Lusa Zhou

Principal at Monogram Capital Partners
B.B.A. from University of Michigan / M.B.A. from HBS

Background:
Lusa Zhou is a principal on the Monogram Capital team, an LA-based consumer-focused growth & private equity firm. She joined Monogram pre-fund as employee #1 and has been incredibly honored to have been a part of the journey as they built the team and their fund over the years. In her role, she sources, evaluates, executes, and supports investments across various consumer and retail verticals. Prior to joining Monogram, Lusa was with The Carlyle Group, a leading global alternative asset manager, where she was a member of the private equity practice’s consumer and retail team. She began her career in investment banking at Evercore as a generalist in the Mergers & Acquisitions practice. Lusa earned a B.B.A. from the Stephen M. Ross School of Business at the University of Michigan and an M.B.A. from Harvard Business School. 

Lusa immigrated with her parents to the states at a young age and grew up in the good ol’ mid-west in Michigan. As an immigrant’s daughter and as the eldest, there was an innate sense of determination and grit, partly driven by a duty to her parents who had sacrificed so much and also by a deep desire for security.

When she was in high school, there was not a lot of great guidance on what her future would look like or what career she should pursue, but she had always been impressed by my parents and their support for entrepreneurship and business. She had this vision of being in a boardroom, though at the time, she was not sure in what capacity, whether it would be in advising the C-suite or sitting on the board or something else. But that was something she had in the back of my mind as she navigated undergrad and recruiting.
Having graduated undergrad in the midst of the great recession, she credits a lot of the start of her career to good luck, intuition (naïve as it may have been), caring mentors, and scrappiness. A unique opportunity through a sophomore externship at Credit Suisse really opened her eyes to the world of finance and had her catching the NYC bug – there was no where else she wanted to be more. However, come recruiting season for junior internships, everything started to hit the fan for Wall Street and the economy. In anticipation for a skeleton crew coming to campus for on-cycle recruiting, a small group of us decided to book flights to NYC, stay on friends’ & alums’ couches, and hit the pavement reaching out to anyone who would take a coffee chat with us. I had been drawn towards the pure M&A advisory shops given their focused practice (and direct interaction with the c-suite), but especially so during that time when not having the distraction of a balance sheet felt like a smart move. 

Against the advice of many of her peers, she followed her gut and chose to intern with Evercore, a lesser known advisory bank at the time. She was incredibly fortunate to have started her career in M&A with Evercore, which was a much smaller, intimate shop with just 2 floors of professionals back in 2009. They set a high standard for her for what it meant to care for your team and were incredibly invested in her growth and development. The firm has expanded an incredible amount since then and she is so glad to have been there when she was with her summer Analyst class of only 8. To this day, she is still very close with her Analyst class (and her brilliant interns) and several of the partners who she had worked with (including her staffer) and owes that to the culture that had been instilled by the Associates and VPs she had been mentored by.

She was recruited to Carlyle’s consumer team mid-way through her 1^st year as an Analyst and having spent 2 years working across industries as a generalist, she found herself quickly and happily immersed in the world of all things consumer. At Carlyle, she was exposed to some of the most impressive management teams and operators of established brands that we knew well and loved and was fortunate to have seen great deal flow during her time as an Associate. The growth investment into the emerging brands, Beats by Dre, was a pivotal one for her, and certainly an interesting one to get through investment committee. It gave her a glimpse into the world of growth investing, structured & preferred securities, and the excitement that came with partnering with high-growth brands navigating the incredibly dynamic first few phases of growth.

This all led to a hope and a dream to work alongside emerging consumer brands and she spent her time in business school exploring various ways in which she could bring this to life (many were dead-ends). She tried not to get distracted by the on-cycle traditional private equity recruiting, and through a long and windy journey of many networking calls and flying back and forth to LA, ended up fortuitously being introduced to Oliver and Jared while they were building up Monogram’s track record as independent sponsors.
And as they say, it’s been an adventure ever since.

