This was the year I became active on Twitter. Rather than summarize my experience this year, which has been amazing, I want to highlight what brought me here in the first place, the brilliant content put out by others. Here are some great tweets from 2020...
Learning to delegate is essential for good leadership. @david_perell had a great post in April
Feel free to reply with your own "best of 2020" tweets and, most importantly, thanks to all of the amazing contributors who shared their experiences and knowledge this year.
Here's to an even better and more learning-rich 2021!!
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In reflecting on my own entrepreneurial journey, I realized that I'm drawn to partnerships. I've had 7 of them (compared to 2 solo efforts). I've had success with each approach, but given a choice would usually choose to have a partner.
Here are some thoughts on partnerships:
What has led to a good partnership (for me):
- extremely high trust and transparency
- clear expectations about role, effort, etc.
- having hard conversations upfront about authority, economics, equity, dissolution, disputes
- working together in some capacity prior to partnering
Value of partners to me:
- reduces my fear & insecurities about my own abilities
- belief that 1+1=5 / do more, faster
- emotional support (during good & bad times)
- forced personal & prof development / accountability
- expanded network (raising capital, diligence, hiring)
People like to say that an investment should be so easy that you can model it on a napkin, but is a financial model an important tool in deal analysis? I have found there to be benefits to creating and using a financial model in my acquisition work.
Models help to deepen my understanding of the business - the levers that drive costs, revenue, and cash flow;
They can show how sensitive to shocks the business may be;
They help me understand how much debt is appropriate and how much leverage to use to manage my risk.
Lastly, financial models also help to build credibility with lenders and equity investors.
Despite having an MBA, I never learned purchase accounting and only the basics of linking financials in excel, leaving me, like many others,feeling intimidated by the task.
I spent about 6 years working in real estate before becoming an investor/owner of small companies. I've been asked which I liked more and, for me, the answer is small company ownership, but not because it is more lucrative or a better path to wealth.
Let's compare the two...
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Liquidity:
- both asset classes are illiquid, but the edge goes to RE
- I don't have data to support this, but I believe there are many more real estate transactions done every year than there are biz buyouts and the process in RE is more standardized and streamlined/easier
Leverage:
- Again, edge goes to RE
- RE loans are more available and leverage levels are typically higher (70-80% LTV vs 50% or less for senior debt, outside of SBA). Also more likely to get non-recourse financing in RE than in SMB buyouts and this downside protection is vital.
I think brokers serve a purpose, but I don't think people should neglect proprietary sourcing just bc brokers have expertise and pre-existing and ongoing deal flow. In my experience, a mix of direct and brokered sourcing yields optimal results.
- Brokers do qualify sellers, which is really valuable since a lot of time can be wasted talking to sellers who think they want to sell or just want to get a free valuation.
- Good brokers maximize the sale price of a company through good marketing and making an auction.
/2
- Brokers that do a poor job create some of the best deals for smart buyers
- Relying only on brokers means you only see deals they represent. If you like an industry, you can wait a long time to see 1+ deals in that sector. If you direct source, you control what you look at.
/3
I’m attracted to the Japanese idea of wabi-sabi, which I understand to mean ‘beauty in imperfection’. The bowl image below illustrates the physical form of this concept.
/1
Rather than replacing the broken bits with a seamless fix or discarding the bowl entirely, the repairs are highlighted and make a dramatic and stunning impression.
Businesses can be viewed the same way. Sometimes it is the imperfections that make them special and “authentic”.
These quirks may well filter out some customers and future employees, but also attract and retain others. Perfection, or its appearance, can feel intimidating or off-putting to many, since we all have flaws. We feel an easy closeness with others who embrace their vulnerability.
I'm a pretty eclectic reader and was browsing through my most recent reads. Thought I'd share the past 10 books that I've read/am reading w/ brief notes.
I'm always searching for great reads, so please pass along any suggestions.
Recent reads 👇
- Surprise, Kill, Vanish (reading): story of the US's secret CIA paramilitary assassination programs. Disturbing, but interesting.
- Raised Healthy, Wealthy & Wise: @MikeBoyd interview guest. Books deals with raising kids in wealthy families, but many ideas apply to all parents
- Blood and Oil: about Saudi Arabia's Crown Prince and his Machiavellian rise to power. I learned some new things about Middle East history as well as MBS's story.
- Master & Commander: saw that @moseskagan recommended it a while back. I abandoned it after reading 15%. Not for me