$60m investment turned into $1.5b in sales

A quick personal update:

Brian Armstong, the founder of Coinbase posted a few days ago:

“One of my favorite lessons I’ve learnt from working with smart people:

Action produces information. If you’re unsure of what to do, just do anything, even if it’s the wrong thing. This will give you information about what you should actually be doing.

Sounds simple on the surface - the hard part is making it part of your every day working process.”

That said, I firmly believe that action gives you ALL the answers and eventually, patience will be rewarded.

This is something I’ve lived by over the past 3 years.

The action part has been close to 17,000 tweets on X, a weekly newsletter, and over 150 podcast episodes, while I haven't missed a day over these years (which drives my gf and family nuts that I’m always on).

Patience? I’ve said No to most offers I’ve received… for some reason, they did not feel right, or I was not there personally (knowledge- and experience-wise).

Deal-wise, there have been two strong cases where I could acquire these two small $1m EBITDA businesses, but interactions with people like Yourself reading have made me think bigger (scale- and growth-wise). And the fact that those companies are based in Eastern Europe and my audience is 70-80% US-based… would not have been a smart thing to do.

(The consumer loan company we’re building is in this market as well, but with the goal of becoming a small neobank in 7-8 years, our focus is and will be the European market.)

Private Equity Guy and Holdco Builders are getting inbound from people I did not even know existed - some true heavy hitters. I am going to bring these stories to you. You will love it.

That means I am going to spend a lot more time in the US - the goal will be to do more in-person interviews.

The content will always be free - the only thing I’m going to do more is sponsorships: CapitalPad and Spacebar Studios at the moment, with many more in the future.

Whenever you see one, read about them, use them to grow your own companies, get better returns on current ones – these are very specific to this audience. Built by excellent operators who all have (and will be) on the Holdco Builders podcast as well.

They win, I win, and as a result, you will see great guests and learn EVEN more because I invest more into this by going and meeting these folks in person.

Win-win-win.

Action produces information. If you’re unsure of what to do, just do anything, even if it’s the wrong thing. This will give you information about what you should actually be doing

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I’d continue with the idea of “action producing information.”

The sponsor of today’s newsletter, CapitalPad, has put in a great amount of action to bring you the high quality deal-flow.

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You never know who’s going to do it... I talked to a guy who used to be an insurance salesman. No private equity or investment banking background.

Made multiple six figures but worked 80+ hours a week and didn’t like it that much. Quit the job to buy a business.

Today, he runs a portfolio of 9 companies. Now in his mid-30s, he has acquired all of them with zero outside capital other than a bank loan.

The first acquisition, ten years ago, was very small... ca $30k in sales. The seller financed the whole thing and only expected to get 50% of the next full year’s profits. This started it all!

From there, he has done one acquisition per year.

So far, he has sold only one: 3x MOIC.

His next goal is to focus on larger $5-20m companies.

Another interesting fact: he has 4 kids under 5... and he wants many more. A true family man.

I said he has to start buying more companies; otherwise, very soon he will have more kids than companies in his portfolio (we both started laughing.)

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The first tiny business he acquired was a chair and umbrella rental business on the beach.

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Feeling the pressure?

That’s good.

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Last week I recorded a rather boring solo episode for many, but it is very practical IF becoming a better communicator and listener during conversations with traditional business owners and potential sellers is your goal.

This is exactly what got Warren Buffett to acquire Nebraska Furniture Mart ($60M deal; today $1.5B in sales) with one meeting…

The same is true with David Cote at Honeywell, who took it to a $100B market cap... (one of the most successful corporate turnarounds)

And how Harley Finkelstein from Shopify made the acquisition of the year... again, by being an excellent listener and communicator.

Coming back to David Cote; his simple strategy described in this episode led to 10x growth. The stock was valued at ca. $20 in 2002; today it trades at $201.

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