Buyers and Builders
00:34:28 · Mikk, Cyrus Hessabi
[00:34:28] S0: Was there anything else you maybe misunderstood? One was the operational side. In the VC side, you look more about the vision and the J curve, as you mentioned. Now it's more about the operational side, people, cost, cash flow, things like this. Was there anything else? Overall economy, maybe? Overall economy? [00:34:47] S1: Yeah. All right. I think, I mean, and I think also, I mean, I don't know that I misunderstood that per se. It's more, I think you need to have appetite for going and getting, you know, smart, like building a viewpoint on a market fairly quickly, basically. Because I think also because of the wealth of information that you have and because oftentimes it's not like many, many people are looking at the same deal. In a VC, you can text a few friends and everyone's seen the same company. You can kind of, you know, build your viewpoint somewhat through a mixture of desk research and input from your friends. I think in in in in these jobs, you have to build your viewpoint at the end as a team yourself, basically. So I think primary research is incredibly key here. You're buying a business that is, I don't know, a roll up of optometrists, and you're trying to optimize work there, and you have a whole suite of ideas of what you could do, just call them. Call optometrists and figure out how they work and what matters. Ask them the question. I think primary research from the source is a key, key thing also to learn how to do these jobs in my view.
00:35:57 · Mikk
[00:35:57] S0: But the overall research you're doing now and maybe which what is the right way to say it in English, like affecting your viewpoint. What I'm trying to say is the information and content you consume now. Maybe previously it was like 20 we see Harry Stebbings. Now you look more about those very traditional niche businesses, maybe follow different operators on X, maybe listening to this podcast here. So how has this changed? Maybe on a if you go through the evening if you have time, maybe reading different books, things like this, how has it changed?
00:36:32 · Cyrus Hessabi
[00:36:32] S1: Absolutely. Oh, sorry. My bad. Yeah. Definitely, like, different books read. Think that one of the... Some good kind of day one books or where was the... To to make it this, and you will see the books go back to people. So the two books I have in mind are Will Thorndike's The Outliers. Sorry, The Outsiders, my bad. The Outsiders. I keep confusing it with Malcolm Gladwell's The Outliers. And then the second book, I forgot the name, is Geoff Smart. The book is called Who? Both of these books, as you can see, are people based. Yeah. What kind of information do you consume? I mean, there's still podcasts. You have... You can listen to your private podcast. You can listen to... There's a few ETA podcasts I was gonna share. And I think most of my time is spent on industry when I'm on a live deal. And I'm a live deal basically, constantly. I think it's very industry specific, and you have to go deep. You have to go to conferences. You have to... You know, at Shore, we say, found the mount... Find the Mount Rushmore of people in an industry. Like, who are the key people who are going to be who could be amazing board members, who could be amazing experts, right, guides to the operators of these businesses and quickly help you get to the eightytwenty answer on this space and what drives it.
00:37:45 · Mikk
[00:37:45] S0: Now, you mentioned people so many times, so you have this great experience of packing different people. One is the guys on the VC side. On the other hand, we have guys on a very traditional business side where companies are profitable. I've met both very different people oftentimes. So what is your experience and maybe some of the lessons you've learned from this type of two types of people because you made those investment decisions by actually looking at those people, their beliefs, their maybe not habits, but how they view the industry, the future and all that. So what's what's something maybe comes to mind?
00:38:31 · Cyrus Hessabi
[00:38:31] S1: Yeah, I think they're very different founders. I think the core traits of great leadership, I don't think they change that much whatever you're doing, because, you know, the ambition of founders backed by VC is to build world leading organizations. Right? And whether you're leading a team of 10 or either a team of 10,000, I feel is the similar set of base principles around trust. Authenticity, I don't want to say authenticity in a cop out way. I mean it in a way where you tell people things as they are and you rule your decisions. I think the biggest difference is probably that in a... I think it's detail. The detail devils needed. I think when you are a VC backed founder, I'm just thinking about this on the fly here, so maybe I'll have a better answer right after the podcast. But I think when you're a VC backed founder, you're great if you're able to, you know, through thick and thin, kind of keep the the ships heading. Right? It's kind of there... It's chaos. You're at... In the middle of the sea. There's high waves. You've lost a couple of your crew. Two of your sails broke down. It's just a picture of the the chaos, but you still have some, like, stars that you're following to get you to to the new world in a way. Right? And and you're gonna get there. I think that's kind of a VC backed founder. Of course, many in the middle of first x x y reason, of course, they they don't make it, but that's the the that's the whole game. And in fact, actually, my example, as I say this, one of the earliest forms of venture capital was indeed European royal families funding expedition ships leaving Europe, or even going to the polls or going to other places. So think that actually is a good example. So the like the PE style investing founder, I think, is more, am I able to hand manage complex systems, put the right people in the right places to, you know, be able to, at the same time, have a view that, like, impact and influence various areas of my ops, but at the same time trust that I have, you know, a good management team also kind of on the ground. I think also you have to be super, you know, your business is running right now. It's you have to generate cash every period. You have to pay back some debt. You have to, you know, execute on fairly aggressive time bound growth plans and margin expansion plans and whatnot.
00:41:01 · Cyrus Hessabi, Mikk
So you're kind of very on a clock. And a lot of the ways that you create value in these businesses is around very detailed operational improvement, renegotiating contracts, launching new products requiring businesses that require deep diligence and then integrating them. And integration oftentimes hinges on a few key people, so you have to manage a whole set of champions. I think it's more kind of meticulous day by day versus I think in the VC side, if I had to stereotype a little bit more, it's more just how good are you at maintaining your ship together in a very chaotic and uncertain environment. I know you're probably harder to be a VC backed founder than a PE backed management team. [00:41:45] S0: And now yourself, have this experience in working in a top firm and now as well you're working in a top firm in a B industry, but obviously it was in a VC industry. At the same time, you're super humble saying that you're this young guy in early stages of your career. So question for you, like, what have you learned and maybe implemented yourself? Number one, meeting the partners and the founders of those firms, number one. And number two, all those entrepreneurs, operators, people wanting to build those VC firms, people who you're going to or already have backed when it comes to those traditional businesses. So personal, really personal. What have you learned and what do you implement on your own journey when creating value and making hopefully good decisions? [00:42:40] S1: Just to clarify your question, you were saying learning from who? Sorry.