923 Lindsay Guzowski:

Wings of Inspired Business Podcast – Transcript EP923 – Host Melinda Wittstock Interviews Lindsay Guzowski

Melinda Wittstock:

Coming up on Wings of Inspired Business:

Lindsay Guzowski:

We really wanted to make sure that testing wasn’t going to reinforce the maleness and the whiteness of the, you know, private equity and venture capital backed space. But more than that, it was important to say that we should be evaluating people on the items that are likely to make them successful and the combination of items that make them successful, knowing that each individual brings something unique to the table. When we started using the Crucible for clients that were hiring or evaluating teams, there were a lot of women who were otherwise overlooked that had truly phenomenal scores and profiles that people another chance or that may have put to the side or downplayed because they didn’t look like everyone else sitting in the room.

Melinda Wittstock:

There’s a lot of unconscious—and conscious—bias in the venture capital world, which goes a long way to explaining why women and diverse founders get less than 2% of the available investment dollars. Lindsay Guzowski is changing all of that with her innovative executive evaluation tool, the Crucible. It challenges biases and identifies the right founding teams for peak performance—her results often surprising VC and PE firms and leading them to rethink their decisions. Today we explore what really makes founders succeed—from cognitive horsepower, and emotional leverage to resilience and simply put, the “refusal to lose”.

Melinda Wittstock:

Hi, I’m Melinda Wittstock and welcome to Wings of Inspired Business, where we share the inspiring entrepreneurial journeys, epiphanies, and practical advice from successful female founders … so you have everything you need at your fingertips to build the business and life of your dreams. I’m all about paying it forward as a five-time serial entrepreneur, so I started this podcast to catalyze an ecosystem where women entrepreneurs mentor, promote, buy from, and invest in each other. Because together we’re stronger, and we all soar higher when we fly together and lift as we climb.

Melinda Wittstock:

Lindsay leveraged her deep experience in private equity, quantitative sociology, and executive recruiting to collaborate with statisticians and organizational psychologists to create The Crucible. Since its founding in 2020, the data-driven company has won multiple awards, including two from Wealth & Finance International, the Best PE-Backed Mid-Market Performance Enhancement Research Tool 2024, and the Award for Excellence in Human Capital Development 2024. Listen on because Lindsay shares vital insights on what predicts success in any founder. Lindsay will be here in a moment, and first:

[PROMO CREDIT]

Helping women build wealth and make their purpose driven impact on the world through entrepreneurship has always been a mission close to my heart. That’s why eight years ago, I started this podcast to help women succeed as entrepreneurs. Over the years, I’ve driven more than $10 million in sales to the women I’ve featured on this show, and this year I’m taking my investment in female founders to a whole new level as a venture partner of the new firm Zero Limits Capital, where we’re dedicated to investing in highly scalable seed stage startups founded by women and diverse teams – a mission more important than ever as the Trump administration cracks down on anything and everything DEI. We’re looking for innovators with exciting new applications of AI, Blockchain and other emerging technologies that make a social and sustainable impact to change the world. Is this you? If it is, take a moment and tell us about your opportunity at bit.ly/ZLCintake – that’s bit.dot.ly/ZLCintake – capital ZLC lowercase intake. And coming soon, because I know from 20-plus years of experience raising venture capital, I’m going to be opening up my schedule to help female founders nail their investment strategies and pitch decks at the earliest stages of their companies. So, stay tuned!

Melinda Wittstock:

What does it take to eliminate bias in the assessments of executive talent? Turns out the founder and CEO of The Crucible, Lindsay Guzowski, has the inside skinny on how to identify overlooked entrepreneurial talent with a more inclusive and equitable assessment process. Today she breaks down the crucial elements she tests with the scientifically validated Crucible, plus how her assessments are changing the dynamics of venture capital and private equity, helping to align team goals, reducing turnover, and even assuring successful mergers and acquisitions.

Melinda Wittstock:

Lindsay knows what it takes to grow a company to a lucrative exit, growing a $40,000 investment in a plumbing company to a $20 million exit, and then as a partner of an executive search firm, leading double-digit compounded annual growth for over a decade. She is driven to find holes in the market and fill them, and her research on leadership and culture has been published in leading peer-reviewed journals. So, it’s no wonder she’s built the data-driven tool that is changing the game for women and diverse founders who often get overlooked or misjudged by investors.

Melinda Wittstock:

Let’s put on our wings with the inspiring Lindsay Guzowski and be sure to download the podcast app Podopolo so we can keep the conversation going after the episode.

[INTERVIEW]

Melinda Wittstock:

Lindsay, welcome to Wings.

Lindsay Guzowski:

Well, thank you for having me.

Melinda Wittstock:

I’m really intrigued by what made you go from the plumbing business into founding the Crucible. What was the spark there?

