turning $17M into $130M in “boring “ biz space

It such a hot summer in Europe that my phone literally died in the middle of a call. But I got something for you:

Had a short yet value backed 20-min intro call with a gentleman who sold his company in the early 2000s and then, with a few colleagues, started making small investments in traditional companies in Europe and the US.

Today, 20 years later, he owns a large majority stake in an investment firm whose largest investment has been over $450m.

When asked if he had everything planned out?

The answer was a quick "no way"; "you just stay in the game and new exciting opportunities will come." It is now a family business, with a wife and children involved.

They've made over 100 investments so far and currently have over 40 active investments in their portfolio.

The biggest lessons are probably that start as early as possible and simply stay in the game (even during 2-3 hard  cycles).

-

The more I do such calls the more I see how relationships run the world.

And you need like-minded people around you:

That is where today’s sponsor, Scalepath comes in…

They’ve built a network of over 2,000 business owners across the U.S. and Europe—and when you book a free call with their founder Rand today, he’ll personally introduce you to up to 3 vetted entrepreneurs in your area.

A fellow podcast listener Nathan Niehuus said: “Men will literally join Rand’s group instead of going to therapy”

To get to know 3 vetted operators in your area: Book your free intro call now at JoinScalepath.com

Because in this world, relationships CAN BE your edge—and sometimes your therapy, too.

- - - -

Another special conversation I had this week was with Brandon (a fellow holdco builder).

By the way, he sold his agency for seven figures.

Then he started acquiring and building various businesses.

One of his portfolio companies is a sponsor of this newsletter - Spacebar Studios.

What they do is build and scale B2B newsletters—and they do it well and fast.

Brandon said they took a compliance newsletter from zero to 115k subscribers in 14 months,

Then grew a hospitality list to 35k+ engaged operators with 5%+ average CTRs,

and helped multiple SaaS and services brands turn newsletter-first audiences into seven-figure pipelines and ARR.

He got pretty generous with readers of this newsletter, saying he and his team will set up a brand-new newsletter for free.

He’s offering this to six companies that book a strategy call this month.

If you run a company doing $1M–$50M in revenue and want a growth channel that compounds every time you hit “send,” I’d book a call by clicking here or the image below ASAP while slots are still open.

- - - -

Last week, a gentleman named Brent joined a16z (an $45m AUM giant in the VCworld); not as an investor, but as a media specialist).

(Here is the announcement but overall, this is a gamechanger, I’ll explain why below.)

Again, this is HUGE for private equity (but only for those who understand it. I mean this is young David Rubenstein energy)

While everyone in the VC world and Silicon Valley is talking about TBPN, a16z, 20VC, Turpentine…

Most private equity investors and other investment firms are still:

“Cool, podcast network, daily news, short form content… it has nothing to do with me.”

This is the Blackstone-before-Blackstone type of moves.

And if you’re building a PE firm, holding company or family office focused on $5M–$50M EBITDA businesses…

You should be paying VERY close attention.

Let me explain:

1. a16z = $45B aum venture capital firm; 20VC ca $750M AUM fund

2. Turpentine = podcasts + newsletters + YouTube → talent + deal flow + LPs and future GPs

3. TBPN = Daily show which I’m sure will soon raise a fund (I’m sure it will be $1B+)

So these shows are not just content, they are not just media.

It's WAY more like distribution, mindshare, audience, trust. All under one roof.

They are not media companies, not at all. Far from that.

The main reason VC funds understand the game and put so much effort & capital into these interviews-podcast is because it’s the present and the future of GP leverage.

They bring deal flow, partners and LPs.

These are huge funnels (and companies) which are very profitable themselves.

I believe TBPN brings in 8 fig in revenue and high 7-fig in free cash flow (if not 8-fig in free cash flow per year ALREADY)

20VC… Harry Stebbings has said it does multi 7-fig in sales and is super profitable.

And these are not EVEN the main businesses…

Managing $45b…

Managing $700m… brings a lot of fees.

THAT SAID…

What does this have to do with a typical old-school PE firm or a family office that invests in traditional businesses?

I’d say EVERYTHING.

