Inspired with Alexa von Tobel
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?
00:27:52 · Michael Brown
[00:27:52] S0: Yeah, Yeah. So it does a couple of things. I mean, the... A couple of concrete examples that come to mind. So one is that, you know, whatever we're weighing in as a as a group, so we meet daily to look at the acquisition funnel. And one of the questions I always ask myself is, do I think this business will be around in fifty years? Right? And that has to be yes. It's it's one of a number of sort of necessary but not sufficient questions that... You know, but I'm one of four voters, you know, to to to take on a new company. That's that's a question I ask myself. And so it means that we turn down companies where we're not highly confident. It... We don't have a crystal ball, but I I think, hopefully, you can use your intuition to figure out, like, odds are people will be eating hamburgers in fifty years. And maybe the mix of meat and non meat changes, but people will be eating. So I think that that's one thing is that we turn away opportunities where we don't know that there is an ultimate evergreen nature to the business. I think it's part of how we approach the first year of the transition. A lot of investors, whether public or private, understandably, they sort of say, well, how quickly can you grow the company in the first year? And it was like, well... And a lot of people don't really know the SME space very well. If you try and at least I came into that in 2013 and bought a business said, let's grow, grow, grow right away. And what happens is when you do that, you can really you can really kinda disrupt the existing customer base if you come in and make a lot of changes right away. And you kinda wanna build the support naturally and organically. And the support is there because in Teamshares' model, we bring in employees as equity partners in the company. So that that builds naturally. But first, you have to build trust. And oftentimes, we have to upgrade the systems, right, and and take these companies. So I'd say it... It's it's embedded in our ability to go slowly to build growth over time but not rush into it because you need to, again, take care of the business. And I think it's even at a company level, it... It's... We've done some, know, like, unintuitive things over time. So we set this headcount cap years ago following the Dunbar principle. Said, we're never gonna have more than a 150 people, right, at the parent company.
00:30:13 · Michael Brown
We're 90 today. We we were bigger at one point, and and that just came from... For for a whole bunch of sort of strategic and business and innovation reasons. We didn't wanna have a huge, huge headcount at the parent. It seems really big to to the outside world today, but, you know, it's like we have two investment associates processing 1,500 companies a year. So it's actually each team is very, very nimble. Even actually, I think Alex and I have not had a we've not had many fights, but one of the fights we had early on was about KPIs. And Alex had genuine concerns in the back of a well known bank that led to some really bad decision making based on sort of KPIs and metrics and stuff. And so we had this sort of heated debate about how to OKRs and KPIs the right way that don't lead to downstream decisions, ripple effects, twenty, forty, fifty years from now. And so we think a lot about the culture of Teamshares and making sure that we're trying to build Teamshares at the parent company in a sustainable way that allows the cultures of the companies we take on as our partner companies, right, to to exist in a sustainable way with their own cultures too. So
00:31:23 · Alexa von Tobel
[00:31:23] S1: I love that. And as as we both know, culture certainly eats strategy for breakfast, and so I respect just the the major focus on it. I'm gonna transition to just some questions of of of things that you can pay for to other people. But I want to say one thing as your friend. I'm so proud of the work that you're doing with Teamshares as they're in a world where obviously AI is happening everywhere and AI, of course, impacts your business in really good ways because it can make a lot of things really efficient. You know, our team here at Inspired has always said, you know, you're digitizing the small business economy, which is a third of The US economy, and you're taking really important businesses that we all need, plumbing businesses, electrician businesses, those aren't going anywhere. Right? And you're doing this incredible good, to to basically really digitize a part of the economy that no one else is. That's a pretty great reason for everybody. The, you know, the the Teamshares team is so passionate about, their job, but I feel that as an investor. I feel that as your teammate, that must be pretty great to be able to have a business that's genuinely unlocking such good in the world.