← Tiny Office Hours
Tiny Office Hours
#1: Ask Us Anything
01:02:48
We answer questions from donors for our first ever charity Ask Us Anything session.
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- [00:00]
A
Thank you so much for being here and bidding. That's really cool.
- [00:04]
B
Yeah, it's really neat.
- [00:05]
A
Okay. Does someone want to go first? Alejo, do you want to choose somebody or yourself or you can ask us a question if you want first.
- [00:12]
C
Yeah, amazing. I'll start. Why not? Sure. So here's my question. So I'm starting a Shopify agency in Latin America, and Shopify is fairly new there, and there's not a single Shopify plus partner in the region. So I'm setting up this company, and I want to hire a CEO in the next six months to run it. What should my game plan be for these first six months, and then who should I hire a CEO and how do I find them? Finally, if I wanted this company to be acquired in, say, five years, what are the key things that the company needs to have in order to be an attractive acquisition target?
- [00:49]
A
This is a new company you're starting?
- [00:51]
B
Yes.
- [00:52]
A
Why wouldn't you? Is there any reason? Do you already have another business?
- [00:57]
C
I do.
- [00:57]
A
I do.
- [00:58]
C
I have two other businesses.
- [01:00]
A
Gotcha. We always take the approach that you want to find somebody who's done it before. So I would look at, could you acquire a small agency that's already working? If you have the money to do it, that's always the easiest thing to do. And then you can identify growth opportunities for them. So we, for example, we own Metalab, which is like a large digital agency. And we had a lot of leads from smaller companies, and so we went out and we acquired a very small but incredibly talented design agency called Z1. And we help them rebrand and reposition, and then we just give them all of our leads. And that business now is, I think, what, 20 times the size from when we bought it. So we bought it very cheaply, but it was a great, fully formed team and just needed better marketing and stuff. In terms of choosing the person. Yeah, just I would poach someone from a top Shopify plus partner.
- [01:54]
B
The part you're gonna have the most hard time with is that it's easier to poach someone if you do have an existing brand. Because otherwise, if you're just going to someone and you're saying you're going to bankroll them, you could just so easily just create this themselves. I love the idea of trying to skip the line and buy an existing agency in advance and then go out and just poach. It just is fundamentally easier.
- [02:14]
C
Awesome. And what about in terms of if I wanted this company to be acquired in, say, five years, the number one.
- [02:21]
A
Thing, an acquirer is going to look at is a track record. Right. So they want to see that whoever the CEO that's in has been operating the business profitably and growing it. The number one thing is that you're not part of it, that you're not the key and that you're not sprinkling the magic on top, that you're at a distance. We've had times where we've tried to sell businesses and Chris and I weren't really that involved, but there wasn't a clear leader. And if they interviewed them, they might say, you know, yeah, Andrew and Chris do X and Y and Z. You want them to say no. Alejo does absolutely nothing. We don't even talk to him. We talk to him every six months.
- [02:58]
B
I'd say more than anything, build that business so that you're holding it for 10 years and with no mind of selling whatsoever and it'll be a great business that someone will actually want to purchase. Totally.
- [03:08]
C
Thank you. Appreciate the response. Let's go with Steve and then we'll go with Rahesh.
- [03:13]
A
Perfect.
- [03:15]
B
On the topic of CEOs, I know you guys have spoken before about the model around bringing great CEOs for businesses and that's a really key part of scaling. Tiny, can you talk about how if you're hiring CEOs that have real experience, they're super valuable, they have a lot of other things they could be doing.
- [03:33]
A
You want them to run one of.
- [03:34]
B
Your businesses, how do you create an incentive structure that makes it worth their while to take that option without overcomplicating the structure that you guys have for.
- [03:43]
A
The way that you like to own.
- [03:44]
B
And cash flow businesses?
- [03:46]
A
Yeah, it's so tough.
- [03:47]
B
I'd say we're in this quest of trying to redefine comp across all the companies and I feel like I can almost talk your ear off on all the mistakes that we've actually made more than what actually works the best. And our goal on a go forward basis is really to try and mirror what Constellation has done well and provide everyone with a base salary that accomplishes their needs and then essentially comp then on return on invested capital plus organic growth. And our goal in the long term is to try and basically make a piece of that bonus calculation in some form of future participation in the business. What's difficult is that Tiny, at least at present, is going to be private forever. And so it's hard to try and create a structure that gives them that sort of participation or that lift in the future, but still gives them flexibility. We always go through a conversation of what do you want to prioritize? Is it base salary, is it variable, or is it some form of unlocking that value? And the mistake that we've constantly gone over is how do you solve for that future potential, the stock options path? I feel if it's in their personal company that they're operating, there's so many second order consequences that keep coming up in the sense of not wanting to pass capital up to the parent company or wanting to use capital or trap capital within their enterprise. And so I'd say we're really in a year of exploration of redefining what actually success will look like for these CEOs. But it paints a bit of a.
- [05:13]
A
At the end of the day, the ideal incentive package for anyone is getting them to write a check and have skin in the game. So our ideal would actually be that we go buy, we go buy a business, we buy 80% of it and we have a co founder CEO who comes in and they buy 20% with their own personal capital and they think like an owner. And that to me is the best alignment. Now finding people who have the money to put into a business or where they'll take risk is very difficult. We find most executives want a very good base salary. They want almost a guaranteed bonus. They don't want to take a lot of risk. And so it really depends at the end of the day on the psychology of the individual. Because there's certain people where you go, this is the right person to run the business. I know they'll do a great job, but they're risk averse. So in those situations you say we're not going to have equity alignment. But the dream is always that you get someone to come in and cut a check. It's just hard to get people to do that even when they have money.
- [06:11]
B
And just a quick follow up, have you had success with just creating like cash comp that's tied to growth? Is that something you've experimented with as opposed to the equity piece?
- [06:20]
A
Most are actually 100% cash based comp. We don't really do a lot of equity because people aren't willing to write the check and don't value it. And so we've had really good success with a structure where we say, look, this business is already growing at 15% a year or something like that. For every. If you grow it above 15% a year, if you've got 25%, we'll take the gulf between that and we'll give you 10% of it or something like that. And that hurdle increases year after year.
- [06:49]
B
That's helpful.
- [06:50]
A
Thank you guys.
- [06:52]
C
Thank you. We'll go with a quick follow up from Nathan. Doj agrees on this. And then we'll go with Rahesh. Let's go with Nathan. And then we'll go with Rahesh.
- [07:01]
A
I'd just love to hear some more.
