Podcast Summary: Noah Kagan Presents

Episode: The Next Warren Buffett – Andrew Wilkinson

Host: Noah Kagan
Guest: Andrew Wilkinson (Co-founder, Tiny Capital)
Date: January 28, 2021

Episode Overview

In this engaging episode, Noah Kagan interviews Andrew Wilkinson, co-founder of Tiny Capital, popularly dubbed “the next Warren Buffett.” They dive deep into Andrew’s journey from designer to business owner, discuss how Tiny acquires and grows companies, and explore entrepreneurship strategies, deal structures, leadership, and operating at scale. Andrew shares candid reflections on life, personal productivity, business philosophies, and even rumors about his involvement with Slack.

Key Discussion Points & Insights

1. Building Tiny Capital – Copying Warren Buffett (00:00, 23:05)

• Andrew’s Playbook:
  • Andrew reveals that Tiny Capital’s approach is modeled almost exactly on Warren Buffett’s Berkshire Hathaway: “We just copied Warren Buffett, literally everything down to the way we do deals, the way that we structure the businesses, the way that money moves through the companies, I mean almost everything.” (00:00, 23:05)
  • Both Andrew and his business partner, Chris, prefer not to be involved in daily management. Instead, they hire smart leaders and let them run the show.

2. Early Career and Transition from Designer to Investor (06:11)

• Andrew started as a designer, never expecting to wind up in investing or running a holding company: “I started out as a designer and I somehow stumbled into investing and buying businesses.” (06:11)

3. How Tiny Values Companies and Why They Buy (06:50, 08:00)

• Profit and Predictability:
  • Tiny pays a multiple of company profit (typically EBITDA), with a higher multiple for safer, more defensible businesses.
  • Example: They paid a premium for Dribbble due to its organic, direct-traffic-driven user base and network effects, then rapidly grew it by improving operations and marketing: “We 12 or 14x earnings or something crazy like that.” (08:00)
• Investor’s Advice:
  • “If you know how to grow businesses, keep growing your own businesses or using the money to start more of your own stuff.” (06:50)

4. Traits of a Desirable Business (10:54)

• Notable factors that make a business “buyable”:
  • Little dependence on a founder or 'star'.
  • Durable moats (e.g., network effects, high switching costs).
  • Low vulnerability to competition.
  • Predictable, recurring cash flows.
• “When your business is too dependent on you, that's a big problem.” (10:54)

5. Raising Capital vs. Investing in Your Own Business (12:51)

• Selling vs. reinvesting is a trade-off between security (stocks, safety) and excitement/growth (hands-on entrepreneurship): “That's the fundamental trade-off that every entrepreneur makes: security versus...excitement and growth.” (12:51)

6. Starting With Little or No Money (15:10)

• Andrew’s advice: “Investing is something that happens way, way later. It's like you got to go out, you have to start a company or you have to have a job, or you have to build up enough money that you can be an investor, period.” (15:10)
• Hands-on business operation is essential before investing/buying companies.

7. Finding CEOs and Scaling Management (16:57)

• Andrew emphasizes cultural fit alongside business qualifications when installing a new CEO: “We needed somebody who the community would like and respect and would be a good steward of that.” (16:57)
• With around 32 companies, he relies on high-level check-ins, CEO updates, and monitoring employee sentiment rather than day-to-day ops.

8. Key Performance Metrics and Company Incentives (18:12, 20:10)

• “I'm not aware of the day-to-day details...I just get a quarterly email from each CEO.” (18:26)
• Growth expectations vary; some companies incentivize teams with shared upside, structures differ case-by-case.

