Inspired with Alexa von Tobel
00:18:40 · Alexa von Tobel, Michael Brown
[00:18:40] S1: I like that a lot. So... Okay. Let's take a big step back. Sure. We're an inning one. You're gonna go public. Mhmm. What I know, and I will never forget, we were sitting at a coffee shop at Grey Dog... No. At News Bar Cafe. [00:18:56] S0: News Bar. [00:18:57] S1: And we decided to invest, and I just absolutely loved your vision. And you had said, Alexa, I hope... You go, one day, I'm gonna make it so that you wish you gave me $10,000,000 today, not the maybe 5 that we gave you. And that really sat with me. And I know that you truly feel like you're an inning one here. Let's talk a little bit about where do you want the company to be in a decade? What does this look like? We get the ingredients, which is business model actually, your business model gets better when you're public, which is a pretty unique unlock. There are ample companies. You have really no competitors, and you have an incredible core team that is so focused. [00:19:46] S0: Great team. We're very [00:19:47] S1: You have the you have the best two cofounders as well that the three of you kind... Really are like brothers in some way. That's very much how we've thought about it. [00:19:57] S0: I call it a marriage, actually. It's... I mean, it's a very... Like, we've been we've been through a lot. So [00:20:03] S1: what does the next decade look like, Michael? Where are we gonna go?
00:20:06 · Michael Brown
[00:20:06] S0: Yeah. So I mean, I think actually just like on that point. Right? So like the the reason why I've always had just like on con... And this this ties into the question too. Right? So like why I've always had conviction about raising capital for Teamshares is I know what we can deliver. The main risk in Teamshares as far as I see it, maybe not the list of all the risks and the prospectus, but just as human to human. When I always think about, like, what's the risk of Teamshares, it's usually that things take longer than we hoped. That's what I found over and over again is that, But we've always had conviction that the market's there, that we want to do this for the rest of our careers. We really believe in what we're doing. And so that's why we've always had a high conviction that when we go to raise capital from people, that it's not some like, oh, we'll hope this works out sort of institutional philosophy. It's like we view it as these are relationships that we're building from investors that's taking capital, whether it's their own or money they're managing, right? And that we have a fiduciary and a moral obligation to do our best to build returns for the investors we take on capital. So that's where that strong belief has come from. And I would say it remains today because now we're at this point that's really interesting where we're right at the point where the company is approaching free cash flow breakeven. That's been challenging, obviously, to build a profitable but free cash flow negative business due to interest. So we're now at the point where we're approaching the public markets, free cash flow breakeven. Our pipeline of companies remains as robust as ever. And in fact, now that we have this new tool of businesses sort of up to 5,000,000 of EBITDA, over the long run, it it it helps at a minimum sort of ensure that we can, you know, meet the sorts of targets that we've set out to meet and and and maybe in the long long term more. And and then we've got, hopefully, these these, you know, capital callouts on the debt and the equity side. So we put out a forecast, right, over the next two years, right, to say, okay. We wanna get to, you know, from 19,000,000 of corporate EBITDA in 2025 to 100 or more in 2027. And in that forecast, we say, you know, it'll be sort of adding up to 50,000,000 of EBITDA in 2027.
00:22:17 · Michael Brown
So we we haven't put out any sort of, like, guidance beyond that period. But what I can say is that we've always set up Teamshares to be a really repeatable engine. And so we think about 2027 as a year that we would hope to be able to repeat indefinitely if the market conditions are there. And then the other thing we've set on this sort of non time bound, going back to that sort of two hundred year vision, is that we really wanna do this for thousands of businesses. We have a specific number internally that's really lofty but almost would sound ludicrous externally. So we just think about like, hey, thousands of businesses. We're not in a rush to get there. We wanna build... This is this is not a roll up. Like, a roll up is where you buy things together really quickly, smash things together, and sell it. Right? This is a very durable business, right, that is full of very high quality businesses that were great on their own and that are now part of a diversified holding company. And the cash flow is the sort of lifeblood of the whole organization. And so for us, it's different than in other types of acquisition based models where you're building to sell quickly or you're buying one company, you're going to sell it quickly. It leads to different behaviors and different decisions. Every decision we make is over a very, very ultra long time period, including the fact that when we take on a company, we don't try and force it to grow in the first year. We know that growth is going to happen more naturally. So that's the goal. It's a journey from here to thousands of companies. And I don't know if it's the top of the first or the bottom of the first, but it's still the first inning. Michael,
00:23:52 · Alexa von Tobel, Michael Brown
[00:23:52] S1: what can you tell us about the process of going public? I know you have some really incredible investors like T. Rowe Price that have stepped up. Yeah. I'm [00:24:03] S0: very fortunate them involved. [00:24:05] S1: Is is... You know, they are very long... Very discerning and very long term investors. Yeah. What else can you tell us, about this this next month? [00:24:15] S0: We publicly filed our S-four, which is the registration statement that talks a lot about the transaction and Teamshares and Live Oak, who's our partner in going public. And we have our Investor Day, which we had just done last week on the March 31. So that content is now out there. You can watch the recording. And you can watch I think of that as almost like the onboarding material for a public investor to get to know Teamshares. It's a lengthy and 90 page deck, but it's actually a quick read and a ninety minute sort of presentation that any investor can really get up to speed on Teamshares fairly quickly. Going back to the rest of the process, yeah, it's really to complete our registration statement. And then the transaction will include at some point in the second quarter and will be publicly traded under ticker TMS. [00:25:07] S1: I love it, TMS. As you go public, you made the decision to reinvest your equity. And I know you're someone over time who's invested on phases throughout the company, your own dollars. I also did this back in the day at LearnVest, so I very much respect it. Say more.
00:25:26 · Michael Brown
[00:25:26] S0: Yeah. So we agreed voluntarily. Actually, we proposed with no one asked us. We actually proposed to do a a four year lockup of all our existing equity. And the reason is we just wanted to give people, people being investors, right, confidence that this is not an exit for us. Because I think some of the worry when a company goes public, especially at a small size, right, you know, there... There's a lot of investors, the new investors, the public investors who are trying to figure out, is this, hey. Like, this didn't go well and you're just kinda trying to get it off your books? Or is or or is this, like, you know, sort of something with a future? Right? And so we wanted to very clearly demonstrate to the market our unusual level of skin in the game. So we agreed to a four year lockup. It's actually technically the sooner of four years or the stock price trading at $25 versus the $10 where it starts. But either way, it's a meaningful piece of skin in the game. The five people in the executive team combined were investing $1,000,000 of our own cash and were on reasonably modest salaries. So it's a meaningful contribution from us. And we've invested before and, you know, hope to continue to invest in the future and and and just be really long term holders of the company because it's something that we just, again, have this utmost confidence that it's hard for us to promise exact weekly timing of Teamshares, but we know over a multiyear and multi decade and and hopefully, century view that Teamshares is gonna be a bigger company in the future than it is today. Michael,
00:27:07 · Alexa von Tobel
[00:27:07] S1: one of the thing that you... And I do share in common is that we really, at our core, are long term investors in how we think about our time, our effort, our life. Again, going back to that two hundred year plan that you took the time years ago to actually write down, I want to ask a practical question, which is how does that actually change your day to day? When you're making a tough decision that requires some short term thinking, how does that scaffolding of you're an inning one, this isn't seven for you, this is inning one of again a multi many decade thinking project. What benefit does that give you and your team?