- [07:02]
B
Of those compensation mistakes that you've run into. One of my favorite mistakes, Andrew just lightly touched on one, which is what we've gravitated towards is more of a hurdle approach. The mistake we did recently is we were comping a lot of people on saying, hey, we're expecting 15% annual growth in the company and basically we'll increase that target each year by 15%. The problem is that if one of those businesses doubled in any year, then they were penalizing themselves for future years because their new target would increase by 15%. So there's a second order consequence of both sandbagging expectations, but also kind of an aversion to wanting to double the business. And we don't want that. And so implementing a hurdle and saying, hey, the business right now is say doing X and it's going to increase at its own rate. The hurdle rate is going to increase at its own rate means that someone could double the business and they'd be in a bonus capacity for multiple years until that hurdle catches up. And so it creates much greater alignment long term.
- [08:04]
A
One of the worst things we did is in one of our businesses we had a compensation structure where people would get as long as they get within 70% of the net profit target, they trigger their bonus. But it was based on an annual budget. And so what would happen is, as Chris would say, as Chris said, they would achieve, let's say, $10 million of EBITDA or net profit. And, and we would say, okay, guys, you've been growing for last five years at 30%. The new target should be 13 million, 30% above. And they would always say every single year, oh no, those were freak years. We're gonna have a terrible year this year. And the reason was cause they're incentivized to set the target as low as possible to maximize bonus. But yeah, never do budget based. It's just brutal.
- [08:52]
C
Thank you. We'll go with Graham Robbins.
- [08:56]
B
Okay, Graham Robbins. So I have a legacy business, customs brokerage. And we, and we spun out a little business to create a Shopify app to help people ship across borders. And we're just getting started. We're just submitting it to the shopify store and I thought I would ask how do we get it into users hands? What's the best way to figure out product market fit with the Shopify ecosystem?
- [09:22]
A
I think you could either appeal to small merchants and have to have a thousand customers or you could probably find 10 or 20 large people that have this exact problem and solve it for them and probably make more money with higher margin. There's a lot of public databases of Shopify merchants. I try and get access to those. You can usually pay like 10 or 20 bucks a month just to see people who are doing large volume. And then I would do targeted reach out to all the CEOs. Hey, is this a pain point for you? I can do, I can solve it for X dollars and basically have your customers pay to do development and figure it out and find product markets. But I did actually look at your website when I saw you register and the product was really cool and I thought the marketing site was clean. I appreciate that.
- [10:07]
B
Is there also a reseller network with people that go in and help you set up on Shopify? Is that a good entrance point to connect with those guys that are selling you? Here's your QuickBooks, here's your Shopify. Here's your Mailchimp. Is, is.
- [10:21]
A
Is there such a thing? Well, Shopify plus is basically that. Right? So Shopify plus is like the enterprise version of Shopify for larger merchants. And I would try and go on LinkedIn and figure out who your top people at Shopify plus are and then email them and say hey, here's what I'm working on. Would this be a fit for any of your customers? And then there's also I would reach.
- [10:40]
B
Out to agents in time. There's a whole slew of agencies that fulfill on Shopify and just create, create a kickback. I actually think kickbacks for agencies is such an interesting channel. So you're saying pay them something to use to install the app or to refer. Awesome.
- [10:58]
C
We'll go with Aleem James. So Aleem Mawani.
- [11:03]
A
Hey, how's it going guys?
- [11:04]
B
I'm curious about your guys relationship and history behind that. What you guys feel are your strengths and individual weaknesses. What makes for a good sort of business partner relationship.
- [11:14]
A
And the thing I'm specifically looking for.
- [11:16]
B
Is it any different than say a co founder relationship? And I feel like I know that what makes a good co founder relationship.
- [11:22]
A
Work but do you feel like that's.
- [11:24]
B
Any different in your business?
- [11:26]
A
I think one of the most interesting things about our relationship is the things I really care about. Chris doesn't give a shit about. And the things Chris really gives a shit about, I don't care about at all or I don't care about the details of. And so it means that we. We both get our little circles to play in and we don't bug each other. We have very complimentary skill sets. And I would say before Chris and I partnered up almost 10 years ago, I had shiny object syndrome, and I said yes to everything. And so I was the gas, but I didn't have a break. And then Chris was the break. Chris was reality. Chris was a check on my thinking, and then vice versa. Chris will be too conservative on something or too hopped up about something, and I'll be the counterpoint. And I think that just like with pair programming or anything else, you can make better decisions with somebody complimentary to you. Finding that person is very difficult, I'd say. But it's been a great partnership because we don't hold each other back from doing the things we like. We both still can follow our rabbit trails and passions and stuff, and we don't feel like we're letting one another down.
- [12:29]
B
Appreciate that.
- [12:30]
A
Thank you.
- [12:31]
C
Awesome. Thank you. We'll go with James Friel now.
- [12:35]
B
Hey, guys. So my goal is to intelligently acquire or take positions in other companies like you guys have done. And I have a model right now where my thought process is. We have all these internal capabilities, and as we seek partnership opportunities, we're looking for companies that our skill set is.
- [12:56]
A
A good match to help add fuel.
- [12:57]
B
To their fire, their existing fire. And I don't really know is that. I'd just love to know your perspective on that. Is that model something that you guys have experience with? Do you think that it's just better to go out and create some deal flow and acquire companies and not necessarily be bringing our own capabilities to those companies? And I'm trying to figure out our.
- [13:21]
A
Way from point A, where we are.
- [13:23]
B
Right now, to where we're doing more.
- [13:26]
A
Of an investing approach, but not necessarily.
- [13:28]
B
Dismissing the success and the model.
- [13:30]
A
The problem is, let's say Your agency does $10 million of EBITDA right now, and you go and you make an investment in a business and you start saying, okay, we're gonna go off, and now we're gonna run PPC or marketing or whatever for this business. We found that that new partner is very demanding and wants basically to be a client for free. And so you end up maybe giving them too much services, and then they control the business at the end of the day so they can still make bad decisions executionally and stuff. And then you've also got, let's say Kellogg's over here as a paying customer who's got $100,000 a month retainer and they're. And whenever they bash their fist on the table, you've got to run back from where you're doing all the other stuff with equity. And you got to really service them because you can't lose them because they give you the money to do everything else. And so we did that a little bit and we learned it didn't work. Our opinion is that every business that we invest in has to stand on its own two feet. We can't depend on synergy. And we might have the view that if we buy Dribbble, we can do better SEO. But I don't want the SEO work to be dependent on a business that we own and lose out on customer revenue over here.
- [14:45]
B
How do you guys create your deal flow for those acquisitions and think sen?
- [14:50]
A
We've been writing for 15 years, building up a Twitter following, doing that kind of stuff. We were known as entrepreneurs. And when we planted our flag and said, hey, we're here and we're acquiring businesses, we had to do some outreach. But really we just have naturally gotten deal flow. But that's a 15 year process to build up an audience and talk about this stuff.