Lindsay Guzowski:

I’m going to start way back, coming out of business school where I was given an opportunity to work for a small private equity fund in Chicago. And one of the things I recognized there was that the investment theses mattered. But whether or not your executive team could deliver upon that thesis was the critical difference. And so, after business school, I thought I was going to keep working there and got a call one day from an executive search firm that said, hey, why don’t you come over and work with us and do executive search for private equity? I was there doing executive search, and my cousin called me, and he was a plumber and said, I’d like to buy out the plumbing company I’m with. And I said, okay, let me help you review the documents. And I was just going to be an advisory person. And as we were going through that, I asked him the question, well, what would it take for you to start your own plumbing company as opposed to buying this one? And the dollar figure was orders of magnitude smaller than buying out this plumbing company.

Lindsay Guzowski:

And so, we talked through it, and I staked him, and we were able to start and build a successful plumbing company together that was able to eventually sell into private equity. In order to ensure I mitigated my risk a little bit, I kept working at the executive recruiting firm. And so, as the plumbing company grew and developed and needed me less, I was doing more searches and finding that a lot of our clients wanted assessments of various sorts. The problem was they weren’t measuring things that were necessarily relevant to private equity. They weren’t valid in a lot of cases, and most importantly, they weren’t calibrated for the executives that they were hiring. They were often general, you know, general assessments. So, everybody looked good. And so, after a really excellent candidate got eliminated by a fund using an assessment that wasn’t statistically valid and didn’t tell them what they needed to know, I got a little frustrated with them and said, well, why do you even use this? And they said, well, if you had a better one, we’d use that.

Lindsay Guzowski:

And they said, fine, I’ll go build it. And I think the irrational confidence from having started a plumbing company, which I knew nothing about, told me that I could do this as well, especially because academically my background’s in quantitative sociology and finance, so I’m a numbers geek. And so, we developed the Crucible and spent two and a half years testing it for validity, making sure there’s no bias and back testing to make sure that it actually worked in private equity and venture and then went out on the market with it. It’s been a lot of fun.

Melinda Wittstock:

What an amazing story. So, there are a lot of different threads to pull on here. I think I’m going to pick up first with the bias one and of course that’s interesting to me as a female founder where women get less than 2% of the venture capital money. And you know, that certainly at precede seed and maybe a little bit less so by Series A. But you’re being evaluated really for the team. Like you said, what’s your ability to execute even on the best laid plans, even if you have a differentiated product and you have a large market, you have all these things, it doesn’t mean anything unless a team can execute on it. So, I don’t know, with my female founder in tech hat on, I think, oh my God, like how am I actually being evaluated and how to take the bias out of that, you know, you know, for, for women. How do you eliminate the bias?

Lindsay Guzowski:

Yeah, one of the things that we really wanted to make sure was that testing wasn’t going to reinforce the maleness and the whiteness of the, you know, private equity and venture capital backed space. And so that was the, you know, the floor of what we were looking for here. But more than that, it was important to say that we should be evaluating people on the items that are likely to make them successful and the combination of items that make them successful, knowing that each individual brings something unique to the table. And so when we started going through using the Crucible in, you know, for clients that were doing, hiring or evaluating teams, there were a lot of women who were otherwise overlooked that had truly phenomenal scores and profiles that people gave another, you know, another chance or that may have put to the side or downplayed because they didn’t look like everyone else sitting in the room. And now they were identified for having talents that otherwise may not have emerged. And so, I think that being able to utilize some more quantitative data and highlighting what women bring to the table, both individually and as a group can be really powerful for changing some of that culture of, you know, male white leaders from very specific backgrounds.

Melinda Wittstock:

Yeah, because people invest based on a comfort level and a relationship.

Lindsay Guzowski:

Right.

Melinda Wittstock:

Like, you know, I heard Kara Swisher at one point called it, rather than pattern recognition, it was mirror recognition, right?

Lindsay Guzowski:

Yeah. There’s a…

Melinda Wittstock:

So much big comfort, comfortability factor.

Lindsay Guzowski:

Yeah.

Melinda Wittstock:

Like I know this person, so like I’ll invest in them. And women don’t necessarily, at least not historically, have the, the same sort of relationships or that same sort of pattern. So, you mentioned there are a whole bunch of different factors that do predict, say, you know, who has the right stuff. Can you break some of those down for me in terms of what your data shows?

Lindsay Guzowski:

Yeah, there are really five high level categories and then some really fun unique ones in there. It’s cognitive horsepower. Can you recognize patterns? Do you have logical skills, leadership elements, emotional leverage, interpersonal skills, and then the ability to execute. And within that, I think there are some that are particularly useful and relevant and where women tend to shine. My very favorite of the elements that we measure is disdain for losing. So, a lot of people talk about competitiveness and wanting to win and pushing out there to do those things. What we found is that equally important, if not more so, depending on the type of scenario you’re in, to refuse to lose and having that ability to put yourself out there and say, yeah, I’m going to ensure that we hit the mark. And you may not be hitting home runs every time, but you absolutely will get on base.

Lindsay Guzowski:

That is a skill that a lot of women bring to the table. They do leverage.

