Why it’s so hard to be a VC-backed CEO right now with Shoshana Vernick, MD at Avathon

“A CEO’s job is tough and often lonely, and that’s the benefit of having a smart board of directors or a safe space outside of that network”
– Shoshana Vernick
There are many CEO struggles right now, particularly venture-backed or private equity-backed CEOs. With shaky markets, a polarizing political environment, and major global events, CEOs have their work cut out for them. On this episode of the On Work and Revolution Podcast, Debbie talks with Shoshana Vernick, co-founder and managing partner of Avathon Capital. Shoshana has been in the private equity industry since 2001 and shares where CEOs are seeing success dealing with complex variables right now.

Debbie & Shoshana discuss:

✓ How to strike the very difficult balance between humanity and liquidity
✓ Importance of developing a clear point of view within your company culture
✓ The key factors that lead to a higher probability of success for CEOs and Boards

About our guest, Shoshana Vernick:

Shoshana M. Vernick is a co-founder and managing partner of Avathon Capital, a $400
million investment fund launched in 2016 to foster innovation and impact in the
education and workforce markets.

Shoshana has been in the private equity industry since 2001 and, prior to that, held roles
in strategy and investment banking. While Shoshana’s current focus is dedicated to the
education and workforce sectors, over her career, she has worked across a broad range
of industries and has served on numerous boards as a caring and powerful thought
partner to executives.

In addition, Shoshana is a member of PEWIN, the preeminent organization for senior
women leaders in private equity, on the Board of the Illinois Venture Capital Association
(“IVCA”), on the Steering Committee of KPMG / University of Chicago’s Economic
Forum, 2020 Most Influential Women in Mid-Market M& A, 2019 Crain’s Chicago Most Notable Women in Finance, and frequent participant in the University of Chicago Booth School of Business and Indiana University mentorship and guest lecturer programs.

Shoshana earned a BS with honors from Indiana University in accounting, finance, and
international studies and studied abroad in Maastricht, The Netherlands. She grew up in
Munster, Indiana, and was one of two children raised by a schoolteacher and an
entrepreneur. Currently, Shoshana and her family live in downtown Chicago.

Helpful Links:

Follow Shoshana on LinkedIn

Open for Full Episode Transcript

Open for Full Episode Transcript

Debbie Goodman  00:04

Welcome to On Work and Revolution, where we talk about what’s shaking up in the world of work right now. And how we can make work life suck less. People who know me know that I’m always aiming for a higher bar. Amazing work life. But on some days suck less can feel just fine. I’m your host Debbie Goodman, and today we have Shoshana Vernick as our guest. So Shoshana is Co-Founder and Managing Director of Avathon Capital, a fund that invests in companies in the education and workforce management sectors. Prior to this, she was managing director at Sterling partners, running their education opportunities fund for several years, all in more than two decades as an investor in companies across sectors, which naturally also includes being a board member of many. And today, we will be talking to Shoshana about what it takes to succeed as a CEO of a venture or private equity-backed company and why it’s particularly a hard job right now in the current markets. So we’re going to talk about what’s shaking up for CEOs right now. So welcome, Shoshana.


Shoshana Vernick  01:26

Thank you. Thank you for having me, Debbie. It’s an honor.


Debbie Goodman  01:29

So a few things before we head into the CEO struggle. Firstly, I noticed that you’re currently a board member of Academic Programs International, Edcast, Shore light, and Susiecakes, and the first three-year-old in the education and training sector, which totally makes sense. And then there’s Susiecakes, which makes the best chocolate cake in the whole of California as far as I’m concerned, I am have been a purveyor and taster of many. But I’m not sure that I fully understand that investment thesis.


Shoshana Vernick  01:58

You know, I actually think the list is probably even longer than you listed for current board membership. But I’ll touch upon your question, which is how Susiecakes fit into all of this. And really, it’s for two main reasons. The first reason is, it’s an investment that predates my time at Avathon Capital, back to what you referenced at Sterling partners where, you know, I’ve been, on the team for many years. And Susiecakes was the firm’s investment in the consumer retail sector, where we partnered with Susan Sarah, who is a wonderful Los Angeles-based entrepreneur who started this amazing brand that celebrated celebrations. And so, being in LA, I don’t know if you’ve eaten at or enjoyed some of our Susiecakes treats, but all of that sort of goes back to the time at Sterling. And then, my relationship with Susan and the company itself has permeated beyond my time at Sterling. And so I’ve stayed involved and have been, you know, arm in arm with Susan and thinking about kind of growing that bakery concept.