- [15:12]
B
We started off just actually like ringing doorbells though, and inundating people that we really loved their companies and just saying, hey, you should sell to us, you should sell to us. And it really did start off almost like a Dennis the Menace approach. We just constantly went next door and knocked.
- [15:26]
A
That was how we got dribble. We just were there. The other opportunity, when you own an agency, you do get insight, right? So what I would do is if you see someone's business, let's say someone has an iPhone case business, and you're scaling it and within the first campaign, you're like, oh my God, this should be like a $20 million business at that moment. I would say go to the founder and say you want to buy 60, 70, 80, 100% and then do the deal and take it over and then build your own PPC team to do all that stuff within the business. But I, I haven't had a lot of success ever with minority investments because at the end of the day, if you're not steering the ship, they can still drive it into an iceberg even if you fill the fuel tank.
- [16:06]
B
I feel like over and over too psychologically, if you're offering your Services as a minority investment and you're taking equity for that service, they always treat you not as an actual investor, but almost as an employer or contractor. And you don't really get the same level of updates that you would have received if you actually invested. We're pretty strict on this. We never do work for equity. We will get paid for the work, a fair rate. And then afterwards we will actually invest and say, hey, we love your business and invest with cold hard cash.
- [16:36]
A
Yeah. We'll say if someone comes to us to like, hey, would you guys invest? We'll be like, yeah. But then you got to pay Metalab, you got to do the services or whatever. But we never do that work for hire because, yeah, people abuse it.
- [16:46]
B
Yeah. That's awesome.
- [16:48]
A
Yeah, thanks, guys.
- [16:49]
C
Cool, awesome. We'll go with Adrian Albus now.
- [16:54]
B
Hey, what's going on, guys? Nice to meet you. I have a very early stage company we're literally about to launch. My question is if you just talk to me a little bit about the mentality that I need to have to take my company from 0 to 100 customers versus taking it from 100 customers to 1,000 or 10,000 customers. The context is that I'm building an online freelancing platform really inspired by me using Upwork and Fiverr quite a bit in my last role, CEO of my last startup. And we're really trying to focus on allowing clients to buy specific outcomes and bundling pre scope projects around those outcomes. So for example, if you wanted to drive traffic to your platform, here's the two or three projects that we think align pretty well with that.
- [17:41]
A
We are not like blitzscalers. Right? We always think about how do we start this as a small business, then make it a medium business. Then if it deserves it, we'll make it a large business. Going back to the advice I gave before, it's find your first five, six customers. There's probably people in your network or that you're friends with or people you just know on Twitter or whatever who you could probably get to use the product. Especially if you gave it out at cost or whatever it is. It goes back to that Henry Ford quote. If I'd asked customers what they wanted, they would have said a faster horse. You, you know exactly what the problem is, how to solve it. It's going to be about how do you explain your unique value proposition. What I would really try and figure out is how do you summarize the pain point in one sentence? So if you're talking to a bunch of people who have Used upwork. It's I paid this person hourly. They did 30 hours of work and I didn't get what I wanted. How do you put that in a succinct one sentence pain point and then try and do some customer development around it. There's a great book that we read 10 years ago called Made to St. It's all about how to create that memorable thing that grabs people and makes it make sense for them. And that can also be part of your naming and all that kind of stuff. But ask follow ups like I want to know exactly what you want to.
- [19:00]
B
Yeah, I think the thing that I'm struggling with is that we have a lot of conviction around our core concept and I've built. We just passed through an alpha round, had a bunch of friends and family use that. They loved it. We now have a waiting list that we're building. Some people on the waiting list don't necessarily want the exact product that we want to test. So I feel pulled between prioritizing those customers that would help us validate our hypotheses versus getting some revenue in the door and maybe working a little bit about outside of our scope, but just getting some money running through the business.
- [19:39]
A
We started a business called Flow 12 years ago which is productivity and we made the critical error of listening to our customers too much. So we have noisy squeaky wheel gets.
- [19:50]
B
The grease and they hear that too.
- [19:51]
A
Yeah, we need project management, we need Gantt charts, we need whatever. And I think if we just stuck to our core principles and delivered the product we originally wanted, we would have been way more successful. So I'm a big fan of just sticking to your guns, but I'm totally allergic to not having revenue within six months. So I would really fight hard to dig through your network and find one or two people and just say look like how can I if I can deliver outcome based results, it's a no brainer to pay for it. And you're only going to pay for it if you get the outcome you want. Find two or three people like that and make sure you're not burning too much.
- [20:28]
B
Thanks.
- [20:29]
A
Yeah, cool.
- [20:30]
C
Awesome. We'll go with Dmitry and then Nicholas.
- [20:36]
B
So my question is around sourcing and finding the first deal, what do you think about all these different websites like microacquired.com and all of that? Would you take a look on that or just go direct and find the app or the site that you like and just approach the CEO?
- [20:55]
A
If you look at your city and you look at all the big real estate developers the deals get done on the golf course and at dinners. They don't go on listing sites and stuff. And I think when things go on listing sites that means none of the smartest people want to buy them or they're very low quality. We used to look at the listing sites and over again we would just see low quality businesses. There are exceptions. Microacquire is actually quite good. There's some good stuff on there. We like Andrew who runs it, but I would think you'd have much better results doing the Peter lynch and just thinking about what are the 20 tools I use online that I love every day looking up who owns them. And if it's an individual emailing that individual, I use a tool called Voila Norbert. So that is like an email finder. And so you punch that in and then get the email and I just cold email people and it only works one in a hundred times. Chris and I always like to joke, if you see a beautiful girl walking down the street, you have to go up and talk to her. And so when you see the beautiful business, you just go up and say something.
- [21:56]
B
Yeah, makes sense. And if you've never acquired the business, would you recommend any deal size, profit? I don't know. How would you approach in terms of the size of the business?
- [22:09]
A
What's your operating experience?
- [22:11]
B
I'm not an operator at all. I'm a software engineer. But I find it interesting and I know how to build the technology teams around the product and I think that nowadays people I can see the opportunity how to optimize the cost around the building the product. And I see that as an opportunity for myself. And also just in general, I work with the software a lot and that's.
- [22:37]
A
Why I'm, I mean if like something simple as saying, okay, there's 250k of revenue, I'm a developer, I can do this myself for 40 grand a year, 120 grand a year, whatever. If you can operate the business as one person, there's a huge advantage in that. The biggest thing you want to think about is you don't want to buy a corner store, right? A corner store is a business that does 300k of revenue and maybe 60k of profit. And all the profit has to go to somebody who works the till. And so you buy yourself a job and it can never grow. A corner store is only as big as the neighborhood you're in. Doesn't matter how good of an operator you are. So you want to find a business that is profitable, has enough profits that if you want to, you can delegate it out and hire somebody and that it doesn't have to triple because. But it has to have some ability to grow with clever growth hacks. And I think that's the big opportunity with these businesses is finding a business where you have an unfair advantage. So an example of that would be, let's say you have 100,000 followers on Twitter and you're a marketer. Could you go on product hunt, find a failed startup that is some marketing tool, buy it for five grand and then resell it, repackage it and sell it to your customers where you have free customer acquisition and they didn't have that solution. Or could you find a business with a great product but they're terrible marketers and so you buy it and you just market it better and then you're in the money. We love stuff like that.
