YouSaid · the spoken record

Brent Beshore

lines on the record: 187
first: 2024-06-11
most recent: 2024-06-11
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Success would be to be an ambassador of the kingdom of God. My life transformed when I became a follower of Jesus. I've been rescued, and the thing that I want to do most is to, we're called to love and serve people around us. Worship a God who condescended himself into the physical realm, who's the author who wrote himself into the ultimate book of reality and came to serve not to be served and to rescue. I want to with that same love that I've been given, give that to other people. Serve them”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Sometimes generational work. That is a heavy burden in some ways, and what an honor in other ways. And then all the people who we get to work with who are trying to be as excellent as they can at their craft. I get to interact with so many interesting people and we get to do such interesting things. And I don't know. Like I said, I think I have the best world job in the world.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Is tiring. Why do I do it? Because I feel called to help families transition. I feel called, I mean, like, you know, in my paradigm as a Jesus follower, work is pre-fall. Work is for our good. Work is something we should engage in deeply. This is our co-creation that we get to do. And I feel that. Like I feel that on a daily basis. And there's thistles and thorns. And it's difficult and it's fallen and it's broken and it's messy. And so that's life, though. Like that's what we get to do. And like, I can't imagine a better job than getting to serve the families and the institutions that give us capital that trust us with our capital for 30 years. The amount of trust that they have with us to give somebody capital for 30 years. There's nothing you can get back 30 years. I don't take that lightly. That's incredible. I feel honored that somebody would trust us that much. I want to serve them. I want to serve them well. The families that sell us their life's work.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“I think I have the best job in the world. I get to meet extraordinary people from very different cultures around the United States. One day we'll be doing a dinner in New York at a Michelin Starred restaurant. The next day we're eating at Hardy's in the middle of Ohio. We will go from Oregon to Florida to New Mexico. The cultures are different. The food's different. The people are different. The businesses are all different. I mean, I can't imagine having, I mean, we have a blast doing what we do. And it's hard and it's stressful.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Over and over and over again. I mean, it is a miracle that permanent equity has 15 companies. It's a miracle Miracle that we have a team that for the most part loves each other and cares about each other and wants to do good things like it's a literally not a day goes by when I don't think it's a miracle and by the way the future is not secure like we might screw up badly and so Always work to be done. There's no free lunch, nothing's easy.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Head level. Now you've got personnel issues. Now you've got culture problems. Now you've got technology issues. And now you've got an operating business that's trying to operate businesses and you've got the same issues in the operating business, the parent co. as you do in all the smaller businesses. Brutally difficult And then you go through another phase where you're like, okay, now we got a tight group of people, it's a small group. Now we've got three or four or five companies, maybe six. Now you've got to build a much larger organization. You got to go through the whole cycle again. So every time on the way up the cycle up, you got to pass through this gauntlet.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“These things, right? It's a lot to worry about. Oh, and by the way, you got regulators all mixed in there as well. There's a lot of places to hit a pothole. And so you say, Whoo, I'm working 100 hours a week every week. And yeah, we're making a bunch of money. Things are going great. I'm making up a scenario. But now you got to basically take all of your earnings, all the free cash flow of your business and go to zero again. So you've started zero or with very little, you invest it, you do well, you do well, you do well, you run the gauntlet two or three times. Now you got to go back to zero because you got to take all your free cash flow and you got to reinvest it in that next layer. Brutally difficult. Now you've got a whole other set of issues. Now you've got meta problems at the”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Is a brutally difficult thing to do now you get to do that again and again and again. And oh, by the way, this is an interesting dip that happens where, so now you've got, let's say you've done this three times, three brutally difficult and you've just now cash flowed them, so you still retain them. So now you've got a portfolio of three companies. Well, now you can't be a CEO of three companies, I guess, unless you're Elon Musk and, you know, somehow he's figured out how to do this, but most normal people can't even operate one business well, let alone two or three. So you got to make a choice. Okay, well, now I'm going to take my free cash flow from three of these companies and I'm going to build a layer of overhead to be able to then scale and manage. So somebody's got to be out there looking for deals, interacting with capital partners, diligence really matters, legal due diligence, financial due diligence, technology due diligence. Somebody's got to be managing all of that, documenting it, negotiating that process all the way through. And then, of course, post-close operating.