00:18:38 · James Andersen
[00:18:38] S1: I guess we were probably nine months into Clearview Capital, eight or nine months, when we closed a company called Via. It's manufacturer of office furniture, essentially chairs. But what was unique about this business that we really liked was two things. First of all, the founder, leader of the business is one of the most impressive people I've ever met. He remains a friend to this day. He's just a winner. And you know, one of things that I think is underappreciated in private equity is, at the end of the day, success is all about people. It's not about business models. Yes, of course, a good business model is better than a bad one, but people are what makes it work, particularly for smaller businesses where one individual can make all the difference for a business. But this guy was really impressive. We loved him. But the business itself was interesting, because if you've ever bought office furniture, you know if it's not black, like, you know, you want something a little bit different. It's twelve weeks. It takes twelve weeks. It's just what it is. These guys could produce everything in their catalog, which was tens of thousands of permutations of styles, options, leathers, fabrics, controls, and they could produce anything in forty eight hours, and ship it in forty eight hours. So we thought, wow, that's really interesting in a market where nobody does that. So we like the business model. So we did a whole bunch of research, and we found that the office furniture business, if you look back over forty years, the worst year it ever had, I think it was 1981, where the industry was down 8.3%. 1981, that was the Paul Volcker, we're going to crush inflation time. Like, wow, that's not bad, really. It's not a very cyclical business. We love that. So we closed the deal on 06/01/2000, and at the time, it was just that the dot com implosion was starting. And what we didn't realize was all these companies that were imploding at the time had two assets. They had servers, and they had office furniture. So what happened was, the dotcom implosion is the market was flooded with used, sometimes actually unopened boxes of furniture. So the industry fell 40% in the first eighteen months of our investment. And if you look back at the data, there's an office furniture association called BIFMA. If you look back, the absolute peak of the market was May 2000.
00:21:08 · James Andersen, Mikk
We closed on June 1. 40% straight down for eighteen months. Well, that's not an easy way to start an investment, particularly a leveraged investment. So eighteen months in, we're basically, our mark at zero. I think we had maybe 2,000,000 EBITDA, but we knew we had a great leader, and we knew we had a really interesting differentiated business model, but even more important than that, we had no choice. We had to be successful, because you can't become a private equity firm and blow up your first deal. This is never you're done, if that happens, because you're never gonna raise money again. So we had no choice. So we invested very heavily in the business to triple our sales and marketing, which, when you don't have money, is not an easy thing to do. And again, because we had a great leader, we were able to come out with a lower cost whole set of products that really appealed to the market at the time. So we got through it. We ended up making two and a half times our money in about five and a half years. In PE, that's fine. That's an okay deal. That was an amazing deal. I am maybe more proud of that two and a half times deal than I am of anything else we've ever done, because we were dead. We were absolutely dead in the water right out of the box. And we were able to salvage that and and make money on the deal. So, you know, again, you just gotta put your head down because you don't have a choice and and plow forward, and it worked out. [00:22:39] S0: What made this Danish guy so special? You've seen a lot now. What what made him so special?
00:22:39 · Mikk, James Andersen
[00:22:39] S0: What made this Danish guy so special? You've seen a lot now. What what made him so special? [00:22:45] S1: It's hard to explain. Well, first of he's personally a very gregarious kind of guy, and he knows how to make people feel good about themselves. But he's just like, he doesn't have a college education, but he's just a great businessman. He can spy on opportunity and know how to take advantage of it. He motivated people. He did a small thing one time that I still remember and actually wrote about. Company had a good quarter, and I think it was coming out of this really difficult time, everybody's struggling. And the company had a good quarter, and he walked around the plant. There are only 40 people in this factory, and handed each person in factory a $100 bill. Now look, at the end of the day, that $100, even for relatively low wage employees I know it's nice, but it's not like the end of the world. But you would have thought that was the most important thing that ever happened to these people, because the way he did it. He just went and said, Look, I just appreciate you. And I learned from him some things about motivating people. And by the way, he did that less, I think, to motivate people and more just because it was the right thing to do. Like, you know, you learn something from people like that. I don't know, just it's really hard to describe. You meet a winner, sometimes you just know it. And he was one of them. And by the way, he's continued to go on to do amazing things. Just it's an incredibly successful guy.