In traditional private equity firms, family offices, holding companies -- media is still strongly underused.

Imagine if one could add one of these media arms to their portfolio:

• A podcast for folks acquiring companies

• A video interview where operators who sold their businesses share what they wish they'd known

• A YouTube series called “$2-20M EBITDA — owner interviews, walk-throughs, and day-in-the-life operations

• A content hub teaching business owners how to prep for an exit (building trust early)

It becomes the top of the funnel. The credibility layer.

It attracts talent, deals, and capital.

If you’re building the next PE firm, family office or holdCo, skip the cold calls.

Build (OR add) the media. Or hire someone to do it. Seriously.

(Remember, a16z thinks the media and Erik from Turpentine and with his podcast are so valuable that they made him a general partner.)

Harry Stebbings was able to raise $700 million... mostly thanks to his famous podcast (= huge distribution channel).

Wait... and you'll see TBPN raising a very large venture capital fund (And hosts John and Jordi are NOT the ones running it. They partner with the best people to do it.).

This is how the next generation of private capital wins.

Not with more cold outreach.

But with trust, distribution and gravity.

I wonder which private equity fund, holdco or family office will take the first big step by:

1. partnering with someone who is big in social media

2. simply starting to take media more seriously

3. hiring someone super competent to build this angel for them

- - - -

Yes, you can definitely turn $17M into $130M in “boring “ biz space

Summary figures from the annual reports of a gentleman who sold his shares at a local 12-13 years ago and then reinvested everything into various traditional businesses:

• dry cleaning and laundry

• real estate development

• a portfolio of commercial real estate

• drone manufacturing

*see equity line

- - - -

I was reading this the other day and I had to raise my hand.

Writing has quietly changed (improved!!) my life as well. Even though English is not my first language, sharing my thoughts and journey here has made me so much better at what I do at my profession.

The key is to be yourself. Yes, sometimes I'm tempted to post something spicy to get a dopamine hit and have a  tweet that I hope will go viral, but the next moment I realize that's not me and I almost always delete it.

Clear mind, clear thoughts, clear writing = better life.

Business-wise and most importantly, a better investor. But we'll see that later in life.

- - - -

How has been the week in the small holding company world?

Traditional company

Received a call from the broker of the heavy-equipment company deal.

Four local banks gave the green light, so at the beginning of August I will be having a meeting with their CEO. I’ll keep you posted.

- - - -

 This week’s podcast:

Thanks to twitter I have met many great business, fund and holding company builders.

What I’ve found is that the biggest ballers IRL are often the quietest…

No articles or podcasts, hardly any interviews.

Yet, run 10/10 companies and investment firms while being focused, easy going, generous and still have great relationships with family and kids.

True champions at home and capital allocators at work.

That said there are still many of them coming to podcast to share their story:

Here are 9 takeaways, quotes, and lessons from Sam Mahmood after 3 acquisitions and building a $66m holdco in 11 months:

1.  Confidence is two inches wide and 10 feet deep. Fear is a mile wide and an inch deep.

2.  I don’t know how to operate a paving machine. But I know how to attract the best guys who can.

3.  Don’t build a to-do list. Build a to-WHO list.

4.  Capital is a commodity. People are not.

5.  The biggest LTV to track isn’t your customers. It’s your people.

6.  If I don’t see myself doing business with you for life, I won’t do it for a day.

7.  Every time we win a job, everyone wins.

8.  The best recruiting strategy is a strong thesis + contagious energy.

9.  Don’t get romantic about M&A. Get obsessed with growing what you’ve already bought.

So if you got $100k, $1m, $5m, or $20m+ to invest in traditional businesses?

This episode covers everything you need to know about building a portfolio of profitable $7m EBITDA, “boring” niche businesses:

> How to choose the right industry with enough tailwinds

> How to attract and build a board of advisors

> How to raise capital (step by step)

> How to acquire a company (deal structure, price, terms, everything)

> How to do add-on acquisitions

All covered in 57 minutes.

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

That’s all for today.

Thanks a lot for reading and I’ll share a few updates again next week.

Take care,

PrivateEquityGuy / Mikk Markus