The Exchanges

Q Justin, have you ever felt like you failed as a manager? I'm young and I make mistakes. I often feel like I fail a bunch of times.

A Um, one that sticks out the most to me is, um, when we raised our first fund, it was a small fund, a hundred million dollar fund. I was so excited. We had a, my view is some name brand LPs that I was really excited about and The very last week they left me at the altar. We were still a month close of fund, but I was frustrated that the people I thought were coming in didn't come in. So, okay. Close that chapter. That was the framework for our next fund. We raised now only two hundred fifty million dollars, whatever it was. I told myself, I'm not gonna be in a situation again where someone I wanted involved would leave me at the altar. We could be short what we needed. So I went out and I made sure that we had a bunch of interest and I had again, way more than we needed. And I think the mistake was I didn't communicate well to those LPs, and all of them went and did their work, and all of them came in. I didn't have room for all of them. And the outcome was some frustrated LPs who had minimums they had to invest. I could do it to all of them. Really big learning lesson for me on expectation setting. And I think I failed some of those LPs, this is about like 10 years ago now, by letting them go do their work, write their investment committee memo, go do their thing, and then not have them come into the fund at the size they wanted. I think that's about expectation setting. And si…

AI assessment note: “I think I failed some of those LPs, this is about like 10 years ago”

Q Justin, the best often do have egos. How do you think about willingness to accept them, and if so, ego management in teams?

A Yeah, so like I read a book about Phil Jackson. And, um, he wrote, I'm part of it, something to the following effect. Um, no, he feels or no, Phil Jackson was a famous basketball coach for, for the Bulls and for the Lakers. This is when he was managing the Lakers. He had, um, Shaquille O'Neal on his team and Kobe Bryant on his team. We're probably two of the probably top 10 players of all time, roughly, maybe top 20 players, whoever they were. They're two great players. And he said, there's a point in the game where both of them said, He's like, they both wanted the ball. They both wanted the ego stroke. They both wanted to be told they were the best. And he said he would ask for a timeout, basically step away from timeout, grab Kobe by the jersey. Kobe, get over here. You're the best goddamn player on this planet. Go out there and you make sure you get this bucket next. A second later, turn around to Shaquille and they'll grab him by the jersey and say, Shaquille, get over here real quick. You're the best goddamn big man I've ever seen in my life. Go basically get the ball and score. I mean, they're both accurate and true, but it's a little bit of nuance and both needed that. You have to understand what that person needs and what motivates them. Some people get motivated by silent pressure. Simple things like just take an article And post it in their office that says, no, the …

AI assessment note: “You have to understand what that person needs and what motivates them.”

Q the end of this interview. Um, I have so many things to ask. You said that, like, hey, we've never had a deal that's, you know, less than three X. What an amazing track. In venture one would say, are we taking enough risk? We should have more losses, or we should have that as part of the portfolio. Is that mindset the same for you and in your business?

A We're buyouts, right? So we're microcap, but just for those who don't know our firm very well, We focus on investing with businesses, one million to ten million of EBITDA at investment. We make somewhere between six and 10 platform investments in a fund. If one goes bad, that's not good at all. And so to me, we can't have zeros. Unlike venture, where you could end up be fortunate and invest in a Facebook, and that can be, you know, a thousand to one, whatever it be. In the private equity industry, in the market sector, a really, really good outcome is enough four or five times your money. You can't afford a zero. That makes sure your average comes two and a half or so, or whatever it may be. So to me, it's not acceptable to have a zero. And we try and mitigate all those things. And Unlike in venture, we're not in control in our industry only to control investing, right? And so, you know, my buyouts, if it isn't going well, it's on us to make changes, and that is, whether it's management, whether it's doing another acquisition. Um, one of the things that's been a little bit of, not a secret to our success, but I think it's increased our margin for error, is that, like many private equity firms, we allocate a certain amount to a thesis. Let's just say we're going to allocate Forty million dollars thesis to invest in the urgent care industry. More often than not, before we make th…

AI assessment note: “In the private equity industry... You can't afford a zero.”

Q from my stalking, you've said before about your father's two lessons on retention, and one of them is people don't leave their friends and pay market comp. I just want to break those down. When you think about paying market comp, ensuring they see upside, incentivizing them the right way. What are your biggest lessons on bluntly financial incentivization that aligns with their career trajectory and keeping the best talent?