- [24:06]
B
Thank you.
- [24:07]
C
Awesome. We'll go with Nicholas Hearance and then Ramon Berrios.
- [24:10]
B
Hey guys, my question is just back to attracting management. So outside of the organic brand building that you guys have done over an extended period on Twitter and podcasts and various other channels, what has really worked for you tactically in terms of attracting management? Like at the top of the funnel between recruiters, just networking, public job posts, and then as a follow up when a manager hasn't worked out for whatever reason, what have you learned about resolving that and making a change?
- [24:40]
A
It's like the Munger thing. To hire great CEOs, you have to deserve great CEOs, so you have to treat the ones that you have very well. And, and I think all of our CEOs for the most part would speak highly of us, or if they didn't speak highly of us, they'd at least say they were fair. They left us alone, they mostly gave us what we needed and stuff. When you're first starting out, it's harder to convince someone to come work for you. But the key to that is having a great business. One of our first acquisitions was Dribbble, which is an incredibly sexy business. This is like the ultimate business that anyone would want to run. So if you buy a great business and you're a nice person and you set it up the right way, I don't think you'll have much trouble for sourcing. We used to not like recruiters. Now we actually think there's a lot of value in it because we're quite busy and we don't have time to go through LinkedIn and do all that stuff. You pay a premium, but the premium is worth it even if you end up hiring someone that comes through your network, it's worth paying the premium of the recruiter because they might bring two or three interesting people you wouldn't have considered in. Our biggest mistakes have been hiring dreamers, hiring people who, you know, they, they were inspiring and cool and we liked them, we saw their potential, but at the end of the day they hadn't done it before. And so they end up learning on the job, they get upset, it sucks.
- [25:58]
B
And often they need more hand holding than the way that we actually operate. We, I'd say the way Tiny is actually structured, we have to hire people who've done it before because we really do throw people in the deep end.
- [26:08]
A
We really are not there to be day to day coaches. We're there to help you make high level decisions. And so there's a certain type of person who thrives within Tiny and then there's this type of person that we shouldn't hire.
- [26:19]
B
Yeah. When it comes to hiring outside of recruiters real quick, I cannot overstress actually going through LinkedIn or finding people who've done this before in larger scaled companies and basically just poaching them and giving them an outsized amount of return and just paying for people who've done this before. And if they're not willing to make the move, just peppering them as to who else you should chat with.
- [26:38]
A
The other thing that a lot of people do, we thought about this the wrong way early on, but you talk to someone who's an executive at some big company and you're like, oh God, this person's total comp is like 500 grand. There's no way we can do that in reality. Often their comp is 180 grand and then the rest of it is variable in stock. So you can almost always get there by getting creative. And if you're going, well, this business is small, we can't afford it. You just say, what's the scale it needs to get to to pay them a lot of money and then target that as the goal and then pay them out based on that.
- [27:12]
B
Great, thanks very much.
- [27:14]
C
Awesome. We'll go with Ramon and then Ermin.
- [27:18]
B
I'll follow up with the question with context in my specific use case. So the analogy of the pretty girl, when you just know, right, so the sexy business, you immediately know what are the common unit economics that those businesses tend to have.
- [27:30]
A
And if you have to go in.
- [27:31]
B
And change the model, is there a rule of thumb that you apply to the unit economics that the business must.
- [27:36]
A
Have we're not very quantitative, we're much more qualitative. So when we're thinking about a business we're going what's the durability of this business? If you think about dribbble, Microsoft could put a billion dollars into creating a dribble competitor and it wouldn't work. It's just such a unique group of people. It's a network effect, it's highly defensible. So we spend a lot of our time actually thinking about that. Is this a business that will continue to exist in 10 years and, and why can it stand up to venture competition or whatever? We really like to get in the habit of thinking about what the mode is of that business and how it's defensible over just cheapness or unit economics or anything else.
- [28:19]
B
On the qualitative versus quantitative real quick. I do find it really important to be able to identify low hanging fruit and just think in a qualitative sense. Anytime we get too quant heavy and we start building like really complex models and you start convincing yourself and putting all of this work into this really pretty model modeling out all these different scenarios. All you're doing is convincing yourself that you need to buy this business. I think that the more and more time you spend in that practice doesn't make perfect. Practice makes permanent and it really does feel like that the more and more you spend in modeling. So napkin math all day. Thank you.
- [28:53]
C
Awesome. We'll go with Ermin and then you Jay.
- [28:57]
A
Hey guys. So like I started an agency three years ago and then following like some of the podcasts you Andrew did, I managed to get myself out of it equation. So like basically agencies run by itself now and manages to pay my bills without me actually doing much. So at this point I'm as you mentioned before, the corner store, you know. So like the question would be how to get out of there. So like basically what's the next step? So like now what would be the way to grow it further? What we did is we said we didn't have enough money to start buying businesses in the early days nor would it have been a good idea. We needed more experience operating and so we took the profits of the agency and we started software companies and we tried all sorts of dumb stuff. We did e commerce stores and we just learned about different business models. So we had about five or seven different businesses and it was obvious which ones were really good. And in about 2013 we pivoted to buying businesses and I think at that point we were ready because we'd Experienced, we knew enough to go, this is a bad business, this is a good business. This is an opportunity that's real versus one that's imaginary. So I would probably start by trying to start other businesses and making sure they're completely separate from your agency. Don't try and do it within your agency and use agency resources, go off, start a separate office, separate team, have your own cfo, et cetera. And just start learning and getting ready and reading about investing if that's where you want to go. Or maybe you don't need to do anything else. Maybe you just buy a bunch of stocks and real estate and have a nice life. I think it depends on what you want to do. But either way, congrats on getting there. It's awesome. Yeah, thanks for your help. I'll just have a follow up question. So basically I like kind of agency business because I get to work with a lot of different companies. Basically I hook them in and then everything else flows through the agency. And basically the question would be, I've seen the pattern that you lately started. Also investing, no code and also E commerce. And basically that's something that you're going wrong. Is there a certain trend that if you would start, if it would be 2006 again, what would you go after? I love boring stuff. A newsletter for people that are into no code, where you can get 2,000 subscribers, charge them all 20 bucks a month, something that's high margin, simple, you can grow, especially for your first few businesses, because what you don't want to do is be the guy who goes into the gym you've never worked out before and you go up and you try and do a massive deadlift of 200 pounds, you're going to hurt your back. You need to just go in and get some baby weights and just kind of start building your muscles. So choosing businesses that are really easy and hard to fail at and hard to screw up I think would be a good move. Cool.
