Thread by @SkolCapital

Why did I start a new, different job shortly after starting my mezz fund?

Related: Why am I biased against specialty retail?

Given the $SPG / $TCO news, it’s time for a mezz thread...

Today, the beginning of my mezz fund...

2012: I was helping my parents with their investments, and had developed the idea for what would become Mountain Mezzanine.

We’d do a traditional mezz fund, but go downstream in terms of check size, etc.

I loved this plan and was having the time of my life getting started.

Meanwhile, Dad was mostly retired but had taken a controlling position in a small specialty retailer (80-100 stores). They were struggling. Dad called one day:

Dad: “Hey, I need you to come over here as CFO”

Me: “Umm; I just started the mezz thing”

Dad: “Yeah”

Me:

Dad: “C’mon, It’ll be fun ... 2 days a week”

Me:

However, I realize:

1) He’s my dad
2) I’m working for him

So, I basically begin a new job while I’m in the process of launching and running the mezz fund:

The retailer is a total mess. The stores are “profitable” but I soon realize that’s on a contribution basis before any cost of capital is allocated to them. Worse, the top 20 stores combine for 100% of the contribution.

Yes, 75% of the stores break even - at best.

I created a map with store locations and color coded push pins based on contribution. There were no obvious trends... No easy answers.

I would read the financials (again) and stare at the map (again)

Meanwhile, the mezz fund is getting off the ground, I’ve closed my first deal, and have a signed term sheet for my second deal.

I’m working constantly, and my wife is ready for a divorce (only half joking)

My mood:

Finally, a breakthrough!

My brother, who also works at the retailer and is now CEO, comes up with a brilliant idea to transition away from stores and create a service business out of the ashes.

I see light at the end of the tunnel and immediately start closing stores:

It’s tough laying people off, but we got down to about 20 stores by the time I left. My brother finished the job over the next couple of years.

Pyramid, $MAC, $SPG, GGP, Westfield ... we closed them all.

My favorite though was $CBL who SCREAMED at me in the middle of Caesars.

I’m not going to lie, it was brutal.

Would I do it again? Absolutely!

1) I had no choice - it was my Dad

2) It was the price I had to pay to do something (the mezz fund) that I was good at AND I loved

Final: Call it blessings, karma, or whatever you’d like, but I believe I was rewarded for the effort.

I had mezz deals open up to me from seemingly nowhere.

Oh, and my wife? Our relationship has never been better!

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