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[00:00:00] Colin Keeley: Hello. And welcome back. This is Colin Keeley here.

[00:00:02] Brent Sanders: And I'm Brent Sanders.

[00:00:04] Colin Keeley: We are two guys buying and building wonderful internet companies.

[00:00:08] Brent Sanders: Yes, sir. And this week I went to the first, I think business conference I've been to since before 2019, went to the, the hold co conference in Cleveland, Ohio where I live, which is amazing, which like 90% of the reason I signed up, But it was really cool. I wanted to kind of talk about that before diving into some other stuff.

Colin, I think you sent me a link to it. You saw it first, but this is basically a conference for SMB Twitter, which, you know, is quite the, the interesting, like in real life community. So it's, it was put on by, I believe, I can't remember these guys' last names.

[00:00:45] Colin Keeley: John Wilson and Kelsey, something like that.

[00:00:49] Brent Sanders: I think it's Kelsey, John and Kelsey, John, and Kelsey put this conference together. They're both Cleveland based, which by the way, I'm just gonna say this. Once anybody in or from Cleveland is not actually in, or from Cleveland, the city of Cleveland's one of like 45 different towns or city, so to speak in an area.

So if you. I think Kelsey's from the east side. John is from, I think, also like Southeast side and it's, so it's like everyone's around this ring in, in this orbit. So it was kind of rare to see it, a conference pop up in my backyard, which again, I signed up and then, you know, months in advance and kind of forgot about it.

And then it popped up on my calendar and it was, it was awesome. So I, I would just kind of give you a little bit of FOMO. Like you definitely meet people that are. Both on Twitter, which again, I'm not much of a power user of, but like still read from time to time and, got to, to meet people that I, I know on Twitter and, and talk to them.

The vibe was amazing. It was, super duper friendly. Like I'm. Kind of an introvert at times when it comes to those things, it's just kinda awkward to talk to a, a room full of people you don't know always, but everybody was just super willing to talk about what they're doing, what they're thinking about, what their, you know, focus is.

It was an environment where you didn't really feel cheesy being like, well, what are, what are your businesses? What, what type of, what industry are you in? And people, everybody had a great story, lots of, high achievers in a room getting together kind of sharing. Stories. And there were some interesting takeaways.

So, I'll talk about the talks a little bit, from a high level, but it was, as far as the people that I ran across, there were some really interesting stories. There were people that we'd actually, you know, indirectly knew through fundraising or, you know, like our LP network. There were also just great operators.

And I think one of the first things that I, I noticed is there were the largest collection of, sorry, what is the, the sleep ring that you wear

[00:02:43] Colin Keeley: Oh, or a ring,

[00:02:45] Brent Sanders: Uber ring. I've never seen as many people wearing Uber rings in one room in my life. So lots of people that value their sleep, but also drank pretty hard. Like it was a definitely alcohol friendly, you know, evening environment.

It was a lot of dudes. I saw

[00:02:59] Colin Keeley: all dudes. Right?

[00:03:01] Brent Sanders: It was not all dudes. It was mostly dudes. It was, and it was a lot of white dudes, but, you know, there were, you know, all sorts of, of folks. It's just the, the it's funny, the ladies were more represented in the speakers and I think actual attendees, but there were, there were a couple women in the audience that was, was nice to see, but yeah, it was super homogenous.

So that was an interesting data point for, for this community. I don't know if that's Twitter or if it's, you know, the, the hold co piece of it. The other thing is there weren't many actual hold codes. There, there were a lot of folks that were, in, there were some independent sponsors. There were some, folks that had their first like, sort of platform, so to speak.

And, and you had explained to me, like, what is a platform? Exactly.

[00:03:43] Colin Keeley: which you definitely knew before, right?

[00:03:46] Brent Sanders: Yeah. I did not know. I mean, it made sense in conversation. A platform, you mean your business, but, there were a couple guys doing some really interesting stuff, smart folks that, you know, were kind of talking about the distinctions of a hold co versus for example, like doing a fund or an independent sponsor.

And, and again, like, even some of the speakers didn't necessarily have a hold co they, they were running like a real estate fund or a home services business. Maybe they had their first, but, John and Kelsey. Seem to have a whole co it's 365 holdings is, is Kelsey's business, which is an e-commerce based, business.

I mean, they they're sounding like they have warehouses doing pick and pack. And, I think there was one other business that, there was a, a talk from their, their operator and this was reg reg Zeller's company. And I, I don't remember, it was like cane cast, where they actually do like manufacturing, which is completely.

