Tiny Annual General Meeting - June 15, 2023

Summary

Tiny Office Hours: Annual General Meeting – June 15, 2023

Podcast: Tiny Office Hours
Host: Tiny, Chris Sparling, Andrew Wilkinson
Date: July 5, 2023
Episode: Tiny Annual General Meeting

Episode Overview

This special episode features a live “Ask Me Anything” (AMA) session for Tiny’s shareholders and community members—a nod to Berkshire Hathaway’s annual meeting, but with a cozier, more irreverent twist ("Coachella for capitalists"). Co-CEOs Andrew Wilkinson and Chris Sparling field uncensored questions covering strategy, capital allocation, acquisitions, company culture, and reflections on going public. The mood is candid, often humorous, and deeply pragmatic, embodying Tiny's ethos of humility, discipline, and long-term focus.

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Key Discussion Points and Insights

1. Origins and Spirit of Tiny

• Name and Mindset:
  Andrew shares that "Tiny" was chosen to avoid the intimidating or “pirate-sounding” names of other investment firms (e.g., Blackrock, Grey Wolf). The intention was friendliness and self-deprecation.
  [10:53] “We thought Tiny was kind of humble. And at the time, we were tiny, frankly. So, yeah, it was just kind of self-deprecating.” – Andrew
• Unexpected Scale:
  They never aimed to build a public company; growth was incremental, driven by pragmatism rather than grand vision.
  [11:34] "We just kept staring at our feet and walking forward. Then we looked up and we'd climbed a mountain." – Andrew

2. Investing and Acquisition Philosophy

• Pragmatic Discipline:
  Tiny prioritizes buying durable, high-margined businesses at reasonable prices, with a keen focus on payback periods (ideally recouping investment within five years).
  [04:18] “We really try and stay disciplined, buy businesses for reasonable prices. When we're playing in a world where things can be disrupted by AI, we just have to be that much more careful.” – Andrew
• Evaluating Moats and Durability:
  The level of risk from disruption determines what they’ll pay (“right price for everything”).
  [16:38] “The more vulnerable the business is, the cheaper we want to pay for it. There's a right price for everything.” – Andrew
• Founder Due Diligence:
  People matter as much as business metrics—bad people mean bad deals.
  [13:52] "We've worked with bad people before. Life’s just too short." – Andrew

3. AI & Innovation

• Measured Optimism, Eyes Wide Open:
  AI’s risks and opportunities are recognized, but Tiny hedges through conservative capital structures and diversification.
  [02:45] "We have to be very, very disciplined and cautious in how we play in the technology world." – Andrew
• Innovation Process:
  Innovation typically emerges from small, autonomous teams, not top-down mandate.
  [41:05] “Often you get into the innovator's dilemma. Generally, our approach has been to take two or three people, throw together a little team, spin up a new business to try and do that.” – Andrew

4. Fund Structure and Capital Allocation

• Private Fund History and Plans:
  Tiny’s first fund was launched during Covid in anticipation of distressed opportunities but, ironically, tech valuations soared. It's close to being fully deployed, mostly into dividend-paying businesses.
  [04:18] “We have an all-star cast of incredible investors. Then we sat on our hands for a year—there was nothing to do.” – Andrew
• Capital Allocation North Star:
  The singular focus is growing earnings per share (EPS).
  [85:26] “Ultimately we want to grow earnings per share. That’s it.” – Andrew
• Debt & Safety:
  Leverage is used cautiously, with interest rate hedging and ringfenced liabilities.
  [64:04] "Debt is like a knife on the steering wheel. You have to be a good driver." – Andrew (echoing Charlie Munger)

5. Valuation, Margins & Public Markets

• Margins and Free Cash Flow:
  As a collection of digital businesses with low capex, the bottom line largely translates to free cash flow.
  [13:02] “It’s a pretty good proxy for free cash flow.” – David
• Going Public ("Why, and Why Now?")
  Access to capital, better debt terms, and the freedom to act as capital allocators made going public attractive.
  [49:11] “If you’re a true capital allocator, being public is the optimal thing.” – Andrew
• Valuation Multiples:
  Although they love 5–6x buys, they've paid higher multiples for exceptional businesses where the payback remains attractive due to growth opportunities.
  [62:13] "I want to pay ourselves back in cash in five years. That can mean paying 10x if we're confident in growth." – Andrew

6. Acquisition Playbook: Dribbble & Aeropress Case Studies

• Dribbble (Online Design Community):
  Bought it as users/insiders who understood its irreplaceable appeal and network effect; saw value in adding an ad sales function.
  [08:15] "Dribbble was an exceptional, unique business with an incredible network effect... we could de-risk by adding an ad sales team." – Andrew
• Aeropress (Consumer Product):
  Acquired due to cultlike following and product quality; leveraged retail and e-commerce expertise, with deep respect for the existing CEO’s vision.
  [25:06] "We hired an incredible CEO, Gerard Meyer. When we meet somebody, we are looking for alignment and alignment of vision.” – Andrew

7. Partnerships, Co-CEO Model, and Culture

• Robust Partnership:
  Andrew and Chris describe their relationship much like a marriage, underpinned by shared hardship, open conflict resolution, and mutual growth.
  [28:37] "Adversity builds memories... And any time we're kind of bickering, we have that hardship to fall back onto." – Chris
  [30:51] “There’s a great book called Making Marriage Work by John Gottman…we use that fight resolution framework.” – Andrew
• Remote, Decentralized Culture:
  Tiny was remote long before it was cool, shunning office culture for autonomy and “treating people well, paying them fairly, and giving them interesting work.”
  [54:50] “We’ve always been a remote company… most of the business is actually run via iMessage and email and asynchronous communication.” – Andrew
• Retaining and Attracting Talent:
  Look for smart, low-drama communicators who can grow into the next level; treat people with respect and ensure flexibility.
  [51:40] “People who are switched on, they're reading, they're good communicators, low drama.” – Andrew

8. Incentives and Alignment

• Complex Yet Crucial:
  Incentive structures are constantly iterated upon, with everything from equity grants and bonuses to requiring executives to buy stock. Simplicity and direct alignment are paramount.
  [44:01] “Incentives can be very hard because you can easily outsmart yourself. The simpler we make it, the better.” – Chris
• Long-term Shareholder Alignment:
  Ownership and “skin in the game” are core—Andrew and Chris control 81% of the vote and have most of their net worth in Tiny shares.
  [72:35] “The best defense is it’s my money too. And I have just as much to lose.” – Andrew

9. Selection, Sectors, and Circle of Competence

• What NOT to Buy:
  Avoids “sexy” sectors drawing too much competition, and any business with big commodity (transfer pricing) risk. Loves “riches in niches.”
  [38:56] “Fish where the fish are. We think boring is beautiful.” – Andrew
• Circle of Competence:
  Invests only where models are simple enough to explain to their parents; gradually expands the circle by learning and testing, not via aggressive leaps.
  [81:37] “Could I explain this business in one or two sentences to my parents? If yes, then that's something I probably want to invest in.” – Andrew

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Memorable Quotes & Moments

• On Durable Business Models:
  [16:38] "We’d much rather buy a cruise ship that’s sailing to Hawaii all day, every day. I want to be buying cruise ships, boarding them, enjoying the sun deck." – Andrew
• On Diversity of Incentives:
  [42:33] “We've tried stock options, equity grants, profit share, bonuses… They all have their pitfalls... But at the end, if somebody is delivering and it's within their control, incentivize them on that thing.” – Andrew
• On Hiring/Firing:
  [70:01] “If you think about firing someone, you probably should. You never think, should I fire this person, about superstars.” – Andrew
• On Competing Buyers:
  [74:04] “Most people are trying to get rich in the short term, not in the long term. This strategy is much more of a long-term approach.” – Andrew
• On Market Cycles:
  [47:26] "We're kind of barbell. Both paranoid and terrified and licking our lips and excited to go shoot some elephants." – Andrew
• On Deal Flow:
  [65:47] “Almost all of it is inbound. We have this incredible deal flow; we’re not having to employ a 25-person team of analysts to reach out.” – Andrew

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Notable Timestamps & Segments

• [02:26] – Macro on AI & Risk Philosophy
• [04:18] – Private Fund Context
• [05:31] – Buyer Due Diligence on Dribbble Acquisition
• [10:35] – Concrete Advice on Doing Your First Deal
• [12:41] – Margin Profile, Free Cash Flow, & Public Company Mentality
• [13:52] – Founder Due Diligence and 'Only Good People' Rule
• [15:26] – Annual Meeting Format, 'Coachella for Capitalists'
• [16:38] – ‘There’s a Right Price for Everything’ Analogy
• [24:12] – 'Paranoid Survive' Risk Management
• [25:06] – Aeropress Case Study
• [28:37] – The Importance and Nature of the Co-founder Relationship
• [41:05] – Innovation via Small, Focused Teams
• [44:01] – Incentive Complexity
• [54:50] – Remote Work Culture
• [62:13] – Valuation, Arbitrage, and Replicating Berkshire
• [70:01] – Firing Fast Philosophy
• [81:37] – Circle of Competence
• [85:26] – Performance Metric: Earnings Per Share
• [97:50] – Where Their Curiosity Is Aimed Now (AI, Insurance, Float)

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Closing Thoughts

The episode is a master class in candid, operationally-driven investing and leadership. Andrew and Chris’s humility, skepticism of sexy fads, and bias for action (“napkin math,” “heads you win, tails you don’t lose much”) set Tiny apart. Their answers reflect not only best practices from business legends but also a culture of learning, patience, and authenticity that resonates strongly with their long-term partners and investors.

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End of Summary.

If you're considering building, investing in, or scaling companies, don’t miss this for the pragmatic wisdom, concrete frameworks, and rare founder transparency.

Transcript

[A]

Hey guys, how's it going? Can everyone hear me okay? Yeah. Awesome. Well, this is a truly bizarre experience. So 17 years ago, this business that you guys are all now shareholders in was a desk in my apartment and I would work at it in my underwear. So this is a very strange thing to Suddenly wake up 17 years later and have thousand, you know, over a thousand employees and 35plus businesses and have all of you here and be a public company. I mean, Chris and I are just kind of pinching ourselves. This is really cool. So we really appreciate all of you coming out. So here's how this is going to go. We're going to literally just have a mic there. Anyone who wants to can line up and grill us like grilled cheese, ask us whatever they like. Chris and I will stay here as long as there's questions and yeah, we welcome them. And I'd love just to start with a show of hands. Who here is from Victoria?

[B]

Hello.

[A]

Awesome. Good contingent local. Who here flew more than three hours to be here? Amazing. Who here flew more than five hours? Who here flew more than eight hours? Who here flew more than 10 hours? Who here flew more than 15 hours? Who here flew more than 20 hours? Who here flew more than 25 hours? Wow. Oh my God. Thank you. Let's get a round of applause for those two guys. Wow. And just, just so we know who hold your hand up if you actually own the stock. I'm just curious. Very cool. Okay, awesome. Well, thank you guys. We, at the end of the day, a stock certificate is a ownership sharing, a business. You guys are our partners. So this is an opportunity for us to, you know, answer questions, talk about whatever you guys want. You can ask us about life, love, business. You name it, go for it.

[B]

Yeah. So the mics, the mic's in the center here. If you want to line up to ask. I just ask you if there's a long lineup, leave it to maybe one question and a follow up and then re queue, but for now it's over to you.

