There was a case study in 2019 that examined 11m LLC tax returns.

A typical firm owned by the top 0.1% is a regional business with $20m in sales and 100 employees, such as an auto dealer, beverage distributor, or a large law firm. The 5 largest industries for LLCs within the top 0.1%:

1) Legal services ($28.6B)
2) Other financial investment activity ($28.2B)
3) Other professional and technical services($8.2B)
4) Offices of physicians ($8.0B)
5) Auto dealers ($6.7B)

Copart is one of, if not the most, successful rollups of all time.

Since their IPO in 1994, they’ve 247x.

Here are 5 key ingredients for their mega success: 1️/ Fragmented Industry:

The target industry must be filled with smaller mom-and-pop players, offering ample opportunities for mergers.

Copart capitalized on the highly fragmented junkyard industry, finding no shortage of willing local biz owners at a lower cost.

I love this chart detailing how capital was allocated for Berkshire Hathaway from 1964 to 1969.

Buffett took control of Berkshire Hathaway in 1964 and went straight to work, reallocating capital to the best available option.

Some quick thoughts on capital reallocation: This chart makes reallocating capital look very easy. Eloquent transition from textiles (low ROI) to insurance and banking (higher ROI) in a span of just 5 years.

The reality is that it's very challenging to reallocate capital within a business.

Before buying a business, it's important to understand the level of pricing power it has.

Here are some tips that will help you.

🧵🧵🧵 1/ What is pricing power?

A company's ability to raise prices without reducing demand.

Pricing power = the measure of a business’s moat

Even if the business doesn’t increase prices year over year, the mere ability to do so indicates the strength of its moat.

Our government should rebrand the Tax Free Savings Account (TFSA) to the Tax Free Investing Account (TFIA) so ppl use it correctly.

Maxing out TFSA since 2009 (inception), and investing in an S&P500 index would mean a $200k+ value today. Accessible instantly, all tax-free. It's so poorly marketed. Many Canadians think the TFSA is just a savings account, and if it happens to generate some tiny interest amount, cool.

In reality, it's a powerful investment vehicle that can compound $$ tax-free. And, it also transfers to a beneficiary tax-free.

I completely switched my career 4 times before landing on what I currently do (buying cash-flowing businesses). If you're considering making a career switch, this is for you.

Here are 7 lessons I've learned along the way: 1/ Humility

You need humility to be able to acknowledge that you may have chosen the wrong career.

It’s not your fault, statistics are against you, don’t fight math.

17 factors that improve/reduce the odds of M&A success:

This chart was put together after studying ~3000 M&A transactions. Though most of the transactions studied involved larger businesses, I think these lessons are relevant for business buyers of all sizes. Many of these… twitter.com/i/web/status/1… This chart was taken from the book Deals From Hell. It’s a great read, I recommend checking it out. twitter.com/i/web/status/1…

I recently re-read Sons of Wichita - a fascinating story of how the Koch family built a $110bn/yr oil refining behemoth.

Here are my 7 key takeaways on how to build a multi-generational business 👇 #1 - Tight Control & Ownership

It’s an understatement to say that it’s incredibly hard to keep a $110bn/year company private. The Koch family has gone to extra lengths to keep tight control of Koch Industries.

Charles once famously said:

This is insane.

https://twitter.com/rpnickson/status/1647548141384736770

There are no laws being broken here, right?

Understanding this math problem can make you statistically better at making career decisions 🧵 The Monty Hall Problem: a probability puzzle.

The problem is named after Monty Hall, a game show host from the 60’s show called "Let’s Make a Deal".

It highlights a paradox, with a solution so simple, but counterintuitive, that most people refuse to believe it’s true.

The textbook definition of pricing power is a business’s ability to increase prices without losing customers or market share.

But it’s a bit more nuanced than just that. Here’s why: 1/ Levels

Pricing power isn’t black and white, there are levels to it.

