Think Like an Owner

My guest on this episode is Will Schoeberlein. Will started his career in investment banking and private equity before taking a leap to Southeast Asia to work on startups and software. He finished his time in Asia in Japan where he met his wife and he has since developed a small company acquisition thesis on the Japanese market. In the episode we discuss his thoughts about investing in private companies, acquiring companies in the U.S. and Japan, aging Japanese business owners and what that means for their economy, IPOing in Japan, and our shared use of Twitter. Episodes of Think Like an Owner are available on iTunes, Spotify, Google Play, Stitcher, Breaker, and TuneIn. Links Golden Southeast Nihon M&A Center Teledyne I'm also the founder of The Operator's Handbook, a print publication where small company operators share their insights and ideas for building more effective and profitable companies. Articles focus on process improvement, sales, hiring and training, managing culture, and all responsibilities within operating a small company. If you run a small business and are looking for new ways to grow and improve, subscribe today and join your peers in the endless pursuit of better at theoperatorshandbook.com.

My guests on this episode are Lui Pangiarella and Akram Sabbagh from Second Squared, an emerging search fund accelerator looking to bring the search fund model to Australia for the first time. The three of us discussed educating the marketplace, the mindsets of investors and owners in Australia compared to other countries, how they view themselves compared to counterparts in the U.S., and more. As they'll describe, Australia does not have a M&A market that is nearly as developed as the U.S. and a large part of their role is education. I had a great time learning about the challenges with introducing search concepts and acquiring companies in Australia and I hope you enjoy it as well. Links Mentioned Second Squared I'm also the founder of The Operator's Handbook, a print publication where small company operators share their insights and ideas for building more effective and profitable companies. Articles focus on process improvement, sales, hiring and training, managing culture, and all responsibilities within operating a small company. If you run a small business and are looking for new ways to grow and improve, subscribe today and join your peers in the endless pursuit of better at theoperatorshandbook.com.

My guest on this episode is Sam Rosati who, along with his brother Joey, ran a search fund called Pursuant Capital in the Tampa area and acquired a waste management broker called Alpha Dumpsters. There are a couple pieces about Sam and Joey's story that are unique. For one, it's one of very few search funds I've seen run by two searchers instead of one. And two, they are continuing to look for further acquisitions. In the episode we chat about Sam's experience searching for companies before and after acquiring Alpha Dumpsters, how he and his brother split roles, lessons learned, and what they want to do next with Pursuant. If you're looking to run a search fund, you're going to like this episode. Links Mentioned Pursuant Capital Alpha Dumpster The Partnership Charter I'm also the founder of The Operator's Handbook, a print publication where small company operators share their insights and ideas for building more effective and profitable companies. Articles focus on process improvement, sales, hiring and training, managing culture, and all responsibilities within operating a small company. If you run a small business and are looking for new ways to grow and improve, subscribe today and join your peers in the endless pursuit of better at theoperatorshandbook.com.

My guest, Mikel Berger, is the co-founder and partner of Little Engine Ventures, along with co-founder Daryl Starr. Little Engine Ventures is a very unique investment firm in the already unique world of small company investing. They have a strong regional focus of companies within a 2 hour drive of Lafayette, IN and are building a firm, brand, and community that resonates with small, midwest business owners. Little Engine also has a very unique partnership structure that includes a maximum investment for an LP, along with a minimum, and allows them to close deals faster than most private equity firms that raise capital by deal can do. In this episode with Mikel, we cover his software background, how he describes Little Engine Ventures and their target business owner, how he protects investors and business owners, among other subjects. This was a fascinating conversation, and I hope you agree with me by the end of it. Links Mentioned Little Engine Ventures DelMar Software Building a Story Brand RelaNet I'm also the founder of The Operator's Handbook, a print publication where small company operators share their insights and ideas for building more effective and profitable companies. Articles focus on process improvement, sales, hiring and training, managing culture, and all responsibilities within operating a small company. If you run a small business and are looking for new ways to grow and improve, subscribe today and join your peers in the endless pursuit of better at theoperatorshandbook.com.

