Money Stuff: The Podcast – Episode Summary: "Horse Barn: HVAC, Windsurf, Vanguard"
Release Date: July 18, 2025
Hosts: Matt Levine and Katie Greifeld
Publisher: Bloomberg
1. Introduction to Search Funds
In this episode, Matt Levine and Katie Greifeld delve into the concept of search funds, a unique entrepreneurial path primarily pursued by recent MBA graduates aiming to acquire and manage small, often unglamorous businesses.
Notable Quote:
Matt Levine (02:05): “I'm only really excited to talk about search funds, if I'm being honest, because...”
2. The Allure of Search Funds
Katie explains the appeal of search funds, highlighting how they offer MBA graduates a structured yet entrepreneurial route to ownership.
Key Points:
- Search funds involve raising a six to seven-figure fund from investors, typically family or professional backers, known for offering attractive returns.
- Founders, referred to as "searchers," spend years sourcing and acquiring a suitable small business, often with aging owners looking to retire.
Notable Quote:
Katie Greifeld (03:02): “A search fund is like you go to business school, you graduate, you raise a like six or seven figure fund from investors...”
3. Case Study: Dan Schweber's Acquisition of an H Vac Company
The hosts discuss a Business Insider article featuring Dan Schweber, a searcher who successfully acquired an HVAC (referred to humorously as "H Vac") company in New Jersey after extensive outreach.
Key Points:
- Schweber sent 3,600 initial emails, conducted 375 introductory calls, arranged 30 introductory meetings, and secured six letters of intent.
- His persistence culminated in the purchase of an HVAC business, showcasing the grit required in search funds.
Notable Quote:
Matt Levine (04:32): “He emailed the guy 12 times... I don't think I've ever made it to the 12th email.”
4. Impact on the Employees and Company Dynamics
Katie explores how the acquisition by a search fund affects the existing employees and the broader company culture.
Key Points:
- Transitioning from a long-standing owner to a young, often MBA-educated CEO can be jarring for employees.
- The new leadership typically brings in optimized business practices, aiming to enhance operational efficiencies and profitability.
Notable Quote:
Katie Greifeld (07:09): “...the founder and owner of the business is getting a bunch of emails. How do the employees react when you tell them this 32-year-old now owns the business...”
5. Potential Paths and Outcomes for Searchers
The discussion shifts to the long-term prospects for individuals who embark on search funds, including the potential for significant financial rewards and career trajectories.
Key Points:
- Successful searchers can exit with substantial payouts, though the majority earn between $4 million to $10 million (16:12).
- There exists a possibility of scaling by acquiring multiple small businesses, potentially evolving into private equity magnates.
Notable Quote:
Katie Greifeld (10:00): “There are two paths to that outcome. There's the outcome of being a private equity associate and there's the outcome of taking over an H Vac company.”
6. Acqui-Hiring in the AI Industry: The WindSurf Case
The conversation transitions to the AI sector, focusing on the controversial acqui-hiring practices involving companies like Windsurf.
Key Points:
- Windsurf, an AI coding assistant startup, was subject to multiple acquisition attempts. OpenAI's failed $3 billion bid contrasted with Google's $2.4 billion deal focused on acquiring top talent rather than the entire company.
- The subsequent acquisition of remaining assets by Cognition left Windsurf's employees without their intended roles, highlighting the precarious nature of acqui-hiring in tech.
Notable Quote:
Katie Greifeld (23:10): “...Google was trying to acquire the top talent from Windsurf to feed into the maw of having AI researchers do AI at Google...”
7. The Role of Vanguard and Index Fund Holdings
The hosts examine the significant influence of Vanguard, an index fund giant, in the landscape of corporate ownership and its indirect exposure to cryptocurrencies through holdings like MicroStrategy.
Key Points:
- Vanguard's Total Stock Market Index Fund is among the largest, holding shares in a vast array of public companies, including those outside the S&P 500.
- This pervasive ownership means Vanguard holds substantial stakes in companies like MicroStrategy, which owns significant amounts of Bitcoin, thus providing indirect crypto exposure to investors.
Notable Quote:
Matt Levine (33:40): “Vanguard is one of the biggest shareholders of every single public company...”
8. Implications for Crypto Exposure through Index Funds
The discussion highlights how index funds inadvertently offer exposure to cryptocurrencies, bridging traditional investing with digital assets.
Key Points:
- Companies like MicroStrategy serve as vehicles for crypto exposure within index funds, allowing investors to gain indirect access without holding cryptocurrencies directly.
- This method satisfies institutional and conservative investors who may be wary of directly investing in volatile assets like Bitcoin.
Notable Quote:
Katie Greifeld (37:01): “The bitcoin treasury companies are interesting because they give you a way to own crypto if your only investment is the total stock market.”
9. Conclusion and Final Thoughts
Matt and Katie wrap up by reflecting on the evolving nature of business acquisitions, the strategic moves of big tech in the AI space, and the broader implications for investors and entrepreneurs.
Key Points:
- The intersection of traditional business practices with modern investment strategies continues to reshape industries.
- Both search funds and AI acqui-hiring represent strategic approaches to growth and talent acquisition in their respective fields.
Notable Quote:
Matt Levine (45:15): “I wanted to say that when we mentioned last week that we were going to name your bird friend of the show Bill Ackman, we got approximately 20 emails saying of Perching Square Capital Management.”
Key Takeaways
- Search Funds offer a structured path for MBA graduates to acquire and manage small businesses, requiring significant persistence and offering substantial financial rewards for success.
- Acqui-Hiring in the AI industry reveals the intense competition for top talent among tech giants, often leaving startups and their employees in uncertain positions.
- Vanguard’s Dominance in index fund management results in wide-reaching ownership stakes, including indirect investments in cryptocurrencies through companies like MicroStrategy.
- Investment Strategies are increasingly blending traditional and modern approaches, providing diverse opportunities and challenges for investors and entrepreneurs alike.
For Further Information:
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