- [31:41]
B
Thank you.
- [31:43]
C
Awesome. We'll go with you, Jay. And then Sam Ducker.
- [31:48]
A
I'm curious about your due diligence process.
- [31:50]
B
Could you guys walk me through an example of what that's looked like for you?
- [31:54]
A
The most important diligence we do, number one, we try and buy from people we know. So we are looking for, do they have a public reputation, are they on Twitter, do we have friends in common? We'll ask those friends about them. Do we know them and what's our sense of the person? The most important thing is you can't do a good deal with a bad person. So if you have a really good feeling about somebody and all of their statements check out, that's a really good first screen. And forget all the other diligence. Obviously you want to do the rest of it, but that's the most important thing from there. Usually the businesses we're buying are quite simple and it comes down to looking at stripe accounts, verifying that the P and L roughly stacks up against the bank balances and everything else. What am I missing?
- [32:42]
B
I think you hit one that's so critical, which is having a good feeling from the founder as you interact with them. The number of times that I'd say almost every single deal that's gone poorly. It's because at some point when we looked back, we've always said, oh yeah, that was pretty obvious when we were talked with that guy and they were a bit sketchy. It is such a. It goes back to the qualitative aspects. Right. Like having a real good feel of the counterparty obviously.
- [33:07]
A
Yeah.
- [33:07]
B
We go through the balance sheets and you know, we go through the bank accounts and we verify that the money is actually coming in and occasionally we'll do cohort analysis and make sure that the underlying business is actually is as healthy as the founders purporting. A large aspect when it comes down to trust is that everything that founder says or represents, just verifying that it's actually true more than trying to uncover any kind of.
- [33:32]
A
If you can do it too, it's nice to have a hold back or something or have the founder, if you really like them, have them keep 10 or 20% just as an added security for them to not, you know, I don't know if you've heard of the term like finite and infinite games, right? A finite game is I interact with you once I can screw you over, I'm never going to see you again in my life. There's no downside. For me, an infinite game is I'm going to have a reputation for 50 years. I need to make sure that it's good. And so if this founder is going to be finite with you, where those sail off into the sunset and never talk to you again, that's a problem. If they're going to have some sort of vested interest in the business for the long term, they have a reason to care and a reason to be really extra honest.
- [34:17]
B
Another core lesson is don't hurry on an acquisition and don't set out to actually try and buy something. The adage of what gets measured gets managed. Don't try and Measure your success as buying a business. Calm down, sit on your hands, be very thoughtful. It's almost like dating. Warren Buffett says this. But be open minded, be available, be like inquisitive, but don't hurry. It doesn't lead to a good result ever. So quick follow up question. So you guys mentioned you do deals quickly. So how do you balance understanding the business, the due diligence process, and also.
- [34:51]
A
Doing it relatively quickly? I don't think any of the things we're describing actually take that much time. Deals naturally end up taking three to six months. Unless it's some crazy thing where the founder's in a big rush. It comes down to the pace the founder wants, right? And often the founder will say they want a quick deal, but they actually want to talk a lot and get to know you. And lawyers slow everything down or whatever. So there's deals we've done in a week and we can do it. It takes a lot more work in a short period of time to get it over the line. But deals just move slowly as people take a while to respond and stuff. So that gives us ample time usually to get a good sense for somebody. And we always just try and structure it in a way where we're happy to walk away. One note is when we have walked away, there's a few times where we've actually paid people. So we'll be like, look, we took you down. We wasted two weeks of your life or a month of your life. We're going to pay your legal fees or something just to buy goodwill. If it's not a fit, use a bit of money to smooth things out so you don't feel guilty about backing out and they don't feel sour towards you.
- [35:56]
B
That's great. Thanks, guys.
- [35:58]
C
We'll go with Jeff Homer, and then we're on to the spreadsheet.
- [36:03]
B
I might be one of the minority groups here in that I don't have any sorts of digital businesses.
- [36:11]
C
Although.
- [36:12]
A
Oh, you've got the winery, right? You emailed me.
- [36:14]
B
Yes, yes, we do have the winery, which is what has really propelled us into the world of E commerce this year, albeit we're 15 years behind, but better late than never. So a couple of my questions are really random. The name Tiny, is there anything specific about that that you chose? Fate.
- [36:41]
A
We called it Tiny because it sounds humble. And we found all these private equity firms are called like blackrock and all these stupid names. And so we just said, you know what, it's a real strategic advantage to be underestimated by people.
- [36:54]
B
I appreciate you. I just couldn't get past that one. So you talk a little bit about boards. It doesn't seem like it, but do you guys use a board for your organization?
- [37:04]
A
We don't really find that boards are super productive when you own the whole business yourself. I think boards are really productive when you have shareholders who have a vested interest. So the ideal board would be if you own 30. 30, 30. You have a three person board and it's each of the members that own the business. Now we have a public company and on that public company we have a really great board that we've assembled of which a bunch of them are shareholders. But we have to have independence and that sort of thing. But I think that across the group.
- [37:34]
B
Of private businesses, no, none whatsoever.
- [37:37]
A
We just do monthly emails. It's monthly email reports that are financial only and then quarterly reports that are more just an update on what's the state of the business from the CEO. But the CEO has no obligation to do a call with us or a board meeting.
- [37:51]
C
Awesome. So we'll go with Justina and then Dan before.
- [37:54]
B
Yeah, thanks.
- [37:56]
A
Hi, Andrew and Chris, my question is about your goals. What are your goals for Tiny? Where do you see it in 10, 20 years? And ultimately I want to know what motivates you in your work life.
- [38:08]
B
This is what we're working on right now.
- [38:10]
A
We ask this question all the time. We were actually just talking about this. We had breakfast before this and I said, we're weightlifters. And we went into the gym and we started lifting little tiny weights. And we just kept, every week we kept increasing the weights. And then you go to the Olympics and then you're like, okay, I guess I have to keep being an Olympian because now I have sponsorships, I have an Olympic team, I have a coach. I want to keep employed, all this stuff. And don't get us wrong, we love playing the game. But now we're like, oh, wow, we have a beast to feed. We have to keep going. And I think for us, at the end of the day, the North Star is, do we like the people we're working with every day? Do we find the problems we're working on interesting? Do we think our companies are doing something positive in the world? And then it's a question of when we have excess profits, what do we do with them? And we've started giving them away via Tiny foundation and doing some philanthropic projects and stuff. But we're just cracking that and trying to figure it out because we've seen so many people who have made a lot of money, who are miserable, are bad parents, not very happy people. And we're just trying to figure out how do we have professional success without that downside. So it's a work in progress. I wish I had a better answer. That's a great answer.
