Graham Weaver
speaker
351 appearances
1 recordings
1 series
first heard May 2025
last heard May 2025
Graham Weaver’s voice in public audio — every appearance, attributed to the second.
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Appearances
If we underwrote an individual deal to 5X, we would never close a deal. So that's kind of how we think about it.
If you look back at the, now that you have all this data and all these funds, is it true in most of the funds that it's 1%? platform or deal that dominates the returns?
Yeah, there's definitely an asymmetry for sure. One of my favorite things, I remember I used to read every word that Buffett ever wrote in his annual reports, and I'm going to get this a little bit wrong, but it'll be directionally correct. I want to say in like 1988 or something, he'd made half of all of his money on two stocks, Geico and the Washington Post.
He had tons of businesses he bought and sold and everything, but 50% of it, yeah, there's like asymmetry. And Yeah, we tend to have at least one real outlier deal per fund. As we're learning, we're figuring out the ingredients of that outlier better and better and better so that we're hoping that each seed that we're planting at least has the potential to be that outlier.
We want every shot on goal to at least have that upside. They won't all hit that, but we're getting better at identifying the ingredients of that outlier, which is, hey, build a real company, build a real hold co with a phenomenal team in a large industry, really spend the time to get the playbook right and give yourself some breathing room.
And if we're doing that again and again and again, we're now starting to have a lot more consistent businesses that are these outliers. In our more recent funds, it's not one company. In fact, in our most recent fund, I'm biased, but I think just about every company has that potential as of now to be a real outlier.
Let's go back to the talent. It almost sounds like what you've built is like a captive search fund business. Yeah, that's right. No, that's a good analogy. It's all the same stuff. Really good analogy. Personal attributes, time of their life. Yeah. So one question I have is on incentives. How do you incentivize? Like in a search fund, it's really tight and clean. Like you're buying a business.
If it does phenomenally well, you as the searcher CEO are going to do phenomenally well. What have you learned about incentivizing the people that get installed to run these businesses?
You know, using your search fund analogy, let's say that you're the kind of person that wants the ball early. That's the search fund person. They want to be CEO early. I love that. I was 25. I wanted the ball. I appreciate that characteristic. So they want the ball early. And if you think about what they want the ball to do, it's to go run a business. That's what they want.
In the search fund world, they first have to go build a private equity firm to find and close. And if you actually look at the data, I used to invest in search. I don't know, I've invested in 70 search funds or more. They usually mess up that first part. investing is a pattern recognition business. Bankers don't want to sell to them because they're only going to ever do one deal with that banker.
They have a clock ticking. So there's a lot of stuff wrong with that first part. And then the other thing that's kind of doesn't really work is they don't have really any support. They're like, yeah, you get the ball, good news, but you don't know what to do with the ball. So we're trying to say, hey, we have I think one of the greatest sourcing engines in private equity.
We're going to find phenomenal businesses. Plus, we're going to have a whole team that's going to help you evaluate the industry and make sure we're getting those right. We want you to play a winnable game. We want to give you a platform where you're going to win based on your talents and hiring and firing and all those things not missing on the industry.
You're not going to figure that out when you're 28. We're very good at that part of the business. And then once they buy the business, we want to have, and we'll get into the training, we want to say, hey, look, we have 25 years of intellectual property of how to be a CEO, but not just how to be a CEO, how to be a 30-year-old CEO going into a really established business
And getting that team on your team alongside you and going forward, that's the specific intellectual property that we have. And it's not super complicated, but we might as well start you off 25 years in year 26 rather than in year zero.
So where do you find these people? Where do they come from? How did that start? I'm sure it's much easier now. You've got a reputation like this can be a place you go do this thing. Yeah.
It was a very inauspicious start, Patrick. At the time we started the CEO and training process, I was a guest lecturer at Stanford Business School. And I would meet with students for coffee and stuff. And the class I was a lecturer for, it was an entrepreneurship class. And so the students wanted to be a CEO. And they'd say, hey, how do I go do this? And search fund was an option.
They didn't like some of the elements I mentioned earlier. And so I didn't really have a good answer. So finally, one student, I said, hey, why don't you join us? We'll teach you how to be a CEO and we'll put you in one of our companies. That sounded great. So we hired this guy and we weren't going to put him in a CEO. We're going to put him in like CFO or COO in one of our companies.
We couldn't get anyone to hire him in our portfolio because they said, okay, let me get this straight, Graham. You've got someone who's got no experience, is a little bit entitled and super expensive. Like, how about no? So we couldn't get that first person place. He left. The next year we had this woman, Laura Walsh, and same thing.
But although this time I said to this particular CEO, I said, listen, hire her. And if she doesn't work out in a year, I'll reimburse you her salary from the management company. So like a money back guarantee. And she knocked it out of the park. And he's like, I want three more. And then it kind of took off from there.
And when I say took off, then the next year we had two and the next year we had three. And It took a long time and it also took us a while to really figure out what kind of business they would be successful in and where their blind spots were and what they could do and not do. We made every mistake you could make, but thankfully we made that on smaller classes of CEOs.
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