[A]

And if you guys just want to, if there's people with questions, just maybe queue behind. Dan.

[B]

Good morning, guys. Dan Chan from TD securities. We've heard a lot about AI. It's the buzziest thing talking about now. You guys have some businesses that I think could be impacted from it both positively and negatively. Could you just talk about how you're thinking about AI, what the risks are there and what the opportunities are and how you're positioning your companies to play in that space?

[A]

Yeah, I would say that we own Businesses that are somewhat potentially affected. And we own other businesses where we believe that they could be profoundly, you know, more profitable, faster moving and that there's a lot of opportunity for us. So to be honest, we really don't try and shadowbox and figure this out. At the end of the day, we really try and stay disciplined, buy businesses for reasonable prices. And when we're playing in a world where things can be disrupted by AI, we just have to be that much more careful. You know, in technology we kind of think of businesses as sandcastles on the beach. And the further up the beach they're safe, you know, the more safe they are. But at the end of the day, a storm can always come and wash them away. And so we have to be very, very disciplined and cautious in how we play in the technology world. And our way of handling that to date has been by underwriting to very quick payback and conservatism or buying long duration businesses that we feel have extreme stickiness, high switching cost and that kind of stuff. So, you know, while we're very aware of the AI risk, we think there's some benefit. And you know, we are going to have certain businesses that are disrupted, but I think that those businesses will pay back far before they get disrupted. Anything, Chris?

[B]

Nothing to add, actually, no one behind me, so I'll ask another one. Sure. Totally unrelated, but we, we know you got that PE fund. What are your thoughts on how to, how that's going to fit into the entire company? Any plans for it? How should we be thinking about that?

[A]

Yeah, so the history on that is during COVID we felt there was going to be a lot of disruption and opportunity to buy technology businesses. And we had, you know, we really wanted to load the elephant gun and prepare for opportunity. And so we raised our first ever fund. We have an all star cast of incredible investors. And then we sat on our hands for a year. There was nothing to do because Covid surprisingly actually boosted technology companies. So we've now had the fund for what, four years, something like that?

[B]

Yeah, about three, I guess.

[A]

And we have some wonderful businesses in it. And probably the most confusing thing about our business is that we have this private fund sitting beneath it. And so we're trying to figure out how to do that. And we don't know how we're going to resolve it, but we know we own wonderful businesses and that shareholders benefit from the carry in, in that business. I'd also say it's going to be fully deployed probably within the year.

[B]

Thank you. Hello.

[A]

Hello.

[B]

So I've got like a personal.

[A]

Well, not like the personal question just for me. And then another question about Dribbble and how you think about, like acquiring businesses.

[B]

First is I might be buying an online business.

[A]

Do you know a business lawyer that can help me buy? Steve?

[B]

Steve Ticket.

[A]

Steve Seville right there. Okay, let's chat after. Ask him. He's awesome. And then my. My real question is, when you. How do you think about the future.

[B]

Risk of like, potential customers not being.

[A]

There in the future when you're buying.

[B]

Like an online business, like when you.

[A]

Bought Dribbble, what gave you the confidence that in five, ten years from now there would still be demand for those templates, there would still be clients there? Like, how do you think about that? Because that's one of the things that I'm worried about for the company I.

[B]

Might be buying is that I'm just.

[A]

Not sure how to price that in or how to even have the confidence.

[B]

To know that in three, five, ten years from now there will still be demand there.

[A]

So just so everyone knows. So Dribbble is a social network that we bought what, seven, seven years ago? Something like that. And it's a place where designers congregate to share their work. So people go there and they post whatever they're working on, they share their portfolios, and by doing so they get to connect with other designers and they also find clients, they find new jobs, all that kind of stuff. And so it's a really interesting social network. And Chris and I kind of think of it as, we always joke, it's like an airport business, right? A whole bunch of people congregate somewhere and you can sell them all sorts of different things. And so when we bought that business, we were, you know, we knew it intimately. I was a designer. That was my original job. And we started with a web design agency. And so we had a relationship with the founders. And we were very confident that this is something that had profound value to designers, because we were designers and we'd actually found a lot of our early clients on it. And so as far as we were concerned, as long as the design profession existed and as long as we didn't mess it up and abuse the community, we. We felt that people would keep coming back. And that's certainly been true. Now when we buy a business, often we are thinking about ways to de risk ourselves, right? So if we're going to pay 10 times earnings, we're going, how do we double earnings in the next two or three years in order to pay ourselves back quicker to de Risk. Right. And depending on the quality of the business, we will pay a larger multiple potentially or be more comfortable with that. Dribble was an example where we went, this is an exceptional, unique business with an incredible network effect where almost every designer in the world either has a Drupal account or visits, you know, once a week or so. And so we felt very comfortable deploying capital into that opportunity.

[B]

Yeah, just to add like I really think that like there's the aspect of like practice doesn't make perfect, practice makes permanent and you can really fall into analysis paralysis if you're digging into a business. When it came to Dribble, we really just did napkin math and we structured it where it's heads we win, tails we don't lose much if at all. And we did that by negotiating a really good price and understanding the levers that we could pull to unlock value, but not paying necessarily for that. And so when it comes to the business that you're looking at, I think if you can structure it on a price basis where it's heads you win, tails you don't lose much if at all and you're not necessarily paying for, for the value you're going to bring to it then.

[A]

So for example, with Dribbble it was run by a designer and a developer, Dan and Rich. Wonderful guys. And they, we always say to a man with a hammer everything looks like a nail. For them it was. They just wanted to design and develop, they wanted to make the product better but they really didn't like marketing or sales. And so when we found that business we realized that they didn't have an ad sales team. And so we went, okay, so we're going to pay 10x for the business but we're going to add in an ad sales team and we think we can sell an additional $250,000 a month and that there's some opportunities for optimization. And so we just implemented that and that de risked our investment significantly.

[B]

Yeah, I'm really just trying to say like don't do a ton of work trying to convince yourself to buy it. You probably have a good sense.

[A]

And then the other thing I would say is make sure your first attempt is a no brainer. Right. So what you do, I see some people go out and they buy a business and it's a mediocre business and they overpay. It's really hard when you burn your hand on the stove the first time. You know, you don't want to go in the gym and lift 300 pounds on day one. Right. You want to go in and take some little baby weights and, you know, do some bicep curls first and build up.

[B]

Well, I think I can pay. I think I can get my investment back within two years if things just stay the same. And then I can also get rid of some contractors, take on that work, and then pay myself faster. So that's my thinking behind it. So do you want to partner in this acquisition? Well, it's kind of small, but sure. Yeah.

[A]

Great. Thank you.

[B]

Okay, thank you.

[A]

Oh, we might have to lower the mic stand here. Hi, I'm Taran from Austin, Texas.

[B]

I want to know how you came.

[A]

Up with the name Tiny and what.

[B]

Gave you the confidence to create Tiny.

[A]

So I'll answer the first question. So Chris and I looked around at all these companies that buy companies. You know, we would have lots of private equity firms reach out to us, and it was always these weird names like Blackrock. Right. They just sound evil. They sound like pirates or something. There's another one. What was the debt fund? There's always, oh, Gray Wolf, which sounds like a spider. Right. And we just wanted something friendly. And we thought Tiny was kind of humble. And at the time, we were tiny, frankly. And so, yeah, it was just kind of self deprecating.

[B]

We debated all the usual suspects, like what streets did we grow up on, what neighborhoods, and everything like that.

[A]

Yeah. And then the courage to grow it. I mean, to be honest, we never planned this. You know, if you'd asked us even five years ago, would we be a public company, would we be doing the level of revenue we are doing now, we would absolutely have no clue that this was coming. Chris and I really had humble ambitions and just kept staring at our feet and walking forward. And then we looked up one day and we climbed a mountain. So. So, yeah, it's. There's no plan.

[B]

I'd say we're flabbergasted by even all of this right here. It's. It's amazing to think of Derek from Montreal, longtime Listener, longtime caller, 2021. Sorry, 2022 looked like a really good year for Tiny. The margins, the growth. If you're looking out, let's say three, five, seven years from now, does the future of Tiny look a lot like 2022 in terms of margin profile? And on that, how much of this EBITDA margin you wrote in the letter, which is a great letter, by the way. Thank you. How much of that converts to cash?

[A]

So if you emailed David, he could give you an answer in terms of that? I don't do public math but I would say that our businesses are mostly digital so they don't have a lot of reinvestment and capex and that kind of stuff. So you know, generally it's post tax is what's left over that's investable for us. David, any thoughts there?

[B]

Yeah, it's a pretty good proxy for free cash flow. Okay. And margin profile, would it be mid-30s? Would be good to think about the future. Is that something in the current form of tiny without future M and a is mid-30s margin something that to be.

[A]

Honest, we don't manage to a percentage or anything like that. But we, we want to maintain businesses that are highly profitable when logical. And there may be times where it's logical for us to reinvest in the businesses and reduce profit margin in order to grow, you know, in year two, three, four. But yeah, and how important.

[B]

You've been doing this a fair amount of years, but how important is the founder, the person? I mean you say you do the napkin math and I agree with you, it's great. And I guess you must be relying a lot on the person, the people. You just maybe outline a bit how you get comfortable with that. Them. Do you hang out with them? Do you call around like what's some of the people due diligence you do in that process?

[A]

Well, the biggest thing, I mean the buffet thing, you can't do a good deal with a bad person. So the first thing that we're looking at is do we have friends in common? What is this person's reputation? Do we get creepy crawly vibes? Do our stomachs go off when we talk to them? And generally that's a fast no if there's anything like that. And then through that ultimately we do two types of deals. Either the founder stays and they're kind of recapping out old investors or they just want to de risk or they want to partner. And if they stay, then we really, you know, it's very, very important. We're going to be in business with them for the long term. On the flip side, sometimes the founder wants to go and that's what they love about us, is they can pass us the keys, we'll work with them to place plug someone new in and they can sail off into the sunset or they can join the board. They can really do whatever they want. But the number one thing is we have to do business with good people because we've been in business for almost 20 years. We've had negative experiences, we've worked with bad People before. And life is just too short. We always joke that you could come to me and tell me that there's some horrible crisis and if I look around the table and there's good people, everything will be fine. And I feel great. But if there's bad actors, everything is hell.

[B]

And then just one more.

[A]

Yeah, yeah.

[B]

You're new to being a public company CEO. Chris. Chris as well. And how often do you think you'll travel to meet investors? Be on the quarterly calls if you hold any. I'm just curious, is it going to be Berkshire 2.0 and Mark Leonard 2.0, or is it something new you guys are going to do and go hold a conference once a year or. This is it. Maybe the agency.

[A]

I think this is it. I mean, you know, they, they have Woodstock for capitalists. We're a little younger. Maybe Coachella for capitalists. I don't know. But at the end of the day, I mean, we, well, we don't want to spend our time flying around the world doing investor relations. That doesn't mean we're not going to talk to our investors. If anyone wants to talk to us, they can always email us. We're happy to meet people here in Victoria, but we just don't want to be. We don't want to be spending all of our time doing that. We want to spend our time investing and operating the business. So I would say we're very much in the Buffett Munger kind of camp.

[B]

Okay, good to hear. Thanks. Thanks. I'm William from Adelaide, Australia, and I was wondering. I've got two questions. One similar.

[A]

Oh, you're the 25 hour travel guy.