My guest on this episode is Tim Ludwig, managing partner of Ohana Capital in San Diego. Tim is a search fund investor through Ohana and has extensive experience, having invested in 75 deals over his career. More recently, Tim has been investing in companies directly rather than investing in searchers through a fund. During our conversation, we cover topics like being a search fund investor vs investing directly, the history of search funds and investing in them, the search fund climate today, and Tim's exciting and sometimes dangerous study abroad experiences in Colombia and Spain. Tim was in Portland on business and was kind enough to share part of his morning with me for this podcast. Links Mentioned: Ohana Capital Stanford Search Fund Study Predictable Revenue Nonviolent Communication Radical Candor Never Split the Difference Random Lengths I'm also the founder of The Operator's Handbook, a print publication where small company operators share their insights and ideas for building more effective and profitable companies. Articles focus on process improvement, sales, hiring and training, managing culture, and all responsibilities within operating a small company. If you run a small business and are looking for new ways to grow and improve, subscribe today and join your peers in the endless pursuit of better at theoperatorshandbook.com.

My guest on this episode is Andy Ellis, a managing partner of Localize Capital in Pittsburgh which, as the name suggests, focuses on investing in companies and entrepreneurs around the Pittsburgh area. Little known fact about me, I used to live in Pittsburgh as a young kid and was extra excited for this conversation because of that. Andy grew up in Pittsburgh, worked in Southern California, and eventually moved back to Pittsburgh to help form Localize. Andy and I talk extensively about the structure of Localize and how they choose to invest in companies over a very long term, with a core idea being to look for owners who think not just in years, but generations. You may have heard of the concept of finite and infinite games, a concept written about by author James Carse. A finite game has known players, a beginning and end, and set rules, whereas infinite games have known and unknown players, no end, evolving rules, and the goal is to perpetuate the game. If this concept sounds interesting, this conversation is for you as we discuss this concept in the context of private equity and entrepreneurship. Please enjoy the episode. Links Mentioned Localize Capital Bryan Materials Group Finite and Infinite Games I'm also the founder of The Operator's Handbook, a print publication where small company operators share their insights and ideas for building more effective and profitable companies. Articles focus on process improvement, sales, hiring and training, managing culture, and all responsibilities within operating a small company. If you run a small business and are looking for new ways to grow and improve, subscribe today and join your peers in the endless pursuit of better at theoperatorshandbook.com.

My guest today is Kevin Graham, an Australian native living in Thailand running a web hosting company called Site Arrow, which he uses as his acquisition vehicle to buy other web hosting companies. The topic of software in micro private equity has come up more and more often and has been a recent focus of mine to learn more about, and Kevin was very helpful to that goal. While a great deal of the technical side of our discussion went over my head, his thinking around using permanent capital to perform a roll-up of sorts of small web hosting companies was fascinating. Beyond web host acquisitions, we also briefly discussed digital nomads and the life of living abroad. I hope you find our discussion as interesting as I did and if you or someone you know is in the business of acquiring small software companies, I'd love to chat as I want to continue learning about this space. Please enjoy the episode. I'm also the founder of The Operator's Handbook, a print publication where small company operators share their insights and ideas for building more effective and profitable companies. Articles focus on process improvement, sales, hiring and training, managing culture, and all responsibilities within operating a small company. If you run a small business and are looking for new ways to grow and improve, subscribe today and join your peers in the endless pursuit of better at theoperatorshandbook.com.

This space has some of the most unique backgrounds and my guest on this episode is no exception. David Krock joined a band as their drummer coming out of high school, did not go to college, and wound up starting a recording studio which led him on a path to entrepreneurship and micro PE investing, which he does today through his firm Sunset Coast Capital. David is your quintessential outside-the-classroom learner and has a rare depth of thought and experience. The topics of our conversation include his early years switching from music to entrepreneurship, the advantages of seasonal and cyclical businesses, lessons learned along the way, and a way he's trying to emulate Amazon. You can follow David Krock on Twitter and on through his sites DavidKrock.com and SunsetCoastCapital.com. Please enjoy our conversation. Links • Scaling Up • Simple Numbers, Straight Talk, Big Profits • DavidKrock.com • SunsetCoastCapital.com Show notes 1:14 Music background and switch to entrepreneurship 2:51 Parallels between music and business 7:13 Leaving the recording business behind 7:58 Advantages/disadvantages due to music background 9:36 Lessons learned by failing 10:50 Not being afraid to ask for help and potentially look dumb 11:30 Initial businesses started & growing into an entrepreneur 16:20 Starting entrepreneurship meetups 19:02 Becoming a consultant 22:06 What industries/characteristics do you look for? 24:00 Investing in a retirement community 25:55 Wedding industry/business model, being a seasonal business 31:55 Building the business in the offseason 34:40 Cash management strategies for cyclical/seasonal businesses 41:00 Using earnings from portfolio companies to reinvest 43:41 Funding projects within portfolio companies 45:07 Calculating returns 50:52 Using Amazon's model in micro PE through Sunset 1:02:58 Which service are you going to turn into a business first? 1:03:56 What class would you teach in college? 1:07:57 Most fortunate event that was completely random? 1:09:07 Best business you've ever seen? I'm also the founder of The Operator's Handbook, a print publication where small company operators share their insights and ideas for building more effective and profitable companies. Articles focus on process improvement, sales, hiring and training, managing culture, and all responsibilities within operating a small company. If you run a small business and are looking for new ways to grow and improve, subscribe today and join your peers in the endless pursuit of better at theoperatorshandbook.com.