[00:04:39] Colin Keeley: foundries, like across the country. I think he's a pretty interesting one.

[00:04:44] Brent Sanders: Super cool. And so his chief operator was like one of the first conversations. And he was great. And these guys, you could just tell love what they do. They're super into the people side of things. Like, so top themes from a super high level, like people are everything. If you are going to run, hold to, and again, this is even with software companies, I would agree.

It's like, Getting the right people, right? Butts and seats. I heard maybe a hundred times. The other thing I heard a lot is everybody likes to talk about when. Want more information on something they say they would like to double click on that, which I find to be a little strange. I'd like to double click on that to get like a speaker, to tell you more about something.

So definitely be stealing that or, or not. I don't know.

[00:05:24] Colin Keeley: Yeah, that's pretty dorky. now say that one again.

[00:05:27] Brent Sanders: But yeah, so going back to, the operators again, it is super. Everyone's crazy about culture. And that seemed to be one of the, the main themes of just like getting the right people. How do we keep, the right people in our orbit? So, yeah, I'll pause there. And before I go into some of the talks that I heard and, and just kind of say it like.

It was super energizing. It came out of it, a feeling I kind of got shot out of a cannon and kind of questioning is the hold code. Technically what, what we want to be doing. Like, does that really make sense? I mean, we have multiple companies, but is that really indicative? Cuz I, I heard, I heard from a lot of people was the term allocation.

It's like in order to have a great hold co you need to be a master allocator and you look like a Warren buffet and he's like the greatest of that. And I kind of know what that means, but I honestly don't. So I want to throw that to you. It's like, what do. See, do, do you agree with that statement that like, if you have a hold co the job to, to do is, is all.

[00:06:22] Colin Keeley: Yes. So this becomes a more technical. So, but, view it as a spectrum. So hold co is like, that would be kind where Berkshire, Berkshire Hathaway plays, where things are like completely independent. Next step after that is like an accumulator, which is more of what we are.

It, it is what we are and that's what like constellation software is with it. There's like some, you know, shared services, some integrations in between things after that would be a platform. So that's like you buy, I would say like you have four platforms and one is like a gardening services or landscaping.

One's like, you know, dental services. So if you bought Brent's dental, that would be a platform. And then you do add-ons onto that. And so that's like all one type of business and then a roll up would be like this Foundry guy where he's just buying up boundaries. He's rolling. 'em all Al.

[00:07:12] Brent Sanders: Right.

[00:07:13] Colin Keeley: so that is kind of the spectrum and like how integrated are those things and how similar are all the businesses kind of depends or decides where you end up on that kind of old co spectrum of sorts.

[00:07:25] Brent Sanders: Yeah. So going into some of the talks, I mean, some of the highlights, I'll, I'll go really quick on some of these, cause I don't really want to bore people to death if yeah. I think they are publishing all the talks. I don't know for free, but, they were recording everything, which was, which was really cool.

So check that out, check them at the hold code conference, Google it, I don't know their website, but Bob and Patel was, the first speaker. So I, I don't know if you call him the keynote and he, these were all fireside chats as no one was like coming up and trying to give their pitch, but he is based in shaker Heights, Ohio, or on the east side of, of Cleveland.

And he's really. Doing real estate, he's doing all these like class C homes, which I was like, okay, that's interesting. But what does that have to do with like having a holding company, but he has this kind of long thesis that I won't get into, but in the short version is manufacturing's going to come roaring back to the United States in one way.

But in number two, It's gonna come roaring back to O Ohio and specifically Cleveland, where we have tons and tons and tons of factories that are functional, that are, if his point was in looking at, you know, where is global demand coming from? He was pointing to India. He's like, if you wanna build a factory in India, you can do that, but you have to then bring electricity in roads and railroads.

And that's gonna take decades of real infrastructure. , liquified, natural gas is kind of what, what his, his main thesis was around. But it was hilarious though. He's like not he's trading real estate in part of that thesis. So all the questions were, were hilarious in the sense that they kind of went.

Back to, well, what are you doing with liquefy natural gas or what are you doing? This sounds like you have a very successful real estate business. So it was kind of interesting just to kind of see why it is that he was. Doing this. And maybe it sounds like in the future, he's gonna have a hold co, but this started to like open up this thing of like, well, wait not, everything's exactly a hold co it's just kind of entrepreneurs in this kind of SMB space.

And we're talking about hold cos Emily Holdman a permanent equity was there. She sounds like they have a, a great, great business and don't really have to, their main, her main message was don't call us. We'll call.

She's basically was saying they don't have to do, they do zero outbound and they have a great business and they have, you know, endowment funds investing in them. And so main takeaway there is she's on a different planet of this.

