#153 — Teamshares IPO: $60M EBITDA, 92 Companies, Zero Exits
June 17, 2026 · Listen · All episodes · Chat with the show's AI
Jessica Lessin, Dave Morin, Brit Morin and Sam Lessin debate the tech of the week.
Full transcript (AI-generated — may contain transcription errors):
Mike Brown: What Alex and I did is that, you know, we worked first all really closely together on the bankruptcy of Hostess Brands, the, the manufacturer of Twinkies and Wonder Bread, and that was really fun.
Jessica: Obviously, as, like, AI becomes, like, so leveraged in a lot of places, like, first, like, how is it changing what you look at, what you buy, things like that?
Mike Brown: AI is absolutely a part of TeamShares in multiple dimensions.
Jessica: Yeah.
Mike Brown: Right? Like, it's accelerating the back office stuff. Our bank recs, right, for our year-end audit, that was, like, a six-week process three years ago. It takes minutes now. So I think that the narrative around private equity is wrong and out of date. Like, it still hearkens back to the vulture days of breaking up companies and firing tons of people. Roll ups do fire a lot of people. All of a sudden it became a third derivative AI play.
Jessica: Yeah.
Mike Brown: I mean, you can't make this stuff up.
Jessica: Yeah.
Mike Brown: I mean, but, like, you know, they... Literally, people were buying HVAC companies for 12 times EBITDA.
Sam Lessin: More or less. Is it no or is it yes? We'll debate the tax that's best. Do we get more or less? Dave and Brit plus Sam and Jess put it all right to the test. More or less.
Jessica: Hello, and welcome to a very special edition of the More or Less podcast, where you only have one less. But I'm here, and I'm very excited to be having a conversation with Mike Brown of TeamShares. Um, Mike and I got to know each other now seven years ago when we put our f- the first check, uh, and I think in the history of the company, although he can correct us, into, into TeamShares.
Mike Brown: That's right, yeah. First, first institutional investor in TeamShares.
Jessica: First money in. So there's some non-institutional. First institutional money in.
Mike Brown: Couple of, couple of angels.
Jessica: Ah.
Mike Brown: Uh, yeah, first, first institutional investor in TeamShares.
Jessica: Fair enough. So w- you know, and, and now we're... I'm talking to you on the eve of you guys being publicly listed seven years in. Congratulations.
Mike Brown: Thank you.
Jessica: It's exciting.
Mike Brown: Yeah.
Jessica: So I wanted to take the time, Mike, just 'cause it's kind of like a momentous moment or, like, checkpoint in a long journey, both in journey to this point and journey forward, just to check in. And I thought it'd be fun to kind of go and just reminisce and tell the whole story of how on earth we got from where we were seven years ago to where we are today.
Mike Brown: Sure.
Jessica: And then kinda get into, like, where we're going, if that's cool.
Mike Brown: Sounds great.
Jessica: Amazing.
Mike Brown: Sounds great.
Jessica: So first, you know, take me and everyone listening back to the earliest, earliest days here, um, even before you and I started chatting-
Mike Brown: Yeah
Jessica: ... when you were just, you know, you know, starting to w- think about doing TeamShares or what it would be or the opportunity.
Mike Brown: Totally, yeah. So even just a very quick origin story before that, right? So Al- the three founders of the company, Kevin, who's our CTO, Alex, who's our president, and then I serve in the CEO seat. So we, we met together at investment banking, so they were analysts, you know, putting together presentations and spreadsheets. I was, you know, an associate turning VP also doing that type of stuff. And so-
Jessica: It doesn't get much more glamorous
Mike Brown: ... it's extraordinarily glamorous. Uh, but, uh, the... Kevin realized that he'd made a career mistake, and he left after his first year as an analyst, and he joined General Assembly as the fourth employee.
Jessica: Right.
Mike Brown: Um, actually, when it was actually still a co-working space. It hadn't pivoted to ed-tech yet.
Jessica: Which is how we, we, and partially how I was diligent to the company early on because Brad, who founded that, is a good friend.
Mike Brown: Totally, exactly. So, so he joined when it was actually still a co-working space on the thesis that, like, oh, he'll meet a company, and General Assembly itself was r- reaching product market fit in edtech in real time. And so he was their first product manager. He eventually learned to code and is a great designer. So he's like a renaissance tech person. We stayed in touch as friends, right? What Alex and I did is that, you know, we worked first all really closely together on the bankruptcy of Hostess Brands, the, the manufacturer of Twinkies and Wonder Bread, and that was really fun because all the partners at our firm, the, you know, th- they didn't really wanna go spend time in Kansas, right? And so we got to go for two years working on this bankruptcy, working really closely together, learning from the CEO and CFO, and that was kind of how our partnership and friendship, you know, sort of really started to develop. And then we eventually realized, like, look, we'd love to go and buy a small business together. And so that process started in 2013 when I left. Basically, the, you know, I resigned in good standing the day I'd made vice president, uh, and went on to go buy a business called Alltype Electric. And I was gonna run it, Alex invested alongside me, a couple friends and family as well. And, you know, moved, moved out to Western Canada to run it, and then, you know, made the transition from, you know, spreadsheet people to operators and, you know, did the transition from Wall Street M&A to Main Street M&A. And, you know, really that w- I never went to business school, so that was kinda my MBA, right? Like, we learned how to-
Jessica: So yeah, talk to me about that. I mean, that's such a, you know, again, like, there are people on Wall Street, especially these days, they're always talking about this. But you guys, you know, now many years ago went out and actually did this, right?
Mike Brown: Yeah.
Jessica: And went from being spreadsheet junkies-
Mike Brown: Yeah, but this is what-
Jessica: ... to, like, operating a small business. Like, what were, like, what were kind of the most shocking realizations doing that? Like, and what did you have to learn?
Mike Brown: Totally. I mean, like, as a bigger picture, I know you're not the biggest fan of Y Combinator, but the, you know, there's some really good writings about, like, how, you know, like, Paul Graham's done some essays of, like, hey, like, real innovation comes from sort of becoming an expert in a space because you're so enthralled with it.
Jessica: Yes.
Mike Brown: Right? And now-
Jessica: That part I agree with.
Mike Brown: And, and that, and, and, and that's exactly what, what happened, right? So we just went in. There was no... We weren't trying to build a public company. We were inspired by Berkshire Hathaway. We thought that was really cool. We thought compounding was interesting.
Jessica: Of course you were. You're bankers. Everyone, every banker is inspo- inspired by Berkshire Hathaway.