Debbie Goodman  03:04

Well, yes, I have tasted several of Susie’s amazing cakes. And it’s so interesting that you are still having a long-term relationship with her in the company, because that’s often not the case, you know, in the venture sector, where it’s kind of in and out. That must have been a wonderful story, but also a really gnarly one during the pandemic.


Shoshana Vernick  03:27

It was, you know, both on the education side and on the hospitality side, we had many businesses that operations that were meant to be in originally designed to be face-to-face experiences. Though those operations were shuttered by and large during the pandemic. In the case of Suzsiecakes, we had, there were 492 employees, and we had to, you know, reach each of them during that moment, make sure they were okay, but downsize the operation in order to hibernate to survive as a corporation through the pandemic. So balancing, as we used to say, you know, humanity and liquidity became very difficult. On the education side, we had other businesses like Big Blue Marble Academy that runs a network of early child care centers in the United States and they are, despite the fact that it was in person, we, by and large, made the decision to stay open during the pandemic. The states allowed it that we operated in, and we really became a necessity for first responder families that needed childcare. And I think that all of us in this country learned through the pandemic the hard way that childcare is essential to a productive economy, and many dual-income families and even single-income families rely on early childcare, either services support or education, to keep our own family systems going.


Debbie Goodman  04:53

Tell me more about liquidity and humanity because I think as we are emerging post-pandemic, concurrent with really shaky markets, whether we’re technically in a recession or not, it should I’m feeling, very recessionary. And, you know, with the layoffs and the news of, you know, really the bad news coming out of almost every sector on a daily basis, I’m seeing a lot less humanity in the desire for liquidity, saving profits, shoring up battening down the hatches, all those things. But I mean, every day, there’s one piece of bad news that really doesn’t take into account the humanity side of people who are in the world of work right now.


Shoshana Vernick  05:39

Yeah, you know, we try really hard not to allow ourselves to be like polarized thinkers, you know, where every choice feels like an ‘or’, you know. I’m either only thinking about the profit of a business, or I’m thinking about, for example, the impact or the mission of a business, or only thinking about liquidity, do I have enough money for tomorrow? Or that, you know, the kind of the well-being of my workforce, right, that’s forcing a decision amongst two opposites as opposed to saying, What’s, what’s the art of the possible? Is there an ‘and’ equation here? Can I strike a balance where both things are possible? And so that’s when I’m, you know, I mean balancing that. And CEOs today, boards today, are facing what feels like, you know, conflicting decisions, just on a regular basis. And that’s where we think it’s just important to understand, you know, what to, you know, take I mentioned Big Blue Marble, you know, why is this business here in the first place? Who is it serving? How do we ensure that we can serve, you know, our constituencies properly and fairly, through the, you know, the bargain of the service for the price? And how do we make sure that everybody that’s involved, you know, has a relative sort of share of what’s going on with that organization? So we’ll make those types of calculations.


Debbie Goodman  07:06

Yeah, I mean, I completely agree with you that it shouldn’t be an ‘or’ around the profit or people and there absolutely are ways to manage those two issues concurrently in a healthy way. I think last week, we had two really interesting examples of a good way and a not-so-good way, with Stripe, announced layoffs. I’m sure you saw that. And which was followed by almost like an apology by the co-CEOs, the brothers, who had taken accountability for some poor decision-making. And that resulted ultimately in needing to lay off quite a large number of their staff globally. But it was done with such humanity and such humility. I saw this as well with another one of the companies in the ed-tech sector, Degreed, David Blake, who just beautiful, you know, he really was so humble in his, in his approach to announcing layoffs, which had happened almost two months ago, I think, and really supporting the affected staff members to, you know, find places elsewhere versus, of course, the dear Mr. Musk, the Chief Twit he calls himself and his approach last Friday, which was just completely the opposite.


