$8m turned into $800M

A quick note before we jump in…

I'm not much of a visualizer, HOWEVER, every night I keep writing down 16 things I want to believe and wish would happen to me (obviously they will happen if I've taken a lot of action to make them happen.)

Here they are:

• €4,000+vat invoice to XYZ in January (that’s a little side project I run)

• Twitter/X gives access to people

• I manage a PE firm that produces 40% IRR; €100m aum

• I have access to unlimited amount of people & capital

• Things got serious – we acquire few great companies in 2024

• People invest €20m in what we build.

• Twitter has 40,000 followers

• Newsletter has 5,000 subs

• My content makes me $15,000/mo

• Gym2x week

• Podcast 2,500 listens per month

• Calls to companies

• Book 2 podcast episodes

• Weekly newsletter

• Listen Sam (my coach)

• Modena bond calls

- - - -

What I believe to be a recipe to beat your competition in business, even if they are Harvard and Stanford MBAs

It's the MINS - the Most Important Next Step

(This is also what very smart entrepreneurs hate about dumber, less smart entrepreneurs)

It is their ability to act without overthinking too much and act quickly…

Here is the example:

What is your most important VERY next step?

It's very often this simple 5 minute task.

Everything in life can be boiled down to a series of little two, three, four, five minute tasks.

For example, "I want to buy my first boring business?"

Okay, what's your most important first step?

Most people think it's about having enough money — Yes and No. 

Go deeper.

What is the most important VERY next step?

(This is what actually gets you closer to buying that first business.)

Go to BizBuySell and look for companies on the market and look for who's listing those businesses.

Simple, isn't it?

Yes, and your entire future for where you want to head in life all comes down to a simple task of going to a website and searching for some businesses.

Yes, that's all it is.

(The reason we fail to make progress on our goals is not because we lack the ability... it's that we haven't defined what the next step is.)

So, to sum it up.

1. What do you want?

2. What is your most important VERY next step?

3. Now go do that.

Defining your next step and then putting that on your calendar — you can literally accomplish anything.

- - - -

A sleepy industry that most investors didn't know existed.

So they decided to invest $8 million in the company which netted $800 million for their LPs.

It is a company called PageNet.

This is 100 times their money.

A comment from the folks who made it happen.

Here you can see the importance of analyzing the overall market first.

"When we looked into it, the industry made sense to us.

Industry revenue was growing 20% a year.

There was no dominant national player.

There were plenty of locally owned and operated, entrepreneurial companies that we could roll into one larger operation."

That done, they could share costs, distribute best practices, and have greater purchasing power - all the benefits of size in any marketplace."

The timing was so great that within 2.5 years they could have 60% of the market and they sort of started running the competition out of town.

“We quickly did seven acquisitions at PageNet, but then the prices got too high. People know we were buyers, so we decided to try start-ups. There was no reason to buy somebody for $10 million when you can start a company for $5 million, spend two or three years, and wind up with the same size company.”

Of course, you jump forward 10 years and the company got wiped out by cellular, but that was several years after they liquidated their position.

Cell phones pretty much killed the paging market.

Image being the buyer…

- - - -

This is common sense when acquiring a small business...

Yet, it's VERY often overlooked...

So, when buying a boring $2-10mm niche business and placing a new operator.

You need to make sure that they have experience in better companies as well.

The new operator has to be a difference maker, and if they are going to make a difference – they have to know what tools are to do that.

And what the real difference actually means.

A CEO or manager of a company that has performed poorly is likely to bring some of those poor practices to the new job as well.

Same thing with 10/10 operators...

Someone who has achieved extraordinary returns has a better chance of achieving that kind of performance in a new setting too.

Again, it's common sense, but it's sometimes not fully appreciated.

→ Of course we can never tell how much of a firm's success is due to the operator or a CEO and how much comes from other factors...

But the odds are higher if you do it right from the start.

- - - -

How has been the week in my small holdco world?

The portfolio of our consumer loan company is constantly growing.

We finance an average of $12,000 worth of loans per day.

For example, yesterday it was $20,000 — slowly and steadily expanding B2B lending to small businesses (like this $9,500 loan)

In December, I raised a total of $154,000 in debt/bonds from 5 investors.

Constantly working toward raising more from investors.

In Wednesday I had a short call with a gentleman whose business did $180m in Q4.

He’s in the oil & gas business.

I was pitching him to invest in our bonds.

The call got funny when we started talking about the ticket sizes.

He said he might be interested in investing a bit.

I  said we are here for the long-term and every bit helps.

When things got very funny was when he said with “a bit” he meant $200-$300k.

We have another call next week Wednesday. A $200-300k ticket would be great!

Traditional “boring” companies

Had a 4th meeting with the founder of one of the agricultural companies.

We spent 5 hours going through a short dd questionnaire.

Few people said that the information I’d ask from this founder is a bit too much - considering the company makes  $0.5 million in profit. My take on this:

I don't know what I don't know, so I prefer to have as much information as possible.

- - - -

The 4 layers of building a business

Taking the time to truly understand this can make a huge difference in your life and more importantly your children's lives.

Why children? Well… handling this situation well allows you to spend a lot more time with them than messing it up.

20 yrs from now, the only people who will remember that you worked late are your kids.

Don't get me wrong, it takes hard work HOWEVER, I'm a big believer that you can have it all by making smart decisions.

If you feel good about life and work, you want to do it for a long time.

And this is the secret, so here are the 4 layers:

1. DIY level — doing the work. Answering the phone, making sales calls, installing the product & providing the service.

Doing the work.

2. Project manager level — you don't necessarily do the work but you hire someone close to you to kind of manage the project

3. COO level — the level where you build a team - you got this business that works like a little engine. Your job is to make sure the engine always works. You're meeting with people, having 1-on-1 conversations with your team.

Btw, that's where most business owners get at some point in their life.

Now there is a 4th level, that not everyone gets to...

4. The architect level — the person that oversees the whole thing. Kind of designs it but is not a part of it.

What an architect does is they hire one person, probably the COO, who then builds a team.

Then the COO generally hires the project manager level and project managers tend to hire the DIY levels or the workers.

Conclusion, every level is fine, however, every level has a limit.

A limit of how high you can grow...

At the same time, the higher you go on those levels, the more risk it is and the more expensive it may be.

Take care,

Mikk aka PrivatEquityGuy

Lastly,

Here's a recent one with Ujwal Velagapud, he runs a holding company in the US that makes multi 7-figure in profits.

(Links to Spotify, Apple Podcast, and YT can be found in the comments section below.)

Thanks a lot for following the journey.