Mike Brown: Well, but, but yes. But I actually think that Berkshire is kind of the anti-banking, uh, company. But anyway, setting that aside. So, so, so yeah. So we went out there and, like, you know, day one it was, like, a rude awakening, right? The first day they were like, "Oh, Michael, we have a safety decision for you to make." I was like, "What is safety?" Right? Like, I have no idea what a safety is. And I realized, oh, we're, I'm running a construction company now. Um, and so it was really cool because I kinda got out there and I viewed it as a blank sheet of pa- This was, like, sort of at the time it was, like, 5 million of revenue, 500K of EBITDA, you know, 15 employees, four people in the office, 11 people in the field, right? And, you know, two owners that were retiring, and I moved out there. I, I-- my first job, I was, like, so, you know, insecure at the time. I called myself VP of finance. Like, I bought the company. I called myself VP of... I just-- I didn't sit in, like, the owner's chair or whatever. I just, like, you know, did spreadsheets and tried to, like, learn from the former owners. Like, we're still running the business for six months. And then, okay, and then we're like, "Okay, got, got my hands around sort of the, the business cycle," right? For, I think it takes us six months, and you're doing everything from, like, payroll to invoicing, everything, nitty-gritty stuff. And then it was the, the business has three divisions, right? And, you know, one of it's kind of light manufacturing, and one's projects, and one's service. And so we had to figure out how to do a transition of two owners, not one, but two business partners who were intimately involved in the business, make some key early hires, retain everyone, build trust, and then start to work on, okay, how do we take this great, relatively small business, first of all sustain it, but then now start to try and grow it and improve it? And so did things like identified in the, in the light manufacturing business, you know, just pick up on things from talking to people like, "Oh yeah, if we go to, like, so and so publicly traded supplier and we ask for OEM pricing, we can save thirty percent on our input costs." I'm like, "Well, let's set up a meeting," right?
Jessica: Yeah.
Mike Brown: So you go-- So I just viewed it as, like, a blank sheet of paper. We would go and, like, you know, implement a DRP and negotiated pricing and hired for... You'd have these other things, like, they would do, the company would do work in, like, the oil sands region. And they're like, "Oh, we could do, like, ten times the revenue, but we can never get a hotel room up there." I'm like, "Let's rent a condo," right? Like, just, like, it was really cool, like, white sheet, like, problem-solving. And so that then, so that was the first few years, and then it was, okay, like, what next? And what became, what was natural was to, okay, keep buying more of these businesses, again, using our money, our own money, friends and family, that kind of thing. And eventually, over the course of twenty thirteen to twenty eighteen, we had bought and integrated six electrical maintenance firms, right? And Alex jumped in in twenty fifteen to start running the business as well, right? As, uh, first as sort of like, you know, equal active-
Jessica: Yeah
Mike Brown: ... well, e-equal financial partners right from the start, but sort of like e-equal leaders, right? And then we figured out pretty quickly that he was much better at, at running the businesses day to day and, like, really integrating all these different companies and getting the people to get along. I was not as good at that, right? And it was not as much where my interest lies. And, and so what we decided to do is it's like, "Okay, why don't you keep integrating and improving these companies? Why don't I go work on sort of like the more scalable version-
Jessica: Yeah
Mike Brown: ... of what we're doing," right?
Jessica: Yeah.
Mike Brown: And that, that was, that took a couple of years, but that was what, what became TeamShares. And I think at the time, we originally thought that, like, oh, you know, we had more of sort of a marketplace, uh, style idea. Uh-
Jessica: Yeah
Mike Brown: ... at the time, I think we were called ExitPlace, right?
Jessica: Yeah, I remember that.
Mike Brown: Right.
Jessica: That was, that was the first pitch you gave me.
Mike Brown: That was the first pitch. And, and actually, when we first met, we said, I'm just going from memory here, but I, I think we were like, "Hey, I've met one of your colleagues." I think it was Alex Marcos, right? And then we were gonna do a meeting with you, and then we realized we were pivoting in real time. We're like, "Hey, like, we actually discovered that ExitPlace is not the right model. It's not the company we wanna build," et cetera. And the, the eureka moment was that, look, this is a sup-supply/demand equation. There are just never gonna be enough buyers for these businesses, right? There's a huge opportunity to help, try and help these businesses, you know, overcome succession, have a permanent ownership model, bring employees in. That's great for retention, it's great for growth, it's great for people, it's great for shareholders. It's obviously, like, table stakes in venture capital. It's table stakes in private equity. It's table stakes in public companies.
Jessica: Yeah.
Mike Brown: People get stock, right?
Jessica: Yep.
Mike Brown: And our thesis was like, let's bring this into a small business economy. Let's transit, let's buy and transition these businesses into a, a Berkshire-inspired holding company and then do this. You know, start with one and, and, and try and scale towards thousands. And then let's use technology to address, you know, the many, many repeatable processes, have great financials, have great data and, and, and even over the super long term, actually trying to create financial products, right? Which we've done some early stages of. So that was TeamShares, and that was, you know, twenty nineteen, I think, was when we met. And I remember you called me the day we came home from the hospital with Edward, our youngest son, and said, "We want to invest." And I was like, "Great." And then I think you, like, threw out a valuation range. We're like, "Let's meet in the middle. Let's go."
Jessica: Things that were surprising, at least to me as an investor on the outside along the way in the journey. The first I remember was very early on you had this thesis which is you had to build the marketplace yourself, and you weren't gonna use brokers. And then you realize there are plenty of these businesses out there that you can just work with brokers. Like, you didn't need to compete with the whole broker institute-
Mike Brown: Totally
Jessica: ... right?
Mike Brown: Yeah.
Jessica: And that was, like, a really interesting evolution. And the second evolution I remember, and this is, I think the, a little bit what you're talking about here, was I remember the initial idea being, well, all these businesses have number twos, and they'd love to own the business, right?
Mike Brown: Yeah.
Jessica: And it turns out that that wasn't quite right, right? When you got into the really studying the business. So, so-
Mike Brown: I would-
Jessica: First of all, are those two recollections of those two important bits, right?
Mike Brown: Yeah, yeah, yeah. Yeah, so-
Jessica: Yeah
Mike Brown: ... yeah, the core idea of TeamShares has been pretty similar, but, like, the, there's a lot of execution tweaks that have happened along the way. So yeah, the first idea was that we, we thought that there would be a value prop to sort of going direct.
Jessica: Yes.
Mike Brown: That was like... So I think when you guys invested, like, the main question was really, okay, like, what's the distribution model?
Jessica: Right.
Mike Brown: What's the go-to-market gonna be?
Jessica: Right, right.
Mike Brown: Right? Like, that was the, the main question. And we thought because in the early days, we thought, oh, well, the, the fees that you, that you pay when, when you buy a business are really high. So if you s- to give the audience, like, a sense, if you, if a, if a business is bought for a million dollars, the transaction fee may be $100,000.
Jessica: Yeah.
Mike Brown: If it-- and this is paid by the seller at closing. If you, uh, buy a business for $5 million, it, it could be, you know, you know, it could... Wait, what did I say? No, no, that's right. For a million dollars, it would be 100K, right? And it could be 500K.
Jessica: Yeah. So it's about 10%. I mean, it could be 10%.
Mike Brown: It starts as, like, 10%, right?
Jessica: Yeah.