[B]

Slightly over 20 if you include layovers. So I guess given technology and Internet, businesses have sort of a history with a lot of disruption in that space. How do you take that into account when evaluating a business, especially given that you want to hold it for the long term?

[A]

Sorry, what do you mean distract?

[B]

How do you. Sorry. Disrupted.

[A]

Disrupted.

[B]

Disrupted, yeah.

[A]

So how do we think about business that could be disrupted?

[B]

Yeah. And make sure that what you're buying, you think will be a durable and sustaining business?

[A]

Yeah, I mean, I'd say the, the, the more of a sandcastle moat that you have, so the more vulnerable the business is, the cheaper we want to pay for it. Right. So there's different. There's a right price for everything. We joke that we've bought oil tankers that are sinking in the middle of the Ocean, but there's $10 million of oil in there and we can buy it For a cent. That's a deal we might do, but we'd much rather buy a cruise ship that's sailing to Hawaii all day, every day. I want to be buying cruise ships, boarding them, enjoying the sun deck. I don't really want to do the oil tankers, but every once in a while there's one that's so swashbuckling and exciting that we'll go do it.

[B]

And thank you. And the second one was. I guess it's been a short amount of time since we Commerce and Tiny went public. Has that changed sort of how you see things, how you operate? I know, sort of. Mark Zuckerberg was famous for saying that it brought a sense of maturity to the company that he wasn't expecting sort of too early.

[A]

I think there's something really nice about having a board of directors and forcing ourselves to kind of, on a quarterly basis, zoom out and get a sense of everything that's going on and have people to bounce ideas off of. Feels like more of a team sport. Whereas Chris are kind of like, we're like tennis partners or something. And now we've got a little bridge club or something going. So that feels really good. And I'd say that going public, getting public is what did I say the best problems are? Interesting, challenging and fun. Going public is challenging, difficult and hard. And important too. Right. You don't want to mess any of this stuff up. So we would be looking at phone size, books of stock options and all these things that define our future, where you can only do it once. And that was really stressful. But now that we're through it, we're really excited to be investing.

[B]

Thank you. Good morning. I just bought 8 shares today, so.

[A]

I don't know if I count as the shareholders. Security. Yeah, well, after this question, I can go. So basically my question is, I think.

[B]

There are a lot of founders, business people here. As you grow your business, what kind of lessons you learned during the way. I mean, it's already very hard to manage like a small team, but now.

[A]

You have like a team of like a thousand people.

[B]

It's obviously very different from when you were very small.

[A]

Yes, that's kind of my question. Well, I'd say two things. You know, businesses are just groups of people and people are complicated. So we are. I would say Chris and I are more therapists than business executive a lot of the time, and that incentives really, really matter. Over and over and over again, we see that when incentives are aligned, when people think like owners or when they're incentivized based on the things that we care about, the behavior follows suit, and that works out very well. And when there's a misalignment of incentives, things don't generally go well. What else, Chris?

[B]

Well, I'd say one of the learnings has been going from being very operational and being able to jump in and just see a problem and solve a problem is very satisf. What's hard is kind of having to step back when we have so many different CEOs and so many different companies and having to sit on your hands, storytell with them, and let them make their own mistakes and let them burn their hands on the stove and hope that they'll learn the right lessons, but without jumping in and being prescriptive. That's a fundamental shift of being operational to what we do now. That's been an interesting learning experience, I'd say.

[A]

Yeah. I remember we had dinner with Charlie Munger, and we asked him, you know, this exact question. Don't you get frustrated, you know, when you see a CEO not doing a thing, that's highly logical. And he said that, you know, he'll go to Coca Cola headquarters and there'll be billions of dollars of opportunity for very simple things, but that he's learned not to exert that, to ultimately choose the CEO, let them do what they're going to do. And I remember saying, like, do you think you can change people or change people's mind? And he said, absolutely not. Yeah, Right. So we accept that we, when we hire a CEO, we have to think they're a good person, and we have to align with their direction, where they're going, and we have to leave them alone. And there's been instances where a CEO does something that we might not agree with, and we have to bite our tongue and be supportive. And sometimes it works and sometimes it doesn't, but it's kind of interesting.

[B]

Thank you. What's your favorite restaurant in Victoria?

[A]

Part and parcel as authentic. It's very good. Hey.

[B]

Hi. Rufaro from Maker Capital. So this is a question, more about your journey. So I was curious as to. In the early days, how did you scale sustainably? And also, what was your North Star? And how did that change over time?

[A]

So we scaled sustainably by not having access to bank debt or venture capital. And what I mean by that is that if we didn't grow sustainably, we would be bankrupt. So Chris and I spent a lot of time, you know, negotiating the price of coffee beans and desks and, you know, trying to get the cheapest office space possible and run a really tight P and L. And that was kind of a blessing. So that that forced an operational mindset where we always wanted to run profitable. And as we started seeing other people's businesses, we would meet other agencies, owners, and people that ran digital businesses. We would be shocked and appalled when we would look at their P and L and see the amount of waste and bloat. And so that kind of created this tremendous opportunity for us to start implementing our approach to these businesses.

[B]

Perfect. Thank you.

[A]

Thanks.

[B]

Hi, Chris and Andrew, thanks for hosting us today. This has been great so far. My name is Amir Rayhani. I'm from West Vancouver. I had a question with regards to risk. So Warren at Berkshire says the chief role of the chief executive officer at Berkshire is to be the chief risk officer. Now this is where the insurance business is very similar to the investing business. You try and come up with the odds of something happening and charge the correct premium. A good insurer will try and come up with the odds of a building being blown up by a terrorist, using bombs as an example. A brilliant insurer will try and daydream and come up and think about something that's never happened before. What about a passenger plane flying into a building? Sorry for being so dark, but it's never happened in the history of the world. But the brilliant insurer will think about that on his own and then he will charge the correct premium based on that as well. So it'll be a higher premium. Now in the investing game, it's also very similar to that too. So for 50 years, if you owned long term parking garages near airports, right, for 50, 60 years, that was a good business. Cost you a few hundred bucks to put someone there, make sure people pay their tickets, whatnot. And some guy in a garage somewhere in California comes up with Uber, you're out, you're toast. Your business is up. So my question to you is, as chief risk officer at Tiny, both of you, do you daydream about, you know, things that have never happened before in the history of the world because they seem to happen all the time?

[A]

Absolutely. I would say that's all. My girlfriend can attest to this. I think like only the paranoid survive. And I spend all of my time reading about financial history and trying to understand just, just how bad things can.

[B]

Hey guys. Christopher Apple. I'm from South Africa but recently moved to Victoria, so easier commute this time. I have two questions. The first one is relates to aeropress. If you guys can just chat about that a little bit because it's one of the bigger acquisitions for the company. And you mentioned that you guys tend to take sort of an advisory role with a lot of your CEOs, but with a company like that, you got some very specific strategic decisions that need to be made up front. So you've got your independent retailers, you've got your director consulting, consumer channels and then you've got your big box guys. So the interplay between those three channels and the decisions you guys made in terms of strategy upon acquiring that entity and what role you played versus the CEO played. So that's just the first question. You can talk about that. And also, how's Aeropress doing?

[A]

Yeah, so we hired an incredible CEO, Gerard Meyer. He ran SodaStream. He was the one that scaled it in the United States. Very similar in a lot of ways. He's a total coffee fanatic, an amazing guy. And at the end of the day when we meet somebody, we are looking for alignment and alignment of vision. And Gerard is very logical and cares about product innovation and he has a lot of experience with brick and mortar retail. And then what we kind of layered in was the E commerce side. So we have one of our investors, John Becker, who's here, who's scaled some massive E comm businesses. He co invested in that business and is kind of advising the business as well. We've sprinkled in a little bit of talent on that side and I'm very optimistic about E Commerce in that business.

[B]

Where do you see the ultimate like sales percentages coming from? Big box versus direct to consumer versus independence?

[A]

Well, our hope is to diversify away from entirely being in retail. I think I want to walk in in 10 years, I want to walk into any cafe in the world and see aeropress and that is what happens. I mean people will be in India and they'll send me photos of aeropresses on the shelf. But we also want to sell direct. We want to have a direct relationship with the consumer. And you know, our margins are better. We can directly email them. There's a lot of advantages to that.

[B]

The second question is a little bit more personal. So maybe Chris, you can handle this one first because you tend to be the quieter one in the group. There are a lot of business partnerships between individuals that fail. You guys have been working together for a very long time. I assume it started from a business context, has become a friendship. It's now on a public platform with a publicly listed company. What do you guys do in order to make sure this relationship works? And what are you guys going to continue to do to make sure the relationship works both from like an investor standpoint, but also like personally. You guys live in the same town, you have a lot of similar friends. I'm just intrigued to know for any of us that do work with co founders, partners, or if we're looking at getting involved with someone in the business, how do you guys stress test the relationship? What do you guys do on a, on a therapist standpoint like you do with some of your CEOs? What do you guys do with each other? Yeah, it's funny because we have, we've done therapy together, but we actually have.

[A]

I assume so, yeah.

[B]

I find, I find it interesting. Like, you know, I keep thinking a lot of people kind of reach out and just ask how to find a great business partner. And I always think starting off looking for a business partner almost sets up to fail because you guys might outgrow each other sooner than you think. Andrew and I really did start off just kind of as co workers. And even now I don't know if I'd really say you're a friend, but we're really good mutual acquaintances. But I, I can't stress that enough actually is like starting off working together, building trust and getting kicked in the teeth together over and over. And adversity builds memories. And we've had a lot of adversity together where we struggled. And anytime we're kind of bickering at each other or fighting, we have that hardship to always fall back onto. It does feel almost like a spousal relationship when it's like that. And I'd say we both are constantly growing and reading more books, which makes us better and more effective communicators with each other when it comes to conflict. And so yeah, I kind of think if you're looking for a partner, if anyone's really looking for a partner, I think step one is just go and start doing things. Don't look for the partner. And when you find someone, just naturally gravitate towards and push yourself to still grow and be a better and better communicator. And I think that's what works here.

[A]

So, Chris, I went into, I was clueless financially. I didn't understand anything about how to read a P and L when I first started the business. And I would look at the bank balance on day 30 and go, okay, it's bigger than on day one. Things are good. That was my level of accounting proficiency. And I knew that I needed to get somebody in who actually understood accounting and financing. Finance and that whole side of the business. You know, at the time it was only like seven or eight people or whatever. And I go into the bank to get a credit card and they say, oh, you have to go back into Mr. Sparling's office. And I expect to see some gray haired man. And this guy is 20. I mean, now he's 37 and he looks like he's maybe like 25. Looks like I'm dying nine years old. And he's wearing this big baggy suit and he's infectiously friendly. And we start chatting and on the wall I can see employee of the month over and over and over again. Just like really? He's just got this really great energy and we hit it off. And at the end of the meeting I say, Chris, are you going to work at the bank long term? What are you thinking? And he says, well, I was thinking about going into accounting and I just blurt out, do you want to be my cfo? Now, I don't recommend that kind of hiring strategy, but it doesn't work most of the time. In this case though, it was this incredible partnership that got launched. And the way that the partnership developed was we would have, I would, I would have problems, you know, in the business. And Chris was the over and over and over again the person that would be in the boardroom figuring it out with me. We felt like we're in the foxhole together. And over time, Chris started expressing interest in actually not only just being a shareholder, but buy. Buying into the business and putting his own money at risk. And so it felt equal in that way. And so that's part of the reason we run the business. As co CEOs, we've always been about this idea of total equality in how we manage. And when we disagree, we will fight. But there's always this feeling that at the end of the day, within 24 hours, we will resolve it and we will hash it out. We have this very nerdy system of kind of writing out, okay, what do we agree is true? True, and we go through it all, but it really is like a marriage.