A So I love giving more upside for performance. But also, my dad taught me this, and I do this all the time. I think it's important to have surprises to the positive consistently. I'll give you an example. So, at Shore Capital, whenever we exit a business that has a return that's been greater than three times your money, there's still more than all of them, but we call it a Shore win. Like, Shore is one, a Shore win. And I'm a believer that when we win, the whole firm wins. And so, From the most junior person in the organization, the most senior person, everyone gets paid a bonus outside of their current compensation package. So let's say we sell business tomorrow for like five times our money. A front desk person gets a bonus of X dollars. The analyst, why? All the way up the chain. Everyone wins as a firm. And I think that creates camaraderie and culture because everyone's pulling for each other to win. And you celebrate those. When we have an exit, all the time with the money, We have a miniature Stanley Cup. We take out the town. We celebrate. We have a horn that goes off that celebrates a win. Celebrates the wins. You catch people doing things right. We reward them in the moment. I think it's a culture. People want to excel. We have a thing every Monday morning. We have our meeting. We have a hall of fame. And so if someone in the organization sees someone else who says, it'…

AI assessment note: “everyone gets paid a bonus outside of their current compensation package.”

Q How do you avoid group think? Cause that's a challenge when you then introduce everyone else.

A So that's a, again, I'm a process person. And so whatever our investment committees, if you were in the meeting, there's a team we call the devil's advocate team. We assign up to five people to be really critical and kind of the jerk who is, um, opposing the deal. Even if Harry loves the deal that's in front of us, um, my job is short capital. I assign the devil's advocate team. I know Harry's really smart on this topic. I'll make sure Harry's on the devil's advocate team and your best friend will leave the deal. We think this is a home run deal, but for the investment fee meeting for the hour and a half or two hours, Your job is to be the devil's advocate and point out all the things that could go wrong. I think that is a structural thing that goes into the fact that I think has really positive impacts. And then the guy who's doing the deal isn't pissed at you that you're saying his deal stinks because he knows your job is to be critical. He may love the deal after you can vote in favor of it, but while we're discussing it, your job is pointing out all the holes in it.

AI assessment note: “there's a team we call the devil's advocate team.”

Q buy at scale and then it obviously cost of units comes down and then you have, you know, Increase better pricing because of that. Can you talk to me about a time when you made an investment or an acquisition and you had a belief that turned out to be wrong on scale in some way? What was that belief and why was it not what you thought it was?

A We've made investment in another sector where we believe the scale matter. It's just, it's another part of the dental industry, actually. We believe scale matter, but the state by state regulation was so overbearing that The complexity of the new state was so challenging that it outweighed the value of scale. It was almost like you're running two separate businesses across state lines, and so the cost of goods sold and the vendor costs That part was right, but the payment structure and the rules in that state were so different. So this is the wrong example, but a nurse practitioner works in Illinois, but does not work in Indiana. And, but indeed, but in Wisconsin, the nurse practitioner works, but it is only able to do A, B, and C. So these are three states with the exact same industry. They get paid different You have different rules, different training requirements. It's like you ran three businesses. So the efficiencies are sucked up with administrative burden to run three businesses, um, the right way. And so I think that's where I would say made mistakes. So now we're, we're so much more focused now in the early days on making sure that if we're trying, if scale and efficiencies is a big part of it, it's ensuring that As you grow to multiple geographies and states that the rules don't change in a meaningful way.

AI assessment note: “state by state regulation was so overbearing that The complexity... outweighed the value of scale”

Q that you make the first time that with the benefit of hindsight, you would never make again. It could be hiring. It could be pricing. It could be new market entry, whatever that is. So I always favor second time founders. Why do you like first time CEOs? Are you not concerned that they make many mistakes that can be avoided? Why do you, why do you think like this?

A So a couple of things. So it's probably, so when I started short capital, I was in your camp. So our first three or four platforms, I went out and found CEOs that were more experienced at Chris Yorke before, a very established CEO. I felt like we had to get the experienced, established person. My biggest, I'd say paradigm shift in investing is, give me that young, hungry energy that wants to run through walls, has yet to make it yet. They're gonna make mistakes, but members, it's in a construct, in a system, but not alone. Now the one thing, if it's, sometimes the venture community, um, You're more a minority investor. You touch base with them four times a year. It's a little more hands off. I try to build a system where we have a board, seven individuals on the table who are helping that CEO, bringing a CFO. We have a lead director on the platform, bringing in a whole team around them. And that young and hungry first time CEO to them, They have to make it work. It is their professional career on the line, and they also know if they succeed in our system, they become incredibly valuable round two. And so if you went from a four people with us to 28 and exited and made eight times your money, now you have a big voice calling. Blackstone wants to back you to go do something all over again. So we're hopefully helping mint future really valuable CEOs for other ecosystems who want t…

AI assessment note: “give me that young, hungry energy that wants to run through walls”

Q from my stalking, you've said before about your father's two lessons on retention, and one of them is people don't leave their friends and pay market comp. I just want to break those down. When you think about paying market comp, ensuring they see upside, incentivizing them the right way. What are your biggest lessons on bluntly financial incentivization that aligns with their career trajectory and keeping the best talent?