Mike Brown: But it starts to slide as you get, um-
Jessica: Yeah
Mike Brown: Shows how good I am at math. But, uh, the, um- But the, the issue is, is that that kind of like for sale by owner, FSBO, in the home market, it's a false value prop. There's a reason why people pay those fees. So that, that was sort of on the seller side. There's a reason why people sell those fees. You kind of only... I- it's even harder than selling a home, right?
Jessica: Yeah.
Mike Brown: So, like, FSBO should work, and it's never worked. Maybe someone will figure it out, but it's... When I say it hasn't worked, it has not worked at scale.
Jessica: Right.
Mike Brown: Like, there's no sort of, like, real-
Jessica: Which is, I mean, look, it's even, that's kind of true in the home marketplace as well.
Mike Brown: That's what I'm saying. In the, in the home market. I'm saying FSBO-
Jessica: In home mar- Yeah, yeah. FSBO in home. Yeah, yeah, yeah.
Mike Brown: FSBO in home, like, should work and it, it hit... I'm sure there've been successful, like, middle market FSBO things, but there's no, like, you know, ReMax FSBO, right? So, so that should've been a warning sign that, like, oh yeah, like, hey, there's a reason why it sort of hadn't worked. Uh, but so people need that expertise. They need the help. And then there was our perspective on it, too. So on our perspective is that it takes so long, and you only buy a business once, so the person needs to be ready to go, right? And, and so if you're gonna do this at velocity, right, like that's why a Stanford search fund takes two years, and one in three Stanford searchers doesn't close a transaction. Two years.
Jessica: Yeah.
Mike Brown: So by the same type of businesses we buy every month, right?
Jessica: Yeah.
Mike Brown: So, so that was one bit. And then the leadership piece, so it ended up being a hybrid solution where we thought, again, as we set off and we were realizing in real time, like, wow, there's real product market fit here, and we were assembling elements of how to go and do this thesis, and we tested each one of those elements, and you thought about how full stack it is and how complex. I mean, Team Shares is a, is a full stack that is very simple to understand as an investor. What we've had to build both online and offline is meaningful, right? And so we were trying to think about how do you simplify the business and, you know, we had had a good experience promoting people from within as we bought and integrated those six companies. We thought, "Oh yeah, like we did it. That was fine. We'll do that." And I think, you know, we did that in the first four, and we had mixed results, right? And, and I think we found that, like, okay, maybe sometimes you do need to hire someone, maybe sometimes you don't. And, and we went through a lot. That's probably where most of the sort of like iterations were were the first three years. The default we landed on is, is that in the smaller businesses, sort of like up to a million or two, they're, they're not generally someone who's ready to take on the financial responsibility for running the business.
Jessica: Yeah.
Mike Brown: And that's why externally, four out of five, three out of five businesses, you know, we need to sort of hire an external president from the... Now, the, the right hand, who's the, the, the director of ops or general manager, they a- a- also get a step up in responsibility and, you know, if that president were to ever leave, they're sort of the natural successor in the future. Uh, but, but what we found was that it was actually just sort of too much to ask to take on the next role while they already have a full-time sort of operations role to then be in charge of all that. So, so those are, those are sort of like two of the main evolutions since the sort of day one, you know, three-page deck version of Team Shares.
Jessica: Fair enough. So you've gone out now, and remind me, how, wha- what's the business count? How many businesses have you bought at this point?
Mike Brown: 90, 92, and about 60 million of consolidated EBITDA from the segments, uh-
Jessica: Yep
Mike Brown: ... from, from, from all the companies.
Jessica: So from that, I mean, so you've bought a lot of businesses now, right? And, and you're on your way to buying a lot more. I'm kind of curious, like, if you think about what you would've told yourself seven years ago as you're getting going 90 businesses in, like what are some of the kind of like the, the, the lessons learned, you know, from the 90?
Mike Brown: Yeah. Well, just as a general, like aside from, aside from sort of like the details of Team Shares, like one is to just sort of like be patient, and I, and I think that, like, we were both trying to really move assertively and, and build, but I think, you know, everything takes longer than you think it's gonna take, right? So that's the sort of a good generic, uh, thing I would tell myself. Look, I, I think that I wish I knew from inception that, like, the, the slightly lar- We've talked about this publicly, that like we focus now on sort of, you know, half a million to five million of EBITDA, uh, businesses. I actually think, so where we started was in the sort of the, the long left tail, like 2 million of revenue, 200K of EBITDA businesses-
Jessica: Yeah
Mike Brown: ... and employees, that type of business.
Jessica: Yeah.
Mike Brown: These are more like 25 to 100 employees, right? So we started there because that was sort of where, um... Is what we could afford. It's just what our thesis was, and that's kind of what we had bought before. And I think when we were doing it in low scale, when Alex and I were buying and running these businesses, it was pretty consistent.
Jessica: Yeah.
Mike Brown: When we started doing it at scale and we went, you know, we, as you, as you remember, we sort of launched our first... So the, the sort of pre-seed stuff, right, was in 2019, and then we launched with our first acquisition doing one per month in one Q of 2020, right as COVID was starting. So and then we paused for the rest of the year, and then we did like one more end of 2020 and then like 20 acquisitions-
Jessica: Right
Mike Brown: ... in 2021. Like, that's when we started scaling, right?
Jessica: Yeah.
Mike Brown: So as we started doing that with that size range of company, kinda two to three million of revenue, 10 employees, 200K, 300K of EBITDA, there was a wide variance of outcomes.
Jessica: Yeah.
Mike Brown: So you could actually build a venture... I, I'm just talking about portfolio theory. These are subsidiaries or team shares. They're not portfolio companies. But like you, you could build a, quote, "venture style portfolio," I think around the 200K kinda EBITDA company, that sort of size of profile. That's not what we're trying to do. We're trying to have real consistency, predictable financials, compounding. And so I think that is one thing. And then I'd say, like, the other thing I think was... I don't know. I, obviously I wish we sort of knew the leadership model from inception, right? 'Cause there was a lot of iteration there. But-
Jessica: Yeah
Mike Brown: ... that one's like, that one's more just like It's kinda like knowing that, like, XYZ stock went up 10X last year and you wish you knew that. Like, you, you can't really know that. We could not have known the exact leadership model without going through all the little iterations and micro mistakes. So that, that one, that one I, I'm sort of like, "Hey, that was, that was a journey that was worth," kind of like-
Jessica: Well, let's talk about the leadership model, 'cause I find this totally fascinating. You know, when I graduated college, you know, I didn't do banking, but it, it was clo- I did, I did banking lightweight, I'd call it, at Bain- Bain & Co, right? Um-
Mike Brown: Consulting
Jessica: ... for a few years. Consulting. Ugh, dirty, but true.
Mike Brown: You were probably the last era of consulting before it really changed. Like, I think it was like, that was like peak, peak old school consulting before it started getting disrupted.
