20% ROE and a net profit of $28.5mm in Q3 2025 alone (lessons below)

Dear Friends, Company Builders and Fellow Capital Allocators,

For every owner, investor, and operator in boring-but-beautiful niches: this take is universal.

Straight, word for word, from a 32-year-old Paul Tudor Jones in Trader who later built a $12b aum hedge fund:

“Where you want to be is always in control... never wishing... always trading, and ALWAYS, first and foremost, protecting the downside.

That’s why most people lose money as individual investors or as traders: they’re not focused on avoiding losses.

They need to focus on the money they have at risk... how much capital is at risk in any single investment they make.

If everyone spent 90% of their time on that, rather than 90% on pie-in-the-sky ideas about how much they’re going to make, they’d be incredibly successful investors.”

(It’s been said that, years later, Paul Tudor Jones doesn’t like that documentary being public and has tried to get it taken offline. So when it does appear, people watch. So here’s the link.)

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A quick shoutout to our sponsor and a few examples of how Spacebar Studios turns newsletters into revenue.

There are many companies that treat newsletters like a checkbox. Spacebar Studios treats them like a growth engine.

On my call this week with their co-founder Brandon, he confirmed that they’ve built a compliance newsletter from zero to 120,000+ subscribers in just 14 months… and that list drives real business, real revenue.

For one of their clients, their newsletter generated over 50% of total pipeline and sales.

More numbers:

Across every brand they manage, Spacebar delivers 44%+ open rates, 4%+ CTRs, and subscriber costs under $0.20.

And something they’re most proud of: they’ve never lost a client.

If you’re building a Holdco, fund, or B2B company - and you want your content to actually drive deals - click here talk to the team at Spacebar Studios.

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Before sharing the lessons, here are is the long-term financial forecast for this company:

(This growth rate is why I spent two and a half hours listening to their annual meeting.)

• year 2025 / net profit $125m

• year 2026 / net profit $153m

• year 2027 / net profit $184m

• year 2028 / net profit $229m

• year 2029 / net profit $268m

The company is LHV Group - a small bank in Eastern Europe (recently expanded to UK)

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> zero to $500mm aum in 8 years on one small market

> it took the same product from zero to $500mm aum in 1.5 years in the market 80x larger

> Q3 2025 net profit: $28.5mm

> 20% return on equity

> Competitors are VC-funded, looking to increase customer count rather than achieving a 20% ROE

The difference between a $50mm loan book and a $5 billion loan book isn’t time... it’s how you start and STRUCTURE the company (the bank, in this case).

(During the weekend, I was listening to a shareholder meeting of a bank that has built a $5 billion loan book.)

Here are 6 key takeaways you can use when building & growing your traditional small business:

(A) Start small. Niche down. While many new-age neobanks and fintechs start with code and then wait (often pray) for users, they started with beer festivals.

First...they started in a small market (1.3 million people) selling banking services (pension funds) at the local biggest beer festival.

Then they went to shopping malls. The “boys at the booth” signed up over 100,000 customers. This helped them become known and REALLY built the brand.

They knew from day one that the hardest thing in finance isn’t writing software... it’s GETTING humans to switch banks.

So they almost brute-forced trust one handshake at a time using the “boys at the booth” approach.

Folks talked to people at shopping centers, convincing them to change their pension fund from one bank to another.

These young, energetic guys spending 10-12 hours per day at the malls. Every time they signed a client, they earned a fee (0.5-1% of the total amount of the collected pension).

The great lesson from this is: Start with one product and before you go digital, go physical.

(B) Building everything around a single god metric: 20% ROE

Every decision runs through one filter:

Does THIS  drive a 20% return on equity?

In the UK market, where every neobank is burning capital ($$$) for user growth, they are compounding it.

(C) They run on a new tech stack (while many other are almost dying on old ones)

They are one of the few banks in Europe built entirely on cloud architecture.

In case you think that’s normal in 2025… it’s not.

Only 10–20% of EU banks are cloud-based.

That means:

• They can launch new lending products in weeks, not years.

• They can analyze risk in real time.

• They don’t need armies of IT people to maintain 20-year-old systems.

This makes them very effective. Many banks are built on concrete; they’re on asphalt. They can move.

(D) Efficiency, efficiency, efficiency

They laid off 100+ employees at their peak growth phase. This, only because they got too comfortable.