[B]

Yeah. Could you expand on that conflict resolution piece?

[A]

So there's a great book called Making Marriage Work by John Gottman, and it's really useful. But effectively they have a fight resolution framework and you can use that. We often use that when we've got an employer, a CEO who's feeling frustrated. I'll use the same methodology. Chris and I use it, use it with my girlfriend. It's. It's incredibly valuable.

[B]

Thanks a lot, guys. Appreciate it. Just a fun side story. I'll never forget my very first day with Andrew. I was dressed up to the nines, for myself at least, which is not that dressed up. I'm standing on the street corner of Fernwood Road in Gladstone, in the neighborhood Fernwood, and Andrew rolls up 30 minutes late, screeches to a halt, jumps out of his car, pops open the trunk, grabs all these papers and hands it to me. He's like, I'm so glad you're here. I'm so glad you're here. Why are you dressed up? You don't have to dress up. I don't have room for the apartment so I rented to a basement suite two doors down. Just knock on the door, introduce yourself, I'm late for something else. I'm so glad you're here. And he jumps in the car and rips away. And it was one of those moments I had to buck myself up, knock on this door and say, apparently there's a basement suite for me. And the whole time I'm thinking, I'll go back to the bank, get my job back. This is not going to work. It really was though, the first year. I feel like learning the business together. But yeah, it's amazing I've stayed. And we're glad you did. Hey guys, it's Milan from Lira. Nice to see you guys. So I'm going to ask another tiny capital question because I do think there is a good amount of shared interest with the PubCo because you're both getting the carried interest as well as probably the largest shareholders, largest LP in the fund is the Pubco, correct? That's right, yeah. So then when you look at that and you're saying, okay, we'll finish deployment sort of by the end of the year, what do you sort of set as expectations in terms of that fund returning capital to the PubCo as well as to the other LPs is that sort of a five year, ten year time frame? And then you sort of your expectations on carry from that for the PubCo.

[A]

Shareholders, I'd say the large majority of the businesses that we've acquired in the fund are cash flowing and we will over time issue dividends. And as we issue dividends, not only will the Pubco receive some of those dividends for its LP stake, but also receive carried interest as well.

[B]

Got it. And then do you set a target of sort of a multiple of invested capital for the fund or for the, for, you know, that you would look at it in that way or you don't really look at that way you just look at it from, from a cash flow state.

[A]

Pretty simple. Yeah. We just try and buy businesses that cash flow and where we can pay ourselves back quickly. And we don't really think about exit a lot. And I think that the open question for us is we've got what is it? A five. I think we have a five year investment period and a ten year fund life cycle.

[B]

Yeah.

[A]

So we do have to figure that out with LPs and we have a duty to figure that out. So we're going to resolve that with LPs at some point.

[B]

Okay. So you probably thinking about it as more of the, towards the 10 year, you could add extensions.

[A]

I think it's going to depend on what the LPs want to do. I mean at the end of the day we want to raise the fund and we've got a duty to them to deliver whatever the best return is going to be for them. And so it's going to be consultation.

[B]

Right. And then last question would be around. You know I always thought the, you know I kind of think of that fund and it, this would be the perfect time to raise that fund because you know that sort of thesis around VCs that want to get rid of their portfolios that aren't doing well, they're selling them off, selling them off pretty cheap for the ones that they aren't going to get their returns on. And that's where you guys have done a great job of being able to turn those companies around, turn them into cash flowing entities. So I was wondering, are you guys seeing that opportunity sort of like, you know, maybe if you could talk to the girl boss story which I think is very was in that fund and you know, could be a lot of those are not big checks. But there are great opportunities.

[A]

Yeah, there's, there's businesses, just to speak in broad terms, there's businesses that we've acquired for next to Nothing because the VCs are going to, this business is burning cash, they can't raise more money. And we look at it and we go underlying that business there's something really great there, there's some great assets. And so sometimes we'll go in and we'll buy these businesses for pennies on the dollar of what's been invested by the venture capitalists. The venture capitalists are just glad to have it off their plate to be off the board and be done with it. And then also sometimes we can offer the founders if they want to stay on kind of a rescue package where we say look you know, we can turn this business around together or you can leave if you want. So, no, I mean, we are. Let's just put it this way. Our appetites are bigger than our stomachs right now. There's a lot of distress starting to appear. And I think that most of the venture businesses probably still have six to 12 months of cash, but we're getting. It's really interesting. I've been an angel investor for probably 15 years. Just, you know, I'll give someone 50, 100K here and there when I meet someone interesting. And I didn't get any investor updates for the last three or four years. And all of a sudden in the last two quarters, everyone's giving investor updates. Hey, remember me? Hey, how's it going? So I know there's, there's, you know, it's coming.

[B]

Yeah, you guys are going to be very well positioned if you can stay sort of focused on that playbook.

[A]

Yeah.

[B]

You know, and I guess the one question will be, so I think the. How do you do that with the public company versus the fund? And how are you going to select? Have you guys already worked through that sort of committee of like, how. Which one goes into this bucket? Which one? Because you could just do the same deal for the fund.

[A]

Yeah, well, we have. So we have a variety of platforms beneath Head office, and if we Commerce, for example, wants to buy a Shopify or E Commerce business, they just go buy it. And if Beam wants to go buy a digital services business or whatever, they go buy it. But if there's a net new acquisition that goes in the fund until the fund's fully deployed, the fund has, I believe, 53 million American left, which is.

[B]

About half of it, I think. Right.

[A]

It's 150 million fund USD. Yeah. So about 200 million Canadian. Yeah.

[B]

All right, Thanks a lot, guys.

[A]

Yeah, you bet. Good to see you.

[B]

Good to see you. Hi, my name is Brittany.

[A]

I'm from Victoria. I am going to go to my.

[B]

Plan B. I was going to ask about how you made your partnership work.

[A]

Because most of them I hear. Should we kiss for them? I think they want us to kiss. No kidding. Can someone hit a glass or something?

[B]

So I'm just wondering if there's any businesses that are on your, like, do not purchase list if you want to share that.

[A]

Well, we own some restaurants personally, and I'd say often those are. Should be run as nonprofits. Those are very hard. I think any, any business that a lot of people want to get into is a hard business. There's a Great saying by Charlie Munger, fish, where the fish are. And what he means by that is, if you see a fishing hole, but there's a thousand aggressive fishermen and women, and they're all elbowing each other out of the way to catch a few big fish, you don't want to go to that one. You want to go to the tiny little fishing hole off the beaten path. And I think that finding riches and niches is great. I know your business. I remember we had coffee and you're doing the MRI clinic. And I think there's a nice regulatory mode. It's not something a lot of people are thinking about. I think that kind of business is great. The not sexy business. A lot of people look at our businesses that are in tech and they say, well, you guys aren't in AI or drones or crypto or any of this exciting stuff, but we think boring is beautiful. I mean, we own businesses that are kind of cast aside or misunderstood. We love those businesses because there's not a lot of competition.

[B]

And to be more granular, like, do you actually have an internal policy that.

[A]

Says, like, do not buy.

[B]

You don't have to answer the business, but, like, do not buy this business? No.

[A]

Maybe like businesses in the. We don't like wholesale transfer pricing risk. So if we buy a business, we once invested in a business where it was dependent on the price of zinc. This is years and years ago. It was a stock that Chris and I bought, and the price of zinc went down and the business went bankrupt, and we lost everything in the investment. And we didn't understand that risk at that time. So. So we really avoid anything with big wholesale transfer risk.

[B]

So, like, an example of wholesale transfer price risk is why are there no New York restaurants where the restaurant that have existed for more than 25 years, where the restaurateur is not also the landlord? It's because over time, the restaurateur will improve. A space becomes a very popular destination, and the landlord ends up being the net beneficiary of that long time over the long term.

[A]

And.

[B]

And so we do tend to try and avoid those. But even then, at the right price, I very much follow the Howard Marks approach. Right price for anything, we'll look at anything. So.

[A]

Yeah.

[B]

Thank you.

[A]

Thanks.

[B]

Hello, my name is pj. I'm coming from New Brunswick.

[A]

Oh, no way. Cool. That's awesome.

[B]

I had a question. I was interested in your thoughts on fostering a culture of innovation within a company. What specific incentives or practices do you believe are crucial in encouraging creativity? Risk taking and continuous innovation among employees?

[A]

Well, I'd say freedom really. Giving the CEOs freedom to do whatever they want to do. At the end of the day we, you know, there's businesses where we might want them to innovate more, there's businesses we might want them to innovate less cause we don't want the R and D expense. But at the end of the day we leave the CEOs to make a lot of those decisions. And then also I'd say most of our innovation actually comes from very small teams. So we find it. Often you get into the innovator's dilemma. You've got a 5,000 person company and you say, hey, turn the cruise ship, let's go check out AI or something. Generally our approach has been to take two or three people, throw together a little team, spin up a new business to try and do that and allow that business to grow versus trying to get the existing business to innovate. But it really depends on the business.

[B]

Can you give us. Earlier you talked about incentives and you said they're very important. Can you give a specific example of senior management? How are they incentivized in order to align their interests. Interests with the companies?

[A]

Chris, do you want to take that one?

[B]

No. What we keep realizing is just how hard incentives end up being and how easy it is to outsmart yourself and just how often we end up creating unintended consequences with incentives. Some of our senior management is we're kind of mirroring the Constellation approach right now with a return on invested capital. So we're kind of very much measuring like, you know, what are they running, how much has it been invested, you know, organic revenue growth within that, a personal multiplier and the return on invested capital. In other cases, you know, we're kind of going to them and you know, prescriptively making them just buy stock. And so we're, we're kind of all over the place on what we're trying. But it keeps going back to like incentives can be very hard because you can easily outsmart yourself. The simpler we make it, the better.

[A]

We've tried, you know, full on stock options, which have a lot of pros and cons. We've tried equity grants, we've tried profit share, we've tried bonuses. You know, we've tried having people just buy the public stock. We've tried giving loans to people and then they buy stock. We've tried so many different things. They all have their pitfalls or structuring issues. And so it was. And again, like we met Charlie Munger, we said like Charlie, like what's the best incentive structure? And he goes, we have hundreds, hundreds of different ones. And it's so hard to figure out what's going to work and what's not going to work. But at the end of the day, if somebody is delivering on the thing you want and it's within their control, I find incentivizing them on that thing. So let's say that we care about net profit after tax, saying to that person, hey, you know, your target this year is X and if you hit that you get $100,000 and if you do double that you get $200,000 and next year that's going to be 15% higher because that's our growth rate. Right. There's a million different ways to do it, but it's important and it's probably the number one thing that I see people miss. I was recently talking to a friend and he was getting frustrated because all of his employees didn't care as much as him. And you know, you know, they weren't excited to try and hit numbers. And I just said, well, do any of them get paid when you win? And they didn't, you know, everyone was just paid a flat salary. So I think it's a critical thing that a lot of people miss.

[B]

And just the last question. Any public company CEOs currently, other than Warren and Charlie, that you like and admire?