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“They try to go too fast, too soon, assuming they know too much. So we, from the time we bought the first business to the time I bought the second business was four years, four years of toiling away and correcting and learning and trying to get a good foundation of capital and into position to do the next deal. Now we were looking for deals in between. It's hard. Buying one business, one small, medium sized business, negotiating it, documenting it, closing it, operating it, and having some sort of either through distributions or through a sale, positive outcome one time is brutally difficult.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Sure. I mean, Buffalo News. Like they were buffing among her were very, very active in many of their situations. Now, as they've gotten into massive businesses that are, you know, you're hired. They're going to be better at operating than they are. So, I mean, at a certain point, it flips and you have such an access to capital and such a need for size that some of those problems take care of themselves. Now you've got the other problem, which is the fact that Berkshire hasn't beat the market in 20 years, 25 years now. Well, why? Because they're so freaking big. So you got, I mean, there's problems either way, and there's pluses and minuses either way. You just get to choose which one you want to engage in. Where do people go?”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Right. I mean, like a big part of humility is just acknowledging we're far less in control than we really think we are. Also, when things do happen and you do see a need, talk about it, voice it, see how you can access people and resources. And so I would just argue that no one can take a business that's small, loosely functioning, sometimes makes money, and leave it alone. These are highly variable assets with very difficult attributes about them. And it's a knife fight.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“The famous Harry Bottle story. They convinced Harry Bottle to move his family from Los Angeles to the middle of nowhere, middle of the heartland, Harry Bottle fixed the business, they ended up selling it, and that I mean Buffett said without Harry Bottle, without Charlie Munger, without a few of these things going a different way early on, there is no Berkshire, there is no Warren Buffett, there is no institution the way it is today. One is good to acknowledge just how much luck plays a role in all this stuff.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“These things that we get access to as well in our area of the market. He got access to then in his area of the market, right? Things just don't work out. And so you get sideways, operating issues, the value of the business. It starts to go pear-shaped. And so he got in touch with Munger and Munger said, hey, I know this guy, Harry Bottle.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“And he met this guy, Charlie Munger, who started to develop a relationship with. I mean, they actually talked about the annual meeting this year, kind of how they got together and they had a family that brought them together. And when they met each other, it was like kindred spirits. They stayed in touch. And one of the things that Munger asked Buffett was, you know, what problems are you facing? And Buffett was like, oh, I've got this business that like, I don't know what we're going to do. It's upside down. Sandboard Maps is a whole different story. And it was kind of upside down in a different way that worked out. But Dempster Mill was just a mess. Like he needed somebody to go to the middle of Iowa. I think it was Iowa and fix this company and get it fixed up and make money at that business. And he's like, he didn't have anybody because he was a stock investor, passive investor, and become activist and active in that business by the nature of how much stock he bought. And again, this is where, you know, look, the balance sheet was stuffed like they had a lot of resources, low free cash flow yield.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“And where they are now bears zero resemblance to where they were in the early days. Where they were in the early days is where we are, where we like to play. And this is where, again, by the way, they said they generated the highest returns, right? Smallest amount of capital, highest returns, being able to access small companies. But Dimpster Mill was a disaster, like buffet had gotten sideways with relationally with people. And he was kind of desperate.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“So when you look at them early on in their journey, so this is like let's go back to the Buffett Partnership, let's go back to actually when Buffett first met Munger. Buffett was invested in Sanborn Maps and Dimpster Mill. Those are the two primary investments. I think this represented 70 or 75% of the assets of the Buffett Partnership. One of the things that Buffett Amongger connected very early on about was struggling businesses was struggles he was having with those two businesses. The story I think it's been told a number of times, but is not often remembered because Where they are now, there's been like five seasons of Berkshire.