Jessica: I mean, honestly, the consulting that you-- I look at the people I work- was kind of associates with at Bain, uh, you know, a year ahead of me in my class or whatever in New York. It's a killer group of people, right? And so, you know, I don't-- you can talk about what the work was, but in the end of the day... And I don't know how it's evolved. I mean, I, I still see Bain people popping up. But there's no question there was a killer group, uh, that came-
Mike Brown: Yeah
Jessica: ... through those pipelines, you know, when I was around. But like I, I'm really curious, 'cause we've talked about this before and, and you've, you've seen so much now. You know, one of the things I thought was exciting in the business was you said to me one day-
Mike Brown: Mm-hmm
Jessica: ... you said, "Look, you know, what we're finding is that there's an enormous demand of really smart kids, right? Who are ready to go, they're green in a lot of ways, but they don't wanna go to consulting and banking anymore. They like the idea of dropping into, like, small businesses, having more ownership, control, et cetera, et cetera." Can you kinda tell me kind of the story of that and your, your discoveries around that and where it works and where it doesn't and things like that?
Mike Brown: Our lens on everything, right? Just as sort of like to understand the framework, was the Toyota production system. It was all about applying technology and people, right? And how do you keep making things repeatable. We looked at it as a tech-enabled factory, and how do you make everything really, really, really repeatable and tech-enabled. And so for us, so, so when that-- like if you inspect sort of the, like the leadership component of building out Team Shares, so we said, "Okay, what are gonna be as we scale? How are we gonna be able to predictably and repeatably like bring in successful high-quality leadership candidates every month," right? And the places that are natural to look and think through that are, you know, firms like consulting firms and sort of on-campus business school recruiting. Be- because there are a rep- you know, for people who are less familiar, like there's a repeatable funnel of people graduating, there's a repeatable sort of class of people who stay-
Jessica: Yeah. They all look kind of the same.
Mike Brown: They all look kind of the same, but there's-- but, but even you think about the cycles, right?
Jessica: Yeah.
Mike Brown: The, the, the graduation bit is obvious. For people who don't know Big Three consulting, uh, it is like literally like you have a two to three-year contract and then you leave. So there's like a repeatable f- So the issue was in that... And again, we went back and we sort of looked at, like when Alex and I were running these businesses, we came from investment banking. We were very young. We were in our sort of like mid to late 20s, and we were generalists. We were not industry experts at all. And so we're like, "Oh yeah, like we figured it out. Other people can too." And the r- again, the results were very uneven. And so the sourcing was very predictable and repeatable. The financial sort of like outcomes from those early hires were not, right? There was a wide divergence. So we, we learned that like look, okay, we-- when we sort of were, you know, a couple years in and had now enough data points, so, you know, 20, 30 sort of data points, we said, "Okay, so there is a, there's a, there's a set of playbooks, but each company is gonna be a little different. Sometimes where it really can be an internal promote," right? It, it, it's a little more rare. It's one in five. But it, it, when it works, it works really well. Okay?
Jessica: Yeah.
Mike Brown: And then you figure out like what's the right backhi- backfill hire there. And then if you're gonna hire externally, it needs to be on average an industry specialist. It's someone who's local. It's someone who's been in the industry. It's someone who's had P&L responsibility.
Jessica: Yep.
Mike Brown: And I think one of the things that we under... So, so there were elements that I'm describing of the learnings of we didn't quite hire the right group in the beginning. We didn't have-
Jessica: Mm
Mike Brown: ... the right sort of characteristics. That generalist model didn't sort of hold up all the time. But what we did in the process though is we actually were able to bring, we were able to build a, an incredible demand for the role.
Jessica: Yeah.
Mike Brown: So when we have a Team Shares president opening, we have like generally at least 50 applicants. Sometimes we get hundreds of applicants for a single opening.
Jessica: Yep.
Mike Brown: And there are people, and so then, you know, when you get down to five finalists, right? And the one person who's picked, right? They, you know, there'll be a g- another couple other people that like maybe they were not quite the right person for that job, but then you've got four other people in Cleveland ready to go for the next companies. So there's a real flywheel-
Jessica: Yeah
Mike Brown: ... right to the whole sort of leadership model. And then of course, then internally it's a really interesting value prop because you've, you've had P&L responsibility. You, you've run a company. You've obviously, you're, you're, we think, coming into this a great leader, and you get to sort of see how they perform and, but now you get to be, you get to be the, the leader and have the-
Jessica: Yeah
Mike Brown: ... ultimate task of financial accountability. Uh, and then if you do well, right? Like then there's a, there's a chance to continue to grow, and it's not out... You're not running a company out there on its own as a single isolated business. There's almost like an internal YPO, Young Presidents Organization, right? Where we have like, you know, annual get-togethers and Slack community and it's, it's very vibrant. And so I think that that, we always had the community sort of YPO vision from the beginning. But I think we just sort of had to, had to find the right model, and we do. And now over 80, over 80% of our president hires work out, which we think for hiring leaders, we think that's a very strong track record.
Jessica: Yeah. And I mean, talk to me about it, 'cause it, it's such a fascinating model on the talent side for me, 'cause it's like I can totally imagine you're young or you're, you know, whatever. You want one of these roles. The, the old version was like the GE thing, right? Where you go and you-
Mike Brown: Yeah
Jessica: ... rotate through a few departments and, you know, you don't really have full responsibility, but you, you get to see a lot.
Mike Brown: Yeah, like a rotational program. Yep. Yeah.
Jessica: Now the, your version is no, no, no, like you can actually have real full P&L responsibility. You know, you can own, you can look at the full stack. You can be a true, you can learn true entrepreneurship in a lot of ways. But then you're not necessarily stuck If you're an ambitious person running one, you know, electrical company in Milwaukee forever, right? There is the ability to move around, to move up, to do more businesses, et cetera. So it, it's... Yeah.
Mike Brown: Yeah, we've been able to develop a great career path. So I'd say the majority of presidents are running a business that, that they will run, like if they're doing well and, and they're fulfilled, and we think they're doing well, the team on the ground thinks they're doing well, like there's people that have been in seat already for six years. And there's great sort of-- There's, there's companies that we buy that are sort of GDP plus growers, right?
Jessica: Yeah.
Mike Brown: And then there's companies we buy where the EBITDA growth potential is literally 10X.
Jessica: Yeah.
Mike Brown: Right? And so there are lots of presidents running businesses that have a, a very significant growth potential just in that first business they take on. There's others that may be buying more sort of, uh... They're not buying, so they're, they're jumping into businesses that TeamShares has bought for them to be the day-to-day leader. And, you know, they're, they're gifted both the, the humans or EQ elements and the financial performance elements, but the, the business itself like, "Hey, there's, there's, there's capacity to kind of run multiple businesses in the same industry," right?
Jessica: Yeah.
Mike Brown: And that's what we call a group president. And then for, for the people that are really, really financially inclined, maybe like, maybe the people management side of it is less their thing. There, we have a role there called industry lead, and they're almost like a sort of a super CFO or sort of like a, you know, a, you know, the equivalent of like an industry PM, right?
