First Round: Gigi Butler's secret ingredient

First Round has always had a theory that private equity execs target businesses they secretly wish they’d started themselves. This must surely be the case with Gigi’s Cupcakes, the US’s largest cupcake franchise, which was recently acquired by Fort Worth-based private equity firm FundCorp. Why else would local news reports reference “aggressive” expansion plans that include a store in Fort Worth itself?

Private equity has a thing or two it could learn from company founder Gina “Gigi” Butler, and not just on the importance of a proliferation of baked goods in the workplace. 

Aside from her prowess as a baker, Butler is a canny businesswoman who opened the doors of her first store in Nashville with just $33 left in her pocket. Eight years later, there are more than 100 Gigi’s Cupcakes franchises across the US. Butler also became something of a celebrity last year by appearing on CBS’s hit series Undercover Boss.

For the uninitiated, Undercover Boss presents the experiences of senior execs working undercover in their own businesses to discover what’s really going on day-to-day on the “front line”, as it were. As well as an opportunity to identify improvements (Butler discovered certain employees were making unsanctioned tweaks to cupcake recipes), it also shines a light on those often-underappreciated staff members without whom the whole enterprise crumble.

This could be the icing on the value creation cake firms have been searching for, the recipe for squeezing that extra 0.3 percent of alpha out of a portfolio company, not to mention making the right calls when it comes to hiring and firing.

Would Addison Lee run smoother if David Rubenstein took a turn ferrying businessmen around the streets of London? Would customer satisfaction at TheTrainline skyrocket if Henry Kravis took a turn on the helpdesk? Would flight schedules run more tightly if Steve Schwarzman took a turn piloting a Trans Maldivian Airways seaplane over the stunning Indian Ocean? First Round is unsure.