02:18:10 · John Coogan, Tucker Brown, Rodrigo Liang, Ben Thompson, Jordi Hays
[02:18:10] S1: Were you doing deals? [02:18:11] S6: I was trying to do deals. [02:18:12] S1: Okay. But when you do the deal, are you a back of the envelope guy or a napkin math guy? Which one are you pulling out? [02:18:19] S6: You gotta kinda combine, I guess, both. Both. [02:18:21] S4: Oh, I've [02:18:22] S8: gotta Is that just because, like, [02:18:23] S1: you're doing a DCF and it gets so big, you might have spread in comps on different tabs? [02:18:27] S6: It'd be I mean, yes, I'm sure you understand, you know, the the category that we're [02:18:31] S0: in. Yeah. [02:18:33] S6: You gotta be creative with the deals. Yeah. So Makes sense. [02:18:35] S1: Okay. So take us back. [02:18:37] S0: What was your first can? [02:18:38] S6: What was my first can? [02:18:40] S0: Yeah. When when did you go for the [02:18:41] S6: first It was this year. Okay. So I've been to film festival for [02:18:43] S0: a waited until it was, like, actually gonna be productive for you. Yeah. Exactly. I'm gonna make [02:18:48] S6: it worth the, you know, the money you gotta spend to get there. [02:18:50] S1: But but yeah. Take us back early in your career. How'd you get here? [02:18:53] S6: So I've been at CAA for fifteen years. You know, the talent agency that represents biggest entertainers in the world, athletes, and all that. I was at Evolution Mhmm. Which is our investment bank Mhmm. Working on large scale m and a, capital raising transactions across, you know, different categories. So that for a long time. I like the applause on that. [02:19:13] S0: For capital raising.
02:19:13 · Jordi Hays, Tucker Brown, John Coogan, Vincent Weisser
[02:19:13] S0: For capital raising. [02:19:15] S6: Yes. For yes. Worked with pro sports teams, worked with entertainment companies, TV, you know, TV studios [02:19:21] S1: Yeah. [02:19:21] S6: Production companies. [02:19:23] S0: When does that then get get tapped in for a transaction? [02:19:28] S6: Like So [02:19:28] S0: like Yeah. Like I can imagine if a sports team is gonna transact or or an emerging league or an athlete has a business that they wanna sell, like, am I am I in the right area? [02:19:42] S6: Yeah. It sort of it depends. Right? I mean, we're we don't work on tiny deals. We like to focus on larger scale transactions. So in sports, it's probably gonna be something 50,000,000 plus. Mhmm. So if you're putting a a check into a team and you got some money to spend and wanna buy a piece of a sports team, we'll facilitate that transaction. [02:19:57] S3: Okay. [02:19:58] S6: We'll work on, you know, team sales too. So entire teams that trade. One of the earliest deals that we did was the sale of the Sacramento Kings Civic Runway in 2011. How much That team's traded, by way, for $500,000,000. Yeah. [02:20:12] S0: So Good. Good much does [02:20:13] S1: that organization look like a standard investment bank? [02:20:16] S6: A lot like an like, I mean, it that's the service that we provide. I think the difference is we sit within CAA. So we have the strategic connectivity, the knowledge that might be a little different than other investment banks have. [02:20:26] S1: And and probably less public markets coverage? No Yeah.
