from $15m to $190m (through M&A); Steve Schwarzman-Jonathan Gray 2.0

True story:

A while ago, it was Tuesday, and a gentleman from this newsletter contacted me:

“Are you in London tomorrow by any chance?”

Then I asked who he was…

It turned out he was one of the co-founders of a global company with 15 offices and development studios around the world.

I BOUGHT tickets for the next day and we met in London.

The reason I tell this story is because you never know who will subscribe to your newsletter…

That is why I partnered with Spacebar Studios where they build and scale B2B newsletters.

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Gets even better because they’re offering 3 PrivateEquityGuy subscribers a 2-week free trial of Spacebar Studios.

They’ll set up your newsletter, send your first few newsletters and prove the channel works.

Literally, no fees and zero risk.

(And who knows, maybe someone with more than 15 offices around the world will end up on your list very soon..)

Only one way to find out: Start your free trial today.

- - - -

You need to read this…(It's so good that I even printed it out and read it 2-3 times while drinking my afternoon coffee.)

There’s a gentleman who runs an investment firm that buys software companies – his name is Joe Liemandt and he was on the Invest Like the Best podcast this week.

According to Wikipedia, Joe is worth about $6.2 billion.

Excellent episode, but EVEN better are all the lessons shared by someone who has spent hundreds of hours with him.

Lessons about business and education:

- A boss’ job is to raise their team’s quality bar, tell them exactly where they’re falling short, and elevate their conception of self. You should expect more from your team than they expect from themselves.

-  Your job as a leader is to have the highest quality bar of anybody you work with. And in order to do it successfully, you have to set a high quality bar, define what quality looks like, and maintain that quality bar with iron determination in a world that’s constantly trying to lower it. 

- When you make a bold bet, people will think you’re insane. 

- At the end of our first year working together Joe gifted me three 100-point wines alongside a simple message: “These are in honor of your 100-point quality bar… never lose it.” 

- Joe’s core insights about education are decades old. They’ve been trapped in a forgotten field called learning science. Joe’s core insight was to take them seriously, while other educators were ignoring them, and pair those age-old ideas with the cutting edge of AI and software. 

- Education should be more like a video game than a movie. It’s better to gamify the learning and make it interactive than it is to create a sit-back-and watch experience.

- Most companies’ biggest mistake is to not charge enough for what they do. (Mikk is asking: what about you??)

- The core bottleneck in education doesn’t have to do with information delivery, which is what most people focus on. It has to do with motivation. It doesn’t matter how effective your teaching is if students aren’t motivated to learn in the first place. 

- Quantify everything. The first cardinal principle at Joe’s school is that kids should love it. But on its own, that sentence is flimsy. So Joe asks every kid: “Would you rather go to school or attend vacation with your family?” Then he measures his success based on the percentage of students who prefer school to vacation.

- To the point about quantification, good goals are concrete and ambitious. Look for divisive and edgy words that there’s no escape from. For example, “we’re going to help students learn faster” isn’t as good as “we’re going to help students learn 2x faster than the average public schooler in America.” That second one is much more concrete and easy to measure. 

- Feed the Fatties: Try a bunch of stuff, be quick to shut down things that fail, and go all-in on the things that have momentum. I’ve seen Joe fail at more projects in the past four years than everybody else I know… combined. But he moves on like nothing happened and concentrated his chips on the things that are working. 

- Unlike most software entrepreneurs, Joe compensates people for profit margin instead of growth. People always want to grow and empire-build. Profitability doesn't excite them as much.

- Doing is better than listening. Lectures are an extremely ineffective way to learn, and yet, they comprise the majority of what kids do in school.

- Your customers have all the answers. At most school events, the principal will sit with the parents. Joe sits with the kids and asks them questions the entire time.

- - - -

When talking to business owners, operators, investors and CEOs.

People in their 30s, 40s, and even 70s.

I sometimes like to ask what they learned from their father when growing up.

Ca 90% of folks say it's work ethic.

"Dad was always working, getting up early, staying up late. Long hours. He was never watching TV, he was out, working, fixing things, doing something. He just never sat on the couch and did nothing. Never. There was always something going on."

Turns out our fathers motivate so many of us to work harder, to persevere.

During tough days, people really think about it and then carry on.

I find that fascinating.

- - - -

Bigger picture: capital is a commodity; deal flow isn’t.

The real bottleneck is sourcing great opportunities early, then moving with speed and clarity.

(Hear it from the guy who does deal by deal, backed by two family offices in the US.)

Thinking a few steps ahead, we all know there is only one Blackstone, one Schwarzman and only one Jonathan Gray…

But we all start somewhere, usually in our 30s or 40s, after we have gained all the experience and deep knowledge by working for others...

Then a few (0.01%??) of us will EVER decide to take the leap and build something for ourselves -- starting with building deal flow and raising capital.

That being said...

If you have experience, a burning desire, years of experience, and are in your 30s or 40s and want to "jump"...

We believe we have something to offer you:

Imaging an investment firm built on warm introductions. Powered by people, capital, and deal flow?

Or an hybrid of search fund, independent sponsor, and lower-middle-market PE -- serving family offices and HNWIs?

As with everything, we start with people.

1. If this got you thinking - send me an email.

2. Or if you know someone, ask them to get in touch.

- - - -

Last week I heard a story about a woman who used to work for the FBI.

Then she was hired as an operator for a private equity backed traditional business.

She grew the company from $15m to $190m (through M&A).

Today she is in her 40s and is just getting started.

-

I know a gentleman who knows all kinds of similar business builders and operators.

His name is Rand and he is the sponsor of today’s newsletter:

What Rand does is, every month, he shares real stories and hard earned insights from his community of owners (2,000+ company owners and operators).

If you’re a searcher or entrepreneur, sign up to the Scalepath newsletter (It's free and this is the last time you'll see this post here, as this newsletter will have a new sponsor starting next week. So do yourself a favor. Subscribe for more business stories) for an honest, behind-the-scenes look at what it’s really like to run and grow a business — one of the recent members grew his company from $2M to $10M.

- - - -

If you EVER plan to raise capital from investors to acquire SaaS companies, this episode is full of lessons from a person who did just that.

1. Raised capital from 35 investors

2. Bought 4 companies

Enjoy.

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

That’s all for today.

Thanks a lot for reading and I’ll share more updates on everything next week.

Take care,

PrivateEquityGuy / Mikk Markus