- [39:27]
B
Thanks.
- [39:30]
C
Thank you. Dan Beaufolia.
- [39:33]
B
Awesome. Thanks. Thanks Andrew and Chris for doing this. Really appreciate it. Quick question for you. How do you guys think about debt? I know that you guys aren't big fans of it, but how much debt do you consider on a deal and why?
- [39:48]
A
We think of debt as a knife on the steering wheel. You can be the best driver in the world, but it's pretty easy to gore yourself if you drive over a speed bump. We've used debt. We usually try and use debt that's very consistent, conservative. Where in Canada, for example, we've used the bdc, which is a government bank that is not in the business of taking your home and taking out crazy guarantees and stuff. And we've tried to structure our debt in ways where we have government backups and lots of defensibility. But at the end of the day, our goal is always to have less than six months of debt. So at any time we want to be able to pay off all of our debt in about six months. And if you look at Berkshire Hathaway, that's how they do it. I do think when you're starting out, if you don't have capital, if you're buying a truly exceptional business, it is worth stepping up to the plate and using some debt if you have high confidence. But it's got to be a very predictable business. It's got to be a SaaS business that's profitable. Where you have some confidence, you can grow it. The idea of margin of safety really applies where when you're modeling out the acquisition, you want to make sure that in all scenarios, including like a 40% dip, you're going to be able to pay off your debt and make it through. I think debt just magnifies returns but also destroys people's lives.
- [41:04]
B
Yeah, debt's the only thing that can kill you. It's the only sort of Damocles that really hangs. Right. Hubris and debt. Those two combined is the recipe for disaster. To your one point, by the way, I really think that we only use debt ever if we have really high conviction over the next one, three, five years. If we don't have enough high conviction, but it's still a no brainer deal, we just use cash.
- [41:24]
A
Yeah.
- [41:26]
B
Awesome. Thank you.
- [41:27]
C
We'll go With Tanuka and then Kevin Lin. So Tanuka and Kevin Lin.
- [41:33]
B
Hey, guys. So my question was. So obviously started out as just you guys, but I noticed on the tiny team page, you guys are starting to expand the investment team. So I was curious to understand how you guys are thinking about expanding the investment team, how you see that growing.
- [41:48]
A
So I'd say our goal is to try and keep the head office very small. And the way that we can achieve that is by setting up platforms. So we've done that with we commerce. So we started buying all these businesses in the Shopify ecosystem. And we said, you know what? This is a vertical. It's a focus. Let's hire its own cfo, its own management team, and it can really be its own thing. And it reports into head office. We own a large stake, we're a large shareholder, but we're not responsible for the capital allocation. We're just approving it and signing off on it on a board level. So I think we're going to do more of that over time. In terms of the makeup of our team at head office, it's primarily accounting and consolidation. So it's taking all the financials across all the companies and bringing it up into a simple P and L for us. So that's a big. That's a big job. There's, you know, 40 or something corporate entities across everything. And then we have a small M and A team. So we have another partner, Jeremy, who's worked with us for five or six years, and he runs the M and A team. And their job is really to screen the inbound and tell us when there's something that's high conviction, high signal that they think is really interesting. And Chris and I don't like to get invested in a deal until we actually think there's their high conviction. They know they can get it for a fair price. It's a good business and the founder wants to sell and that's when we'll start to engage in it.
- [43:14]
B
Got it.
- [43:15]
A
Okay, thank you.
- [43:17]
C
We'll go with Kevin Lin and then Nathan Barry.
- [43:21]
A
So you have met many amazing mentors such as Munger and Ackman. Can you share some of the most important takeaways from your meetings? For me with Munger, there's lots of really interesting insights, but the one that stood out to me was we asked him about synergy and whether they ever have any level of synergy. And what I mean by synergy is if you have two businesses and they both buy Salesforce, for example, would you ever pair that Together and negotiate the contract together or say, hey, all of our companies should use Salesforce and let's negotiate a discount. And Chris and I, at the time, this was about two years ago, we were really interested in whether or not we should pursue that stuff. And Munger said at any given time if you made me the dictator of any of the companies, I could force them to do things that would increase the earnings by billions of dollars. But I don't because then no one will work for us. And at the end of the day you have to leave your CEOs to make mistakes and do things themselves. And as long as they're non fatal errors, you're better off. And so he said they never pursue any synergies. And we've had that repeated to us by many different people at conglomerates. So that was the thing that really stuck with me.
- [44:34]
B
I totally agree on the Ackman front. What really stands out from Ackman is this holding people around you to a higher standard and really high, saying like you have to operate at this level and watching people, people actually rise to that occasion. It's interesting just watching us like how much we've grown just knowing Ackman and the expectation that he puts on us has been tremendously high and it's been rewarding. We're trying to mirror that with those around us. I'd say more and more.
- [44:59]
A
Thank you.
- [45:01]
B
So with Convertkit and Andrew, you and I have talked a decent amount in the past, but I've always said stay privately held forever. Watching a few companies go public has made me think that public might be a path for a company like ConvertKit as we scale to closer to say 100 million ARR, which we're a long ways off from. But what advice would you have? Having gone through that process and owning a bunch of companies, Is it something that you think we should consider or you're like, no, private is better?
- [45:29]
A
Well, I would say that first of all guys, everyone should check out ConvertKit. I think Nathan owns one of the best businesses on the Internet which he's been quietly bootstrapping mostly. You've bootstrapped the whole thing, is that correct?
- [45:41]
B
Yeah, yeah, totally bootstrapped.
- [45:43]
A
Yeah. It's an incredible story. I think it's really complicated. I think it depends on how much you care about liquidity and access to capital. I think that if you said I need to go and make four or five big acquisitions that it would make potentially sense for you to have access to public markets. Or if you said you know what, I want to sell 30% of my founder stake. And I like the idea of doing an annual general meeting, having a cool board of investors, et cetera. It could be okay. At the end of the day, it's a lot of brain damage because you have a lot of stakeholders. You have a lot of quieter voices, right? You might have a thousand shareholders or 10,000 shareholders, but you don't know who's going to make your life difficult. Whereas if you were to go to a private equity firm and say, hey, I want a $50 million investment, you just have one very loud voice. And if it's a good voice, then that's good. And if it's a bad voice, then your life is shit for the next 10 years, and you probably leave your company and sell it. So I think it's a really important decision for you to make. I think right now a lot of very small companies are going public, and I don't know that those are going to be sustainable. I think the advantage you have and we had is we're profitable. And at the end of the day, the market might vote us to be a big business, but we need to weigh that. It's a big business in terms of cash flows and earnings. And the only reason we went public is because we're confident we could grow those.