00:22:45 · James Andersen, Mikk
[00:22:45] S1: It's hard to explain. Well, first of he's personally a very gregarious kind of guy, and he knows how to make people feel good about themselves. But he's just like, he doesn't have a college education, but he's just a great businessman. He can spy on opportunity and know how to take advantage of it. He motivated people. He did a small thing one time that I still remember and actually wrote about. Company had a good quarter, and I think it was coming out of this really difficult time, everybody's struggling. And the company had a good quarter, and he walked around the plant. There are only 40 people in this factory, and handed each person in factory a $100 bill. Now look, at the end of the day, that $100, even for relatively low wage employees I know it's nice, but it's not like the end of the world. But you would have thought that was the most important thing that ever happened to these people, because the way he did it. He just went and said, Look, I just appreciate you. And I learned from him some things about motivating people. And by the way, he did that less, I think, to motivate people and more just because it was the right thing to do. Like, you know, you learn something from people like that. I don't know, just it's really hard to describe. You meet a winner, sometimes you just know it. And he was one of them. And by the way, he's continued to go on to do amazing things. Just it's an incredibly successful guy. [00:24:16] S0: So first, successful exit, very successful exit considering all the all what happened. Done. What's next for you?
00:24:26 · James Andersen
[00:24:26] S1: The next deal was the hardest deal, even harder in a lot of ways. It turns out it was another furniture company. Well, the next deal we closed was was actually the the deal I told you about before that ended up becoming a public company. But the third deal we closed was really difficult because... And, again, we... You learn over time. Right? But we partnered with a founder who was never ever, ever gonna listen to anything we had to say, was 100% driven by himself. And, look, he was really successful, but he built a company that couldn't survive, an afternoon without him. And we tried everything we could to make the business more valuable for all of us, and he just wouldn't do it. He just was an impossible person to deal with. And I can remember, I had little kids at the time. Son that was born shortly after we bought that company, I'd go to sleep at night because I was so tired, just exhausted. Like, I'd be gone. But then he'd wake up, and I'd get up, and then I couldn't go back to sleep because all I could do was think about how we were going to manage this really impossible partner that we had. And again, you know, this is our third deal. We can't blow it up. It needs to be successful. And it was just so hard. We ended up managing through it. We sold the company. We made way, way less money than we would have if our partner, you get in the nest, like, I'm not sure he really ended up, if he really was a partner, but if he had let us do, make the company more robust with better systems, but he just, he just got in the way everywhere, and it was... We learned we'll never do that again. We'll never partner with somebody like that again.
00:26:17 · Mikk, James Andersen
[00:26:17] S0: What did you... When doing, like, underwriting this person, what did you get wrong wrong? [00:26:22] S1: Well, he had a background of blowing up businesses in the past when he didn't get along with his financial partners. Literally drove the prior business into the ground, and then restarted the one that we ended up buying from him, or with him. Look, at the time, it was early on, we were doing the deals we could. Again, it's scratchy and clawing as an entrepreneur, right? We took a lot of risk, more risk than we would take today with a committed fund. It was a little bit of a swing for the fences kind of thing. No, we didn't pay very much for the business, and we convinced ourselves that you know, the three times multiple for a company growing at 40% a year would overcome this guy. And I guess we were right. We made four times our money, but it was painful. It really was. And so not doing that again. [00:27:09] S0: What about this period for you when it comes to day to day? I mean, like, it's so easy to say now, like, small kid and kids at home. But in reality, you have those kids at home, lack of sleep, sometimes four or five hours, constantly waking up during the night. Then you have those long days at the office. How was the day today like? Was this just like another moment for you where you just keep your head down and just just keep going? Pretty much. It's really not It's They're just breaking there.