A So I love giving more upside for performance. But also, my dad taught me this, and I do this all the time. I think it's important to have surprises to the positive consistently. I'll give you an example. So, at Shore Capital, whenever we exit a business that has a return that's been greater than three times your money, there's still more than all of them, but we call it a Shore win. Like, Shore is one, a Shore win. And I'm a believer that when we win, the whole firm wins. And so, From the most junior person in the organization, the most senior person, everyone gets paid a bonus outside of their current compensation package. So let's say we sell business tomorrow for like five times our money. A front desk person gets a bonus of X dollars. The analyst, why? All the way up the chain. Everyone wins as a firm. And I think that creates camaraderie and culture because everyone's pulling for each other to win. And you celebrate those. When we have an exit, all the time with the money, We have a miniature Stanley Cup. We take out the town. We celebrate. We have a horn that goes off that celebrates a win. Celebrates the wins. You catch people doing things right. We reward them in the moment. I think it's a culture. People want to excel. We have a thing every Monday morning. We have our meeting. We have a hall of fame. And so if someone in the organization sees someone else who says, it'…

AI assessment note: “everyone gets paid a bonus outside of their current compensation package.”

Q that you make the first time that with the benefit of hindsight, you would never make again. It could be hiring. It could be pricing. It could be new market entry, whatever that is. So I always favor second time founders. Why do you like first time CEOs? Are you not concerned that they make many mistakes that can be avoided? Why do you, why do you think like this?

A So a couple of things. So it's probably, so when I started short capital, I was in your camp. So our first three or four platforms, I went out and found CEOs that were more experienced at Chris Yorke before, a very established CEO. I felt like we had to get the experienced, established person. My biggest, I'd say paradigm shift in investing is, give me that young, hungry energy that wants to run through walls, has yet to make it yet. They're gonna make mistakes, but members, it's in a construct, in a system, but not alone. Now the one thing, if it's, sometimes the venture community, um, You're more a minority investor. You touch base with them four times a year. It's a little more hands off. I try to build a system where we have a board, seven individuals on the table who are helping that CEO, bringing a CFO. We have a lead director on the platform, bringing in a whole team around them. And that young and hungry first time CEO to them, They have to make it work. It is their professional career on the line, and they also know if they succeed in our system, they become incredibly valuable round two. And so if you went from a four people with us to 28 and exited and made eight times your money, now you have a big voice calling. Blackstone wants to back you to go do something all over again. So we're hopefully helping mint future really valuable CEOs for other ecosystems who want t…

AI assessment note: “give me that young, hungry energy that wants to run through walls”

Q Justin, have you ever felt like you failed as a manager? I'm young and I make mistakes. I often feel like I fail a bunch of times.

A Um, one that sticks out the most to me is, um, when we raised our first fund, it was a small fund, a hundred million dollar fund. I was so excited. We had a, my view is some name brand LPs that I was really excited about and The very last week they left me at the altar. We were still a month close of fund, but I was frustrated that the people I thought were coming in didn't come in. So, okay. Close that chapter. That was the framework for our next fund. We raised now only two hundred fifty million dollars, whatever it was. I told myself, I'm not gonna be in a situation again where someone I wanted involved would leave me at the altar. We could be short what we needed. So I went out and I made sure that we had a bunch of interest and I had again, way more than we needed. And I think the mistake was I didn't communicate well to those LPs, and all of them went and did their work, and all of them came in. I didn't have room for all of them. And the outcome was some frustrated LPs who had minimums they had to invest. I could do it to all of them. Really big learning lesson for me on expectation setting. And I think I failed some of those LPs, this is about like 10 years ago now, by letting them go do their work, write their investment committee memo, go do their thing, and then not have them come into the fund at the size they wanted. I think that's about expectation setting. And si…

AI assessment note: “I think I failed some of those LPs, this is about like 10 years”

Q which is, you know, you said people don't leave their friends. Um, in, in venture we have, you know, Doug Leonis Sequoia who famously says Sequoia is a team. It is not a family. Um, really imbuing that performance above everything else. It kind of flew in the face of that when I heard that people don't leave their friends. How do you think about people don't leave their friends?

A I mean, I want to create the environment where people want to be around each other. Um, no, I think, no, we're all fortunate enough in our life right now to pick where you work and have choices and the best people have those options. And so I believe by working in a way where you have deep relationships and friendships with people, I think it creates a better long-term success strategy. By the way, I'm not trading off one penny on, um, or one inch on quality or execution. So if they don't perform, then they don't have the opportunity. I have a really, really high bar. Hope it gets to a certain level of your organizations, vice presidents, and principals, and partners. If you're there, I think about this way. I'm giving you a role as a vice president. I'm giving you a role for your career, unless you mess something up. That's how I really think about it, and I think, I mean, absent bad behavior, which is a whole different conversation, the, the creating environment for friends, and, um, a place behind each other, that's really, I think, an emphasis on those I would say the younger half of our organization, where I think I want to create the option where they want to be around each other, they work in the bullpen late at night, they become friends with each other, and then when they go off on their own to go to Business school, or they go to work in a company, they have contacts …

AI assessment note: “I believe by working in a way where you have deep relationships and friendships”

Q I like that a lot, and I agree with you on the importance. I think it's so personal. Um, tell me, what's the biggest surprise of owning a sports team?