Melinda Wittstock:

Yeah, because often we’re working with less capital than a competitor or, or we’re being underestimated or whatever it is, right? This whole idea is you have to be better, right? But yes, actually measure something like that.

Melinda Wittstock:

Is it like a, is it a test that you make people do or like, how do you, how do you know that somebody has a disdain for losing?

Lindsay Guzowski:

Yeah, it is a test that we do, but it involves a variety of questions that revolve around how they react in certain environments and then the intensity with which they would display said reaction. You know whether that’s having a bunch of statements that you rank order or using a literal slider scale and so testing feelings about not measuring up all the way to literal loss and loss aversion, which are things that you do. Enough questions across the test and you get a really keen insight into how someone feels about those items and how that plays into their other. There are other behavioral profiles. So, one of the other things that it, you know, I like to look at in conjunction with that is resiliency, which is another trait that a lot of women bring to the table. Because if you refuse to lose and you’re an incredibly resilient person, you can achieve anything. You’ll make it happen, and you’ll roll with the punches, you’ll find new opportunities. There’s a robustness to that leader.

Lindsay Guzowski:

And so being able to test them through effectively an online survey, but by digging at different ways of expressing some of these same concepts that are behavioral, situation specific and standardized, actually gets at a lot of these elements in a way that they can be comparable and tracked over time.

Melinda Wittstock:

Very interesting. I think sometimes the bias in all of this is somehow women aren’t as competitive as men. And like, what possible evidence is there for that? I mean, women are very competitive. You know, it’s fascinating. How often are your clients and you know, the PE firms and the VCs who are like, surprised? They’re like, oh, huh.

Lindsay Guzowski:

It’s interesting because they’re often surprised when they initially see it and then not at all after they get to talk to people because it highlights that we also measure things like urgency and hunger and drive. And those things aren’t necessarily expressed in the same way for everyone. Before I got into doing this testing, one of the items that we would hear time and time again from clients in the recruiting side was that people didn’t have that X factor, or they just didn’t bring it to the interview. And I looked back at some of the people that were getting those comments once we started testing them. And a lot of them had incredible drive and incredible resiliency, incredible hunger. But they were more introverted, or they were people that like to listen first, or they were people that really wanted to engage buy in of the other side. And so, their style in an interview is going to be wildly different than, you know, your classic charismatic type that’s going to run out there and, and put themselves, you know, out front. And so, they would do less well in interviews than they should have.

Lindsay Guzowski:

And when we were able to highlight that to these funds, we started seeing a broader personality profile map across their fund. And it reduced, I mean, with one of our clients, it reduced turnover by almost 10%.

Melinda Wittstock:

This is so important because, you know, I always having, having run a previous business of mine was a social intelligence business that used the, you know, the beginnings of AI and natural language process, understand people from their social conversations, right, variously to figure out who would be like a micro influencer for your company or who would be most likely to buy your product. And everybody said they wanted the data, but they also kind of didn’t do you know what I mean? There was a fintech company that thought they were selling to baby boomers who were at Morgan Stanley. It was actually millennial women. It would have required them to completely change their whole everything. Right. And to what extent are they willing to change that? Suffice to say they didn’t, and they did not succeed, right? But like we could sort of see that coming. So, when you’re presenting data to people, do you find that there’s a resistance? Because sometimes people just want to believe what they want to believe.

Lindsay Guzowski:

You’re absolutely right. There are people that want to believe what they want to believe. What’s actually somewhat nice about working with the funds about their portfolio companies is there’s almost a level of separation in some cases where they can say, yes, this is what I see about this team or about these people. I recognize that in my conversations already. Now let me really dive in. And so, we’re able to overcome a lot of those challenges because I think people in investor backed businesses, the investors are ‘numbers people’ at their core and they want to make sure that they have something backing up their decision making. And so, this gives them a little bit of confidence there.

Lindsay Guzowski:

But when we’ve had the challenges with people who truly want to believe something that isn’t borne out by the data, it’s often talking to them about why they feel that way and how to, how to think through the implications of that. Is it possible to test wrong? Sure, anything’s possible. There’s going to be an error factor involved in anything with numbers. But are there takeaways that you can glean from the information anyway? And the answer is almost always yes. And when you get into it, there’s a slow but sure turnaround in their thinking to really embrace some of the information that they’ve been provided and to see how to Utilize that to make themselves a better, you know, a better partner, a better collaborator, or at least just understand why they’re frustrating themselves or others.

Melinda Wittstock:

Right. So, say, you know, at that stage where a venture firm is evaluating a team, are we going to invest in this team? And maybe it gets through a due diligence and you’re really kind of figuring out, you know, it’s a relationship that you’re going to have, you know, with this founder and this founding team. You got a bunch of people around a room, you got all these different styles and people are evaluating it based on a whole bunch of things that they may not even be conscious of, you know, within themselves. And the founders trying to figure out, you know, what pushes the buttons of like all these various people in the room. I mean, it’s very, very difficult. I think there’s a lot of deals that probably get missed just right there. So, where in the process, say if we’re talking about the VC firm, you know, deciding whether to invest or not to begin with, where in the process are they using this data? Pre pitch, post pitch, how does that all work?