Doing it long term. And I think that was like the, the big thing with, with all the speakers. Trish Higgins from Chen mark was a, probably one of my favorite speakers and just talking about going slow and fast, which is, I think we know a lot about is like some seasons you're, you're acquiring a lot of stuff.

And then other seasons you're like figuring out your systems. So it was.

[00:10:03] Colin Keeley: all those guys, are so GenMark and permanent equity. They're like really pushing on content. I both find them fascinating and they got into it way earlier than us. So. Brent haw and permanent equity were like the first they wrote messy marketplace and, you know, did all original content. And then C mark is a much newer one.

So probably in the last, like three years, five years, they did their first acquisition. They just buying up a bunch of random companies in Maine. And they, they couldn't raise any capital. They ended up doing SBA loans for like their first deals. And now they're just compounding their own money. They just bought like a tourism, like whale watching business.

They just do all different kinds of things and I've just been integrating 'em. So they've been super cool. Trish is a great podcast. Listen.

[00:10:47] Brent Sanders: Yeah. Definitely give a listen to her, their, their NYC finance folks that yeah, they have, they ended. Purchasing. I think the, the first one was, was landscaping and then they scooped up a bunch kind of unintentionally took a freeze for two to three years and then. Picked up at these two boat tour companies and a frozen dough company, which is

[00:11:07] Colin Keeley: Yeah.

[00:11:08] Brent Sanders: biggest takeaway from her, which I thought was really cool is they take cybersecurity really interesting, which I did not expect to hear that term from anybody, but they've, they're like, you know, these are the, the businesses that get targeted for brands somewhere and we just don't want to deal with it.

And so it was, it was pretty interesting. Good thoughts on compensation? Like again, how do you put in operators? How do you keep good talent in orbit? Yeah, it was super energizing and really fun. Like met some everybo. I met a guy who just sold his Peloton accessories business. It was amazing. And he's now, you know, transitioned into something new.

Everyone had a great story, right? It's like, oh, I grew, this grew that sold this, all that or wore I'm in the thick of it. It's like, they're either way ahead of you way behind you. And it just, it was a very cool, like we're all kind of rising tide lifts, all ships

[00:11:54] Colin Keeley: So was it all, I guess, practitioners, was it people like us, you know, actively doing it or that it's like, you know, people that wanna do it or it's investors trying to back people doing.

[00:12:04] Brent Sanders: It seemed like everybody that I spoke to was in it, they were doing it like, you know, I think at first. They showed something where it's like, oh, it was supposed to be a little more exclusive to the actual CEOs or the actual like assets under management was a certain minimum. I don't think that was the case.

I think they still, you know, small companies and big companies, or, you know, there was an MBA who had just, you know, did his first search fund or an MBA that did just bought their first home services business. And he was gonna do a search fund. So, but they were all people that were actively having a deal or had something under LOI that was like about to happen.

[00:12:39] Colin Keeley: Sweet. Yeah, I sounds like a successful first one. I guess they're gonna do it every year. Going forward.

[00:12:45] Brent Sanders: I, I hope so. And hopefully they keep it in, in Cleveland. It, it was like, I think everyone was, we had the best weather, so it's like very good look for the city when it's like, we had dinner at the rock and roll hall of fame outside. And like, it was 70 degrees out and beautiful and sunny. It was just perfect.

[00:13:01] Colin Keeley: I mean, there's a few of these conferences every year, I guess. Yeah. One of us should probably start going to them. Sounds like they're worth.

[00:13:08] Brent Sanders: That was my takeaway. It was like, shit, I gotta do this more often. And I, again, I'm not a networker, I hate that kind of stuff, but it was, you know, maybe I'm just getting older and I don't really care who I talk to anymore, but, it made me realize like, oh, there's. There's a great community in this space.

Everyone, I think treats it the same way. It's like total dream job. This is the dream job. This is like the environment of folks that were, everyone loves what they do. And so that just by itself is, is super infectious.

[00:13:37] Colin Keeley: Sweet. Any other takeaways you wanted to talk about onto to the

[00:13:40] Brent Sanders: No, no, let's, let's talk about our latest dead deal.

[00:13:45] Colin Keeley: So losing a deal to Michael Jordan, that

[00:13:47] Brent Sanders: Yeah, exactly. Exactly. Do you wanna talk about the business at first? I mean, we can keep it vague of course, but, but we were, we're still a little sore about.