Jessica: Yeah.
Mike Brown: And their job is to be all-- They have financial accountability and responsibility too, but their job is to be all over the numbers and like taking and like really understanding every lever of the business. And, and of course, there's a flywheel for them helping us underwrite, uh-
Jessica: Of course
Mike Brown: ... new businesses in that industry, right? So, so I think that that's what we found is that the, we have a career path for everyone because I think that like running one business, there's, again, there's businesses that, there's businesses that we, we bought at 1 million of EBITDA that will, we think become meaningful middle market-
Jessica: Yeah
Mike Brown: ... companies. So-
Jessica: I mean, it's amazing. It's also like, I mean, like, like we were talking before about YC. There is like a YC flavor to this as well, right?
Mike Brown: Totally.
Jessica: Which is you build up this community, right, of really switched on people who really do have business-
Mike Brown: Yeah
Jessica: ... building and leadership experience in these types of things to help you evaluate things, to help you o- you know, like, uh, like there's so many opportunities and community around that.
Mike Brown: Well, well, the other thing, yeah, so there's, there's the canon of knowledge and all that stuff, both like from, you know, from YC and, and so the founders, right? And that's the same thing we think about TeamShares. The, the parent company is almost like the State Department, or we think of the presidents as like the, the, the ambassadors, right?
Jessica: Yeah.
Mike Brown: The embassies. And there's a healthy relationship between the two. It's all TeamShares, but that's how we kinda think about the two roles. The other thing that came out of YC that probably wasn't planned from the beginning, but it, but was planned from the beginning from TeamShares and is still very nascent, but I think could become very meaningful over time, is if you remember YC, how a lot of those startups got their first customers, they sold into other YC companies.
Jessica: Sure.
Mike Brown: Right? Different context here, of course, but like we own a mattress manufacturer, and we own furniture retailers.
Jessica: Yeah.
Mike Brown: Right? So you can ima-- And when we buy businesses, we don't underwrite into that growth. But that, that sort of... So there's a, there's a Canadian holdco, I think called the Irving, Irving Group or something, and they're like famously like only buy within the, you know, the sort of, uh, try and buy within. And so those things are super nascent, but yeah, we have a box company, and they try and do as many of the boxes across the, across the network as possible.
Jessica: So that's the, the talent side. I mean, talk to me about like the technology side.
Mike Brown: Yeah.
Jessica: Um, and especially as like AI becomes like so leveraged in a lot of places. Like first, like how is it changing what you look at, what you buy, things like that? And then really interestingly, how do you think about like with the points of leverage with the presidents, with the businesses of like applying, you know, centralized technology versus letting them kind of, you know, YOLO things, et cetera?
Mike Brown: Totally. Yeah, yeah. Great. Okay, so I think let's start with actually just like the durability of the businesses.
Jessica: Yeah.
Mike Brown: Um, so we've always... I mean, the, the tech disruptions change year to year, but like that's something that we've always sort of with like o- one of three questions I ask myself is like, "Will this business be around in 50 years?" Right?
Jessica: Yeah.
Mike Brown: So before, you know, people, whatever, since ChatGPT, people have been talking about AI, but before that, there were all kinds of things, right? So we've always been really focused on durable businesses that we think... You don't have a crystal ball, but we really think that... We a- we ask these really banal questions, like, do we think people will eat cheeseburgers in, in 50 years?
Jessica: Yes.
Mike Brown: It sounds like such a stupid question, but we'll start with that, and then we're like, "Okay, like, well, they may also be eating like Impossible meat burgers too. Like, you know, okay, like this can evolve," right? So we, but we start with these like r-r- reason to exist, right to exist, why does this business exist kind of questions, and we don't like... So I always think about like I think most people would go and try and buy like a pickleball company. We would rather buy a tennis-oriented company because I personally just believe that it's more likely that tennis will endure for 20, for 200 years than something that could be more fatty. So, so that, that has always-
Jessica: Also, tennis is just a better sport. But yes, point taken.
Mike Brown: Correct. Yeah, yeah, yeah. But, but the p- the point is, is that I'm not trying to pick on pickleball. Um, it's more just like we don't like fads. We like things that we think are evergreen businesses that are gonna be around forever.
Jessica: Yeah.
Mike Brown: Okay? And so that helps you endure through technological change and say, okay... So we don't think that there's a revenue challenge today for any business that TeamShares owns. Like literally not one. In fact, actually, AI is and has been for multiple years at TeamShares. We don't try and overreach on this, but AI is absolutely a part of TeamShares in multiple dimensions.
Jessica: Yeah.
Mike Brown: Right? Like it's accelerating the back office stuff. Our bank recs, right, for our year-end audit, that was like a six-week process three years ago. It takes minutes now.
Jessica: It's amazing.
Mike Brown: To do a bank reconciliation for an auto company, like our tax return's longer than Berkshire Hathaway.
Jessica: Yep.
Mike Brown: Right? Like this is a... There are, there are like almost 100 subsidiaries in this company, right? So, so the natural place for us to build our own stuff there was really in The accounting, right, and the financial reporting and performance and task and all that stuff. We don't build software if good software exists, so anything to do on like the marketing or revenue growth side, we just install it. Now, where does TeamShares build its own software at the platform level? That's around transactions and that's around financial performance, cash flow management, all that stuff. So again, the underlying companies, right, like they'll be on NetSuite or QuickBooks Online or whatever their accounting system is, and then if they're... You know, it's pretty rare for most of these companies to be on a modern API-centric operating system, like let's say Toast or ServiceTitan, but they'll go onto that within the first year.
Jessica: Yep.
Mike Brown: And then we're able to get-- We're able to then conform all the financials to US GAAP, right? Dry topic, but important thing for us as a, as a soon-to-be public company, right? And then have really great operating data and then layer analytics on top of that. So that's what allows us to move cash around by standardizing the banking, standardizing the financial performance, having all the types of financial analysis and operating KPIs that would be table stakes in a venture-backed company, in a private equity company, in a, in a public company and bring that down to small business, right?
Jessica: Right.
Mike Brown: And then on the transaction side up front, it's all the sourcing, you know, 75,000 leads per year of actually for sale businesses, the valuations, the LOIs, the legal documents. So there's a human process, and that's why I've always thought about the Toyota production system. We need to meet owners. We need to hire presidents. We need to have relationships with the companies, right?
Jessica: Yeah.
Mike Brown: But it's the, it's the industrialization of all the repeatable processes and data visibility.
Jessica: Yeah.
Mike Brown: Um, and, and it's really... I mean, even now we're into the point where like the data engineering team is helping us identify so much across the board. So anyway, it's, it's one of those things that's super exciting and obviously like, you know, like any, any software-oriented company, like you're building more software faster as well too, so.
Jessica: Fair enough. And how do you think about like... I mean, so there are now... I mean, even for the last several years, right, there's been a boom in roll-ups of all sort, right?
Mike Brown: Sure.
