September 23, 2023
Read time: 2 minutes

I just got back from a week in Cleveland, Ohio meeting 100 other Founders of large Holding Companies.

To give you an idea of the type of people I met:

  • Thomas Ince has deployed $200m of equity in the last 4 years across 9 roll-up platforms spanning HVAC, plumbing, roofing, and more.
  • Kevin Gould is a founder of multiple 9-figure eCommerce brands, including Glamnetics, a $50m topline beauty company.
  • Amir Haboosheh is the CEO of Snowball Industries, which will be a $100m+ roll-up of home service businesses by next year.
  • Michael Girdley is a majority shareholder of Dura Software (roll-up of SaaS businesses), Near (offshore hiring agency) and 10 other businesses, many of which he incubated.

There’s so much wisdom to unpack, I’ve decided to split it into several newsletters.

Today, I’ll focus on a few themes that emerged time and time again:

  1. Enrollment > Mandate
  2. Talent > Ideas
  3. Think Bigger

Let’s go:

Enrollment > Mandate

The Holding Company model is built on the premise of autonomy.

The idea that you, as the business owner, can delegate and empower someone else to run things in your place.

What I found interesting was that all successful HoldCo founders, regardless of their industry, emphasized the importance of establishing an enrollment-first culture.

Here’s what that meant, in practical terms:

  • Never set annual targets for your portfolio companies. Instead, let the CEO tell you what the target should be. Then ask questions to help them sharpen their view. The minute you set a target for them you strip away autonomy (and by consequence, undermine the accountability they feel when things go wrong).
  • Never give equity away for free. Instead, create a system that allows management to buy into ownership. The act of taking one’s own money (even if in the form of an annual bonus) and buying shares is a powerful incentive alignment mechanism.
  • Ask more questions. As the business owner, your job is not to solve problems. Rather, your job is to find great people who are equipped to solve those problems and motivate them appropriately. Proactively solving their problems is a sure way undermine their accountability.

In short: find great people and align incentives, then spoil them with autonomy.

Talent > Ideas

Ideas are plentiful (and easy).

Execution is hard.

For many HoldCo leaders, the most common bottleneck to growth is talent.

Not just any talent, but specifically A-players.

Nearly everyone I met shared the view that one A-player is significantly more valuable than five B-players.

As a result, sourcing the best talent is a core piece of where to spend time.

This looked a bit different for each organization:

  • Chenmark has a GVP—General Vice President—program where they recruit directly from top MBA programs. GVP’s work at headquarters for 1-2 years and help source/diligence new acquisitions. After completing the rotation, they spend time inside one of Chenmark’s portfolio companies, directly reporting into the CEO. Chenmark uses this program to build a deep bench of operators from they promote new CEOs.
  • Michael Girdley has an Associate program where he’ll find a young entrepreneur who wants to start a tech company. He will pay for their salary and work with them to find a viable business opportunity. Once identified, he’ll provide seed funding to get it off the ground. He’s essentially built a lean start-up accelerator, but pre-idea. Super smart.

In short: killer operators are a more valuable currency than killer ideas.

Think Bigger

There are various kinds of risk.

The one we think about most often is the risk of losing money.

But there’s another type:

The risk of not allocating one’s time to its best use.

The risk of missed opportunity.

The risk of regret.

Everyone at the conference is fueled by a healthy fear of this kind of risk.

They don’t want to look back in 20 years and think, “boy, I wish I did [x] thing.”

This idea greatly shapes how I personally think about investing my limited time and money.

At the end of the day, I believe this is what differentiates the most successful business people.

They simply view risk differently.

For better or for worse, loss of capital is less terrifying than loss of opportunity.

Next week we’ll cover a few of the more tactical learnings, including:

  • How folks are leveraging AI to streamline SMB operations
  • The best sources of offshore talent
  • The power of thesis + team

And a bunch more.

Have some fun this weekend,


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