Here's an example to illustrate:

Every Friday I send out a timeless gem to around 2,500 readers

The goal is quite simple: help you become a better capital allocator & business builder.

Here's why I decided to start 'Friday Gems': As a full-time investor growing my own investment firm, Atlasview Equity, I spend a lot of time analyzing investment opportunities, studying historic case studies, industry research, and reading all things that spark my curiosity.

Imagine buying 7 buildings for $7bn using a 0.7% down payment and 99.3% 1-year short-term loans, personally guaranteeing a large chunk of it...

That's what Harry Macklowe did in 2007 (in his 70's): I won’t comment on whether this was a good or bad move, it’s too easy to judge bets in hindsight.

I am just flabbergasted at the level of risk Macklowe was willing to take…at his age…and his wealth level.

Incredible.

List of legendary fund managers & the age at which they launched their fund/firm:

- Zhang Lei (33)
- Paul Singer (33)
- George Roberts (32)
- Larry Robbins (31)
- Dan Loeb (31)
- John Goff (30/31)
- Chris Hohn (30)
- David Abrams (30)
- John Gray (30)
- Marc Stad (~30) - Lee Ainslie (29)
- Li Lu (~29)
- Bill Ackman (~27)
- Eddy Lampert (26)
- Joel Greenblatt (~26)
- Chase Coleman (~26)
- Seth Klarman (25)
- Allan Mecham (25)
- Warren Buffet (25)

Shoutout to this Twitter account for sharing this list.

https://twitter.com/prefshares/status/1607217636651274241

Every public company has:

1) Investors with short-term hold periods
2) Investors with long-term hold periods

Their motivations differ and in fact, often conflict with one another.

Management has to make tough choices. Always ask yourself:

• Which investor group would management prioritize?
• Which would they be willing to sacrifice?
• Which group are you in?

After all, as a passive investor, you’re at the complete mercy of management.

In one of my recent newsletter issues, I shared an excerpt which highlights profits from the leveraged buyout of Gibson, a greeting cards company in the 80s: To provide more context - Wesray Capital (pioneer in LBOs) acquired Gibson for $80m for which they:

• Put up $1m of equity ($300k of that was Simon’s)
• Borrowed $79m

18 months later, they sold Gibson for $290m.

The net proceeds back to Wesray was $210m.

A cool 14,000% IRR!

What's the most efficient & effective way to increase your bottom line?

Increase your price (🧵) Every dollar price increase to the bottom line comes with no risk.

Especially if it's:
• Sticky
• Mission-critical
• High switching costs

If you hate cold calling, give me 2 minutes and I'll tell you how it completely
changed the entire trajectory of my career 🧵 Cold calling has gotten a bad rap over the years.

Movies like Boiler Room and Wolf of Wall Street have made cold calling look
slimy.

But the reality is, as an entrepreneur, cold calling might be one of the best
things you could do early in your career.

TIL in the 80s Coca Cola acquired Columbia Pictures (yes the movie studios) for ~$1bn...

...and tried their hand at making coke-themed films/TV series (?!).

(it was short-lived and ended up being shut down) Coca Cola paid a 75% premium to buy Columbia Pictures, and then ran the company into the ground.

…but then they somehow managed to sell it to an even greater fool a few years later for a $2bn profit. That greater fool was Sony.

A great example of timing (& luck) > else.

Went to an event yesterday where Mark Leonard (founder/ceo of Constellation Software $csu) was the keynote speaker. The discussion was around general business/career advice.

Sharing some of my notes: On his early career:

He worked for a VC firm called Ventures West. They didn’t do too well, mostly because the VC industry in Canada sucked at the time. He got his true start (Constellation) later in his career( late 30s).

Software investors focus on the high gross margins but completely overlook the high maintenance capex many of these businesses have.

"Software companies are investing through the P&L" might be one of the biggest lies ever told.

Here's why: Since capex has shifted to P&L for software businesses, it's difficult to tell how much is maintenance capex or growth capex.

The definition of growth capex is discretionary spend to add new capacity/customers.