Lindsay Guzowski:

Post pitch is actually usually post LOI in a lot of cases that. And if it’s in rounds that, you know, you’re not quite as structured, it’s typically prior to any, any official agreement.

Melinda Wittstock:

Prior to the term sheet.

Lindsay Guzowski:

Yeah. It takes place in part because founders want to prove that they are what they say they are and that they’re able to get out there. But they’re also a little nervous about being evaluated by someone that hasn’t, hasn’t fully expressed interest because they don’t want to lose their opportunities either.

Melinda Wittstock:

Yeah.

Lindsay Guzowski:

Now my advice to people is always it should be a match. You’re basically, you know, getting married to someone for a limited period of time. And you’ve got to know that’s the right fit. And knowing what the right fit is, understanding their governance style, understanding if you can work with Them and providing more information about that will serve everyone better. If you’ve got a great product and direction and vision, somebody out there is the right fit. It’s a question of getting in front of them. But going with the wrong fit will ruin your business just as fast as missing out altogether.

Melinda Wittstock:

Oh gosh, that’s very, very true. I know too many people and you know, a couple of my businesses have had, you know, the wrong investors or, and, or term sheets that, you know, the investor never gets their money and it’s, you know, it’s really tricky, you know, for the, the founder to really know. I mean you just basically going on reputation and, and what you know, and how good you are at, you know, questioning the investor from that side of things. Talk to me a little bit about how this is used for the portfolio companies. So, the, you know, private equity firm or venture fund makes an investment, and the company is, say, at a seed stage and now, you know, they’ve proven product market fit and now they’re off to the races. They’re growing, scaling, they got to hire people really quickly. It sounds like you come in at that stage as well to help those portfolio companies find their right executives.

Lindsay Guzowski:

Exactly. And so, we’re able to test the team, understand where they have strengths, where they’re appropriately lopsided, where they have notable gaps and where there are areas of tension within the team that could be resolved by adding people, could be resolved by moving people around for what roles they have. There’s a really interesting scenario that I was working on earlier this week with a company where there’s some significant discord between the CEO and CFO because the CFO wants to push harder and faster than the CEO does, and the fund knows eventually one of them is going to have to go. But we also highlighted that there might be an opportunity to just move people around in their roles, that you can leverage their strengths in different ways and perhaps take a founder CEO and move them into a more strategic position and reorient how that team is working together. Because it really is a pretty good team in terms of the balance of what they’ve got. They’re missing just a few pieces, but there’s an opportunity to supplement in that case, as opposed to what is often classic in these things where you have a blow up between personalities and you lose both of those talented executives because you don’t know why. We also see where we have Teams that can just identify a gap and say, okay, we don’t have anyone who is truly a process wizard. We don’t have anyone that is our emotional leader.

Lindsay Guzowski:

And finding those people when you’re then looking to fill a, let’s call it a CRO role, that’s excellent because you know that those skill sets can be brought to the table and can improve the team as a whole.

Melinda Wittstock:

Interesting too, because say, from the perspective of a founder and CEO might be the perfect person at the early stage.

Lindsay Guzowski:

Yes.

Melinda Wittstock:

But may not be later on. So how the team changes over time, I mean, do you go in and continually sort of reevaluate as the company is growing and help people really figure out for themselves, I guess, what their best role is? I mean, because some people are starters. They’ll always be starters. They, they, they need their exit out of whatever they’re doing and they’re going to go start something again, right and that’s a delicate balance. That’s, that’s hard on people to really figure that out. So how do you help with that piece of things?

Lindsay Guzowski:

Well, that’s it. That’s absolutely a unique problem that these high growth businesses have because you have people that are phenomenal at smaller sizes or really have that great concept and can bring that concept into reality, but they’re not scalers. They’re not people that are going to be as effective later. They’re not people that can run teams that are more robust or have more layers. And so, yeah, we can track these things across time. We did another one where there was a, a reasonably flat organization and then as the team developed, it became more hierarchical and we were able to show the fund exactly how that changed the dynamics and what they needed to do in terms of when they were looking to supplement with a new leadership team member, how to bring that person in, not just for that now smaller core executive team, but also for the next level down that are still absolutely vital to how that business is going to function going forward.

Melinda Wittstock:

Exactly. So, you mentioned that you had this experience in executive search and whatnot. But the Crucible doesn’t do that. You’re just doing evaluation.

Lindsay Guzowski:

Yeah, it’s.

Melinda Wittstock:

Are you able to give sort of evaluation so that the company actually knows where their gaps are before they start that hiring process?

Lindsay Guzowski:

Yeah, we can. With the team reports, we can highlight where those gaps might be. And one fun thing we can do then is if they test the candidates, we can show them what the team would look like with those candidates in place.

Melinda Wittstock:

Oh, that’s interesting.