[A]

Well, there's a very wise man named Mr. Steven Myhill Jones who runs the Daily Journal Corporation somewhere around here. I don't know where he is. He's still. Oh, there he is. There he is. Let's get a round of applause to Steve. Steve's actually based here, so he runs a company for Charlie Munger. We love Steve. I've known Steve for 15 years or something. We follow IEC. I think we've learned a lot from Joe Steinberg and Leucadia and Jeffries. Who else do we like?

[B]

Mark Leonard at Constellation.

[A]

Yeah, you know, all the usual suspects.

[B]

Yeah, thank you so much.

[A]

Thanks.

[B]

Hi there, my name is Jolson Paul Boff and I have a two part question for you guys. I just wanted to know what's your guys main every one of you guys main city of residence right now.

[A]

We both live in Victoria.

[B]

Everybody lives in Victoria.

[A]

Dave is in Toronto.

[B]

He's half Toronto, half Palm Springs as.

[A]

You can see based on the tan and Vancouver. Vancouver, okay, so all in Canada.

[B]

So I went to my first millions not too long ago and I actually saw you, Andrew, and these gentlemen right Here actually running it. And they did a great job. And in part of that, you guys were letting people bring up business ideas to you, and they were mostly Canadian ones. And you guys live in Victoria or in Canada. You get a lot more visibility to obviously Canadian businesses. And that excites me because 85% of your. Your stock owners are here today. So that's a real big grasp in Canada. Do you guys see, obviously, a more influx in Canadian businesses that you see that you're dealing with and that you're getting, you know, opportunities with that you wouldn't if you were, you know, living previously in California or anywhere? And does that help or hinder you guys living in Canada and trying to run a tech business?

[A]

I think it's a huge advantage for us because for the reason I shared with Taryn earlier, which is it forced us to be disciplined and profitable. I think if Chris and I were based in San Francisco, we would have started a startup, we would have sold to Facebook, and we'd be two miserable guys who worked at Facebook right now. So we're glad that didn't happen. In terms of Canada, I mean, I find Canadians are a little more down to earth. Maybe I'm biased. So I like dealing with Canadians. And whenever we get an opportunity to buy a Canadian business, that's obviously wonderful. We have a kinship with people that are Canadian. But I would say we look globally. So we're looking at, you know, businesses in New Zealand, Australia, Europe, you know, you name it.

[B]

Perfect. Thanks for everything.

[A]

Thanks.

[B]

Hi, my name is Carlos from Victoria, and I've got a question. Get that right. With the economy coming, you mentioned that you have an elephant gun and, and going to maybe deploy some capital in the next year or so. You know, you said the investment newsletters are coming your way, and I think monetary supply, the money supply is shrinking, credit's tightening. Are you guys battening down the hatches or are you loading up or making room in the oven to put more stuff in there to grill, or does the big picture, the macro picture change anything that you guys are doing? Where do you think we're going and how are you kind of putting the basket out or not?

[A]

Well, we don't really manage to the macro. Right. We mostly focus on individual businesses. So I think if the business is dependent on macro success. So, for example, would we buy a home builder right now? Right. Maybe if it was in a region that didn't have a lot of homes. But in general, you know, we're kind of not going to want to bet on A macro super cycle or something like that. We've looked at some businesses in more conventional brick and mortar world where they have very inflated earnings right now because they have been in this super cycle of everyone renovating their house during COVID or something like that. Those are businesses we are very, very cautious on. We are kind of barbell. So we are both paranoid and terrified and totally aware of all this stuff. And we are also licking our lips and excited to go shoot some elephants. And there's a lot of really wonderful businesses out there where I think founders and VCs have been overconfident for a really long time in terms of potential outcomes and now everything is kind of coming, coming back down to reality. So I think that gives us a lot of opportunities.

[B]

Thanks. Hi, good morning. Jeremiah Katz, 35 minute plane ride together.

[A]

First, I've been in the public markets for over 20 years and I haven't seen an event like this.

[B]

So thank you very much. I think it's pretty cool and.

[A]

It'Ll.

[B]

Be pretty interesting if other companies start doing this more.

[A]

Definitely on the smaller side.

[B]

My question I have is why public and why now?

[A]

So we've always wanted to be public. Chris and I have always admired Warren Buffett in Berkshire. And we've always felt that eventually we wanted to go public. And for us, when we did, we commerce, that was us dipping a toe. We had never done anything in the public market and in fact we'd actually never raised outside capital. Our first capital, our first outside capital was Bill Ackman. We had lunch with Bill Ackman and he said, hey guys, I really like you. If you ever do anything, I'll back you. And so when we saw the opportunity to do E commerce, we went to Bill and we did it. And we were terrified that we're going to have a terrible experience. But you know, hey, it's not our core business. It's this secondary thing. And we actually loved it. We had a really great time and we felt that we benefited massively from being able to access capital markets, access debt, better debt markets, you know, being able to issue stock, being able to buy back stock. So I think if you're a true capital allocator, being public is the optimal thing. And so that's why great.

[B]

And other question is, if we're back.

[A]

Here in 10 years, what does tiny look like? Very long beards. I don't know. To be honest, if you'd asked me 10 years ago, what will your business be? Because it wasn't yet called Tiny, I would have said oh, I'm going to have 10 project management SaaS businesses and my design agency. So I just don't believe in being able to predict that. What I can predict is that we're going to keep compounding and buying more wonderful businesses, but that's about it. I don't know how we're going to evolve and change over time.

[B]

Yeah, good. Thank you very much. Hi, I'm Daniel Stojak from North Van. So my question is we need to.

[A]

Get a taller mic stand for you. My question is what is your guys strategy for retaining talent at times?

[B]

Like what do you look for when you hire people?

[A]

Well, I think really just treating people well is probably the most important thing in terms of what we, how we retain people. I mean we've had employees that have stayed with us for, I think we just had someone leave after 16 years. So we've been lucky. We've retained people for a really long time and at the end of the day I think providing people a work environment where they have a lot of flexibility and freedom and treat them well. And then you asked how do we, what do we look for in talent?

[B]

Yeah, what do you look for in talent?

[A]

Generally I would say we look for people who are switched on. They're reading, they're a good writer, they're a good communicator and they're low drama. You know, I love working with people where, you know, we can just be on the same page and get stuff done. And I think that over time we've kind of identified how to just like with CEOs, we've identified how to hire great people and what to look for. The only other thing I'd add is just finding people who have already done the thing you want. Right now with Chris, I got incredibly lucky. Right. But generally when you're hiring a cfo, you want to hire someone who's done it before and has done something at the scale that you want to grow into. And so for example, if you are running a $10 million ARR SaaS business and you, you want to get to 20 million ARR, you should hire the head of growth who's taken a business in the past from 10 to 20. So that's kind of how we think about it.

[B]

Cool. Thank you. Ryan from Vancouver, thank you for putting this on today. I'm actually involved in a really boring business garbage. So turning garbage into money now with climate reporting standards coming out, one of them being the 51107. So all publicly listed companies need to report on their climate reduction strategies. How does Tiny anticipate kind of, I guess improving this metric showing emissions reductions? I noticed that a lot of tech companies, whether it's Microsoft, Amazon, Shopify, are starting to invest in companies that actually produce carbon credits to hold those on their balance sheet. What's Tiny strategy for this?

[A]

Well, I think we're going to solve climate change. No, I'm just kidding. We are doing all the mandatory reporting around ESG and climate and all that kind of stuff, but to be honest, it's not something we've really spent much time thinking about. Most of our businesses are not producing emissions. You know, perhaps aeropress would obviously the production. So I think we'd consider something there. And if you have any thoughts, I'd welcome an email. But most of the businesses are nerds in front of computers and Internet connections, so hopefully not producing too many noxious gases or anything.

[B]

Every company that actually uses data is going to be subject to carbon pricing post 2025 in Canada. So any company that's got, that's focused on logistics has last mile logistics. They're focusing on some sort of climate reduction. Most of it's just optics right now because it's a mess.

[A]

Totally. So I email me, would love to talk about it.

[B]

Thank you.

[A]

Cool, thank you.

[B]

Hey guys.

[A]

Hey.

[B]

Hey, how's it going? Been following the company for a couple years now. So glad to see you guys are public. Finally, question on culture. So what's the culture like over at Tiny? Like what's it, what's the vibe like in the office?

[A]

Well, we don't have. We've always been a remote company, so we've been running remote for 15 years. Like when Covid happened and everyone was like, oh my God, I can work in my underwear. We were like, hey, we've been doing this for quite a while and Chris and I historically actually worked out of a cafe. We didn't even have an office. And over Covid we rented a house and so now we have this house that we work out of, but it's very random so nobody shows up necessarily every single day. I still like working from a cafe. Chris sometimes works from there. You know, different people from the investment team are there but most of the time we're not in an office. Most of the business is, is actually run via imessage and email and asynchronous communication. We do zoom meetings and phone calls and stuff. But yeah, we don't really have an office culture as a result.

[B]

How do you manage a remote culture then? Because that's totally different. Ball of wax.

[A]

Well, I mean, it's really a culture of autonomy, right. So we generally, again, treat people well, pay them fairly, give them interesting work, talk to them when they're upset and you know, validate feelings and all that kind of stuff. When there's conflicts, we have conversation and discussion and debate. But yeah, to be honest, we didn't really. Our goal with head office is always to keep it incredibly small so that we don't have to do one on ones and you know, all those kind of more formal stuff. Obviously in the, the larger businesses they have HR teams, they have more traditional people operations and stuff. But at head offices, you know, Chris and I really only interact with maybe five people on a day to day basis.

[B]

Okay. I don't know. It's all good.

[A]

Thank you. Thanks.

[B]

Hey guys, this is awesome to be asking you a question here in this forum. Super sweet.

[A]

This is Rajeev, this is one of our oldest friends.

[B]

Hey guys. So my question to you guys is, so as a founder of a company, anyone who's a founder knows what it's like to get emails from PE or funds or whatever trying to invest or buy a piece of their company. And it's usually some company called like Sigma Force, you know, Sigma Force Ventures or something with a boilerplate website with a glass, gleaming glass tower and you know, some guy in a suit or whatever. And it's a crowded field. I personally get like five of these emails a week. How do you guys stand out in that crowded field? What's Tiny's unfair advantage in terms of the pitch to founders? Why, you know, when a founder is getting five of these emails a week, how do you get them to, to take your call and be excited about selling to Tiny?

[A]

Totally. I mean our Tiny was really born out of our own experience. I think the best businesses often come out of a problem that you personally have. And then there's that moment like in the infomercial, there's got to be a better way. And Chris and I, after reading about Warren Buffett, we kind of went, wait, why do all these guys make this so complicated? You know, Buffett is famous for one phone call, one one page contract, do a billion dollar deal in a week. And at the end of the day, founders are very high paced people. And so we would get so frustrated. We had probably five or six different private equity firms bid on various businesses over the years. We don't speak in Wall street terms and we just try and move really quick and get to no or yes within a day or two. And so if someone emails Us, Hey, I've got a business. It makes a million dollars a year. It's growing at this rate. This is the industry. We might even just fire them back, a letter of intent and say, well, here's what we'd pay and see what happens. So we try and just get through things really quick and treat people like people.

[B]

Be the buyer that we originally wanted to find and just doing that over and over, but it's harder than it sounds. Cool, guys. This is really cool.

[A]

Thanks, dude.