[00:13:57] Colin Keeley: So. Background backing up. How'd I meet 'em I think they reached out to me initially. So the situation was one of the co-founders just died, very sadly and as somewhat unexpectedly, it seems, and no trust was set up and then it became a big estate issue. So they were gonna have to exit and they had raised a good amount of money and a debt on the business.

So like they really had to exit for like a above a certain value. To our understanding. We were the only people that were like really in it. And we, you know, were prepared to make an offer. We got creative to, you know, reach the value that they wanted. And then, you know, The day, I guess the day after we delivered the news of our offer, turns out, Mark Leonard and Constellation's offer swooped in all cash offer and like double ours.

And so a deal we thought we had, we did not have . So it's a great outcome for the, you know, the founders and the state and everything. But it's kind of cool for us. It's like, yeah, we lost a, a basketball game to Michael Jordan and it's like, well, Lisa is cool to be on the, the floor with Michael. And of course we lost.

So we don't have the money to really compete that.

[00:15:01] Brent Sanders: Yeah, that was, that was like the only, upside that it was somebody we, we admired, I think, to the deal, but you know, it, it's just kinda how this goes. Great team. It's nice to see them get an outcome here like that. I think as we were looking at it, we're like, man, this as, I don't know if you look at the same way, but I'm like, ah, these will.

Will be fun people to work with. It's like part of the attraction of, you know, if they do stay, you know, helping them grow this business, if they don't stay like taking care of their baby. But I think they'll be, so going back to our, we've talked about this on past podcast. What is the constellation playbook though?

It they're not so cutthroat as like ESW where they basically just, you know, cut the team, send it all to Eastern Europe and go away. But do they have like a, a set playbook that we can expect to see what's.

[00:15:49] Colin Keeley: You're asking the right guy. Yeah, this is like, I think if you Google Mark Leonard, I'm like, the name is right next to it with my operating manual. So they are really good for the people getting acquired. So they're not like, you know, Vista, so Vista equity. Has this big playbook, they basically have to very quickly turn around something.

And within three to five years, you know, cut the team, cut the team, really show improved EBITDA and growth. But constellation doesn't have to do that cuz it's more of like, you know, they own, I think 400 of these or something like that now. And so they could, they could, you know, invest a bunch of money in it.

They could don't have to cut anyone. They want everything to keep running. And then they offer like pretty awesome, basically pitching one of our competitors but, they offer great like upward mobility. So if these guys, you know, stick around as executives, they do a really good job. Maybe they'll get put in charge of like three different companies.

And then over time, maybe they can put in charge of like a whole division of things that kind of. Similar end customers, to where their business currently is. So, yeah, super awesome outcome for everyone involved except us.

[00:16:53] Brent Sanders: . Okay, so deal loss, but deal loss to an idol. So, you know, it's a good outcome for them and we'll just move down, move on down the list, cuz you know, there's, there's no shortage of opportunities.

[00:17:07] Colin Keeley: Yeah, it's the game you play. At least like, this is kind of a cool. Yeah.

[00:17:11] Brent Sanders: going back to. Going back to fundraising a little bit, like, it sounds like you had lunch with somebody who's incredibly good at fundraising. And I was wondering if you could maybe tell us, tell me why we're so bad in contrast.

[00:17:22] Colin Keeley: Why are we bad? I think so, backing up a little bit. I won't disclose anything. That's not like super public. But I have a buddy who turns out to be in Chicago and he reached out to me. He raised a hundred million dollars for an NFT fund. So actually two across two separate funds. He raised it.

He doesn't know any people in Chicago, like literally anyone. So I was like trying to see who he knew. He raised it basically by reaching out to people on Twitter that followed him. So he built an audience on Twitter and with a podcast. And then he DMed like original crypto people that he thought had a good amount of money.

and hedge fund people. And he is like, you know, I'm doing this, you know, here are my historical returns. And his whole thing was like, NFTs are gonna be big. And he thought they'd be big in like 20, 24. And so we just started raising like as COVID was starting. So all on zoom, no in person pitches raised money from like the Winkle boss twins and mark Andreeson and Chris Dixon, like basically all the big names in crypto they could ever think of.

And he is, yeah. Off to the races doing really well. But why are we not good at it? I think we just probably have to be bolder and like really just push for it. I think, you know, we have a number of deals under our belt. Now we have some results with our own money and like we're getting blown out of the water by people, like Mark Leonard with a lot more money in all CA cash offers.

So it's, we've talked about in the past, but you know, I. These founders would've loved to sell to us. They really like Brenton Colin. But there's a limit to that. And the limit is like, well, they could offer twice as much money and give it to us all day one.