Lindsay Guzowski:

What I will strongly emphasize here is that people shouldn’t use behavioral assessments like this as go no go tools. It shouldn’t be that, okay, this team is an A. You know, it scores A, and we don’t score it this way, but it scores a 95 with this executive and 94 with this one. So, we should go with the one that’s 95. No, there are other skills and talents people bring to the table. I can’t assess if you’re an agricultural products company, if you’ve had deep relationships in the industry with the right dairy products manufacturers. That could matter a lot more, even if it’s slightly less good fit from a collaborative standpoint with the team. But these are great data points to highlight.

Lindsay Guzowski:

This is where you’re going to be able to gain the most synergistic working relationship out of that leadership team to push things forward in the way that everyone agrees should be happening.

Melinda Wittstock:

Right. That makes a lot of sense. Now, I can see this further down the track. I can see this working. Obviously, you’ve got the PE side of things, really. For a company that’s in a mergers and acquisitions situation.

Lindsay Guzowski:

Right.

Melinda Wittstock:

Say you’re the acquirer and you’re trying to figure out how is this going to integrate? So many deals go wrong. Like, it’s great, happy day, you know, this acquisition happens or merger or whatever, but the teams don’t get along or there’s duplication or who stays, who goes. Oh, my goodness, that can be a hornet’s nest.

Lindsay Guzowski:

Oh, absolutely. And it’s one of the things that so many groups get wrong because they’re buying what they perceive as the value of the company, which is often a product or an idea or equipment, who knows? But often at the end of the day, you’re really buying people and their labor product and figuring out how to make sure that those people still feel inspired and engaged. And having the right person to even help lead that integration is absolutely critical.

Melinda Wittstock:

Yeah. Or they might be the right people, but then you put them into a system that doesn’t work for them.

Lindsay Guzowski:

Exactly.

Melinda Wittstock:

And they’re not the right people anymore.

Lindsay Guzowski:

Exactly.

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Melinda Wittstock:

And we’re back with Lindsay Guzowski, founder and CEO of the Crucible.

[INTERVIEW CONTINUES]

Melinda Wittstock:

So, we started by talking about these five factors, but we didn’t get into all of them. We talked a lot about the disdain for losing and the resiliency and your hunger and drive. And you did mention a couple of other categories. One of them was cognitive horsepower. So, talk to me a little bit about that. What are you assessing there?

Lindsay Guzowski:

Yeah, so with cognitive horsepower, we’re looking for a few different things. You know, all else being equal, one of the few things that have been proven time and time again in academic studies is that smarter people tend to be more successful because they’re able to process information faster and can move it forward into ways that are more actionable with better success. So, what we want to see, because what’s really critical in these businesses that have shorter hold periods and more change, is how strong are their logical skills? How strong are their pattern recognition skills? Do they have verbal acuity? And especially for people that have to deal with numbers, can they deal with numbers? So, some of the questions on their function a lot like your standard SAT questions and things of that nature. But then we have some really fun pattern recognition things and like logic puzzles and other items that were written by some of the smartest people I know, but also designed to be structured that the test. No one should get them. All right. I’ll put it that way.

Melinda Wittstock:

Okay.

Lindsay Guzowski:

Even at this executive level, it’s okay to get some wrong.

Melinda Wittstock:

Okay. Because I can imagine people being a little intimidated by that. Like, oh, my God, I mean, am I going to pass this test? But the pattern recognition is actually really, really crucial. Right. The ability to process information quickly that’s potentially contrary. Or to be able to put concepts together that. Yes, to put concepts together. The sort of chocolate peanut butter type things, right, is where a lot of innovation happens. I don’t even know how you could not be that way and create any kind of potential unicorn business.

Lindsay Guzowski:

Oh, I completely agree. And I think that there is the challenge that is represented in a lot of these companies that don’t have a lot of data at their fingertips about themselves, about their markets, about the change that it’s. That’s likely to occur, which is that you see two data points. Is that a line or is that scatter? And people who have more savvy with that pattern recognition can identify when the third bullet or when the third data point shows up, rather than having to wait until it does and looking at it retrospectively.

Melinda Wittstock:

This is very interesting. I want to ask you a specific question about the difference between linear thinkers and more matrixy thinkers, because I think there’s a little bit of a difference between men and women. Or at least this is my thesis. I don’t have the data to prove that, but I see so many more women doing kind of ecosystem businesses or triple sided markets sort of things. There’s something a lot more matrixy that blows the minds of linear thinkers as opposed to systems thinkers. So how does that break down in your data?

Lindsay Guzowski:

Yeah, to that point. I read a study at one point that said something to the effect of once women have children that it actually rewires their brain in ways that allow them to process information differently. That it effectively unlocks a, a multitasking superpower because they have to be able to focus on keeping a baby alive and also tending to themselves and also everything else that’s happening in the environment. And so, it just evolutionarily it mattered to be able to do multiple things at once and to be able to synthesize all that data quickly.