- [47:11]
B
The part that I'm missing actually, in the question is the why and what you're looking to accomplish. There should almost always be the what needs to be true to accomplish something. Well, the what needs to be true could be going public. But the core question of what is that goal? Or what are you looking to solve for? Really be thoughtful as to what that is. And there's so many different ways you can solve for something. We really did debate going public if that's the best means to load up an elephant gun. So our goal, for example, is how do we load up an elephant gun and do greater and greater acquisitions? We chose going public. But as an idea of going public, whether or not that solves something for you, it's interesting you answered it, but I'd really be thoughtful as to what you're looking to solve. That sounds good.
- [47:49]
C
Cool. We'll go with Ross and then Ron.
- [47:54]
B
My question's a little different. I have a day job and I sell software Salesforce consulting services. But my side gig is slowly taking over my life, and I have an MVP built out. Our first product is where we essentially help people lower their telecom bills. So for 15 to 30 minutes of effort on our part, we're getting about $300 in revenue. The problem is it's not very scalable, obviously, being B2C services business, and I'm having trouble scaling it, but there's tons of demand. I put out a Facebook ad, and they just roll in. The second product is a little more scalable. It's a SaaS product where we would connect people with CPAs, CFAs. It's more pure advice for a low monthly fee. But my two questions are, how can you scale a B2C services business? And second, what do you do with your seed round? I have money in the waiting, and I don't know what to do with it. Do I hire someone to help me with sales, or do I hire money to build a native app? Thanks to all these great agencies, I don't know what to do with the money, and I don't know how to scale.
- [48:54]
A
We have a business called Buyer. So Chris and I used to be, like, total nuts about negotiation. We would negotiate desks, coffee beans. Everything we bought in the office was negotiated. And then as we got bigger and bigger, we just found that we can't tell employees to negotiate. It's just a very unique skill set, and very few people care enough to do it. And so we ended up meeting this guy Kimia, who I think is actually on the call, and he started a business with us called Buyer. And what it is is basically negotiation as a service. And we work with large companies that have Salesforce and Slack and all this stuff. And Kimia goes, and he calls every single vendor, and then he takes a cut of the savings if he went out. And he said, hey, individuals who have Spotify accounts, I'm going to individually negotiate all your accounts. The amount of money he could make would be very small. So what I would do is I would just reach out to large companies and I'd say, hey, which telecom provider are you with? Telus. Okay. Usually when I negotiate with telus, I save 30%. You have a thousand people with corporate phones. I think I can save you $100,000 this year, and I'll only charge you $40,000 to do it.
- [50:05]
B
Thank you. That's very helpful. Yeah, great. Thank you.
- [50:09]
C
Let's go with Daniel Herrera first.
- [50:13]
A
Thank you so much, Alejo. Appreciate it. My question is, as an MBA student now at Columbia, I followed you guys for a couple years, and I'm looking.
- [50:21]
B
To make my mark in a similar way as what you guys have done with Tiny.
- [50:25]
A
Mine's more of a broader base. Question on if you were starting Tiny today, what would you look at that.
- [50:32]
B
You didn't look at back then and this could be in terms of verticals.
- [50:34]
A
Business practices, or really anything else. With hindsight being 20 20, what would.
- [50:39]
B
You do differently, basically?
- [50:41]
A
Well, I don't know if we would do anything differently. We've had lots of bad experiences in business. We've burned our hand on the stove many times and we've always come back to cook. I think there's certain types of people where they burn their hand cooking and they go, I'm never cooking again. And we've always been the guys where we keep coming back and learning and getting better technique. And so all the mistakes that have happened over the last 15 years have actually informed us. And we've been very lucky because they've been non lethal. You don't want lethal mistakes, but non lethal mistakes benefit you. So I don't know if I'd go back and say anything different. I think that's a hard question, right? Because without all the experiences, we wouldn't have it. I think one thing I'd say is I wouldn't set out to start tiny because tiny is like this weird thing that just happened organically. But it's also a collection of companies. I really focus on just one company. How do you make one company work and what's the thing you're most passionate about that also has positive economics? I love that. Thanks so much.
- [51:41]
C
Cool. We'll go with Everest next.
- [51:44]
B
Over the past two years, I've gotten.
- [51:45]
A
More and more into the business side of things.
- [51:47]
B
Who do you suggest reading from, learning.
- [51:50]
A
From or what businesses, Annual letters, different things like that.
- [51:54]
B
Do you recommend learning from?
- [51:57]
A
Like Tao of Charlie Munger was one of the most impactful books for both of us. The Dhando Investor by Mohnish Bhabhrai was really impactful. But we also read that at a time where we were sitting on $10 million. And when you're sitting on $10 million, you have an immediate need. You have to learn how to invest and figure it out. And so if you're not sitting on a bunch of money, it may not be the highest and best use for you to go learn how to invest money. You're probably better off spending your time learning how to make money. So I think getting operational experience is probably a good move. I'm trying to think what were the best kind of like operational books we read.
- [52:31]
B
There's so many.
- [52:32]
A
Four Hour Work Week is a great one.
- [52:33]
B
Four Hour Work Week's a great one. I cannot overstress how to Win Friends and Influence People. I think reading that book at Such an early age has had such a powerful impact. I think the Hard Thing about Hard Things is a really good book even. Yeah, E Myth is amazing. I was about to say the Goal, if you want to better understand throughput and just thinking through the systems to produce something, the Goal is a really good book that I think is really beneficial for anyone in operations. I also think the Rebel Allocator, as terrible as it is a terribly written book but it's a great read in the sense of drilling in an operator's mindset to allocating capital and just really going through like a set of systems that's really beneficial. And to your point about Charlie Munger, I really think anything on the psychology of human misjudgment and really understanding biases can just help you in every way possible. When it comes to interacting with employees, when it comes to trying to motivate people, when it comes to just like interacting with vendors or any. Andrew's pulling up a video that we did.
- [53:37]
A
Actually we did an animated version. So Charlie Munger gave a speech at Harvard. This is an abridged animated version that we made. But basically he just talks about here's all the ways people do stupid things, right? Here's how people warp themselves into thinking they should do something or how they get addicted to gambling or whatever it is. And that is one of the most important speeches or readings that we've ever had.
- [54:01]
B
I read go through the psychology of female misjudgment. Either this speech or even just reading a variety of books on biases every year because it's so beneficial to just have them top of mind and recognizing yourself or recognize with the counterparty that you're dealing with what the biases in play. No matter what investor operating, it's beneficial.
- [54:21]
A
There's a great book I'd recommend called how to Get Rich by Felix Dennis. Horrible title, sounds very douchey, but it's an amazing book.
- [54:30]
B
Yeah, you can go on and on on books by the way.
- [54:33]
A
And Shoe Dogs.
- [54:34]
B
Shoe Dogs, great.