A The collaboration and the friendliness of the people, other owners. Now, on the court, it's fierce competition, but at the end of the day, like, in the NBA, we're all a business partnership, and guess who we're competing against? Other forms of entertainment. In reality, Harry has a hundred dollars to spend. He can go to the movie theater, He can go golfing, he can go race car driving, or he can spend it on basketball. We, as a group, are collectively trying to get Harry's hundred dollars of entertainment to come to this group, and we are trying to do that together. Now, now drafting a player or trading, like, I want that guy to do the worst for me to do the best, so that, but as far as the collaboration and friendliness to help the business side and compete against other entertainment options surprised me in that concept, and then it's been, I think, really positive, I would say.

AI assessment note: “The collaboration and the friendliness of the people, other owners.”

Q really being like Forrest Gump and Captain, I can't remember his sodding name, but being the one left behind. And there's a little bit there that's persistence and just being the one that's plenty persistent, but a little bit of luck there too. You said before PE is a hustle game. How do you think about the balance between skill and hard work and luck in your journey and success?

A So I call my dad a lot. My dad told me the harder you work, the luckier you get. And so, like, how do you parse out hard work and luck? And so, in a vacuum, any moment, we appear lucky, but I would argue it may be the product of hard work or vice versa. Let me give you an example. The very first platform we did in 2009, my partner, Mike Cooper, sourced our CEO. His name was Chris York. Chris York is, uh, I would say, a luminary in the home infusion industry. A very small niche of the world, but he made a phone call Burke answered the phone call, and somebody said, I was lucky. You got ahold of Chris York, who was an industry luminary, who was leaving his job, and that happened that week. He come at the right moment. Yeah, maybe that, that phone call was lucky. However, Mike, I know, made hundreds of phone calls in that industry to learn who that person was, but to make, meet other people, and did 10,000 steps before then, and so that moment came in time. He's prepared. He knew the industry. That guy was interested, and That phone call was lucky, but I would say that was a fire product of hard work. Many, many steps, and the outcome of one moment was lucky, but the whole entire process was hard work. And so I really believe that more often than not, you do the process right. You follow it all the way. You won't always end up with the luck or the opportunity at the end, but I'm c…

AI assessment note: “That phone call was lucky, but I would say that was a fire product of hard work.”

Q We're literally going up the arm here. You can see this, it's turning into a sleeve, uh, smart work ethic training. Where have you most often dropped the ball?

A I would say the work ethic. I've never interviewed somebody and they said, yeah, I don't work so hard. Like that, that is just, it's hard to proxy for that. And unless you have an off sheet reference for multiple people, you know, personally, it's really hard to read on that because you know, if someone calls you for an off sheet reference, you don't know them at all. And you like the person. I think Harry's a good guy, and Harry's a pretty good, I'd say Harry's a B for me, a B or B plus player on my team, and you left the right way, and they call me four years later and say, tell me about Harry. I'm not going to say that Harry stinks. I think Harry's pretty good. He did a good job, and I think, I like Harry, and how does his work ethic? Like, you know, compared to what? You know, compared to who? And so it's really hard to get that answer. You only know, I think, one supporter of your team for a period of time, or someone on your team has worked that person directly for at least three or four years. So that's a harder one to get, I try best to get to it, but I think, yes, where I err the most, that's probably where I err the most, that no one thinks they don't work hard. That's just the reality of it. And so you have to be able to, I would say, know that bias and kind of figure out different mechanisms to get underlying truths.

AI assessment note: “I would say the work ethic. I've never interviewed somebody and they said”

Q industry that I can't remember if it's Buffett or Charlie Munger, but one of them said the secret to success in business is weak competition. And it's something that I think too often, you might be able to tell me who it is, but alas, my memory is not as good as it should be. But I think of that often. How do you think about competition when analyzing industries?