Melinda Wittstock:

And so, you’re describing me, I mean like that, that literally like I think I’ve always been a systems thinker kind of naturally, right, but definitely having children as an entrepreneur and, and just the ability to process lots of different things. And it’s not necessarily that you’re multitasking, that you have to be doing everything all at once, but just the way you’re thinking. You see connections more easily, I think. Yes, experience that. And again, like not having the data, it’s interesting that you’re saying that there is some evidence of that. So, one of the things that I’ve experienced both with my VC hat on evaluating other companies, you know, that are founded by women or men, but also my own experience.

Melinda Wittstock:

I’m not a linear thinker. I can think linearly, but one of the things that’s tricky for systems thinkers is to present their ideas in a way that linear thinkers actually understand. I see breakdown there often in that case translating. Because a linear thinker may listen to a systems thinker and think, oh my goodness, that’s like you’re doing too much. Can you focus a little bit more? Or like that’s too ambitious or that’s too much risk. There are too many risk points. And that systems thinker is saying no, all like fits together completely. Like what are you, what are you talking about? There’s like a total breakdown there.

Lindsay Guzowski:

That’s absolutely right. And it’s when linear thinkers listen to systems thinkers, they frequently think you’re going A to Q, to 7, to purple and then to B. And they cannot process how any of the rest of that happened. But the system thinker says, well, that’s the strategic perspective behind all of it. And here’s why that, you know, why that actually can translate onto a grid.

Melinda Wittstock:

This has been my single biggest challenge as an entrepreneur because every single business I’ve ever built has been an ecosystem system. Yeah, right, because that’s like who I am. But that has actually literally been a challenge. And I’ve come to see it as, okay, this isn’t necessarily like a man woman thing. This is maybe a systems versus linear thinking thing.

Lindsay Guzowski:

Yeah, I completely agree with you. And I think there are, I mean, there are elements that we look for in our test. I mean, we measure strategic perspective, we look for systems and process orientation, but we’re also looking for things like authenticity and some other elements that get at whether or not someone is basically basing that larger scale concept or if you’re just actually wired that way to be able to look at things from a very different perspective.

Melinda Wittstock:

I remember my brother helping me understand this a long time ago about myself because he was wired similarly. He was creating, he was the geologist in the oil and gas industry who invented all these different algorithms to really to find natural gas. And he very much systems thinker. But his, you know, you know, the, the guy that he reported to, you know, was very linear and just like couldn’t understand what the hell he was talking about, right. He literally had to find someone within the company that could translate his systems thinking into linear so it could actually be understood…

Lindsay Guzowski:

Right.

Melinda Wittstock:

…By his bosses. And once that happened, oh my goodness, like he added, you know, gazillions of dollars to the value of that company. Because like, I need to have someone like that on my team that literally can do that translation…

Lindsay Guzowski:

Yes.

Melinda Wittstock:

…or just forcing myself to get better at figuring out linear thinkers and how best to communicate to them. There’s gotta be some training there. So that’s where that kind of aha moment, you know, happened for me. So, with all this data that you’re gathering is, I imagine there’s a use case for really helping people to understand each other in that case, or improve their communication abilities on one hand, but also improve their listening abilities to actually be able to evaluate something if they’re a linear thinker, to better evaluate a system thinker or have more consciousness about that.

Lindsay Guzowski:

Yeah, absolutely. And there’s, it’s not just on thinking style, but also on engagement style and understanding that there are some people that are really, really good at their jobs but are not intellectually curious. There are some people who are wildly curious and want to engage deeply in a. A ton of areas, but maybe viewed as a little flighty. There’s a lot that people bring to the table that I think self-knowledge and also knowledge of those with whom you’re working really breaks down preconceived notions. It breaks down potential walls that we put up when we assume that other people are reacting in certain ways that they may not be. And it allows us to leverage the strengths of others, not just to mitigate our weaknesses, but to move everything forward. And I think that’s where some of this data collection isn’t just data for data’s sake, but it’s in helping people be the best versions of themselves for themselves and for their companies.

Melinda Wittstock:

Yeah, Makes so much sense. So, some of the other five characteristics you mentioned also obviously emotional. I think you called it emotional leverage.

Lindsay Guzowski:

Yep.

Melinda Wittstock:

Talk to me about.

Lindsay Guzowski:

Yeah, so the, the components that are under that are passion, intensity, hunger, resiliency, energy and endurance, and then disdain for losing competitiveness. So, the idea is what do you have inside you that pushes you forward and why? There are some people that are incredibly intense but don’t have a lot of passion for anything, that there’s not something that inspires them or gives them a spark, but they’re going to do anything you put in front of them with the highest level. There are some people that can do that, you know, run through any wall and have a great mission for it, but they can’t do it for very long. And so, understanding what profile someone has in that respect matters because you can treat how you’re engaging with them very differently and you can make sure that you’re working with them in the way that they’re going to be able to give their best for whatever period of time you need that to happen.

Melinda Wittstock:

Interesting. So, what are some of the other five?