02:20:26 · John Coogan, Tucker Brown, Jordi Hays, Will Mayer
[02:20:26] S1: And and probably less public markets coverage? No Yeah. [02:20:31] S6: We don't have capital markets Okay. Yeah. Capabilities. [02:20:33] S0: We don't [02:20:33] S6: do public markets. [02:20:33] S1: We're focused on M and [02:20:34] S7: A. [02:20:34] S6: Yeah. Generally. [02:20:35] S0: Got it. [02:20:35] S6: Okay. So probably a little smaller. Our team's only about 20 people. Mhmm. So kind of 50 to 500,000,000 is our sweet spot. Sports is gonna be a lot larger than that. But I'd say for other, you know, deals, it's really in that kind of range. Okay. So, you know, I was there for a long time and it came to, you know, how I've gotten to compound and what we just launched. Yeah. I started working around creator deals a couple of years ago. Kind of just by chance, you stumble across deals and companies that are interesting, that make sense, you want to lean in and figure something out. And that that was the case with Dude Perfect Yeah. You know, a creator business that been scaling really nicely for a long time built on YouTube. Probably twenty years [02:21:14] S0: in the past. [02:21:15] S6: Yeah. Sixteen years of the time. [02:21:16] S1: Sixteen years of the time. [02:21:17] S6: Yes. Wow. So they were ancient in YouTube Yeah. You know, lands. [02:21:21] S1: But but consistent in their performance the whole time. [02:21:24] S6: Like I think they were growing at a 50% CAGR
02:21:24 · Tucker Brown, John Coogan, Jordi Hays
[02:21:24] S6: Like I think they were growing at a 50% CAGR [02:21:26] S1: for that entire time. And and no matter when you dip a lot of people dip in and out of Dude Perfect content. Of course, you go through some binge watching, you watch a bunch of the archive, then you come back years later and you see that, okay, everything's evolved and the great pieces are still the same, but they've added on a bunch more capability. [02:21:42] S6: Yeah. And their audience, to me, they they they cook sort of eight to 16 year old boys, I'd say, the core of their audience, but they also grew up with them. So these guys are they're 38 now. They have a big audience that, you know [02:21:52] S0: Oh, wow. [02:21:52] S6: Yeah. People in their thirties that do like watching the content. [02:21:55] S1: That's great. [02:21:56] S6: I didn't know much about it other than what I'd seen on YouTube. Yeah. They built a big live entertainment business. They go on tour. They sell at NBA style, you know, size arenas. [02:22:04] S1: Yeah. So what's unique about that deal? Because they're they they have multiple revenue streams at this point. They're doing advertisements, partnerships. They only have a partnership with NERF and, like, a bunch of other deals in the works, tours. And then they were also talking about building, like, a Disneyland, basically. [02:22:19] S6: Do Perfect World. [02:22:20] S1: Yes. Do Perfect World. Incredible. [02:22:22] S6: There was a big mock up of that when I first went to visit their office [02:22:24] S1: in Texas. Yeah. In Kansas You [02:22:26] S6: know, amusement park.
02:22:26 · Tucker Brown, Jordi Hays, John Coogan
[02:22:26] S6: know, amusement park. [02:22:27] S0: To make a pilgrimage. So [02:22:29] S6: yeah. Listen. They wanted to build and we've heard this a lot from creators, but, you know, kind of a next generation Disney type business [02:22:34] S1: Yeah. [02:22:35] S6: For a specific audience around, you know, sports, kids, comedy, family. Mhmm. Very family friendly business. And yeah. So I I I sort of got to know the guys Mhmm. Saw their business, diversified across a bunch of different categories. Yeah. It wasn't just a YouTube business. It was a real media company. Yeah. So we took that to market and executed a pretty large scale private equity transaction. It it wasn't easy. I was naive in the sense that I thought it would be because the financial profile was so attractive. [02:23:04] S1: Why was it legible to [02:23:07] S6: It it just it's it's a new category, I think, generally for transacting. That's opportunity that I see at this point in time. [02:23:13] S0: You don't have decades of, like, case studies and Harvard Business. [02:23:17] S6: There are no there isn't a single comp or press, and I looked at media company comps for it, I guess. And you're dealing with talent, you're dealing with key man risk in a way that's sort of unnerving to some private equity investors. [02:23:29] S0: Platform risk.
02:23:29 · Jordi Hays, Tucker Brown, Vincent Weisser, John Coogan
[02:23:29] S0: Platform risk. [02:23:31] S6: Risk. I mean, with them, it was a little bit less contingent on the platform itself, which was an advantage. Mhmm. You know, their YouTube revenue was a small percentage of the overall business at that point in time. But, sure, you know, investors get spooked by algorithms, what can happen if it goes up or down or changes [02:23:45] S3: Yep. [02:23:46] S6: And how that impacts the business. So it took, you know, to go and by the way, have find the right partner too. For, you know, for Talend and for their business, they built it over sixteen years. [02:23:55] S1: Mhmm. [02:23:55] S6: They owned it outright. They cared about what, you know, what the future looked like with their partners. So finding the right, not just the right deal, but the right people behind the deal to transact with, I'd say in this category and the creator world is more important than in others. [02:24:09] S0: And so you came out of that feeling like you had a greater sort of understanding of these businesses as well as like an appreciation for their potential and their quirks, and so you decided to become the buyer. Is that the right way to think