[00:18:53] Brent Sanders: I don't feel, I don't feel so bad. But yeah, I guess that, or, you know, I think the thing that I, again, going back to the whole co conference, but also what I hear the fact that he started early. I think we were talking about this earlier, but just like the patients aspect of things of like realizing the.

We're new to this space. We've been doing this for, you know, a year or two as the current model. Like we've worked together for longer, but still like the, the reputation, the, if you're starting out in, you know, five years ahead of what you're, you're aiming for 20, 24 rather than, oh, I'm trying to bang this out from 2019 to 2020, and in a year it's.

Being consistent being around and just, just being patient I think is, is part of it. I didn't know that part of the story and that it actually makes me feel a little bit better. Don't feel so bad. It's just time.

[00:19:41] Colin Keeley: Yeah. And I would say everyone is probably bad at it. At least if you don't come from this world of like, you know, tons and tons of money being thrown around. So this guy didn't for sure. And it was just like networking. You reach out to some people and you get intros from them to other people. And then you eventually, you know, end up in the room with billionaires and billionaires have to deploy the capital as well.

And like, you know, you get some in and you show performance and you just grow from there. So you start small. And I don't know, I don't think it's fair to say we're bad at it. So just we're beginners at it.

[00:20:12] Brent Sanders: Sounds fair to me. Cool. And then I saw you do another operating manual. Is that right?

[00:20:18] Colin Keeley: Yes, of sorts. So this is funny. So just like from the creator perspective here, so I spent a bunch of time on this, John Malone one. So the cable cowboy, that one kind of was a bust, complete bust on Twitter. Like over time, Google will love it and it'll like be ranked Tilly. So maybe a payoff over long term.

And then I listen to a podcast with Peter levels. So Peter levels is. One man startup studio. I don't know if you're familiar with him at all.

[00:20:43] Brent Sanders: I am.

[00:20:44] Colin Keeley: But he's been throwing things at the wall for like a decade. And he is part of this like remote work thing way before he was popular. And so he is launched, I don't know, a hundred projects and he is only really had two, but those two, and a few others have reached about 3 million in ARR.

And so he was on a podcast and he was talking about how he operates. I was like, cool. I'll just compile these to like a list of 10. And that blew up on Twitter. And I, I don't know, like a million people saw it or something crazy. I think I gained like over a thousand follow. And so it's like these kind of streamlined ones, maybe it's a, you know, luck of the draw and there's nothing to it, but seemed like these streamlined ones are doing better.

So I did another one with, Brunello Kuli so famous, like billionaire fashion designer in Italy, who basically has turned his like tiny hometown solo Mayo into like a classical Disney world. And he just made every part of it gorgeous and it's like an amazing place. And he has, you know, unique operating principles as.

[00:21:39] Brent Sanders: I'm pretty sure it's pronounced Cinelli

[00:21:43] Colin Keeley: Yeah, I wasn't gonna attempt to do that, but that sounds much better.

[00:21:48] Brent Sanders: So this is funny, like from what you were saying, it died on Twitter, but then blew up on LinkedIn and like, how do you, can you even Gander a reason why it's just different algorithms or you think it's like totally different?

[00:22:00] Colin Keeley: So this was maybe more upbeat. It's like, you know, what does he do? It's he has limited working hours. So after five 30, no one everyone stops working. No one can send emails. He gives 20% of his profits to charity and he also like pays people really, really well. And every day they have an hour and a half lunch.

That's like locally sourced. Super nice wine and everyone takes a nap after lunch. I saw all that, I think kind of plays well on LinkedIn of like, you know, treating your employees nicely. I also just think creating content generally is just like a crapshoot. You just gotta throw a lot at the wall and, you know, randomly things blow up.

And I don't know. I try not to get too hard on myself. It's like this one didn't work. No explanation just onto the next one.

[00:22:41] Brent Sanders: Fair enough. Fair enough. Well, that's the way to do it. Otherwise you're, you know, gonna have negative feelings around, oh, is this gonna be good? Is it not? It's like, who cares? Just do do interesting stuff and it'll get reward.

[00:22:53] Colin Keeley: Yeah, I get a lot out of it too. I mean, you're juvi like basically distilling all your learnings of reading from people. And so it's like beneficial to me, whether other people read it or not.

[00:23:04] Brent Sanders: Good to hear. Cool. Well, I think that's it for me. You got anything else? You wanted to go over?

[00:23:08] Colin Keeley: No, I think that's good. Yeah. Until next week.

[00:23:12] Brent Sanders: Take care. Thanks for

[00:23:13] Colin Keeley: See ya.