Jessica: And the, the roll-up story, I mean, has gotten even more intense recently and bigger, right, with like accounting firms or whatever, people like think that they're doing this. You guys are fundamentally far broader and more generalist in your approach-
Mike Brown: Yeah
Jessica: ... right? And so I guess I wonder like when you think about how that especially changes the software picture of where there's leverage and where there's not and how you think about it, like y-you know, I, I assume that part of the story is there isn't really a box production roll-up to do easily, right? And so you, you catch all the things that are less similar, right? Which means that there's certain types of software to do. I also just wonder like, are there places where you think that the people who are trying to do pure play roll-ups and pay the premium for that in terms of like accounting firms or pool cleaning or whatever it's gonna be, where they're kind of misaligned or missing the boat in terms of what you can and can't do with software?
Mike Brown: Yeah. I think that... So first of all, I just, as, as you know, like I like run TeamShares along with our colleagues and parent William and Edward and, you know, try and be a, a decent husband. I don't pay attention to what's going on. I've got my hands full, so like we just, we just do what we do, right? Uh, so I don't, I don't even know like the other sort of parties out there. But what I would say when I, when I hear people ask me these questions is like, okay, 'cause we have bought and integrated companies, right?
Jessica: Yeah.
Mike Brown: Integration of small businesses, it-- like integrating large public companies is hard, right?
Jessica: Yeah.
Mike Brown: Integrating small businesses might be harder.
Jessica: Yeah.
Mike Brown: I don't know. Like it might be. It's-
Jessica: Well, it's certainly harder per dollar.
Mike Brown: Right. So I think that if you look at some of those things, what's actually going on is they're buying the revenue and firing all the employees.
Jessica: Yes.
Mike Brown: That's not what TeamShares does, okay?
Jessica: Yeah.
Mike Brown: TeamShares buys businesses with 25, 50, 100 employees. Everyone gets stock. People are staying. People are happy. It's a very high satisfaction rate, so TeamShares, right? And then everyone gets to see the numbers, everyone gets to grow. So what I, what I think people will find is that integrating disparately run small... Because if you just take accounting firms, if you take five different accounting firms in, that are small business in nature, how they're run is so different. Just set the software aside, just like the, the standard operating procedures and stuff. So I think that people will find that integrating, because bolt-ons are very hard to integrate. But I think also the other thing is, is that that's why we've always been... Because even before some of these sort of more recent things come along, like there's always roll-ups. Roll-ups are, you know, 50 years old, right? Like no one... Like that's not like a new thing. There's a couple things. I think that the work, first of all, to sort of create like, you know, sort of Sarbanes-Oxley style numbers-
Jessica: Yeah
Mike Brown: ... is a lot of work, and that's, that's hard to do, and I think that's a lot of reason why people that typically do roll-ups, they get in and get out in the private market.
Jessica: Yeah.
Mike Brown: Right? They're just like, "Hey, buy a bunch of stuff." They're playing a multiple arbitrage game. Public companies, right, like Danaher, Constellation Software, Berkshire, all, all the great sort of programmatic acquirers, you're playing a different game. You're owning that cash flow for life. The incentives are different. You're not doing short-term incentives, you're doing long-term incentives, and the standard of the financials is totally different than the private markets where you can have really aggressive add backs, right? Then there's the case of, look, the reality is that roll-ups come and go.
Jessica: Yeah.
Mike Brown: Right? And so we've seen this. We saw it in 2020 with landscaping. It was like one of the only things with revenue growth in 2020. We stayed away.
Jessica: Yeah.
Mike Brown: We let it cool off. We bought a few HVAC companies early on, right? What, two? Two of 90, right? All of a sudden it became a third derivative AI play.
Jessica: Yeah.
Mike Brown: I mean, you can't make this stuff up. I mean-
Jessica: Yeah
Mike Brown: ... but like, you know, they... Literally people were buying HVAC companies for, for 12 times EBITDA.
Jessica: Yeah.
Mike Brown: These are businesses that are like project-based businesses, right?
Jessica: Yeah.
Mike Brown: And now you're seeing Chapter 7 liquidations of private equity backed HVAC things. So we purposely have always been diversified. We're structural. Our, our acquisition rate is structural. Um, and we do not, uh... We deliberately want diversification both for like- ... economic cycle management, but also just so that we're just not gonna be subject to the whims of a single industry. If y- even if you look at something like Constellation Software, it's one of the most amazing public companies of-
Jessica: Yeah, I remember, I remember you, that you, you've told me before it's the only stock you would buy.
Mike Brown: Very few people-- Well, there's, there's only, like, three or four stocks that we sort of own at any given time, but, like, Constellation is amazing. Very few people, like... It's shocking how many people don't know Constellation Software. Maybe 'cause it's Canadian, but it went public at a $500 million valuation. I think it at some point hit 80 billion in market cap, and it's been clobbered over the last six months because of the AI perception threat. And, like, I mean, look, they're hopefully stoic enough that they're, you know, sort of not bothered by that and gonna just keep on trucking. But, like, that sucks when you just have this, like, this existential shock happen in a single-- If you-- Being a single industry strategy is great until it's not.
Jessica: Yeah.
Mike Brown: That's what I would say about that.
Jessica: Yeah. Fair enough. So okay, so tell, tell, let's talk a little bit about the future, 'cause again, it's been a hell of a journey so far. You're at 90-plus businesses.
Mike Brown: Mm-hmm.
Jessica: You know, it's, it's, you've learned a ton. You have your engine running.
Mike Brown: Yeah.
Jessica: You're gonna be a public company very soon.
Mike Brown: Yeah.
Jessica: That's exciting.
Mike Brown: Yeah. Super exciting.
Jessica: Where do you, where does it go?
Mike Brown: Yeah. So let's, like, kind of break it down into sort of short term over the next years and then kinda, you know, like, long term. So, you know, we put out a forecast, right, to go from 19 million of corporate EBITDA. So there's, like, segment EBITDA, right? So it's just sort of roughly, you know, 60 million, but then at, after our parent overhead of 90 people that, you know, propel the machine towards thousands of companies, it's 19 million of, of EBITDA on a pro forma basis last year, 2025. So the plan is to get to 100 by the end of 2027, so 5X growth over the next, you know, two years. So that, that I think is already a good pretty starting point for growth. But everything wi- we've done has really been to set up the business to be able to sort of grow in a very sustainable and repeatable way, and we put out there publicly that our ambition is to, over the long term, help thousands of businesses, you know, be a part of Teamshare. So I just personally, you know, I'm 42. This is an incredibly fulfilling, like, intellectually fulfilling, great people we work with. We think it's good for small business owners, we think it's good for small business employees, we think it's good for small businesses themselves, right, to be a part of Teamshares. And it's an interesting thing is a little bit like even though people would never, ever in a million years compare Teamshares to Amazon, culturally, it is actually, at least from the, at least from the, like, uh, entrepreneurial, it's one of the mother sauces of Teamshares. It is-- What I mean by that is that we're never done innovating. We're gonna continue, we're gonna continue on this very sort of focused path over the next two, three, four years and really continue to just, you know, stick to that knitting and execute well, build market trust, and work towards issuing over the long term, sort of issuing bonds, right? That's the end sort of financing goal for Teamshares, right? And a range of tools. I think most companies that go public, it does not directly help the business grow. But if you take something like Kinder Morgan, direct benefit, acquisitions, acquisition, financing. Okay, so back to the Amazon bit. Teamshares internally is a very innovative culture, right? Like, the question we ask all the time is, "What if we just?" The premise of what if we just is, like, asking radical questions, just change a variable. The biggest transformative breakthroughs that come, come from that question. And so I think that over the ultra long term, I think in 20 years, like, I don't even wanna describe the things that, or things that we could go and do, 'cause they're just gonna sound kooky in the way that, like, if you went back to the early days of Amazon and des- and described Amazon today back then, it would sound nuts.