What inspired you to pursue investing as a career, and what helped you decide which stage and industry focus were right for you?
Investing was a natural next step for a lot of young Analysts in M&A. I wish I had had as much forethought and preparation as some of the amazing Analysts and Associates that I have the privilege of meeting and working with today, but truth be told, on-cycle recruiting hit our class unexpectedly (as it always seems to these days) and was over before we even knew it. More than anything, I really admired some of the second years ahead of me, and looked up to them – so there was a desire to follow in their footsteps as well.

Knowing that in investing, I would have a chance to be involved beyond the transaction itself and have a hand in shaping the trajectory of the business was very compelling to me (very original thought, I know). I wanted to continue to hone being a well-rounded business person and to better understand companies. I also was drawn to the structure - knowing that it would be a program and I would have some of the smartest peers joining alongside me. The recruiting process happened quickly, though not as quickly as nowadays. I was 6 months into banking at the time when the process kicked off, and I completed 5 interviews with Carlyle in 4 dayswhile recruiting with all the large cap private equity firms at the time wrapped up within the week. I am so impressed by how intentional the younger Associates are nowadays with the stage and group they want to join. At the time, given how quickly everything moved, I focused on the people that I had interviewed with, their investment in me, and thoughtabout how I could keep as many doors open as possible for my longer term career while I was still figuring it all out for myself.

What made you continue to pursue consumer as your industry focus after Carlyle?
What really cemented my interest in consumer was when we worked on Beats Electronics. It was quite a different structure, stage, and overall thesis than our other investments. It really sparked my interest because 1) it was a young, emerging brand that had grown a tremendous amount, 2) it had a deep ability to resonate with its consumers in a way that we saw few others brands be able to, and 3) it was a minority growth structure. It was a shift away from the more traditional LBOs. That deal showed me that there was a way to be involved with emerging brands as they navigate establishing themselves as long standing consumer brands and that there were unique ways of thinking about deal structures. I also loved that often times investing in consumer allows you to see your work reflected on shelves in real life. It’s rewarding to see that we had a hand in making sure that this brand had a chance to continue to grow its presence and delight its consumers. With consumer products, there's also a deeper level of understanding of the buyer mentality. As a consumer ourselves, we can more readily understand why a product resonates, why it's not just a fad, what its reason to exist is, and how it differentiates from otherbrands and products out there. Furthermore, the consumer industry is constantly evolving, particularly given the changing preferences of the our and younger generations. So to be a brand that has longevity, it must be nimble and innovative -- constantly evolving to address the needs of the consumer.

Can you please tell us about your experience at a large-cap PE firm versus a middle-market firm?
It was an incredible experience to be at a large cap private equity firm. Both of the co-founders of Monogram also came from large cap consumer shops. From my perspective, that experience allowed us to deeply understand consumer from the lens of established businesses that have truly built a legacy over the years and navigated different cycles and challenges. Working with businesses such as those, I got to see what it takes to be a blue-chips company that continues to be able to address competitive forces and shifts in the economy. Also, in large cap investing, I had a chance to see everything as there were few deals that did not cross our desks. It was a really good opportunity to understand consumer from a really broad landscape from the top. At Carlyle, there was a lot of institutional knowledge there, and I learned what it took to be a good deal maker, learning from Sandra Horbach, who was the head of our consumer group. Sandra put a lot of emphasis on supporting women and our team had one of the highest proportion of women as investors when compared with other groups on the street at the time. It was a really important differentiating factor, particularly when it came to consumer investing down to the subtle note of always making sure we used the product and wore the products going to management meetings. And as the female consumer and household buyer that they're targeting, it was critical to show management that we had that perspective. All in all, starting my investing career at Carlyle gave me a solid foundation and perspective of the consumer space that I take inspiration from today.