A Yeah. I mean, so we like to think about where can the small player win? And that's how we think about it. Like, and we like to invest in industries where being inherently local is a true competitive match. And so people want to feel like you're A cottage, or a boutique, or a small field where you have a relationship with the customer. We usually like to invest in those sectors. Where short capital is not really good is if you have to be multi-continental. We're not good at that. You know, so there's some, like, drug, pharma companies that require testing to be done in India, and in Western Europe, and the US, and South America. Not for us. That's not something that we think we have expertise in, nor should we with our capital size and allocation. But where we have some kind of advantages, Is where something is on the smaller side, where the local player wins. And we also like when we can get to places before larger funds can get there. So an example of probably a decade ago, um, I heard over and over again, a lot of larger funds. They love the veterinary industry, but every time a platform that was of scale came to market, it was back then it was 12 times EBITDA. It was so expensive. That to me was like music to my ears. Okay. Let's go one step back in the food chain. Our competitive advantage is we can go to a niche where very few are playing. Bye, it was three of you, but don…

AI assessment note: “we like to think about where can the small player win”

Q the end of this interview. Um, I have so many things to ask. You said that, like, hey, we've never had a deal that's, you know, less than three X. What an amazing track. In venture one would say, are we taking enough risk? We should have more losses, or we should have that as part of the portfolio. Is that mindset the same for you and in your business?

A We're buyouts, right? So we're microcap, but just for those who don't know our firm very well, We focus on investing with businesses, one million to ten million of EBITDA at investment. We make somewhere between six and 10 platform investments in a fund. If one goes bad, that's not good at all. And so to me, we can't have zeros. Unlike venture, where you could end up be fortunate and invest in a Facebook, and that can be, you know, a thousand to one, whatever it be. In the private equity industry, in the market sector, a really, really good outcome is enough four or five times your money. You can't afford a zero. That makes sure your average comes two and a half or so, or whatever it may be. So to me, it's not acceptable to have a zero. And we try and mitigate all those things. And Unlike in venture, we're not in control in our industry only to control investing, right? And so, you know, my buyouts, if it isn't going well, it's on us to make changes, and that is, whether it's management, whether it's doing another acquisition. Um, one of the things that's been a little bit of, not a secret to our success, but I think it's increased our margin for error, is that, like many private equity firms, we allocate a certain amount to a thesis. Let's just say we're going to allocate Forty million dollars thesis to invest in the urgent care industry. More often than not, before we make th…

AI assessment note: “we can't have zeros. Unlike venture”

Q How do you avoid group think? Cause that's a challenge when you then introduce everyone else.

A So that's a, again, I'm a process person. And so whatever our investment committees, if you were in the meeting, there's a team we call the devil's advocate team. We assign up to five people to be really critical and kind of the jerk who is, um, opposing the deal. Even if Harry loves the deal that's in front of us, um, my job is short capital. I assign the devil's advocate team. I know Harry's really smart on this topic. I'll make sure Harry's on the devil's advocate team and your best friend will leave the deal. We think this is a home run deal, but for the investment fee meeting for the hour and a half or two hours, Your job is to be the devil's advocate and point out all the things that could go wrong. I think that is a structural thing that goes into the fact that I think has really positive impacts. And then the guy who's doing the deal isn't pissed at you that you're saying his deal stinks because he knows your job is to be critical. He may love the deal after you can vote in favor of it, but while we're discussing it, your job is pointing out all the holes in it.

AI assessment note: “We assign up to five people to be really critical and kind of the jerk”

Q off the bus, and you'd see him, and uh, it's, I think that's a pretty special moment. You also have a challenge, Justin, if we're honest. I've spent a lot of time talking to your Doug Leonis, talking to David Velez at Newbank about bringing children up in very affluent families, which brings challenges. How do you ensure that they are humble and hardworking despite a lot of financial fortune?

A Yeah, no, I'm early on in my journey here, so I wish I had an answer to that. I mean, I think it's a super high priority to think through those challenges and And create, again, I don't think of a system person. How do I create an environment where they know they have to work for what they get? They have to, my biggest thing is I want them to be passionate about something. I don't care what they love to do, but I think if a child or a person loves something, they'll be relatively successful at it. They put their heart behind it, and so my children will buy more financial means than most. I've already told them, like, it isn't your money. It's your mom and I's money, and a lot will be given away. I will make sure you never go hungry, and I'll make sure you have education, but You have to earn your own place. And I think people, you know, I also, I don't know. I'm still early on this journey. I've talked to a lot of friends, asked this question all the time. And, you know, what I've heard a lot back from friends is not allowing them to work for you early on. You know, they must go get a real job somewhere else. They have a promotion somewhere else before they come back to the family business. My business probably does not make sense. My business is a little different, but I wish I had a better answer. And if there's listeners out there have good techniques, I'm all ears because I…

AI assessment note: “I've already told them, like, it isn't your money. It's your mom and I's money”

Q which is, you know, you said people don't leave their friends. Um, in, in venture we have, you know, Doug Leonis Sequoia who famously says Sequoia is a team. It is not a family. Um, really imbuing that performance above everything else. It kind of flew in the face of that when I heard that people don't leave their friends. How do you think about people don't leave their friends?