Jessica: Yeah.
Mike Brown: But there are so many other adjacent businesses that we can build in a really tangible way over the long term.
Jessica: Yeah.
Mike Brown: But over the short term, we are really focused on growing the business, hitting our plans, making our stakeholders happy, creating shareholder value, and just continuing to grow. So-
Jessica: So let me push on that, though, 'cause the Amazon thing is interesting. Amazon, you guys are kind of in some ways the opposite of Amazon, right? 'Cause you produce EBITDA, right? And you're very focused on that. Right?
Mike Brown: Yeah.
Jessica: And, like... So I guess the question for me is, like, when you think about the guardrails, obviously, like, when you're building a big s- you know, there's a big s- thesis broadly around small businesses and the future of them, et cetera, right?
Mike Brown: Sure.
Jessica: And you, you know, I, I would argue there's some conversation you'd say that the problem is, like in most problems, the middle drops out.
Mike Brown: Yeah.
Jessica: So you're gonna have the behemoth platforms of the world, you know, we'll see in a few days whether SpaceX is on that list, et cetera.
Mike Brown: Yeah.
Jessica: And then you're gonna have, like, a ton, a ton, a ton of small businesses, right? Um, and very little in the middle, right-
Mike Brown: Yeah
Jessica: ... as a potential configuration.
Mike Brown: Yeah.
Jessica: So you guys are gonna be, like, you know, the champions of and the platform for a lot, a lot of small businesses.
Mike Brown: Yeah.
Jessica: I guess the question is, how do you-- Like, there's so much you could do with it. How do you think about... And I understand the short term is just plow money back, grow, get access to cheaper capital, prove you can keep making it productive, et cetera.
Mike Brown: Yeah.
Jessica: But how do you put guardrails on a thing where you really could do anything?
Mike Brown: Yeah. So I think first of all, um, it all comes down to really good capital allocation, which is a discipline that we really pride ourselves on. Again, there's, like, multiple core competencies to Teamshares, right? Everything ranging from acquisitions, operations, technology, right? And capital allocation is a thing that people, you know... I think in the venture community, people think about a lot. But I think in g- even amongst public companies, there's a range of how much companies focus on it, and that's something we're very focused on, so-
Jessica: Well, this is a classic Will Quistism, who's my partner, and you know Will, which is, like, basically CEOs are just capital allocators.
Mike Brown: Yeah. Well, yeah, and actually our, uh, our lead investor, uh, at Hero, David Drew, so he actually wrote a book on capital allocation. Uh, it's a, it's a, it's a, it's a really good book. But, um, in any case, so already today, just to sort of talk about how we think about this today, is our primary capital allocation is to new acquisitions. Right? And then our secondary is to organic growth, where capital would help further accelerate growth with really good paybacks, one to two years. So that's a good example. There's like opening a new location if it's a unit-based business.
Jessica: Yep.
Mike Brown: Right? So-
Jessica: And internally... Sorry, I wanna hear the whole story, but just 'cause it's, it's an interesting one. Like internally-
Mike Brown: Yeah
Jessica: ... is that literally like one of your presidents, like they come up with like, "Here's my wish list," and like what my, what I'm, what I'm, I'm effectively what I can do-
Mike Brown: Yeah
Jessica: ... and you guys allocate centrally what gets approved or not approved?
Mike Brown: So that's a bit where, again, there's sort of like a three or four mother sauces to Team Shares. That's a bit where we drew from, from the Berkshire principles of like decentralized leadership, centralized capital allocation. So by default, all cash flow comes up. And again, employees benefit because of the dividends, all that stuff. But cash flow comes up, and then to invest back for growth, that's a reallocation decision, and there's a separate sort of reinvestment committee that's Alex, our CFO, and a, and a few other folks, right? So yeah, so the... But it's competing for the sort of same, you know, returns on equity, right? So, so I think it's about having the same discipline, right, and doing things that are germane to what you're doing.
Jessica: Yeah.
Mike Brown: Right? So I could make a case over the ultra long term that incubating businesses at one times EBITDA is germane to what we do. It's not something we're doing right now.
Jessica: Yeah.
Mike Brown: But I could make the case of the long term-
Jessica: Yeah
Mike Brown: ... right, when you get to a point where you say, "Hey," actually, 'cause there's a point that the whole sort of true Berkshire, true constellations, like your free cash flow far exceeds the amount you can do.
Jessica: Right.
Mike Brown: Right? And what did Berkshire do? Berkshire famously went bigger, bigger, bigger, bigger. Now they buy like railroads, okay? That is not our strategy. Our strategy is not to work towards buying American Airlines, right? Like-
Jessica: Yeah
Mike Brown: ... we think that the, we think that the, the SME space, right? Like if we've done a $7 million EBITDA, will we do a 10? Probably eventually, right? But the litmus test is it has to fit the unit economics, uh, and each business we buy is, is, is not financial material, right? So i- if that's your core competency, if that's your core focus, right, then you could imagine over the medium term, or certainly over the long term, that actually it becomes some of those things have to be buy versus build.
Jessica: Yeah.
Mike Brown: Right?
Jessica: Yeah.
Mike Brown: Of like, hey, if you could start this business for one or two times EBITDA in a really risk-adjusted way, and we're not talking about like venture risk. We're talking about like-
Jessica: Yeah, yeah
Mike Brown: ... a digital billboard company just to make it up, right? Like something like the market exists, but we noticed that South Carolina is undersaturated, right? Like, you know, just making it up, right? That's something that feels germane. You know, these business owners, right, they have massive liquidity events. A lot of them don't have wealth planning and tax planning. I think that there's a number of ways you could execute at that, right? Those are things that are, are germane. There's a whole, what do, I think you called it the private economy.
Jessica: Yeah.
Mike Brown: Uh, in fact, there's like a whole list. We've done really nascent early tests with, you know, business insurance and health insurance taking over those products.
Jessica: Yep.
Mike Brown: We'll continue to do those. And so, so I think that those things are just super germane to what we're doing.
Jessica: Yeah.