In large cap investing, much of our focus was largely on working with established brands and businesses, but my interest was leaning more so around supporting emerging companies and founders and being operationally involved in lifting them up and guiding them over time to become long lasting brands. I wanted to have a hand in helping these companies during their pivotal stage where they've done the hard work in having created strong brand resonance but now needed strategic and capital support to scale and grow sustainably. This was where I started to think about how I wanted to spend the next phase of my investing career. I wanted to be more operationally involved beyond just at the board level but really rolling up my sleeves and working alongside the founders, thinking strategically about how to best deploy capital, how to best deploy time, how to build their team, what the best route for them to take as they think about scaling, etc. And luckily for me, around the same time, a lot of these younger, lower middle market firms were emerging, especially in consumer. They were not as prevalent when I was recruiting for private equity back in 2012, but they were very much so in the market when I was coming out of business school. I started speaking with Oliver and Jared before they had launched fund I, and I was very much aligned with their vision of being strategic partners alongside emerging brands. I loved, too, that they had similar backgrounds coming from large cap consumer investing - I appreciated that we had a shared perspective that we could lend to our portfolio companies as we thought about how to take the special magic the founders created and help professionalize it over time. In terms of differences in approach versus large cap investing, our thesis is growth-oriented. Beyond the profitability metrics, we're look to identify businesses and founders that we fundamentally believe have the ability to scale and to resonate with consumers. It may have been a risk for me to join a firm pre-fund, but I, at that time of my career, was very willing to take the risks. My thinking was that I could try to return to PE in NYC, but how many chances would I get to be at the ground level to shape something from scratch alongside founders who I really admired and wanted to learn a lot from? Worst case scenario, I learn a lot and I head back to New York, but why not take this once-in-a-career experience and see where it goes. Knock on wood, with a lot of hard work and luck as well, we’ve built something we’re really proud of.

Can you tell us more about your experience joining Monogram Capital pre-fund?
I alluded to some of this above, but delving in a bit deeper - Oliver and Jared, the two Monogram founders, had incredible relationships, from LPs to investors to portfolio companies. Prior to me joining, they had alreadycompleted four independent sponsor deals and had started to establish their track record with a handful of investors who had been brought alongside us into those independent sponsor deals. After I joined, we continued to do a few follow-ons into those pre-fund deals. Successfully establishing the fund was a combination of Oliver and Jared's incredible relationships combined with really great work establishing a track record prior to fundraising. It was just the three of us as we deployed a good chunk of Fund I together, while we were incredibly diligent and disciplined in recruiting the amazing team that we have today (Caroline being one of our all-stars!). What was a start difference here versus my time at Carlyle is the deployment cycle. At Carlyle, we were quite active and I had completed a deal a year. Here at Monogram, we're closing on an of avg. 5+ platforms a year alongside follow-ons into existing portfolio companies. Over the past few years, we've continued to establish our reputation within the industry and with founders. Even if a deal may not be the best fit for us at the time, we're always willing to connect and help and cheer them on from the sidelines. And our reputation has been the same across not just how we treat our own teammates but also our portfolio company founders and our community at large.

Lastly, what advice would you give to a junior female investment professional early in her career?Firstly, it's embracing failure. It's a topic that isn't talked about a lot, but we say this to founders - fail fast. You learn a lot from "failure" and failure should be celebrated as long as you're learning. But of course, you have to have a safe space for that. And so I think one of the most important things is having a confidant, someone to bounce ideas off of, someone who is in your corner. It's great to have a peer group where you can share experiences, but it's also important to have a mentor, someone who you can talk through all your worries and frustrations and someone who gets it. The most important thing is just having a mentor be your advocate, both from a confidence building standpoint and because of certain industry dynamics where sometimes you need someone else to help you crack open the door a little bit. As you become more senior, it's even more critical to be an advocate for yourself. There are going to be times where you really need to push because no one else is pushing for you. But it does take time to build up that confidence. Some of my best experiences have come from someone looking out for me, saying "why don't we give the floor to you. what do you think?" Sometimes, an external party such as a founder may need to see that confidence coming from and instilled by your own team to trust you as a more junior member of the team and to give you the opportunity to step up beyond your current role. So I'd say those two pieces are the most important - finding safe spaces and actually embracing failure. Because that's where you'll learn the most, especially about what you don't want or like or want to emulate in your career or your life. Find a company where there are key people that give you that safety net and are going to be a strong advocate who is always in your corner and invested in you.

Thank you for your time, Lusa! To learn more about Monogram Capital, check out 
https://monogramcapital.com/