This episode is unique and is a joint episode with Karen Spencer from Searchfunder, Walker Deibel, and myself, and is something I'm calling "Author's Chat." I recently sent out a survey to see what content listeners and readers might enjoy hearing most and many of them said that conversations with authors of books relevant to micro PE would be interesting to them. This is one conversation along those lines. Karen and I's guest, Walker Deibel, is an acquirer of 7 businesses, author of the book and site "Buy Then Build", and is an active investor and advocate for entrepreneurship through acquisition. This conversation focuses on his book and lessons and stories from his investing and operating experience. I hope you enjoy our conversation and if you want more episodes with authors, please let me know! I'm also the founder of The Operator's Handbook, a print publication where small company operators share their insights and ideas for building more effective and profitable companies. Articles focus on process improvement, sales, hiring and training, managing culture, and all responsibilities within operating a small company. If you run a small business and are looking for new ways to grow and improve, subscribe today and join your peers in the endless pursuit of better at theoperatorshandbook.com.

My fifth guest of the show is Nick Haschka, an MIT graduate living in San Francisco focused on buying small private companies through his firm Cub Investments, along with two other partners. Together, they recently purchased a business called The Wright Gardner which provides interior plant leasing and maintenance services to companies in the bay area. One thing that is interesting about Cub's approach is their use of add-on acquisitions to expand the plant leasing business and part of our discussion is on how they view the risk with add-ons versus platform acquisitions, which was very interesting. The more I read and learn about the micro PE and permanent capital space, the larger and more diverse it feels. Every investor invests differently and each story is different. Nick is no exception, and in our discussion we cover how his background has influenced his investing, his unique work experience, misconceptions he sees in small company investing, and his disagreements with the concepts of competitive advantage and Porter's Five Forces. I hope you enjoy our conversation as much as I did. Show Notes Links • Cub Investments • The Wright Gardner • Credit Parent Notes 1:30 Brief overview of Nick's background 4:00 Strategy of focusing on local businesses, found The Wright Gardner 5:04 No external investment, utilizing SBA loan program 5:30 What experiences prepared you best? 6:44 How do you view add-on acquisitions at Cub and diversification? 9:31 Weighing buying a new platform business versus an add-on 11:32 Risk of investing in an add-on and integrating it into your existing companies 14:42 What is involved in the Cub Investment "car wash?" 16:46 Examples of new processes added to companies 18:18 Are there benefits to not having experience in the business you're going to acquire? 19:31 Misconceptions with buying small companies 23:34 What gets looped into the earnings number that you need to remove and how do you view that process? 25:22 Role of the 80/20 rule in due diligence and working with the seller 27:53 Role of the previous owner after acquisition 30:29 Is the size of purchase an indicator of the replacement value of relationships with customers? 32:28 Growth of Cub Investments 34:26 Change of valuations recently 36:39 Competition for deals 37:34 What class in college would you teach? 39:10 Most fortunate event that was completely random? 40:47 Best business you've seen? I'm also the founder of The Operator's Handbook, a print publication where small company operators share their insights and ideas for building more effective and profitable companies. Articles focus on process improvement, sales, hiring and training, managing culture, and all responsibilities within operating a small company. If you run a small business and are looking for new ways to grow and improve, subscribe today and join your peers in the endless pursuit of better at theoperatorshandbook.com.