They now try to automate what others hire for:

• AI does the cold calls

• Cloud runs the ops

Next time a process grows, they ask, “Can a line of code do this instead of a person?”

(E) New leaders should be hired from outside

Their CEO said:

“Leaders should be hired from outside, not promoted from within.”

Because insiders protect the old ways. Folks coming from outside are willing to build new ones.

They want people who already think in systems, efficiency, and tech... not people who “paid their dues.”

This is brutal, but it’s the reason they scale.

If your leadership still acts like the old company, you might need to build a new one.

(F) Understanding the compounding curve

The first few years of any serious business feel dead (and that’s normal).

They spent almost three years building before scaling.

Their growth didn’t curve until years 6-8… and then it took off.

In the small market of 1.3 million people, they took 8 years to hit a $500mm loan book.

In the UK, they hit the same milestone in 1.5 years... because the system was already built.

They could reuse the same system in the UK market.

Even a great system takes years to not look like it’s working — and then suddenly everything happens.

To sum up: If you’re scaling any business (not just a bank)...

A few great questions to ask yourself:

1. Have I built real distribution, or am I hoping for virality?

2. Do I have a single financial metric that defines success?

3. Is my infrastructure actually scalable, or just duct-taped?

4. Do I hire for what I need, not who’s been here longest?

5. Am I patient enough for the curve?

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A few takeaways from my conversation with the founders of CapitalPad:

1.  Seven deals completed since launch; mostly first-time searchers.

2.  1,000+ accredited investors

3.  Investors are building holding companies (literally); one of the co-founders has invested in all 8 deals and said he will keep doing it as long as he can.

Here is the link if you want to look at deals, invest yourself, or raise equity for your own buyout:

CapitalPad is connecting accredited investors with acquisition entrepreneurs to power the next generation of SMB ownership.

So far only two to three buyouts haven't closed (not because of the investors or buyers,but because of the sellers).

Many investors have invested in more than two deals; one even invested in all eight. Building their own holdco.

Highly suggest looking at the platform they've built (they’re also a proud sponsor of the HoldCo Builders podcast and this newsletter).

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When it comes to building of world-class team for your business… I believe if we take two people who graduate with the same resume:

One works from home...

The other walks into an office every morning, surrounded by people whiteboarding ideas, arguing about strategy, and pitching clients.

After one year, they look similar. After five, they’re playing different games.

When you’re in the room, you absorb patterns:

• how deals get made,

• how people build trust,

• how strategy forms under pressure.

Add, again, whiteboard sessions and debates that can lead to real pivots or new business ideas/opportunities.

Over time, the one in the office gets better at communication and soft skills.

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Australian billionaire, the founder of Hungry Jack's franchise in Australia with 400+ locations:

“Most satisfied people I know have control over their own lives and affairs…”

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Consider this:

You’ve built something very valuable for a private equity group to acquire. 

You’ve either started a company from scratch or acquired one; you then operated and scaled it.

After 5-10+ years, you sold a majority to a PE firm (cash and rolled minority equity); then several more years later you receive the “second bite of the apple”, larger than the first cash payment. A major liquidity and wealth milestone for you and your family, maybe beyond your dreams. 

But here’s the question no one asks:

Now that you have wealth…how do you keep it?

Two scenarios:

A gentleman sold his construction company for $20 million. Within a year, half was gone. He had “diversified” into venture capital, luxury condos, and private crypto funds. He was chasing shiny objects.

Contrast that with another entrepreneur who sold his HVAC business for the same amount. He put 60% into municipal bonds and short-term Treasuries, then took his time deciding what to do with the rest.

The lesson:

You don’t need to swing hard after you’ve already hit the home run. Build the wealth, then preserve and compound for today, tomorrow and future generations.

In this episode, I break down the two-bucket philosophy:

• Capital Preservation

• Balanced and Compounded Growth

I hope it gets you thinking about how to preserve and compound your wealth...starting today.

Here are the links to Spotify, Apple Podcasts and YouTube.

That’s all for today.

Thanks a lot for reading and I’ll talk to you again next week.

Take care, PrivateEquityGuy / Mikk Markus

If you enjoyed this week’s issue, forward it to a friend who values discipline over hype, protects the downside like Paul Tudor Jones, and wants to build something that compounds quietly… but lasts forever.