So they can sort of still stay a going concern. But there’s a lot of frustration of, you know, beating your head up against the wall. And so those are typically the ones that adapt to the change the quickest. Right? Yeah. Um, I can’t remember the saying from one of my colleagues, but, uh, it’s something to the effect of the pain of change has to outweigh the pain of the status quo in order for a change to take effect. Uh, so that’s something that’s 100% true. And so that’s one of the distraction you get people that beat their head up against the wall, they’re willing to make a change. The other end of the spectrum is typically it’s young men.

Trisha Stetzel: Okay.

Terry Hess: That have yet to beat their head up against the wall. Yeah. Um, you know, and but they’re just, you know, they they’re they there’s a lot of ego or bravado or they’ve had a lot of success. And they think because they had it in the past that it’s just going to continue going forward. But change is inevitable. I mean, I think, you know, for for society as a whole, it’s with, with, with AI and how fast AI is coming. And, you know, I think UPS laid off 48,000 workers this week. We need to get our head wrapped around what that means. So yeah. Anyways, yeah, but back to your point. You need to adopt change. And that’s also how we cull out those 80 that we you can sort of, you know, by talking with people and, and trying to see if you can establish a relationship if they’re not open to change. We just don’t bother.

Trisha Stetzel: Yeah, absolutely. Well, they have to be dissatisfied. There has to be some kind of vision, and you guys can come in and help them with those first steps, right. To help them, uh, start to move the needle. Um, what about a turnaround story that really stands out for you? Uh, yeah.

Terry Hess: I’ll tell you one of my favorites. Um, okay. This is a guy that start, uh, a very, very rough background. Um, you know, if, if you choose chose to get in it with him, you would wonder why he’s not in jail. Still, um, but I think that that, you know, at some, at some point the light bulb clicked for him that he doesn’t want to keep going down this path. He’s married, he wants to have kids. And I give him a tremendous amount of credit. He put he just put the bootstraps on and went to work in a very, very difficult, very dirty industry. And uh, seven years later had, uh, $3 million worth of equipment in his shop. And, um, he’s a guy that, you know, again, because because of that success, he thought he could, you know, continue to grow and scale. He’s a prime example of someone that beat his head up against the wall. So when I came in and when I came and got involved, it was a very, very toxic, uh, wildly profitable, so very profitable, but very toxic environment. And, um, you know, all the skills that, you know, the modeling and the looking at the business and the strategy and, you know, putting the right people in place, all that was done.

Terry Hess: But the real driver of changing that company was Basically just being a sounding board for this person. I needed to relate to him. There would not have been anything that we could have done unless he got started to take steps to get his mind correct. And, uh, again, I just, I tie it, you know, all the business acumen was there, but if we just let that be, it would have failed. Um, and now, you know, cut to two years later, what he is doing and what everyone else in the company is doing by repairing his psyche, for lack of a better word. It’s it’s phenomenal. It’s wonderful. I mean, just to give you one little metric that went from, uh, a visible pipeline of $1 million, I think for the next 12 months. And, uh, now I think again in two years, it’s probably close to $12 million of a visible pipeline, not to mention what we could get if we just keep going after it.

Trisha Stetzel: Yeah. Wow. It is amazing what a mindset shift can do. Or the right partner, the right person to have those conversations with. Wow. Congratulations! It sounds amazing. I can’t wait to hear the rest of that story. Um, as we get to the back end of our conversation today, we’ve got one last question for you. For the entrepreneurs or leaders, owners who are listening today who feel stuck between that potential and the actual performance or the activity, right. That gets us where we want to go. What is one mindset shift or action step they can take in the next 90 days to move their business closer to its true value?

Terry Hess: Yeah, um, there’s so many resources, but I’ll just throw out two that I think would be helpful. Um. Uh, there’s I’m blanking on the name of the book, but there’s a, there are several EOS books. Um, and I can’t recall the name of the, uh, the bread and butter one. Uh, it might be rocket fuel, but anyways, I would recommend going on iOS, going on their website, their their series of books and the the foundational book is on there. Also, there are a list of consultants across the geographies. Are there available for people to review. So that’s one path. And then the other path is this is I would strongly recommend if you are in that place where you want a mindset shift, hire a business coach that that, uh, they will do volumes for you. You know, you are so many people in those leadership positions. They’re so used to and accustomed to being responsible and to, you know, keeping people accountable. Um, and because of that, they kind of, you know, get in this island unto themselves. But to have an outside individual that can be that for you, it may it’s that basic and simple, and many people just shy away from it because they feel like they don’t need it. I’ve seen a lot of examples. If you’re open to it, it does wonders.

Trisha Stetzel: Absolutely. Well thank you Terry. This has been a fantastic conversation. I appreciate you taking the time to join me today.

Terry Hess: Excellent. Thank you very much, Trisha. I really appreciate it.

Trisha Stetzel: You’re very welcome.

Trisha Stetzel: Yeah, absolutely. And shout out to Steve Landrum for putting the two of us together. Uh, glad to have you. All right, guys, that’s all the time we have for today. If you found value in this conversation I had with Terry today, please share it with a fellow entrepreneur, veteran or Houston leader ready to grow. Be sure to follow, rate, and review the show and helps us reach more bold business minds just like yours and your business, your leadership and your legacy are built one intentional step at a time. So stay inspired, stay focused, and keep building the business and the life you deserve.