A I mean, I want to create the environment where people want to be around each other. Um, no, I think, no, we're all fortunate enough in our life right now to pick where you work and have choices and the best people have those options. And so I believe by working in a way where you have deep relationships and friendships with people, I think it creates a better long-term success strategy. By the way, I'm not trading off one penny on, um, or one inch on quality or execution. So if they don't perform, then they don't have the opportunity. I have a really, really high bar. Hope it gets to a certain level of your organizations, vice presidents, and principals, and partners. If you're there, I think about this way. I'm giving you a role as a vice president. I'm giving you a role for your career, unless you mess something up. That's how I really think about it, and I think, I mean, absent bad behavior, which is a whole different conversation, the, the creating environment for friends, and, um, a place behind each other, that's really, I think, an emphasis on those I would say the younger half of our organization, where I think I want to create the option where they want to be around each other, they work in the bullpen late at night, they become friends with each other, and then when they go off on their own to go to Business school, or they go to work in a company, they have contacts …

AI assessment note: “By the way, I'm not trading off one penny on, um, or one inch on quality or execution.”

Q How efficient is the allocation of add-ons? So like in, in venture, we obviously have reserves. I don't believe in reserves at an early stage because I feel like your early winners are not often sustainable value generators and they're just traction winners. How efficiently can you allocate those add-ons And is it really telling who the winners are early?

A So it's not super efficient at the investment. It gets super efficient. I'm a .4 at 1.4. I know. So, so let's say we have a, we have a five hundred million dollar fund. I'm putting no tall portfolio companies in there, roughly forty million dollars each. I can get to when I make three investments all at the same time, the same quarter, whatever, maybe I'll get 40 to each of them. I can get probably, you know, 18 months in and go, this is a thesis we need to double down on. I'm gonna change my allocation from 40 to 80, and the one that we thought was pretty good, I mean, 42, orders to 25. So we can readjust our allocation, While we have some more knowledge of the industry. You know, I've never bought a business where I knew everything in the way out. It's just, you make mistakes. And so once you get in the game with the people, the industry is most important part for me always. When we get the right people with the right industry, with a system and a process, we believe that we've actually as a firm for a long time. Usually it goes pretty well.

AI assessment note: “So it's not super efficient at the investment. It gets super efficient.”

Q How old were you when you had your first child, Justin?

A 41. 41. So I got married when I was just turned 40. My wife's eight years younger than me. So, uh, I had the chance to, like, there was, I started short capital when I was 31, and I do believe one of our competitive advantages was, you know, early on, my partners were then 28, 27, and 29, and one of them was married, and other three of us were not married, and we weren't routinely in the office till seven, eight, nine, 10 o'clock at night. It was normal course. It was the behavior of the organization. And I think as you matured, you have a 150 people, and I think things change. But I think, look, it's important to be there for my kids, coaching their games, drop going to school, there are street conferences. At 34 hours and doing that, then I have kids. So there is an advantage of, um, you know, I'm sure there's probably a disadvantage as well. You know, when I'm now, I'm coaching their four-year-old baseball league, I'm the older dad. Most of their dads are 35, and I'm 45, right? So there's a, there's a trade-offs, of course. Um, But I know, I view that everything in life is a balance and trade-off, and if there was a right way to do it, someone would write a book and everyone would follow it. There's no right way. You gotta figure out what's right for you and for your family.

AI assessment note: “41. 41. So I got married when I was just turned 40.”

Q industry that I can't remember if it's Buffett or Charlie Munger, but one of them said the secret to success in business is weak competition. And it's something that I think too often, you might be able to tell me who it is, but alas, my memory is not as good as it should be. But I think of that often. How do you think about competition when analyzing industries?

A Yeah. I mean, so we like to think about where can the small player win? And that's how we think about it. Like, and we like to invest in industries where being inherently local is a true competitive match. And so people want to feel like you're A cottage, or a boutique, or a small field where you have a relationship with the customer. We usually like to invest in those sectors. Where short capital is not really good is if you have to be multi-continental. We're not good at that. You know, so there's some, like, drug, pharma companies that require testing to be done in India, and in Western Europe, and the US, and South America. Not for us. That's not something that we think we have expertise in, nor should we with our capital size and allocation. But where we have some kind of advantages, Is where something is on the smaller side, where the local player wins. And we also like when we can get to places before larger funds can get there. So an example of probably a decade ago, um, I heard over and over again, a lot of larger funds. They love the veterinary industry, but every time a platform that was of scale came to market, it was back then it was 12 times EBITDA. It was so expensive. That to me was like music to my ears. Okay. Let's go one step back in the food chain. Our competitive advantage is we can go to a niche where very few are playing. Bye, it was three of you, but don…

AI assessment note: “we like to think about where can the small player win?”