[B]

Hi, guys. Isaac Kitchen. I'm originally from New Zealand, but call Victoria home now. First of all, congratulations, Andrew. I wanted to ask you on your trip to New Zealand, were there any trends or frontiers that you kind of saw that was sort of leading edge as opposed to Canada that kind of took you by surprise? An example being you might have noticed the coffee culture. We didn't give Starbucks the middle finger, but, you know, independent coffee shops really reign supreme down there.

[A]

So I joked that when I went to New Zealand, I fell asleep on the plane, woke up 10 hours later and landed, and I thought my flight had been redirected, and everyone that I talked to was Canadian and had just had a stroke and talked funny. It's very similar to Canada. And so I immediately felt at home. Absolutely loved it. I think New Zealand is very interesting because it's a very small market, and there's actually a lot of businesses that have grown up independent of the rest of the world. So I was surprised. You don't see Home Depot. They've got their own Home Depot, they've got their own Best Buy, et cetera. And I think there's a lot of opportunity in a market where everyone's dismissed it as too small. And so we've actually had a lot of really interesting meetings with founders in New Zealand. I love visiting. It's a beautiful country. I definitely want to go back, and there's a lot to like there.

[B]

Awesome. Thank you. And secondly, sort of curious, you know, going public on the Venture Exchange and Victoria being home, is there a sort of change in the feeling of wanting to invest locally versus sort of casting the net a little wider now that you're public? I know you say we buy beautiful businesses, but is there a second flowchart where it's like, let's keep it BC or is it really sort of anything's on the table?

[A]

I mean, we would love to buy Nebraska Furniture Mart in Victoria. Right? Like, we'd love to find some incredible business that's right under our nose, but we. So far, we haven't found something like that. And to be honest, most of our investing activity is more philanthropic or, you know, we own some restaurants, not within Tiny, but personally, just kind of for fun, because we like the businesses and we knew the founders, but it's not a way to make money. It's more about stimulating the local, you know, food culture and that kind of stuff. So, yeah, I. It's not a focus for us at this point.

[B]

Awesome. Thank you.

[A]

So, Glenn Vanarsdel from Los Angeles, a few capital allocation kind of macro questions for you. So you bootstrapped a company up to.

[B]

An enterprise value of 8, 900.

[A]

And at the IPO is valued about 17x. And you've talked at least on podcasts about liking to buy things at 5-6x because you bootstrapped it up. You guys own the vast, vast majority of the company. So from a capital allocation standpoint, that valuation difference between what you want to.

[B]

Buy and what you own, how do.

[A]

You think about that?

[B]

I mean, is this share issuance, do you so forth.

[A]

We don't want to play the, the conglomerate arbitrage game, right? So we don't want to be trading at 17 and then issue stock at 4. I think we've just, if you look at financial history over the last hundred years, you've just seen blow up after blow up trying to do that strategy. So to be honest, when I say on a podcast, we like to buy businesses at 5x, the way I really think about that is I want to pay ourselves back in cash in five years. That can mean that we pay 10x and we double the business or triple the business or whatever it is in order to achieve that profile. Or it can be buying a business incredibly cheaply.

[B]

So as shareholders of 35 companies, we.

[A]

Don'T have that kind of look through ability. So how should we think about a.

[B]

17X valuation versus the 5x valuation in terms of the context you were just talking about?

[A]

Well, I think we own a lot of incredibly high quality assets that if you did, I mean, just for example, as part of the process, we did a fairness opinion and the businesses were valued. We may have bought some of these businesses cheaply. Often we didn't pay 5x. You know, for example, there's businesses in there where we paid 10x15x, but we've managed to get a payback in five years by growing them. And I think that if we were to sell, if we were to split the business up and sell it all to private equity, I think we would be getting much higher multiples. So I Would not, I would not. I would not think most of the businesses are worth 5x. So then you've also talked about, you know, how you're maybe not indestructible, but if you hadn't been built for sustainability, you wouldn't still be in business. So when you bootstrapped, you did it.

[B]

Without debt, and now you have not.

[A]

Insignificant amount of debt. Talk to us a little bit about the safety around that or what you're seeing. Charlie Munger has a great quote. He says debt is like a knife on the steering wheel. You have to be a good driver. And so we are very, very cautious with using debt. We're thinking a lot about interest coverage, and we've structured our debt so that not only are the interest rates hedged, so we are locked in, we're not exposed to interest rate risk, but they're also ring fenced. So only the subsidiary that has the debt is securing the debt and they're separated out between two different entities. So. So we're feeling quite comfortable about it right now, but we want to continue to pay it down. So back to the capital allocation question.

[B]

And just a little more color on it, if you don't mind.

[A]

So if I'm to interpret what you said correctly, there is Runway for changing the multiple in each company at whatever the current price is, is that correct? For the most part, no. I would say. Sorry, just can you clarify that a little bit? So if we as shareholders are buying.

[B]

Now, say at 13, 14x or whatever, there's Runway, just like you're thinking. When you buy a company for 10x, actually in three years, it's 5x because you've grown the company.

[A]

I would hope so. And how much of that is dependent on acquiring new companies versus what's already.

[B]

There at De Novo?

[A]

I think that if we stopped acquiring business businesses, we would continue to see earnings growth.

[B]

Okay, thank you.

[A]

Hello, Joanna from Seattle, Washington.

[B]

I have a few simple questions. I'm just curious. Out of all your acquisitions, how much.

[A]

Is usually inbound versus outbound? So I would say that almost all of it is inbound. And so, you know, we go on podcasts, we have, you know, a loud kind of Twitter following, that kind of stuff. But every once in a while you see the beautiful person across the bar and you have to go talk to them. So that's how aeropress happened, for example. That's how Dribble happened. Some of our best acquisitions have actually been things that are right under our nose, where we get excited. But a lot of them are people Actually opting in too tiny. And I think that's one of our greatest advantages is that we have this incredible deal flow. We're not having to, to employ a 25 person team of analysts and junior people to go reach out to companies.

[B]

That makes sense. And that actually leads to my second question. So I knew Dribbble, but are there any examples of other companies that you've.

[A]

Invested in or you have purchased where.

[B]

You were a customer yourself? Aeropress is the best example. You should go on.

[A]

Yeah, I mean, I was literally making my morning coffee. I've been using aeropress for over five years and there's a guy, Ali Bosworth at the office of in Metalab, who brought in this strange contraption and it just made such a bloody good cup of coffee that I started using it at home. And one morning, Chris and I, we've been having a lot of conversations about trying to buy a brick and mortar business. And so I was looking at all the products in my kitchen and as I'm using it, I look down at this thing and I go, man, I wonder who owns this? And typically when you do that, the answer is, you know, private equity, whatever. And I was shocked to see that the founder, who is in his 80s, Alan Adler, still owned the business and that he was the creator of the Erobi Frisbee. So serial inventor. And we emailed him and he goes, I don't hear very well, so you're going to have to fly down to Palo Alto to meet me. And so Chris and I went into this little. He had this funny little office in a strip mall kind of office park in Palo Alto. And he was an awesome guy. And we just built a relationship over the course of, I think three or four years before we were able to convince him.

[B]

Oh, wow, that's very cool. And then just a personal question, I'm curious, have you ever invested, invested in or thought about investing in fashion? Well, Frosty.

[A]

Yeah, so we, we do tangentially. So we own a agency called Frosty. They do basically fashion and branding work and marketing work for, you know, Calvin Klein and all sorts of, of large fashion houses and stuff like that. So we sell pickaxes to gold miners in fashion, but we are not participating necessarily. We don't own fashion businesses. I think part of the challenge with fashion is simply that it changes so often. It's very unpredictable.

[B]

Outside of our investment in endure or outweigh.

[A]

That's right, you have an investment in Rob's sock company. If anyone got the tiny socks, those are made by Endure your Or sorry, outweigh. Outweigh. And they have a business called Custom Lab where they can make your company socks. So if your company needs socks, go to customlab.com Is that right? All right, great. Thank you. Hey dude, how's it going?

[B]

Yeah, good to see you. This is really fun. Thanks for putting it on. As you know, I run an agency up island and you guys have a portfolio of agencies. A lot of great agencies we've worked with. What kind of advice are you giving to the founders of the other agencies? Sort of to like deal with this coming change in the market and you know, a lot of anticipated distress.

[A]

Well, I think that for a long time working with startups was incredibly attractive because they were flush with cash, they needed work quickly. There was constantly new startups coming. And over the last five years we've really encouraged our agencies to focus on long duration contracts, try and move up market, work with the Fortune 500. And so we've, we have made that transaction transition largely in many of the agencies. So that, that's really the advice I would give is try and find companies that will exist without venture capital.

[B]

Yeah, that's great advice. Thanks. Thank you.

[A]

Hey Matt.

[B]

Hey. Hey guys.

[A]

This up just a little bit.

[B]

Take this out.

[A]

Question about the won't surprise me. My question is about hiring CEOs. Do you have a general sense of how long a CEO or what the timeline you should give them to see the results before you potentially will make a change or has that changed since the that you're now a public company? Well, I think it really depends. I'd say that we generally like to hire fast, fire fast. So if we feel that we were actually talking to a founder about this the other day and we gave him the advice, we said if you think about firing someone, you probably should because you never ever think, should I fire this person about superstars. There's people at Tiny where I just go, oh my God, we'd be lost without them. We would never even think about it. It would never cross my mind. It's the people where you wonder where it usually doesn't work out. So that's generally what we do. But we're very loyal so we work with people for a very long time and if they're doing a good job, we're not going to nitpick over should they be doing 5% better. When we like someone and we think they're doing a good job, we will leave them in place for a very long time. Thanks guys.

[B]

Thanks. Hey guys, I'm here Again, sorry. So like in the late 90s, we're talking about greed, envy, all those human emotions that are terrible. We all know about them. If some fund manager didn't buy pets.com at 80 times earnings and the guy down the street did, and he said making 40, 50% a year, he would get fired for sure. And my question is, I know you know Howard Marks, right? And Howard wrote this brilliant piece on how Warren became Warren and was allowed to build Berkshire. And it's all the stuff that we already know. You know, he's a prodigy. You know, he has a temperament, all those great attributes. But Howard said that the most important thing that allowed him to build Berkshire is he can never get fired. Warren can never get fired. So I'm wondering, would you guys ever be able to get fired? Like, is that something that's on the table? Because he owns all the the A shares and that's how it's structured. So I'm wondering, like, how is Tiny structures? I'm sorry if I don't know this.

[A]

By reading the annual report, I believe so. I think Chris and I hold 81 of the vote. I think it would be very challenging. I mean, Steve Seville can help you. You do a proxy and take over if you like.

[B]

No, no, I take your word. I'm just wondering, so you can sit in your tiny office and not buy pets.com and.

[A]

Yeah, we don't worry about that. And I, I, you know, the best defense is, hey, look, look how aligned we are, right? We have, we have pretty much all of our net worths in this stock, as do everyone at Tiny. And so when someone, you know, we've, we've had this situation before with investors where they say, you know, what the heck, you're sitting on cash, shouldn't you be moving? And we just, you know, the best defense is it's my money too. And I've put in, you know, just as much or the same amount as you, as you have. And I have just as much to lose. I think that alignment really solves that problem.

[B]

It is a small detail, but it's so important.

[A]

Yeah.