Lindsay Guzowski:

Yeah, sure. So, leadership is another major area. And one of the interesting things in leadership is the idea of organizational ambition. So, are you setting high standards? Do you inspire confidence and belief in those who work for you? Are you direct in sharing information? Are you optimistic about what the organization can do? All of those are really critical elements of a strong leader that people want to work for and making sure that it’s the idea of Setting lofty goals and also believing in your people that they can do it.

Melinda Wittstock:

Yeah. Inspiring them to be their best selves. Do you notice any difference between men and women in that case in terms of leadership styles? There’s all this debate right now about, you know, hardcore, “gonna set up my, you know, bed in the office and work”, you know, all that kind of command control type leadership as opposed to a more inclusive collaborative style. And I imagine generally women and men can break down a little bit differently there. What, what does your data tend to show you about that?

Lindsay Guzowski:

So, across leadership as a high level, we don’t see a lot of differences just in the pure raw score when aggregated. But there are some areas that can be different. In additional organizational ambition, you’ve also got culture of outcomes. Women tend to do pretty well with ensuring buy in and engaging deeply with stakeholders. Maybe because we’re naturally oriented that way or maybe that’s because we’ve been trained to do historically. And so, you end up with a, a slightly more collaborative leaning leader. Yeah. In those environments.

Lindsay Guzowski:

And men tend to index a little bit more toward the directness and you know, driving accountability. Not to say women don’t hold people accountable because they absolutely do. It’s just through a different mechanism in some capacity.

Melinda Wittstock:

Yeah, it’s just a different style. It’s not necessarily that one is better than the other, it’s just right, you know, depending on the company and its culture and such. What am I missing in the other thing that you measure? We did cognitive horsepower, emotional leverage. We did leadership.

Lindsay Guzowski:

Ah. So interpersonal would be the, the last major category there, which is, you know, your own self-esteem, empathy, confidence. I talked about authenticity a little bit, but even things like collegiality and knowing that a lot of those elements you want to be high but not too high. If you are too collegial and have too much empathy, you’re likely to give people second chances when maybe they shouldn’t get them.

Melinda Wittstock:

I’m laughing at that because, gosh, I’ve seen in myself over the years, and I see in other women. We’ve all been socialized to want to be liked by everybody. And, and that doesn’t always work in business.

Lindsay Guzowski:

Yeah, I think it’s a question of ensuring that you have enough empathy to connect with others, to understand what they’re going through, to really have a solid sense of not just what the people in your organization are doing, but your investors and your customers and your vendors and having that ability to feel for them and with them, but not being in the 90th plus percentile relative to other executives on that front. Having too low empathy can be atrocious as well. But you want to make sure that you still maintain a little bit of skepticism or removal so that you can say, okay, I’m not going to feel so deeply that your emotions become my emotions.

Melinda Wittstock:

Right, it’s a delicate balance. So, at this stage, I mean, obviously data-driven company, do you use AI in your business?

Lindsay Guzowski:

Our head of engineering is a machine learning expert, AI being a subset of machine learning. And so, we do use machine learning techniques when we’re trying to. For instance, for a given fund, if we have enough data, we can configure a specific algorithm that meets their governance style and say these are the specific elements that are more important for you. We just did this for a fund, and it showed that there were a few execution elements that if they only looked at those things, they would be able to weed out people that were likely to fail in their organizations.

Melinda Wittstock:

So, you custom craft, I guess, algorithms, like, I mean, you get into the business of kind of weighting…

Lindsay Guzowski:

Exactly.

Melinda Wittstock:

…information, right?

Lindsay Guzowski:

And that’s how we use, you know, I’m not going to call it generative AI because we don’t use generative AI, but some of the colloquially referred to AI techniques to produce better information. I think there’s an opportunity, as we continue to roll forward with this, to find ways to incorporate other data from the organization to tie it to Some of these leadership surveys to see if there’s a way to garner more insights. And AI would be absolutely fundamental in that. We’ve partnered with a couple other groups that do one who does cultural surveys and one that does business valuations to really connect all this data across the board. And we do use AI in that to help generate insights from those three different pools of data.

Melinda Wittstock:

It’s interesting in a mergers and acquisitions context, too, because the value of a company, at the end of the day is in the eye of the beholder. Like maybe the value of that company to company acquire a might be the culture of the company. It might be their technology.

Melinda Wittstock:

And so, in terms of what you’re looking for and the matchmaking around all of that, I could see this being incredibly effective in making sure that those deals not only are the right deals, but the valuation is right. And then that the actual integration goes down like you presume everybody wants. It’s not like an AOL Time Warner kind of scenario, you know?

Lindsay Guzowski:

Yeah. That was actually the entire philosophy behind… We call it the Performance Learning Leadership Lab. And we developed a dashboard product that takes all of our individual solutions and puts them together and allows people to see all of that information so that you can figure out, what’s this team? Are we paying the right price? Is it integrating well? And how does that then circle back around to impact the valuation?

Melinda Wittstock:

Yeah. Fascinating. Really interesting. So, you started this business when, in 2020? Yep. And so how has it grown? How many clients do you have? Tell me a little bit about the growth of the Crucible.