9. Excitement About Podcasting & Supercast (21:44)

• Andrew’s current passion is podcasting and subscription-based models. With Supercast, he’s seen impressive direct subscription revenues: “We've been shocked by the amount of money they've been able to make. It's like 1999 and everyone's thinking the only way to monetize is with ads. And we're going like, no, no, no, no, no.” (21:44)

10. Money Flow and Investing Strategy (23:34, 24:05)

• Most profits are retained in businesses for growth; excess cash is centralized and redeployed for more acquisitions.
• Andrew’s personal allocation is heavily in Tiny: “99% probably. I have enough money that, you know, in conservative stuff that I could be okay...But other than that, every single thing is in Tiny.” (24:05)

11. Slack Design Controversy (24:20, 26:17)

• Andrew clarifies his company’s early design contributions to Slack, responding to criticism by former Slack designers: “I made the mistake of tweeting about how I never could have predicted that Slack would become a $25 billion business...I obviously wasn't intending to claim that we had engineered it all...Super frustrating.” (24:30)

12. Taking a Company Public – The Experience (27:30, 29:41)

• Going public was validating but brought new responsibilities: “...It's a different thing though, when all of a sudden you're like, oh my God, I have 10,000 people all counting on me.” (27:40)
• “If you have a big, big growth opportunity, it can make a lot of sense” to go public, citing access to capital as a key driver. (29:41)

13. Funding for Acquisitions (33:26)

• Historically, the team self-funded acquisitions. In 2019, they partnered with high-profile investors like Bill Ackman and Howard Marks.
• Raised a $150M fund anticipating post-COVID opportunities.

14. Founders’ Post-Acquisition Paths (35:48)

• “Almost all of them leave.” (35:48) Most founders exit post-sale; a few become advisors.

15. Calendar-less Living & Personal Productivity (36:12)

• Andrew experiments with being “calendar-less,” scheduling no fixed meetings: “The jury's out. But I'm really enjoying the feeling of not being time boxed.” (36:36)
• “Half the people don't even ever email me a follow up because they realize they don't actually need to talk to me that badly.” (36:36)

Notable Quotes & Memorable Moments

• “We just copied Warren Buffett, literally everything down...”
  Andrew Wilkinson, 00:00/23:05

• “If you know how to grow businesses, keep growing your own businesses or using the money to start more of your own stuff.”
  Andrew Wilkinson, 06:50

• On founder-led valuation:
  “When your business is too dependent on you, that's a big problem.”
  Andrew Wilkinson, 10:54

• On investing with no experience:
  “I would never give my money to someone who's never run a business before, to be honest.”
  Andrew Wilkinson, 15:10

• On being public:
  “It's a trade-off. You sacrifice a little bit of autonomy for [capital access].”
  Andrew Wilkinson, 27:40

• On controlling his calendar:
  “I'm really enjoying the feeling of not being time boxed.”
  Andrew Wilkinson, 36:36

Timestamps for Key Segments

• [00:00] – Modeling Tiny Capital on Berkshire Hathaway
• [06:50 & 08:00] – How Andrew values and acquires companies
• [10:54] – Building businesses worth acquiring
• [12:51] – Reinvesting vs. security in entrepreneurship
• [15:10] – Advice for aspiring investors with no capital
• [16:57 & 18:12] – Management, KPIs, and operating at scale
• [21:44] – Podcast monetization & subscription vision
• [23:34 & 24:05] – Tiny’s financial structure & Andrew’s allocation
• [24:20] – Slack design controversy and online reputation
• [27:30 & 29:41] – Taking a company public
• [33:26] – Funding approaches for acquisitions
• [35:48] – What happens to founders post-acquisition?
• [36:12] – Calendar-less productivity experiment

Final Thoughts & Takeaways

Andrew Wilkinson's approach is pragmatic, conservative, and deeply influenced by Warren Buffett, prioritizing defensible businesses, great people, and long-term cash flow. He offers valuable insights for entrepreneurs at all stages—whether it’s building a business others will want to buy, smart operational delegation, or refusing to follow the crowd’s conventions in calendars or capitalization. Noah's conversational style draws out candid reflections, giving listeners actionable “ear nuggets” on buying, scaling, and living well as an entrepreneur.