Shoshana Vernick  08:23

And then I think Jack Dorsey came out and apologized the day after those layoffs and said, you know, what, I have some culpability here, too, you know. I grew the organization and a headcount, you know, too quickly. And so, you know, when we’re coming off of 2021 and 2020, that, you know, in economy with juxtapositions, where people were, you know, applauded for growing very, very quickly, you almost couldn’t hire fast enough to keep up with, you know, the perception of market demand. But when that market demand starts to taper off, and you have a government force that’s intentionally trying to slow down demand, you know, many organizations that don’t have sufficient independent self-sustaining profits are finding themselves with a lot of, you know, extra weight. And that extra weight is now being trimmed, and trimming extra weight, people are going to look at nondiscretionary spending, and they’re going to look at headcount. That becomes, you know, non-essential to core operations. And there we have hiring freezes and layoffs that have been done.


Debbie Goodman  09:30

And I think we saw this was sort of mostly a trickle, maybe in May, and that has, you know, started to flow a little more, and now we’re seeing some pretty, pretty deep cuts. To go back to the CEO struggle. They are many right now, one being this decision about how deep and how fast do we cut, probably our biggest cost, but also our potentially biggest driver of profit, namely people. And so that, together with what are the other variables that you think are just compounding this vortex, the epicenter of the hurricane that many CEOs have, particularly venture-backed or private equity-backed CEOs and founders, are finding themselves in right now.


Shoshana Vernick  10:16

Yeah, you know, a CEOs job is tough, right? And oftentimes, a CEO’s job can be lonely. And that’s the benefit of having either a, you know, a smart and involved board of directors, and oftentimes can be the role of the private equity firm or the venture capital firm, to be a sounding board to that executive, or it’s important for the executive to have a safe space, you know, somebody outside of that network that they can go to, to confide, because these issues are complex, and they’re real. You know, so CEOs today are not just living in the execution of their own business strategy and business plan, you know, the days of saying, am I better than my competition? Can I take a share or can I grow demand, right? You know, those days have faded away, the new reality is, you have to have a clear point of view on how to have a culture at your own business where you’re engaging your employees, they feel connected to the purpose, they feel valued, they feel that their contributions are rewarded, acted, right. So you need to do everything you can to be a culture and social captain of that organization and have true leadership. Where vulnerability, you know, as you mentioned earlier, is really rewarded by that employee base, it creates, you know, emotion, it creates loyalty. And CEOs are dealing with a very, you know, complicated polarizing political environment. And that political environment and toxicity, you know, is in the lives of our employees that walk in and out of our companies every day. And so CEOs are often now feeling like, there’s certain issues that they need to cast opinions on. And there’s certain issues that maybe they don’t want to, and they have to make those calls on. When to walk into politics. And so there’s just more things going on. I mean, obviously, the macroeconomic environment is very difficult for, you know, quite obvious reasons, growth is slowing, inflation is continuing to rise. And so managing those issues, let alone, is difficult. And then we have major exogenous factors, war on Europe and other places around the world and other things that kind of create almost the need for a bit of perfection, for your business to kind of float through without feeling pain or volatility.


Debbie Goodman  12:53

Yeah, and I think that perfection, as we know, is elusive and impossible. And so I think as well, to add to this cauldron, the hot pot – CEOs of course, they’re in the hot seat, and they sign up for that – I think the added variable is the complexity around the workplace. So many changes, so many new variables to take into account: engagement, productivity, hybrid, work from home, working moms… like just add, add, add so many factors to that. There are, being a CEO myself, and I’m sure you know this too, sometimes I just want to say, can I just get a break? Somebody just give me a break? No, we sign up for that. So when you make a decision to invest, how much are you betting on the product, the service or the offering of the company versus the CEO, the leadership team, the vision, the capability. Because with all of the stuff that’s happening in the world, and now we’ve got this one snapshot of time, but look forward a year, there’ll be another range of complex variables? How do you know that the founder or CEO has got what it takes?