Q off the bus, and you'd see him, and uh, it's, I think that's a pretty special moment. You also have a challenge, Justin, if we're honest. I've spent a lot of time talking to your Doug Leonis, talking to David Velez at Newbank about bringing children up in very affluent families, which brings challenges. How do you ensure that they are humble and hardworking despite a lot of financial fortune?

A Yeah, no, I'm early on in my journey here, so I wish I had an answer to that. I mean, I think it's a super high priority to think through those challenges and And create, again, I don't think of a system person. How do I create an environment where they know they have to work for what they get? They have to, my biggest thing is I want them to be passionate about something. I don't care what they love to do, but I think if a child or a person loves something, they'll be relatively successful at it. They put their heart behind it, and so my children will buy more financial means than most. I've already told them, like, it isn't your money. It's your mom and I's money, and a lot will be given away. I will make sure you never go hungry, and I'll make sure you have education, but You have to earn your own place. And I think people, you know, I also, I don't know. I'm still early on this journey. I've talked to a lot of friends, asked this question all the time. And, you know, what I've heard a lot back from friends is not allowing them to work for you early on. You know, they must go get a real job somewhere else. They have a promotion somewhere else before they come back to the family business. My business probably does not make sense. My business is a little different, but I wish I had a better answer. And if there's listeners out there have good techniques, I'm all ears because I…

AI assessment note: “I've already told them, like, it isn't your money.”

Q Okay. What have you changed your mind on in the last 12 months? Most.

A I think the biggest thing is how to communicate with Our portfolio managers. So I've always believed like, no, my roles is one of the leaders of start capital is I communicate to my partners and they communicate to the portfolio company CEOs and they communicate to like technologies change that we use a simple app, bomb bomb. I will now routinely record a four minute video on something. And I want me to answer both technologies. They will be, I'm going to communicate to my team. Hey, go tell them that we're going to focus on Audits this year. And here's a way when auditing whatever may be. And I'm going to record a four minute video. I want the message to come directly from me because the telephone game gets in the way. So I can record the message relatively efficiently and get to where it's got to go. My partners and our colleagues can also disseminate it both ways. So what's changed the most is I'm doing a lot more direct communication at scale through videos. I think people want to see the face and hear the story. I want to hear my message and my words get across exactly. And my partners deliver it their way also. So I think that's changed a lot for us over the last year.

AI assessment note: “I think the biggest thing is how to communicate with Our portfolio managers.”

Q What's the single hardest thing about owning a team?

A Well, so far I'm, I'm, we're only a year into it. It's really hard. Um, injuries. Like in my day job, if I hire Harry to be my CEO, like absent a major life instance, you come to work, you know, And playing on the field almost every day. If it's 20 business days a month, Harry's playing 19 to 20, you know, consistently. Put it that way. In pro sports, rightfully, people get hurt, and that's, it is a, you can do everything right, and then someone's ankle gets a, with injuries as contact and non-contact injuries, I can't plan for the contact injury, knee bumping a knee, and that's really hard when you do the things right, and you're in a really good position, and someone has a knee injury, and All of a sudden, like, the competition in sports is so tight and so close. An injury between one player changes the, the dynamic of a team materially, and so that's hard as a business person to, like, um, I'm learning how to handle that. I don't, I don't know how to answer that at this point in time, but that's been a surprise at how impactful it can be.

AI assessment note: “injuries. Like in my day job, if I hire Harry to be my CEO”

Q dying maybe too early. Ironically, I, given my youth, I think about this a lot, and I respectfully look at you, someone who's achieved immense success, respectfully has All the money that one needs. How do you think about that? And bluntly the concept of dying too early and missing what, what could be time with family? What could be time with your wife? How do you reflect on that?

A I think it's everything left to balance. Like, the last thing I want to do is die too early. That's for the first thing. And so, like, to me, you have to invest in your health, and you have to invest in, like, a balance, which is kind of incongruous what people tell you in, like, the world of what we do. Like, work, no, no, all hours of the day. Like, hustle through everything. I think out your health, you have nothing. You know, like, you have to balance. So, like, to me, it's like, I have a Primary care doctor. I do my regular physicals twice a year. Kind of proactive steps on testing. You know, you try and you do all the right things, but there's, there's luck, and there's genetics, right? And there's, and there's some things you can do. Like, I can't tell you if I go out on the street from my bus, so it's a live your life to the fullest, um, but to me, you know, my grandfather died with a heart attack at the six, so I'm very aware of heart issues, and so like, I'm proactive on heart stuff. My dad is as well, and my brother is as well, and so, No, you know, you have that lineage to try and be mindful of it, but a way I think about it is my job is to be here for my kids until they're, you know, 3040, 50, 60 years old and beyond, and so, um, how do you balance that with building an organization? That's what I think you have to do. I can't be, and by the way, there's time for e…

AI assessment note: “the last thing I want to do is die too early.”