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“You're doing all these things. And so, yeah, the ability to do that is non-existent in our area of the market. And by the way, having spent time with both Buff and Munger, they would say the same thing.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Oftentimes there isn't a family member who has the capacity or either financial capacity or talent capacity to be able to do it or some combination of both. And these businesses are not ones that you can just like leave alone. Like there's no passive income in working in small business land. Another way to think about is like, you know, sort of buying an index of small businesses, right? I mean, from time to time, it's like people come up with this idea of like, oh, what if you just put like a thousand dollars with, you know, a thousand of these small businesses and created like an index? The reality is over long a period of time that index is zero. Like it's really hard. The governance of these things is difficult. Like the norm for most small businesses is entropy, is decay. Is dying slow death and being wound down. Like that's a norm in the small business world. You have to fight to grow. It takes dynamic leadership. It takes vision. It takes risk-taking. It takes capital. It takes mitigating risk”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“People get divorced. People have health issues. People die. People lose interest. Things are constantly changing. The ability to self replicate is unbelievably rare. I mean, the reason why we are in the position we're in to be able to buy these businesses is because we are the best option for the business to transition.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Come talk to us. Let's work through things. The only things I would say is we're aggressive about post-close in the short term is if there's just any laws being broken, which sounds funny to say, my guess is 80% of the small businesses out there are either knowingly or should know that they're breaking some sort of rules. There's a lot of government regulation depending on the state you're in. And often, by the way, federal regulation, state regulation, and local regulation will oftentimes conflict with one another, and it requires a tremendous amount of background and understanding to know how to be in compliance.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“So that's fraud. So, that's one of the things that we can do is if we're adept at that and understanding the people, then we can say, hey, that person's external processor. Hey.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“There's usually no one to share sorrow with. There's frustrations. Like you're isolated. And so one of the things we do is just try to be relationally connected and offer to be a release valve for the very natural human tendencies we have to be seen and heard and blow off steam and consult on difficult situations. You know, again, it's interesting going back to like the personality typing, you know, we try to understand for our CEOs if they're internal or external processors. That's a really important piece. If you're a CEO as an internal processor, then you can go away with your thoughts and be fine. If you're an external processor and you're the CEO, you have no one to externally process with or you end up creating inappropriate relationships with people who work for you.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so we are usually in touch on a weekly basis, depending on if we're going through periods of negative change or positive change We're more active and helpful being supportive, being corrective maybe if we need to be, if things are in the box, smooth sailing, no storms on the horizon, then we can be a lot less hands-on. We always tell our leaders, like, we're always available, everyone has your. Can get in contact. We're the easiest people in the world to get in contact with. Running a business is lonely. If you've never run a business, if you've never been in the CEO spot. You can look up from in the organization and it looks rosy. Oh, look, that person gets paid a lot more. Look at all the freedom they have. Oh, I want to be the one to set vision and whatever. Looking down from that position.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“When does it matter? And again, we're coming in hopefully with high humility saying, you all are the experts, we're not. We're asking questions like, okay, well, if that's the business model, wouldn't it make sense that this would be like a leading indicator? And that sometimes they'll be like, no. Oh, interesting. Tell us why, right? We try to come at it from that perspective as instead of just telling them what we want to see. Like, do you think this would be helpful? Are you looking like what are you looking at and why? Aren't you looking at this? Why are you looking at this? How does this work? Again, this is not rocket science. Like, this is like treat people as humans, be humble, be kind, be long term. Things usually work out.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“We want information every which way, the Morse high signal we're trying to separate the signal from the noise, right? So there's tremendous amounts of information being thrown off by these businesses that doesn't matter. We're trying to get down to a handful of metrics that we can agree on that the leadership team and us that we're working in concert to understand what they're telling us. That's actually one of the most difficult things post-close is just getting on the same page about what matters.