- [54:35]
A
We have a million books. If you guys send us an email, we'll send you a list of books.
- [54:39]
B
Thank you.
- [54:40]
C
Thank you. We'll go with a question, I think. Last question from.
- [54:44]
B
So have you guys ever considered doing roll ups in your portfolio companies? Have your portfolio companies ever rolled up other companies? There's a bunch of other businesses that are very complimentary to us that are low margin but attached would be very high margin and trying to think through not only the structure but also how to manage those other companies. Have you just smushed all the companies together or have you just let them run independently but funnel leads between them.
- [55:09]
A
That's a hard one because let's say you do CRM and you go, wow, if we had invoicing software, this could be really valuable. Now let's say you find an invoicing app that's doing a million dollars of ARR, you have to buy it for $3 million. Now you've got the option of either destroying that business and integrating it and losing the million dollars of revenue or leaving it as a separate business and trying to do some wacky integration. And so we've always found like within dribble we've made acquisitions where there's a great team or there's a small amount of technology or expertise and we'll do an aqu into dribble in order to help us accelerate something. But usually when we do acquisitions, we do them separately. When we did a merger with Creative Market they became brother and sister. But we didn't make them conjoined twins. We didn't integrate them. We kept them separate as their own businesses because we didn't want to destroy the business value.
- [56:03]
B
In Creative Market, don't value your synergies. Any work that you have to do, I would almost say discount that to zero because the mistake most people tend to make when it comes to doing bolt on acquisitions or tuck ins to an existing org is they'll really value the advantage that they bring. Got it.
- [56:19]
A
Cool.
- [56:19]
B
Thank you.
- [56:21]
C
Cool. We'll go with a question from Joe Kitts.
- [56:24]
B
So I'm a student. I go to Northeastern University in Boston. I never really grew up doing programming or anything but I've always, especially in recent years, become really interested in technology and tech and I have a few, the last several months especially I've had a few ideas of been bouncing around in my brain but I didn't really have prior programming experience and so I've been trying to teach myself but I'm finding that I don't really have a natural, a natural knack for it necessarily. But I'm trying to trudge through the swamp a little bit. And so I've connected with a few people who really like this is that's their thing. My thing is really more operating and driving the business forward. I don't know if you saw my note, I've run my own landscaping business and so freshman year of high school and started knocking on doors and now when I was a freshman, now we've grown. It did almost 20k last summer and so that's My thing. So I guess at what point, in terms of software related businesses do I. At what point should I get, in terms of my capability where I can, I should bring in someone else who really, this is their, this is their forte.
- [57:35]
A
Real estate developers don't know how to lay bricks. Real estate developers don't know how to swing a hammer. I think if you want to be an operator, you need to know enough about coding that when your developer says, oh, I don't know if we can do this and he has some excuse, you can call BS on it and say, no, I think we can figure it out because of this. But Chris and I don't know how to code. I know basic CSS and I could do a bit of HTML, but within a month of doing it, I started delegating that out to someone else. So I think that if you want to do anything at scale, you being the developer just holds back your business massively. You should go find one who loves it and say, hey, come and work with me. And if you can convince them to do it, pay them or do equity or whatever it is. But I think it's a total waste of your time, energy to learn something you're not passionate about. Our whole approach to business is if you don't like running, but running is part of the business. Find someone who freaking loves running and then just pay them to do it and incentivize them. They're happy and you're happy.
- [58:41]
B
Yeah. All right, that makes sense. Thank you.
- [58:44]
C
Cool. I have another question and then we'll go with a question from you, Jay. Thinking about investing in the public markets in 2021. Yeah. What are you guys thinking? I'm kind of scared. With how high the valuations have gotten, I don't know if I should move to cash. Yeah. What are you guys thoughts on the public markets at this time?
- [59:06]
A
I don't know. We don't really think about it too much, to be honest.
- [59:09]
B
Especially trying to time the market. It gets so difficult.
- [59:12]
A
Chris always laughs at me because every year I say, this is the year that's going to burst. The best defense against public market is to own great businesses, to buy them at fair prices, and to not think about it. So we just focus on one thing, which is growing our earnings year after year, buying more great businesses. Doesn't matter what the market does unless I need to trade in and out of it. So if I was told in six months we have to sell every single one of our businesses, I'd be much more attuned to private Equity markets or public markets. But because I plan to hold the businesses forever, it's irrelevant what the market does. And it seems like a lot of you guys are thinking about investing and buying businesses. There's no better time to buy businesses than when everyone's panicked. And right now everyone's way too optimistic. Like most founders we talk to think their business is a billion dollar business even when it's teeny tiny. And they're not fearful at all. They're uber confident. Which I think is probably a bad sign. Yeah.
- [60:13]
C
Thank you, Eugene.
- [60:16]
A
I'm super curious to hear if you guys have a way of practicing the refinement of your decision making. For example, like I've started playing poker recreationally as just a way to refine my probabilistic thinking and just understanding how to make decisions in a closed environment. So then I can call those lessons.
- [60:35]
B
And apply them into investing.
- [60:37]
A
The way we practice is probably just by doing it every day for 15 years and learning through trial and error.
- [60:44]
B
Keep building scar tissue, right?
- [60:46]
A
Yeah. I think there's lots of games that can teach you about this stuff. But at the end of the day, nothing's better than hands on experience. Awesome. Thanks guys.
- [60:58]
C
Cool. I think those are all the questions we have. I'll ask just one last one that I have. I know both Bill Ackman and Howard Marks or his family office are investors in WeCommerce. Biggest lessons from them and from working with them.
- [61:14]
A
We said before one about Bill. There's another one about Bill that I thought is interesting. When we first met him, we said look, we've got all these businesses. Should we think about selling them like. And he just drove home. Just think in decades, think super long term. If you understand your business deeply, you're better off owning that and just holding it and diversifying and buying more businesses than panicking and trying to time the market.
- [61:40]
B
I'd say one lesson from Howard that I've been thinking about a ton has just been. He did have to travel a ton when his kids were young. But anytime he was in town, he made it especially he made it a priority to always be at his kids little league practices or any plays that they had and just making sure that when you're able to be as involved in your kids lives as possible, we really think about what I always call like the bad dads club. And especially when we read all these biographies. How many of these, how many of these very successful individuals, their kids are third or fourth rung in their priorities and there's so many more important things in life than just wealth accumulation. So it was interesting hearing that from Howard.
- [62:18]
A
Thank you so much guys for your generosity especially. Seriously.
- [62:22]
B
I did.
- [62:22]
A
Yes, you did an incredible job.
- [62:24]
B
Seriously. It was amazing.
- [62:26]
A
Yeah. And feel free to email us if there's any other follow ups or anything like that. And yeah, thanks so much guys. I hope we added some value. Really appreciate it. Very flattering.
- [62:41]
B
Sa.