Shoshana Vernick  14:04

It’s an ‘and’ not an ‘or’ right, like, it’s not just one, right? A forced choice. If you force a choice, I will always say I take the jockey over the horse. However, the truth is, it becomes a both. And so you know, you want a higher probability, if you put yourself in a growing market. A large growing market, a higher probability of success, it’s a good product, a good solution, and you’re investing in kind of the maturation sustainability of your solution set. And you really believe the value proposition is great, higher probability of success if you have a strong business model, right, where where, you know, you have high gross margins, your gross margins can afford your operating expense structure and you have cash flow to invest in innovation and all of the things we said you want to do as a corporation to build a healthy culture, right. So all of those things lead to a higher probability of success. And those tend to be categories that investors can perform due diligence on. Market product, business model finances, right? Then there’s everything else, which is just the art. What is the culture of the organization? What’s the context of its current stage? How does the CEO skill set fit into the context of what needs to happen over the next few years? How much growth as an executive do they have in front of them? What is their mindset towards growth, right, on an individual basis and towards your organization? So we spend a lot of time evaluating the talent of the leadership team and certainly placing a bet on the talent of the CEO.


Debbie Goodman  15:45

What would you say to a CEO, whose leadership team bought into a vision that was accompanied by financial rewards, where the parameters of those have needed to, have adjusted, have changed quite radically? Valuations have dropped, potential new raises have been paused, bonuses for this year have already been impacted. I literally this week have been interviewing senior-level candidates on leadership teams of companies that are, you know, struggling right now. And they’re going, I didn’t sign up for this. They’re going, I signed up for the growth and the vision and the bonuses, and the equity. Yeah, and now that’s not looking quite as likely or guaranteed or a sure thing, and they don’t have necessarily the I would say that they’ve got the luxury of walking if they choose to. Versus the CEO who’s sitting with this, they, you know, – this is their baby – so they can’t walk away quite as easily. And my tendency is to say you signed up to be part of leadership, to be part of a growth story. And that’s never guaranteed. So show a bit of grit, man. So that’s what I want to say… but what would you say?


Shoshana Vernick  17:09

Well, I don’t know, if you need to hold back, I mean, people who jump ship, that either becomes a sign of character, or a situation that they’ll have to explain when they go to the next job. I don’t know if anybody is immune to, you know, having no consequences to their decisions. And so folks that jump ship or have short stays, or multiple businesses, because they left when things got more difficult, eventually that catches up. And they are less attractive in the job market as both investors and a partner to executives, right? And somebody who wants to help executives be as good as they possibly can be and have multiple relationships with them, you know, over decades, you’d like to find people who understood what they went into, understood that there’s no such thing as, you know, perfect vision. And when situations get difficult, that’s when actually it takes creativity. It takes adaptability, right, you have to be flexible, you have to have ingenuity. Right. And I feel like folks were tested, you know, at the beginning of the pandemic and through the pandemic, and how you responded when things become difficult to me, is the most transparent moment of who you really are as an individual, how you treat people and how you make decisions. And I think that is auditable, right? When we do references, when you do references across when you’re hiring, right, that stuff comes out. And so if you think you can just leave, I think it’s short-sighted.


Debbie Goodman  18:47

Yeah, I think it’s short-sighted. There’s always two sides to any story. And so I try to probe in a little bit more detail to understand, like, what more about the context, because there are some times when strategy has changed too many times when there is a preference around profits versus people. And then I think there are people who are pretty justified in saying, I didn’t sign up for this. But if this is purely just around the money, then and a lot of the time, it is, I totally agree. I think that is a cycle that will eventually end up catching people out. And so you know, we have listeners of this podcast who are varied in their, you know, in a designation, some entrepreneurs are corporate leaders, some are coaches, HR people, but all of them will encounter this particular question for themselves. Like, how can I be creative? And how can I be self-determined in my approach to these really challenging market circumstances that we’re all in? I do feel for many people though because it feels like we have just crawled our way out of the pandemic tunnel and are now faced with hits like imagine I just have got this image of crawling belly first through the tunnel, and then you get out and want to like feel triumphant. And then we’re faced with the headwinds of, of the markets right now. So I do, I do understand that people are just pretty damn exhausted.