Mike Brown: So we're, we're not, we're not like free form diversification, like let's start a biotech, you know, start a test.
Jessica: No, no, I get, i- it's a tight, it's a tight target.
Mike Brown: Tight target.
Jessica: Do you wanna own all businesses forever that you acquire?
Mike Brown: We, we think so. We think that there's a, we think that there's a very clear shareholder answer to that, and we think there's a very clear sort of answer for the business itself. And then there's the promises we're making-
Jessica: Yeah
Mike Brown: ... um, you know, to the stakeholders. So just to take those in order. So a lot of people ask this really thoughtful question, and they're surprised by the answer 'cause people say, "Oh, you're buying it five times. You could totally sell to like, you know, a local competitor for, you know, or, or to PE," right? And you're like, "Okay. Well, let, let's walk through the math," right? So you buy something at five times. Local competitor may... Remember the beginning problem was there's not enough buyers-
Jessica: Right
Mike Brown: ... and it's really hard to sell a small business, but we'll just, we'll just ignore that.
Jessica: Ignore that part.
Mike Brown: We'll just ignore that for a second.
Jessica: Ignore that.
Mike Brown: Yeah. So, uh, so let, let's say the pr- the, the competitor is able to, you know, local competitor's able to sort of muster up sort of six times EBITDA to buy the business, right?
Jessica: Yep.
Mike Brown: And bet the farm on their company, right? Well, why would you do that? The business, you know, the market will value Team Shares however it does, but typically public companies are valued way in excess of six times EBITDA, right?
Jessica: Right.
Mike Brown: So you would be harming shareholder value.
Jessica: Yeah.
Mike Brown: And you'd be losing hundreds of years of cash flow.
Jessica: Yes.
Mike Brown: Right? Then there's the business itself. So I think that the narrative around private equity is wrong and out of date. The narrative around private equity is, like it still hearkens back to the vulture days of breaking up companies and firing tons of people. Roll-ups do fire a lot of people, right?
Jessica: Yep.
Mike Brown: Like that's a core premise of like an industry roll-up, okay? Single low con- sort of like highly concentrated 10, you know, portfolio companies. There, there's not jobs. They're generally net job creators. I think the issue with private equity is twofold. The returns are really bad now.
Jessica: Yep.
Mike Brown: And so for, that's again, the capitalist argument. The returns are terrible now, generally.
Jessica: Yep.
Mike Brown: The median, the median fund. There's obviously outliers, right? So it's almost, it seems like it's become venture-like, where you've got a top decile that's really good, and then everyone else is underperforming the S&P. Right? Then there's the health of the business. And so you sell a business to PE with 10 million of EBITDA, and you sell it again at 25, and you sell it again at 75, and then 100, then 200. So you can have businesses that are f- for sale three, four times, and that means the day you close the transaction, the company is already for sale.
Jessica: Yep.
Mike Brown: That's not healthy.
Jessica: Yeah.
Mike Brown: Like that is not healthy at all. It's so much worse than house flipping.
Jessica: Yeah.
Mike Brown: Uh, like house flipping might happen like once, right? Like someone transforms a, a, like a home.
Jessica: Yeah.
Mike Brown: They renovate it, and they sell it for more. And so, so I just think that that is just not a healthy thing for a company. It creates a lot of uncertainty. It creates really like short-term thinking.
Jessica: Yeah.
Mike Brown: So, and so, the, and again, like look, so we've just always tried to be really rational and practical and, you know, I guess try to s- swiss about things as sort of neutral. But like that's our perspective. Like there's a reason private eq- exists. There's a reason why PE exists. It does create value for endowments and all that stuff. But like- It's not good investing and we don't think it's healthy for companies. So no, we don't think it's, we think that permanent ownership is good for Team Shares shareholders. We think it's good for the businesses themselves to not be for sale. And these are the promises that we're making when we go and, you know, look an owner in the eyes and we're gonna buy the business. We're gonna bring in the employees and there's gonna be employee, uh, share ownership and it's gonna be, have a permanent ownership model. And we're very proud of it, but all those things line up together. So-
Jessica: Yep. Fair enough. Fair enough. So there's last question for you, which is, again, you're about to be public, which is exciting.
Mike Brown: Yeah.
Jessica: What's the first thing you do?
Mike Brown: Uh, have a good night's sleep.
Jessica: It's been a while.
Mike Brown: Yeah. It's been, I mean, yeah, it's been, so it's, so seven years, but we sort of launched six years ago with the first acquisitions. And I think it's been... And then of course before that, I, like I left my job in 2013. So I think I, I think I've feel like I've been sort of on a, you know, on, on a long run, right?
Jessica: Yeah.
Mike Brown: Since 2013. And there's long run ahead of us too, right?
Jessica: Yeah.
Mike Brown: And so very, you know, motivated and fulfilled and excited by that journey. But I think we want to sort of also recognize, look, look, we, we've done something that is, you know, something like 1% or 2% of venture-backed companies go public.
Jessica: Yeah.
Mike Brown: Right?
Jessica: No, that's right.
Mike Brown: And so we're extraordinarily proud as a company and, and we've done this in, you know, pretty, pretty challenging. There's been, you know, a economic headwind du jour or policy uncertainty for the last two or three years, right? So I think the first thing is to, you know, just sort of have a good night's sleep and sort of a weekend with the family, right? And then go and execute our plan. I know it sounds like a boring answer, but like-
Jessica: Boring is sometimes good
Mike Brown: ... Team Shares has just focused on just continuing to do what we do and, you know, we don't, we don't really look out at what other people are doing. We just focus on what we're doing. So.
Jessica: Fair enough. Well, it's been a really fun journey to be on with you and be a watch you... If we're being really honest, watch you do since the early days, uh, and kinda get the updates on.
Mike Brown: Yeah.
Jessica: And congrats to you and the team for making it happen. It's gonna be really fun to watch.
Mike Brown: Thanks.
Jessica: And, uh, I'm excited to, I'm excited to see what the next 20 years brings 'cause you, you guys are, you guys are marathoners.
Mike Brown: Yeah. No, we're excited. I think it's cool. Like, I've found my dream job and recognizing it to keep, keep, uh, re-earning the right to, you know, be one of the leaders of the company. But, um, very excited about what's ahead, and I think that we can, you know, continue to do what we're doing for decades to come.
Jessica: I love it.
Mike Brown: So.
Jessica: Mike, thanks for taking the time. This was fun.
Mike Brown: Thanks, Sam.
Jessica: This is our first ever special edition, More or Less. I hope you enjoyed it. We'll do more with awesome people doing awesome stuff. Thank you.
Mike Brown: All right. See ya.
Unknown: If you enjoyed this show, please leave us a virtual high five by rating it and reviewing it on Apple Podcast, Spotify, YouTube, or wherever you get your podcasts. Find more information about each episode in the show notes, and follow us on social media by searching for @moreorless, @davemorin, @lesson, @jlesson. And as for me, I'm @brit. See you guys next time.