Lindsay Guzowski:

Yeah. So, we’ve been able to test thousands of executives at this point. I mean, it started small. You start with friends and family and other contacts, and we’re working with some of the biggest private equity funds in the country to test their entire portfolio. At this point, I have international clients, which is so much fun. The time zone challenges come into play. But being able to talk to people from Australia and really seeing how it’s helping their businesses grow and seeing how we can help people make better decisions, that’s what gets to be most inspiring at the end of the day. But it’s funny because I think that in a lot of scenarios, people expect businesses to become overnight successes or not.

Lindsay Guzowski:

And I think there’s this myth that businesses all of a sudden take off, but it’s a lot of hard work, and it’s A slow grind that builds and builds and then all of a sudden you hit a tipping point and then things start flowing in.

Melinda Wittstock:

And so, after many, many years, like you think of a story like Nvidia, you know.

Lindsay Guzowski:

Right.

Melinda Wittstock:

Many, many, many years, like maybe two decades, suddenly they’re an overnight success, you know, so.

Lindsay Guzowski:

Right, yeah. I mean, it was slow growth for the first few years and especially coming out of COVID but after that it gave us really a great opportunity to structure and build the company with processes, with insights that I think made us stronger in the long run by growing slowly and really bootstrapping our way to where we needed to be as opposed to running hard and fast out of the gate. And now we’re, we’re running a lot harder and faster. So, it’s, it’s a lot of fun.

Melinda Wittstock:

So, for any, anyone listening to this, you know, you know, any, any investors listening to this that are, you know, running a VC firm or PE or just a company maybe that just wants to use this internally kind of for themselves, what’s your pricing like? How, how does this work? How do people engage with you?

Lindsay Guzowski:

Yeah, so an individual assessment runs roughly a thousand dollars. A team assessment, if you. And these are one off pricing is roughly $10,000. For normal size teams, I’ll call that, you know, executive teams of five to 10 people. If you have a smaller team, it’s less than that because I, there’s less effort that, you know, we have to put into it to get all the coordination and analysis and everything done. But for those of those funds that are working with us regularly, for teams that want to engage repeated, repeated engagements, etc., you know, we have subscription pricing, and we have some volume discounting as well. So yeah, just reach out at Lindsay L I N D S A Y@the crucible.com or check out our website, which is thecrucible.com.

Melinda Wittstock:

Well, Lindsay, thank you so much. It’s a fascinating conversation. I think it’s really interesting what you’re doing particularly, and this is close to my heart, eliminating bias because, because there are a lot of VCs that I’ve heard of that are using AI, but if they’re missing, I mean, they could be using AI that’s entirely based on pattern recognition. And the pattern recognition is coming from historical data. And the historical data could be used to reinforce, I guess, incorrectness or reinforce bias.

Lindsay Guzowski:

Yes.

Melinda Wittstock:

So how much of that, I guess how much of that is around just before we wrap up, you know, in the, in the industry? Because it could be adverse for women and you know, minorities and whatnot. Even things like bank loan decisions or, you know, VC funding. Yes or no decisions. If. If the bias issue isn’t solved and it’s just using AI for pattern recognition.

Lindsay Guzowski:

Absolutely. It’s one of the most concerning issues with AI is what you’re training it on and if you’re using it incorrectly. It’s part of why I was pretty specific earlier about the fact that we use machine learning techniques, but I’m not constantly feeding it into an AI, you know, external AI generator that is trying to pull something new out of that, in part because I want to make sure it’s not reinforcing these biases and it’s not getting trained on the historical scenario that we don’t want to continue to replicate. The history of assessments in general is fascinating because a lot of them came out of the eugenicist movement in the early 1900s.

Melinda Wittstock:

It’s kind of an interesting time that we live in with all references to DEI like words like female or diversity or any of these things include inclusion being removed from, like, government websites that. That presumably AI is being trained on…

Lindsay Guzowski:

Right, right. Well, I am heartened by engagement with some clients and when I do get to talk to various funds where they still recognize the value of having diverse teams, having diverse perspectives, and to ensure that they’re recognizing their inherent biases and their subconscious biases that otherwise they may fall prone to making decisions that just aren’t based in what’s best for the company and what’s best for their returns.

Melinda Wittstock:

At the end of the day, 100%. I mean, it’s been interesting watching this debate. The companies that have really stuck with their DEI because they actually do better as a result. I mean, their results.

Lindsay Guzowski:

Exactly.

Melinda Wittstock:

So much data bears that out. We live in fascinating times. Lindsay, thank you so much for putting on your wings and flying with us today.

Lindsay Guzowski:

Well, thank you. This has been fantastic, and I really enjoyed the robust conversation.

[INTERVIEW ENDS]

Melinda Wittstock:

Lindsay Guzowski is the founder of The Crucible, CEO and founder of The Crucible, a scientifically validated, bias-tested assessment and research company that helps private equity and venture firms understand, develop, and retain top executives for their portfolio companies.

Melinda Wittstock:

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Melinda Wittstock:

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