[B]

So thank you. Thank you. Especially for decision making. I actually think more than even a fear of Buffett being taken away, I think, think that permanence in mindset is really powerful. Absolutely. Absolutely. Thank you, guys. Howdy. Howdy. My name's Spencer and I run a.

[A]

Local dog walking business.

[B]

My question's unrelated to that, but it seems like Tiny is the buyer of choice in many of the markets at Targets. And you're Seeing a lot of money.

[A]

Flowing into similar sort of holding co opportunities.

[B]

Sort of like Tiny, with terms popularized.

[A]

By like Warren Buffett and yourself.

[B]

If you see founder friendly terms sort of becoming a commodity, how do you.

[A]

See that affecting Tiny's long term position.

[B]

As a buyer of choice in the markets that operate? And do you think there's enough quality assets in that market to sort of support the rush of buyers into niche Internet businesses?

[A]

I think it's fascinating. I mean, you look at Warren Buffett, he's got, what is it, 60 or 70 years of doing what he's doing. And if you actually look at how many people have actually cloned what they're doing, it's very small because most people are trying to get rich in the short term, not in the long term. And I think this strategy is much more of a long term approach. So from my perspective, I'm not super worried about, you know, everybody implementing these terms. And at the end of the day, I mean, terms are one thing, but actually who you are and reputation and how you are with people, I think makes a big difference. And so, and the fact that we're.

[B]

Bootstrapped and even now being a public company, there's no gun to our head to ever have to sell anything. And I think that really resonates with a lot of founders.

[A]

But yeah, yeah, I agree.

[B]

Okay, gotcha.

[A]

And my, my second question was given.

[B]

AeroPress is sort of like a cult like business, and businesses like that, especially in sort of retail presence, the purchase orders often sort of look like an annuity. Would you agree with that? And do you see more opportunities going forward in more traditional businesses?

[A]

For Tiny, we didn't look at it as an annuity. I mean, we understand that every month, you know, a coffee shop can decide whether or not they want to order from the distributor. So no. And what was the second question?

[B]

It was, it was just, it was.

[A]

Pretty much the question. But you were wondering, what's your dog walking business called?

[B]

It's called Victoria K9. I also work for Mike Ciccarelli for Smelly Dogs.

[A]

Cool. Great guy. Small world.

[B]

Yeah, for sure. And thank you very much for taking the time.

[A]

Thank you.

[B]

Hey guys, Rob here. Yeah, actually similar to the first question from the last fellow there, Just curious how you think about the brand appeal to the sellers, like to the founders or whoever's selling and how that's changed over time in the last few years as you've gotten significantly bigger now that you are public, do you think that's going to narrow your market as far as you know, do you have to look for bigger deals? Like, you've heard Buffet say it's like super hard to deploy that much money that he's deploying. But as you get bigger, how are you thinking about still maintaining the appeal to the sellers?

[A]

Well, I mean, I think if they can do it, we can certainly do it. I mean, they're what, a trillion dollars almost at this point, and they still seem to be able to do it. You know, when we were with Charlie Munger, he told us a story about how he said they wanted to make an investment and they had made a commitment to the founder and it was Friday, and he said to the lawyers, it has to be closed by Monday. And they said, that's impossible. There's just no way. And he said, I don't care. That's just what has to happen.

[B]

He said, your job is not to say that. I think.

[A]

Right, yeah. And they got it done. And I think often there's kind of false constraints on some of these stuff. Now, does that mean that we're going to have to continue to grow our scale and that we're going to prefer over time to invest large amounts of capital versus small amounts of capital? Absolutely. But I think the ethos has to stay alive and we fight every day to keep that alive and to not, you know, get bogged down in some of the public company stuff.

[B]

Yeah, just.

[A]

Just a follow up to that one.

[B]

As far as the companies who are venture backed and, and not growing fast enough for the VCs, how many of those have you done? I know it's at least one or two. But also, what. How is that different than a founder, bootstrap founder selling? Like, is it less about the relationship and more about.

[A]

Yeah, it's less about the relationship and it's more an incentive mismatch where you've got a venture capitalist who's invested their portfolio in 20 businesses. They have to get a 20 or 100x to feel a win. And they look at this business and they just go, this is a zero to me. We look at it and go, oh, wow, this is pretty incredible. And they just don't want the headache. So there's just an incentive mismatch often in those situations. And I'd say we're mutually beneficial. We have lots of venture capitalists who send us deals because they know that we're going to be straightforward to deal with.

[B]

Are you seeing more competition in that space, though, for other buyers?

[A]

Not currently. I think a lot of people are scared. Sweet.

[B]

Okay, thanks, guys. William, again, to take an example from the world of vc, and I understand there's a difference, but firms like Andreessen Horowitz will back multiple people who are the same trying to do the same thing, Whereas firms like SoftBank will just back one and go sort of all in on that. What is Tiny's approach to investing in and acquiring companies which have maybe competing interests or mandates, whether or not you want to sort of look for synergies between them or want to limit stepping on toes? Yes. What's your approach in that?

[A]

We're very. I'd say we're very cautious when it comes to any of that kind of stuff. So first of all, synergy, even when logical, is very hard to execute. I mean, we have. Here's an example. So we have some very large digital service agencies and we have some small ones, and trying to convince them to share leads even, is hard because why would they? Right. So we really don't insist on any of those things. And what we try and do is just connect people and if they like one another, they're welcome to work together, but we're never going to force them to work together. We're never going to say everyone has to use the same credit card processor and we're going to negotiate the rate globally or something like that. So, yeah, that's how we think about synergy. What was the other question?

[B]

Yeah, I guess. I mean, that sort of answers it, really. I guess it was in terms of not like limp wanting to not acquire companies which might tread on each other's toes or if you're okay with that.

[A]

Well, I would say we're not ruthless. So I'd never, you know, I don't want to take, you know, buy aeropress and then buy another coffee press company and pit them against each other or something like that. But I would say, you know, we would consider buying another business in the coffee space and, you know. Yep, thank you.

[B]

And a second one. And whilst you two are in the vast majority of the company, what is your concern with? And maybe it's a good one for your investor relations manager as well. What is your concern with or how concerned are you with wanting to what your shareholder sort of audience is like in terms of their characteristics and what they look for in the company? And I guess to the extent that you're concerned about that, what are you doing to sort of shape that narrative?

[A]

You mean how, like, what kind of shareholders do we want or cultivating?

[B]

I kind of think you get the investors you deserve. And our whole plan right now is like we're just focusing on, on the long term and we're not trying to shadow box in the near term at all.

[A]

But yeah, I would say that we want people who think long term, you know, who are not freaking out about week to week aberrations in stock price, people who could be partners and you know, and good people. Like I said in the beginning, I love looking around this room and seeing so many people that seem lovely. I mean, I know a lot of you don't know others, but yeah, ultimately we're really looking for people who are going to think long term and will treat, treat us right and we'll treat them right. Thank you. Morning Andrew and Chris. My name is Kulindran, I'm from Kuala Lumpur, Malaysia. I have two questions. The first question would be how do.

[B]

You build and recognize your circle of competence?

[A]

And my second question is do you see tiny spawning new businesses from within.

[B]

Or is it just going to be acquisitions moving forward?

[A]

So the test I always have is could I explain this business in one or two sentences to my parents? And if that's true then that's something I probably want to invest in as soon as it gets really, really complex and muddy. You know, we don't love that. We like really simple business models and I think that the circle of competence, you know, we very, very gradually expand it, right? We'll learn new industries, we'll make small investments in an area and start learning it. And sometimes we'll burn our hand on the stove or stick a fork in an electrical socket and not do that again. You know, for example, we bought, we bought some job board businesses. We bought one job board business and it was incredible business. We still own it. WeWork remotely.com and we had this thesis that oh, we'll go and buy five more of these. These are amazing. Well, it turned out they're actually really hard and we had lightning in a bottle so we don't pursue more. In terms of starting businesses. I would say that Chris and I are both very entrepreneurial and that we have ideas or different people within the company have ideas. So we actually have a little studio within the company where when we have an idea we'll launch it. We just launched a basically like audience building for, you know, influencers and social media foundry launched that two days ago. But it's really us just tinkering. We don't know if anything's going to come of those and we're not spending a lot of money. We're just putting 50k into an idea and seeing if it Goes somewhere.

[B]

What about you, Chris?

[A]

How do you build and recognize your.

[B]

Own circle of competence? I think Andrew actually kind of covered it well. But honestly, I keep thinking the only way to really learn learn is to keep doing new things and at the same time reading books. And it's really tough to just learn from reading or anything like that. But doing and reading in tandem is a great way to cement lessons from other people. And so that's all I typically do.

[A]

Thank you. Thanks.

[B]

Hi, my name is Philip Nelson. I'm sorry, sorry. Just so you guys know, we got about 15 minutes left, so if you got a question, John, jump up there because we'll close it down after that. Hi, Philip Nelson. I moved to Salt Spring from Alberta about two years ago. I'm a filmmaker raising for my next film project and have been increasing my lux surface area over the last two years. And I noticed you had attended the Oscars this year and I'm curious if you have any particular interest in the film industry or entertainment industry?

[A]

Oh, man. I mean, I love watching movies, but I think investing in film is a great way to have your kidneys harvested by Hollywood. There's a long list of really smart people who have gone into Hollywood and bought studios and all that kind of stuff, and it never seems to work out. So I'd say for Tiny, no, we steer clear of that. And no, I'm not. That was just a fun, silly thing.

[B]

How about technology and the entertainment? Entertainment business like 3D cinema and VR and things like that?

[A]

I just don't think we know very much about it, to be honest. I mean, I think we're going to participate in VR and AR via our digital services. Businesses like Metalab, they're very, very keen to start playing with the Apple Vision Pro and all that kind of stuff. But in terms of buying businesses in that space, it's not somewhere that we have deal flow. It's not somewhere we look at. It's not somewhere something we understand. And I look at that as almost like deep tech. You know, it's something a little further down the line. Never say never. But it's not something we're thinking about actively.

[B]

Sure.

[A]

Cool.

[B]

Thanks.

[A]

Thanks.

[B]

Hey guys, thanks for putting this event on and thanks for the free swag. That's good. Mirrored reciprocation. Just quick question for you. Capital allocation was mentioned quite a bit in the letter. How do you measure your capital allocation and your performance?

[A]

Well, ultimately we want to grow earnings per share. That's it.

[B]

Thank you. Hello.

[A]

Hi, I'm Kim Nguyen. Oh, maybe a Little closer.

[B]

Good.

[A]

Hi. So I'm an app developer, dating app right now. And I was just wondering there.

[B]

It's a competitive space. A lot of your company companies are that you acquired are in competitive spaces. Like they're going against Shopify or other places like that. What makes you choose them? Like what about them is different enough for you to say they can hold their own space within this space?

[A]

I'd say usually it's in the boring corners. So for example, in Shopify the way we started was we started building themes for Shopify and there's no venture capital participating in that. Right. It's not something that there's a lot of competition. Over time there's been more and more, but those are the kinds of areas that we like to play or we like to find a business that has some sort of moat. So like a high switching cost or something like that where people get trained on it, their staff are trained on it, they're embedded, it's recurring revenue, they don't want to rip it out. So we'll look at stuff like that. I think it's very, we've looked at a lot of Shopify businesses over the years and a lot of them are very commodity. So it's very easy for a competitor to come along, offer the exact same thing and they can switch in 10 seconds and pay $2 less a month. That's the kind of stuff we're trying to avoid. Thank you. Thank you.