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“We're talking about is on a day to day, week to week basis, what are the metrics you're looking at? How accurate are they? How updated are they? How can you make decisions, right? So we've got that group that's working with them to try to increase the quality of those feedback loops. And then we've got, you know, what I call like a board of directors and a box model where there's one point person for permanent equity that accesses all the resources of permanent equity kind of is the Sherpa, the guide for the person internally. So, oh, you've got an issue with marketing or you need help with that. Like we've got external internal resources, recruiting, external internal resources, legal, external internal. So we got all these sort of helpers that we have. And that person's job is to help direct them as well as govern the business. Those are updated based on the constant feedback loops of the business over that quarter in concert with the leadership teams, but we're mostly doing the authorship of them.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“So right now our structure is we have a dual hook in structure post close where our financial team and their financial team hook together. We're constantly getting feedback loops of what I call information from that so our goal with our financial team is keeping scores the easy part. The hard part is giving actionable real-time information to all the stakeholders to make good decisions. So that's their primary role is to help those companies, which by the way, this idea is completely foreign. We come into most of these small businesses and they're like, yeah, yeah, we give all our stuff to this accountant and the accountant tells us how we did. We're like, sure, that's not what we're talking about at all.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, for sure. But here's the thing how would we do it any other way? If we're in the business of investing, of buying small private companies, trying to make them better, we've got to learn. We've got to get better. Like, how would we know if we were getting better or not? How would we know if we weren't doing a look back? So, I mean, to me, it's just, of course, obvious. And I mean, look, if we're not good at what we do, we should do something else. Like, don't waste this life doing things that you aren't good at. For God's sakes, like that'd be terrible.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“We actually do this quarterly. So every single quarter, we have, we call them baseball cards. They're like one pagers, maybe a little bit longer than one pagers that explain the overall strategy, the overall purchase price, the rate of return so far, where we've done well for the wrong reasons, where we've done well for the right reasons, vice versa. So it's like the entire memo is a constantly updated living document of every single investment we've ever made and how we're doing.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“In fact, you might end up making money in the private markets, like give me 48 hours and I can lose a million dollars. Like it's super easy, right? Which means skill really matters, which means if you want to have it as a career, there's a lot of value in honing your skill set. So to me, that's the ultimate mode is it's very simple what we're trying to do. It's just really, really hard, and judgment matters. And so that's the reason why we put everything out on the internet. We literally have our entire playbook on the internet. Like, you can go on the permanent equity website and you can see our entire due diligence toolkit. Not only just the questions we ask, but the why underneath each question. Would we do that? Doesn't that spark a bunch of competitors? Doesn't that help a bunch of people? Yeah, sure”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“And this market is so inefficient, which is, by the way, good and bad, inefficiency being defined as can you make a lot of money or lose a lot of money depending on skill, right? So like argument is if I gave you a million dollars to invest in the stock market and I said, hey, I'm going to let you keep everything you lose, right? So lose as much money as you can. And I'll give you 60 days to try to lose as much money as you can in the stock market. Be really difficult for you to lose a lot of money.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Usually the second and third time they get smoked. I mean, look, we took the better part of a decade toiling away in obscurity, doing things like, you know, I joked that like we were running the world's smallest family office for a good amount of time there. Just slowly compounding, trying to learn systems, trying to get, I mean, we were just getting smacked around constantly. But that then allowed us through that decade to get good at this. And then we were able to scale. Like if I had been given $50, $100 million right out of the gate, I would have lost every penny.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“But how it went post close was not filled with oh man this is perfect now we can hit this huge growth trajectory or whatever he's like yeah our servers went out like the second day on the job the phones don't work we have all these issues you know the head of sales left shortly thereafter had to replace you know it's like this constant fire fighting mode It's running a business. The only people who think buying a business and operating it are easy. Most of the people have never done it. There's a small group of people who got lucky the first time.