Buyers and Builders
00:32:39 · Mikk
[00:32:39] S0: I didn't know.
00:32:40 · Giuseppe Balzano
[00:32:40] S1: Yeah. If you have a Sicilian and and someone from Trentino, for the Italians, you know, listening, you you will know this. They will not understand each other. Like, there is no way they they know what the other person is doing or saying unless they switch to Italian, you know. But the language of choice for people from Milano, Roma, you know, big cities, of course, is Italian. But if you are 75, 80, and you're coming from the old province of a little town of 500 inhabitants in the province of Brescia. You're not speaking Italian. You know, you're speaking also Italian, but the the first language is the dialect. You know? So the way to approach these guys is completely different. We're we're not sending emails. Of course, these guys will not read the email. Of course, you know, the guys will just maybe read the email and think these are scammers. You know? They want to buy my company and they're sending an email? Like, no. So there is a way. There are different ways, and and as always, it's a mix. You can do events. You do calls. You reach out to people close to the family, and you try to win over the person behind. But it depends also on how much time you have. In the end, one of the other responsibilities of the CEO is to to allocate resources, you know, and it's also... It's not just capital. It's also resources, energy, you know, time, which in the end is capital. But if I have two employees, I cannot tell my employees to write everyone and call everyone and try to do the brute force kind of approach to win maybe someone. So we we are ranking businesses. We know there is a word. There is a domain. From a mathematical point of view, there is a domain of of possibilities. These are... We estimate in Italy, we have 4,500 companies that we like a lot, like, companies that we will buy, that maybe that we will not buy, we we want to buy. Okay? This is different. And so we rank these companies by some filters, which is including also the age, maybe, of the founder, or if there is a second generation working, or if the the trend or the sector in which they are is something that is interesting or not for us, for the world, for everyone. You know? So we have some sort of parameters, and we rank these businesses by the score. And then we have several scouting strategies to try to have a call.
00:35:07 · Giuseppe Balzano
My outcome, the KPI for my team is we want to have a call with the founder, you know, like a phone call. I want to speak to the founder. And then you have one minute, two minutes. It's like an an elevator of a of a big building kind of piece. And and and there is no way you're gonna win the deal if you say, hey. I'm gonna buy your business. Because Italians are very proud, you know, of themselves. They they are picky. They're different. You know, we we don't trust anyone. So there is no way there is a young voice, you know, calling you and say, hey. Mister x, I'm gonna buy your business if you want. You know? It doesn't work in this way. It's completely different than the Anglo Anglo Saxon and US approach. You know? You want to build trust. This is me. These are my shareholders. This is what I do. I like your business, you know, and why I like your business. So what do you know about my business? You know? And the first question my my colleagues, my my other entrepreneurs, my founders, reply is, how did you find us? How did you end up, you know, having a call with me? Why why are here on the phone? You know? If the answer is pertinent, they will maybe invite me for for a lunch. There is no other way. There is no emails, no, you know, video calls. Just a phone call, five, seven, ten minutes, you will trust, you propose to have a meeting, or they propose, if they're very interested, and then you have a you have a meeting, and you have two, three, four hours, maybe in Puyall, and you have to drive ten hours, you know, and it's it's an investment. So it goes back to how you allocate resources. Maybe I do seven calls per week, but I decide to visit just one company because my logistics, you know, it's impossible in a given week, and I postpone, you know, the the meeting in the future. But if I see the numbers, as always, out of these deals that we have seen this year, 80% are coming from from our way of doing stuff. 20 are brokers and auctions. But if I see the first three deals that I mentioned, none of them has an adviser. So it's just us finding deals.
00:37:19 · Mikk
[00:37:19] S0: I think I've done here in Estonia, like, hundreds of those meetings. They're so special. I don't need to drive ten hours. I need to drive three hours. It's a bit smaller country, but it's I've gone to Finland as well. It was a long day just to spend three hours with the owner. But it's, I don't know, I just enjoy that. It's so special. No one really does it. Like, no one don't really want to I do
00:37:46 · Giuseppe Balzano
[00:37:46] S1: think you learn a lot. People that know me from from a relationship or friendship point of view, they always tell me, you like to listen. You like to listen and to listen to old people. Part of the answer is yes, because this is my job. But on the other side, I really do. I think there is a is a lot to learn. Like, from people that have eight years, or seventy, or sixty, or fifty, you know, it doesn't matter. I'm 30, so there is a lot to learn from me. They have intuition. They have life, you know, experience, defeats, you know, they can tell you about mistakes or just the story. You know, when when you ask... This is one of my flagship questions, you know, how did you end up building this company? The most boring is, you know, my father or my mother gave it to me, which is not, you know, my preferred answer, of course, but it is what it is. The best answers are the most creative. And and there are, you know, books to be written with with these kind of meetings. I agree. I think I'm lucky. I'm lucky to have the possibility to just speak to successful founders, you know, every day. In the end, they managed to use the company to sustain the family and then to have the second generation studying. Italy, again, leaving aside, you know, the industrial revolution of the sixties and seventies was a poor country, you know, before that, so during the war. So we have the countryside of Italy, which is full, maybe like in Estonia, but I'm not an expert, full of farmers, you know, or fishermen. So having people that managed with nothing, naudily, normally, nothing, just an idea to evolve, you know, and and give some sort of credibility and reputation and and and sustaining, you know, the future of the generation is amazing. And sometimes, you know, I ask myself, without an Internet connection, without, you know, capital or my resources or my investors, would I be able, you know, to start from scratch, just debt, just, you know, collecting money from, I don't know, random clients that wanna pay you because they like you. I don't know. But yeah, this is the outcome, know, hundreds of meetings.
00:40:07 · Mikk, Giuseppe Balzano
[00:40:07] S0: Okay. I want to cover the LP side, capital allocation side. How was the fundraising? How did you explain the liquidity for LPs? Because if you go there, you're a young guy, just a base 30, some of your LPs, maybe the guy is 65. He wants to see some liquidity. So what's the story there and how did it all go for you when it comes to fundraising? [00:40:36] S1: Short answer, it was tough, Very tough. Every time, you know, I listen to some of your other people, you know, interviews and and experience, and then there are people saying, you know, yeah, it was easy, and I managed to raise capital. It's either they they have capital or they have a lot of connections with with with people without a capital, or, you know, they are famous in a in a given country or in a given sector. But for me, it was impossible. Like, it took me two years to to put together all the relationships, also with family offices that, you know, believes me, and we did deals like we did. Maybe we'll be one family. [00:41:17] S0: Sorry for interrupting. You're full time. Right? Full time.