[B]

Hey guys.

[A]

Hey.

[B]

Colton Davy from Anaima. It's good seeing you guys. I had a question about like in your shareholder holder letter you said that like your portfolio companies, you try to like maintain the DNA of them and over the long term, how do you, do you have like a top down plan to, to do that as kind of like people flow in and out of them. Right.

[A]

Well, I think we really focus on, you know, changing the leader at a company is like doing brain surgery. You have to be very, very careful. You have to make sure there's a really good match and so otherwise the patient bleeds out. So really when we hire a new CEO for a business we are very thoughtful in terms of making sure that they resonate with the founders ideals and they're not going to come in and mess with the thing that makes the company great, but only enhance it. So that's generally how we think about it.

[B]

So you think it's like the, it all stems from the CEO or like the leader of.

[A]

Yeah, usually. And I mean don't get me wrong, like companies are like I said, Companies are groups of people and if all those people are bought into the vision, then naturally the culture will be self sustaining. But at the end of the day the leader will kind of set that culture and like the tone and reinforce it. Exactly, exactly. Yeah. So we have to be very, very careful. I mean when we bought Dribble, that was a business where like I said, it was run by a designer and an engineer and they're very product, product focused. And so when we brought in Zach, the CEO of Dribbble, we had to make sure that he had the right background where he'd be able to talk the talk to those people because he was formerly a designer. That was his world. He was in the creative world but he could also do the business, business side, which is what we needed from him. So I think we've just gotten good at knowing in our gut when someone's going to be a fit in a certain company based on the kind of.

[B]

Vibe of the founder and we stay out of there, we stay out of their hair. I don't think culture can be prescriptive from the top of the hold code down to an operating company. I think it is, as Andrew's saying, within these each separate distinct groups. Yeah, that makes sense. And then the other question I had was when you're pitching to like LPs for your fund, did you like, was there a specific thesis you had? Because like it's, it wasn't because it's not like geolog, like geographical based. Right.

[A]

Well, we basically, we basically said look, there's been this huge run up in venture capital and we want to go buy technology businesses as there's distress. That was kind of our thesis but very much the time, tiny ethos, you know, our deck walked them through different sorts of deals. We do how we think about a capital allocation, you know, all that kind of stuff. Was it raised after we raised it before? We raised it in 20, end of 2020, I believe.

[B]

Okay. So you could kind of like you leverage what you already been doing.

[A]

Right?

[B]

Yeah. Okay. Thank you.

[A]

Thank you.

[B]

Nice one. Hi guys. David from South Carolina, first question is just a clarification question on the fund. What I'm hearing or getting the sense of is that after this fund has been fully deployed, it sounds like you guys don't have appetite to raise future funds after this. Right? Okay, great. Second question is your philosophy on stock based compensation? You know, a lot of tech companies have given themselves a bad rap for using it too aggressively. It's one of the items that you adjust for in your Adjusted ebitda. So now that you're a public company and moving forward, what is your philosophy on stock based comp?

[A]

Well, we love what Mark Leonard does at Constellation. So what he does is he basically has people rewarded on return on invested capital or something, some kind of metric that they control. They get paid a big bonus and they commit that they're going to take at least 70% of that money and put it back into the stock. And so we have that incentive structure with some of our leaders, certainly in the platforms, but on a case by case basis, there are instances where we may use stock options. It just depends on which subsidiary and what's logical. But we are also allergic to silly stock options. We do not want that to be the way that everyone compensated. We don't. We look at them as lottery tickets.

[B]

Yeah, I think the board compensation and how that's changed is a really good indication of our, you know, where we want to see things progress to which would be individuals actually buying stock on the public market.

[A]

Gotcha.

[B]

Okay. In the past few years, the pandemic.

[A]

Years.

[B]

A lot was unusual in the world, but especially, but also in, you know, how businesses behaved, how valuations behaved. If you kind of think through that period and the investments that you've made, the acquisitions that you've made in that period, do you think that some of the your own expectations got distorted on anything that you say, wow, the moment of that time, whether it was kind of the E Commerce trajectory or whatever else, that you look back and say that was something that maybe we miscalibrated what the world world would look like once it started to normalize.

[A]

No, I wouldn't say that. I would say that we were really shocked. We would talk to founders and they would say, I have 1 million EBITDA and my company's worth $250 million. And that was kind of where it would end. Right. At the end of the day, we have to be able to wrap our heads around the cash flow and the payback. And so it was pretty wild for us. And it was a test because prior to that we'd been in a feeding frenzy, but where we're just constantly, you know, there's just so many deals out there from 20, what was it, 2014 kind of to 2020ish. And then everything went insane and we kind of felt like frustrated. We were sitting on our hands and waiting to do deals. So now that there's actually reasonable valuations coming back, we're pretty excited. But no, I wouldn't say that any of Our acquisitions were modeled based on some kind of like, insane, you know, the world has changed kind of thesis.

[B]

Okay, I got one more, but I'm.

[A]

No, go for it. Go for it.

[B]

Just one other question, which is I think probably related to how you think about the structure of Tiny. You announced that you recently kind of grouped your digital services businesses under the Beam name and umbrella. Wonder if you could just elaborate on the decision of doing that and what functionally it means.

[A]

Yeah, so basically we started with Metalab. That was the original digital services business. Over time, we realized that Metalab was outgrowing certain clients that couldn't service anymore, but it still had a lot of leads. And so we went out, we bought Z1, and we started expanding into a variety of different businesses. At a certain point we realized, hey, this is a platform. This is something that actually needs its own monitoring and tending to. And that Chris and I just can't keep 30 plus businesses in our head and we can't coach and mentor all those CEOs. Will we pick up the phone for them? Absolutely. Will we spend time as needed? For sure. But we can't understand those businesses deeply. And so we started realizing that we needed platforms where we could have a capital allocator and a CEO to monitor the businesses, work with the CEO, hold the bar, set incentives, and if it was logical to buy more businesses within. And so that's where you'll see, you know, Jordan and Pradeep running WE Commerce and Beam.

[B]

Okay, so does that imply that there's kind of some soft guard rails on how far afield you could go into other types of businesses? Because if you think, oh, we should have a platform that has a team that can coach businesses of a certain type, but then you acquire, say a coffee business or something totally unrelated and you've got to coach them or you need to find someone to coach them. I'm just trying to triangulate how you think about.

[A]

Let me put it this way. If we bought five more businesses like aeropress in the coffee space, I think we'd probably form a platform for coffee. We just have them focus now. I also believe that people who are really, really smart and read a lot can learn in other businesses. And so if logical, if Jordan came to us at We Commerce and he said, Guys, I found this incredible SaaS business, but it's outside of E Commerce. I've negotiated an incredible price. I know exactly how to grow it. This is in my wheelhouse. I think we would say, awesome, let's do it. So we don't want to box in the platform CEOs necessarily. And just because we have a platform doesn't mean we're necessarily going to buy more. So, you know, the fact we own seven agencies does it? Doesn't mean we're going to buy ten more. Right? Okay, great.

[B]

Thanks, guys.

[A]

Thanks.

[B]

So we've got. Yeah, come on.

[A]

Yeah, why don't we.

[B]

Two more people in line. We'll finish up here. And if you guys have any closing comments.

[A]

Nice hair.

[B]

Thanks. Does it look like a coffee to you? I don't know. I'm Stephen. I run a kind of a fledgling media business on the side that's from a YouTube channel about tennis and to trying to be a media business. And I'm just wondering, on your scale of hard to easy businesses, where would you put media like news media? And then in 2023, would you focus more on subscription revenue or advertising? And is Tiny going to look at media businesses going forward as it's kind of a hot.

[A]

So we have looked at a lot of media businesses. We've bought a couple. They are really hard and I think what works in media is being hyper focused. So, for example, if you have a newsletter, there's a guy I know named Edwin Dorsey and he has a newsletter where he just. All he does is he posts CEOs who got fired, CFOs who got fired and companies that have proxy battles. And that's an email newsletter. And the reason that's incredibly valuable is because there's all these people at hedge funds who are, you know, short or they want to do activist takeovers and they just want to know when that happens. And so people pay $1,000. And so he has 100, 200, 300 people paying him $1,000 a month. He's got an incredible business doing a very boring thing. I love that. What I don't love is you going out and saying, I'm going to replace the Toronto Star and, you know, I'm going to make national news business because there's so much competition for that. So I think stay local, stay small, stay niche.

[B]

Cool, thanks.

[A]

Hey, guys, my name is Mark.

[B]

Thank you for doing this. Somebody earlier asked a question in regards to movies and media and things like that. You mentioned it's not something that you're familiar with. Is there an industry or an asset class that you are trying or actively getting yourself familiar with now? I'd say we're trying to wrap our heads around AI right now, but I'd.

[A]

Say, I mean, AI insurance is always really interesting to us. Anything with A flow float is fascinating. We do actually have float within some of our businesses, which is kind of interesting. We've been searching for more of that, but no, there's nothing right now that we're bashing our heads against. Most of the businesses we're looking at right now are very much kind of in our world. Thank you.

[B]

Thanks. Oh, one more Unstamped if you can.

[A]

Ah, yes.

[B]

I mean it's been flat in terms of revenue relative to shop.

[A]

Just curious, Chris, do you want to take that one?

[B]

No. Derek, just to be clear. So you're asking just like a general update on Stamped or Stamped revenue business, how's it going? Haven't heard much since Alex left. So I was just curious since you bought Stamped and how's it going today.

[A]

Relative to when you bought it?

[B]

Yeah, I'm pretty. Stamped is one of the assets that, you know, especially in the merger, as we thought about like, you know, using E commerce as a platform to potentially take tiny public. Stamped, I kind of think is one of those still not well understood, understood gems. Kind of broadly, we have a new CEO who's running it, who took over a few months ago, Mike Berardo, and he's pulling a lot of really interesting levers in the business. You know, I'd say the E Comm category broadly has some suffered a little bit. You could see this really reflected with Shopify and Stamped, no different saw an impact when it came to the funnel. But what that team is doing has me very excited, especially over the course of this year. So it was part of our thinking with the whole deal is there's a good asset there. But I'm not going to speak to the revenue at this point, sorry, of Stamp, from when you originally met them and bought them to today. Looking backwards, the part that's been hard has been when we bought the business, we kind of knew that the CEO Tommy, the founder, was this solo mountaineer who piled everything on his back and he'd jump into the trenches and do all this hard work. And we kind of identified that you'd have to hire 10 people to replace this one founder. And the way that the deal was structured, because he forced it that way, is that he was only going to linger for a very short duration. And so I'd say the one frustration is that it took us quite a bit of time to really build out that team. And I'd say that kind of handicapped what the year's growth should have been was just actually rebuilding a whole foundation because this, you know, there's so much expertise in his mind. The teams there, we're really happy with the whole foundation, but that that time did take longer than we were anticipating when we bought it.

[A]

I also think one of the headwinds for that business is that E Commerce, at the end of the day, is going to keep relentlessly growing. We know that. And I think that because of Shopify's stock price, because of some of the pessimism around that world, because the COVID pull forward, I think there's going to be less competition, more consolidation in that space. So we think we'll be a beneficiary there. Well, guys, this was very, very cool. This is so awesome. Thank you so much for coming out. Hopefully we'll do this one in the Save on Foods arena next year, but. Yeah, that was great. Thank you, guys.