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Course not. So anyway, this guy came in. He had all these grand plans, and I talked to him about, I don't know, a year later, it was like six months ago. And I was like, how's all that going? And he was like, oh my gosh, I haven't done anything that I wanted to do. I was like, oh, interesting. Tell me about that. And look, the business is actually doing well. Like he's glad he bought it.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Land or whatever. This is often the dominant narrative of people who haven't done it, right? So people who haven't actually been in the weeds, who haven't bought a business, who haven't tried to change it is like, this is super simple. You buy things for cheap, huge amount of upside. You go in and you transform them.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“It can happen. There are some tricks and some outside perspective that you can kind of look and see and run a playbook from time to time. But for the most part, like there's no easy solutions. Like I was talking with a Harvard educated search searcher the other day. Actually, when I see the other day, it's probably a year and a half ago, and bought a business and had all these grand plants. He was going to introduce all this technology, all these like changing systems. It was an old school business. He was going to revolutionize with technology. And this is kind of like if you go on Twitter, the, you know, I don't know, we call it or wherever the group of people that are trying to do this. SMB.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, we're trying to stress test where we think based on the history of the business it's going, often assuming for most of the deals we do that there is no growth. So we want the business to underwrite with no change in trajectory. If it can't stand on its own, like we're not big on quote unquote synergies, we're not big on trying to do this massive change. If the business has been operating a certain way on a certain trajectory for 30 years, it is nothing but hubris to come in and think that within a short period of time you're going to completely change the trajectory of the business.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“The lower the price, the more you can absorb things. And so we are, because of the nature of these being smaller companies, they're messy. They've got some weird stuff going on usually in these things. They're not bigger, so there must be some lids on these things. We're trying to figure that out, and we're trying to correlate that to price. And the cool part is after close, like all the problems are merely opportunities. I try to remind our team of this all the time because you get in these operating situations. There's a lot going on, like sometimes relationships are very strange, there's weird power dynamics, all this stuff's going on. And I say to them, yeah, it's hard, but this is what we get paid to do. Like, we're in the business of shaving fur. So do you...”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“And it was kind of like the showstopper drop the mic moment. He was like, because I was asking him all kinds of like, well, how do you think about this? Or how do I think about that? And ultimately, he's like, I use Price as my major due diligence filter. So that was brilliant. It's like this simple heuristic. Like the higher the price you pay for it, the more you're pricing it to perfection, the more things have to go right.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Holding it back. And so our job is through those memos to collect all the findings of where's the moat, why do we think it's transferable, how durable do we think it is, and on the flip side, what do we think the opportunities are for growth and make sure that all of that triangulates with price? Of course, I had the privilege of spending some time with Buffett at one point, and I asked him this battery of questions. And he kind of, I think at some point, got frustrated with me being, I was probably being annoying. And he said, price is my due diligence.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“So, a moat being defined as you can generate above average returns on invested capital. There's something unusual about the business that has allowed them to get into business, build the business into a successful, again, minimum sort of three million dollars of free cash flow. Not a hard and fast rule. We've done some smaller deals, but on average for new platforms, we're $3 million. Means there's something special about the business. It's really good in some ways. And on the flip side, if it's not bigger and has been around for a long time, there's something”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“So, those are the types of examples. So we're probably going to put all that into the memo. We're trying to put all in the memo the things that we think are holding it back. So, first principles, like let's go to kind of first principles on a business that we would acquire. So this is a business that's long tenured. They've been around for on average a long time. And they're still fairly small. So something is holding it back. We think of it as the kind of lids on the business. And we're trying to figure out why they aren't bigger. So by definition, there is product market fit if we're acquiring it. By definition, there's some sort of moat.