Shoshana Vernick  20:13

You know, I think there’s probably two things on that. So one is, these are individual decisions, right. And so folks have to evaluate, like their own family structure, their own personal career ambitions, their own financial situation. And so I would never tell somebody, if you have an opportunity in front of you, where you believe you can have a professionally rewarding opportunity and make, you know, a whole bunch of money doing it and really enjoy who you’re surrounding yourself with, well, that’s valid. That’s, you know, go for it, if you have been, I don’t know, pick it a year or so into a business. And now all of a sudden, that industry or that company has some headwind, you know, true commercial headwind, well, you know, maybe stick around and see if you can be part of the solution. And see if you can find your way through that headwind to create fresh opportunity for that business. And maybe your equity long term will be worth quite a bit, or maybe the job satisfaction and references you get from that will be worth quite a bit, right. Like, that’s, that’s the balance and I respect individual, individual choice on that matter,


Debbie Goodman  21:17

You invest and obviously, not only invest, but must be looking at many companies for investment that are in the workplace, learning workforce management sector. I’m really intrigued to know what is cool and new and exciting that could really impact the future of work and workplace. For the better for all of us.


Shoshana Vernick  21:45

Well, you know, you mentioned a company called Degreed which David Blake, which you know, whom I know and respect quite a bit, we invested in a company called Edcast, which is a competitor of Degreed and both of the Edcast was recently acquired by Cornerstone, I think that entire space is cool, and has a tremendous amount of innovation happening right now. So imagine you work for a global corporation, and you have kind of colleagues and groups all over the world. They have technologies that allow you to connect into your work environment, and receive learning opportunities while you’re doing your job. And to have social interaction with your peers from anywhere in the world, fed to you in the moment that you need advice or content to address like a real work problem that time. And flipping the head of a authoritarian learning management system into a democratic learning experience platform, that’s using technology that is designed for you, as an employee to be the best person you can be in that environment. That is some super cool stuff going on tremendous amount of interesting things going on in what they call talent, talent analytics. So that’s taking all of the data of the individual skills, that we have hard skills, soft skills, and saying how are they best applicable to a corporation, and making sure that those people who are successful in a corporation don’t get overlooked when new job opportunities emerge, and one might look outside to recruit. Now I can point my recruiting inside, because I know all of this, like awesome talent that I have inside of the company. And those people are they’re good fits, they’re oftentimes, you know, brand ambassadors and giving them opportunities, you know, cross-functionally or cross divisionally? Is such a really interesting way to grow the organizations.


Debbie Goodman  23:51

Yeah, I mean, that’s a really great problem to solve. Obviously, we, Jack Hammer, being an executive search firm, we see companies who almost, I think they do some kind of internal assessment of talent. But if they haven’t got technology like this, and if it’s a big company, kind of hard sometimes to determine whether you have the skills internally, and second, then they will almost automatically go external to organizations like ours to find external talent. And then it’s a, it’s pretty much, you know, people talk about the first 100 days, but in my experience, it’s a lot longer for somebody externally to, particularly in a leadership role, to be properly in the seat. And so, you know, we actually always recommend companies, you know, who do you have internally, what’s your succession plan looking like? So this sounds like, I mean, this could impact our revenues, but it sounds like a great idea. Yeah, that is really cool. Look, I mean, that, once again, because I’m engaging with either entrepreneurs who are hiring or individuals who are looking to move careers I hear about such interesting products on a daily basis. And so I’m super excited about what innovation is coming to the world of work. Some of it feels a little spyware related, a lot of it is to drive, almost like digital industrialization, we can’t see you in person, but we will monitor you digitally. So there’s a little bit of that that I’m seeing out there, which is not so cool. 


Shoshana Vernick  25:18

But there’s always the shadow and the light, right, the dark side, the dark side of data privacy, and all of that we have to watch for.


Debbie Goodman  25:28

Well, this has been an absolute pleasure. I’m always committed to trying to wrap up a podcast episode within 30 minutes because we can get a lot of juice and amazing gems, which we have here. Thank you so much Shoshana. This was such a fun conversation and really great insights. Thank you.


Shoshana Vernick 25:45

Thank you, Debbie. I appreciate you having me.


Debbie Goodman  25:51

Thanks for hanging around all the way to the end. It would mean the world if you would rate and review On Work and Revolution on your favorite listening app. It helps people know that the show is worth listening to. And so, I will really appreciate that. Thank you so much.



ceos, CEO Struggles, post-pandemic leadership, people, company culture, business hiring, decision-maker, layoffs, talent acquisition, 


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