Q Okay. What have you changed your mind on in the last 12 months? Most.

A I think the biggest thing is how to communicate with Our portfolio managers. So I've always believed like, no, my roles is one of the leaders of start capital is I communicate to my partners and they communicate to the portfolio company CEOs and they communicate to like technologies change that we use a simple app, bomb bomb. I will now routinely record a four minute video on something. And I want me to answer both technologies. They will be, I'm going to communicate to my team. Hey, go tell them that we're going to focus on Audits this year. And here's a way when auditing whatever may be. And I'm going to record a four minute video. I want the message to come directly from me because the telephone game gets in the way. So I can record the message relatively efficiently and get to where it's got to go. My partners and our colleagues can also disseminate it both ways. So what's changed the most is I'm doing a lot more direct communication at scale through videos. I think people want to see the face and hear the story. I want to hear my message and my words get across exactly. And my partners deliver it their way also. So I think that's changed a lot for us over the last year.

AI assessment note: “what's changed the most is I'm doing a lot more direct communication”

Q How old were you when you had your first child, Justin?

A 41. 41. So I got married when I was just turned 40. My wife's eight years younger than me. So, uh, I had the chance to, like, there was, I started short capital when I was 31, and I do believe one of our competitive advantages was, you know, early on, my partners were then 28, 27, and 29, and one of them was married, and other three of us were not married, and we weren't routinely in the office till seven, eight, nine, 10 o'clock at night. It was normal course. It was the behavior of the organization. And I think as you matured, you have a 150 people, and I think things change. But I think, look, it's important to be there for my kids, coaching their games, drop going to school, there are street conferences. At 34 hours and doing that, then I have kids. So there is an advantage of, um, you know, I'm sure there's probably a disadvantage as well. You know, when I'm now, I'm coaching their four-year-old baseball league, I'm the older dad. Most of their dads are 35, and I'm 45, right? So there's a, there's a trade-offs, of course. Um, But I know, I view that everything in life is a balance and trade-off, and if there was a right way to do it, someone would write a book and everyone would follow it. There's no right way. You gotta figure out what's right for you and for your family.

AI assessment note: “41. 41. So I got married when I was just turned 40.”

Q What's the single hardest thing about owning a team?

A Well, so far I'm, I'm, we're only a year into it. It's really hard. Um, injuries. Like in my day job, if I hire Harry to be my CEO, like absent a major life instance, you come to work, you know, And playing on the field almost every day. If it's 20 business days a month, Harry's playing 19 to 20, you know, consistently. Put it that way. In pro sports, rightfully, people get hurt, and that's, it is a, you can do everything right, and then someone's ankle gets a, with injuries as contact and non-contact injuries, I can't plan for the contact injury, knee bumping a knee, and that's really hard when you do the things right, and you're in a really good position, and someone has a knee injury, and All of a sudden, like, the competition in sports is so tight and so close. An injury between one player changes the, the dynamic of a team materially, and so that's hard as a business person to, like, um, I'm learning how to handle that. I don't, I don't know how to answer that at this point in time, but that's been a surprise at how impactful it can be.

AI assessment note: “Um, injuries. Like in my day job, if I hire Harry”

Q dying maybe too early. Ironically, I, given my youth, I think about this a lot, and I respectfully look at you, someone who's achieved immense success, respectfully has All the money that one needs. How do you think about that? And bluntly the concept of dying too early and missing what, what could be time with family? What could be time with your wife? How do you reflect on that?

A I think it's everything left to balance. Like, the last thing I want to do is die too early. That's for the first thing. And so, like, to me, you have to invest in your health, and you have to invest in, like, a balance, which is kind of incongruous what people tell you in, like, the world of what we do. Like, work, no, no, all hours of the day. Like, hustle through everything. I think out your health, you have nothing. You know, like, you have to balance. So, like, to me, it's like, I have a Primary care doctor. I do my regular physicals twice a year. Kind of proactive steps on testing. You know, you try and you do all the right things, but there's, there's luck, and there's genetics, right? And there's, and there's some things you can do. Like, I can't tell you if I go out on the street from my bus, so it's a live your life to the fullest, um, but to me, you know, my grandfather died with a heart attack at the six, so I'm very aware of heart issues, and so like, I'm proactive on heart stuff. My dad is as well, and my brother is as well, and so, No, you know, you have that lineage to try and be mindful of it, but a way I think about it is my job is to be here for my kids until they're, you know, 3040, 50, 60 years old and beyond, and so, um, how do you balance that with building an organization? That's what I think you have to do. I can't be, and by the way, there's time for e…

AI assessment note: “the last thing I want to do is die too early. That's for the first thing.”