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“And that what that creates is a very capital light, highly efficient, high cash flow, high durability business. That again, everyone else is looking at as a quote unquote construction business. So, other people that may be interested in it were turned off, and they're like, no, I don't want that because that's a, I'm going to put that in the bucket of construction. I don't want to take that to my senior partner or to the loan to the investment committee and say, hey guys, I think we should buy mom and pop construction business in Phoenix there and be like, what in the world's wrong with you, right? Versus we look at that and we're like, ooh, that's really attractive.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“And then I started asking just a few questions. I was like, Hey, can you tell me what percentage of your revenue is direct to consumer? I was expecting it to be 10% or 15%. It was 97%. And then I said, oh, interesting. Like, what is your CapEx capital expenditures on an annual basis? And it was like microscopic. I was like, weird Tiny CapEx, good free cash flow, direct consumer. It's like, man, that's a really durable business. An example of the risks we were taking and the way that the company appeared. Like the core action of that business is they are in the business of marketing pools, like selling pools, and then handling the logistics. But they're subbing out the actual construction. Hiring, the firing, the risk, all those things, the boom and the bus to other people.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“And most pool builders get big because they partner with Development firms and they go through these massive boom and bust cycles, massive boom and bus cycles. It's Feaster Famine all the time. The other thing they do is they're tempted to be vertically integrated and do all the work themselves, right? Because you make more money at every step in the more margin, but you're constantly then in the booms. You're hiring a tremendous amount of people, which creates cultural issues, tremendous liability, all kinds of, I mean, it's just madness. Margins end up not being nearly as good as you ever think they should be. And then in the bus cycles, you're having to let go of a whole bunch of people who are you want to keep, but you have no choice because the business will implode, right? And so two unusual things when I first got the deal memo on this, I remember thinking to myself like, pool builder, big pool builder, like large a single location pool builder in the country, so like at the time it was really large. And I was like, yep, they partner with, they're probably vertically integrated and they probably partner with development firms. And like, that's just not, you know, that's not something we want to do.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Weeds on a deal. And so we like things that Misunderstood. I'll never forget the second large deal I did was on a pool business that we still own. We've never sold anything. So I mean, we still own everything. I shouldn't keep caveating that. It's not like we've sold anything. But the pool business, I remember talking about it with you back in the day.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“So we are describing what I would call the overall situation of the business. Who are they? What business are they in? How does it work? We also think about what is the core action of the business. So oftentimes things, our favorite deals are ones that look weird or different on the surface. There may be a little furry fuzzy things on the deal or they're misunderstood. And hence the price and the connection between the price and the value is off, right? So we're trying to look for mispriced opportunities. And so in order to be mispriced means that something about it is either risky that we can Doing your jobs right Not always correct, but we're trying means that there's a divergence between the risk and our ability to mitigate it and other people's ability to mitigate it, right? Or there's a lot of”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“We don't want to do is we don't want to project onto them what we think they are. And then come to find out later that they're not actually capable. And so when we get really serious kind of down to the final like three to five candidates, it's usually when we start testing. And they often learn things about it. And sometimes we actually had this happen recently. Somebody was like, I don't think based on the testing that I went through and all that, that I actually would be good for this job. They opted out.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, we do. Yeah. We really. And by the way, we don't automatically ask people as part of that. Like it's not like we're like, oh, if they don't fit this exact personality, but what it does is it allows us, if we're getting, you know, it's usually when we're pretty serious with a candidate, right? So we're trying to make sure that we're.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT
“Right, which in any gram means I'm an achiever and I'm like a kind of a people pleaser like to serve, which sounds, oh, he's an achiever and likes to serve people. Like that's, again, like look at it. No, no, it comes with huge downsides. Like my worst fear is. I'm not enough. My worst fear is if people knew me, they wouldn't like me. I'm adaptive to other people. And so it's like, do I know the real me? Like, my serving of others quickly turns into people-pleasing.”
2024-06-11 · The Knowledge Project with Shane Parrish · Brent Beshore: Business Brilliance and Happiness at Home · IDENTIFIED FROM THE TRANSCRIPT