Did you know that there's a tsunami of small businesses about

to change hands and most people aren't even looking, not even aware

of this trend in opportunity, but are you ready to catch the wave?

That's why I brought in my friend and seasoned veteran

and investor Jon Staenberg to break it all down for us.

Jon.

I'm happy we're doing this, my friend.

Thanks for taking the time.

Thank you.

I, I am truly excited.

We've been talking about doing this for a little while.

Here we are.

This is the perfect time, the perfect day.

Let's do it.

it is.

It is.

And you, uh, yeah, there's some cool stuff we've been making on

the side too to support what you're doing and, you know, through setting

up, I mean, everybody here on the podcast probably knows about

Delphi already, so hooked you up with one of those, you know, and

Been great.

I love, I love it because I'm out there telling people AI

is changing the world and then the show people and use it and

get them introduced to it and.

It and it continues to get better and better.

And so it's really been fun to, to have that supplement me 24 by seven.

We will talk about it.

I, I'm curious how you've been using it.

'cause I'm always, everybody's using it and thrown out

there in different ways.

But I really wanna dive into this whole concept that you've kind

of, I don't know if you would say it reinvented your career,

but it came later in your career.

Huh?

Search

I, I think I, I think it is of sorts reinvention.

I. I've been reinventing my career from the beginning of my

career because I don't, I don't think, for me anyway, for who I

am and for what I like and for how I see the world I, and how

quickly the world is changing.

What, what they used to say.

Like my, my grandparents had one career, right?

They did it for 30 years, and maybe my parents had a couple

of careers, and now I think about my teenage daughter.

How many careers is she gonna have?

She will have a career.

Maybe she won't have a career.

I don't even know, right?

But, but I've always followed the same general path, which is find

something that seems like it has outsized potential returns where

I can be learning every single day and constantly be learning where

I'm surrounded by people who are full on, passionate about their job.

Yeah,

And do something that maybe isn't obvious.

I like that.

Yeah.

that's, and so you know that

outrageous.

Returns people and just, just kind of undercover.

Yeah.

Learning.

right?

Inspiration,

Yeah.

right?

It's, and when I went to Microsoft, I didn't, I didn't know I was

gonna, you, if you had asked me at a business school, you know, are you

gonna go work for a tech company?

Like that wasn't even a thing, right?

I win because the people there were mind blowingly intelligent

and challenging, which is what I like to be around.

And then venture capital, it's funny to think, when I did Venture

Capital 30 plus years ago, I had to explain what it was like.

That's hilarious today, right?

Like of course, venture capital, but literally,

Yeah.

I, I don't know why this thought just came to me.

It's like when I went to Burning Man before people

knew what Burning Man was.

Right

You

then you were like, they're like,

Yeah.

That's

and it's funny, and now I'm doing this new ca, not new,

but relatively under the radar asset class called search funds.

The people in the search fund world are kinda like,

shh, don't tell anyone.

It's really good.

We don't want a lot of people in it.

And I wanna tell everyone because I think it's.

One of the greatest entrepreneurial engines in the world, and

it is the time for it with the baby boomers aging out.

And with ai, we can talk a lot about that, but here I am,

no one had ever done a fund to funds for the asset class.

And if you look at mature asset class like Venture Now or hedge

funds or high, you know, big private equity, they all have fund to funds.

And so I thought.

This gets me right back doing what I love doing.

Kind of being early, kind of seeing out there a little bit

and working with great people.

There's a lot of things.

Yeah, a lot of angles.

So like, I mean, you grew up in what, uh, in um, Nebraska,

Yeah.

Warren Buffet.

Warren Buffett fan from what?

Early days or

Early.

Well, he was a neighbor.

Oh, really?

Even cooler.

the neighborhood.

Wasn't next door, but we would go to his house.

Really?

Yeah, we went for the 4th of July.

My mom and his wife were very close, but he wasn't Warren Buffet then.

He was just,

some guy.

I called Warren.

So, but, but yeah, I mean, but, but I was a devotee, if you will, early.

Like, everything he said made sense to me.

Um, and.

The only unfortunate thing is my parents didn't

buy the stock earlier.

Hold onto it late.

So,

just listen to.

right.

But it did.

It shapes who I am today.

It shapes how I think about the future.

It shapes how I invest and not just, not just on the money side, but the

authenticity and the integrity and the, and how you treat people and.

How you work with people.

All of that's part of what Warren and Charlie were about.

right.

Yeah.

so, but I would say he was kind of one who really made

value investing a real term and something people understood.

I think what I'm doing in low end private equity

investing is value investing.

You know, buying good companies at fair prices and

have great people run 'em.

Not complicated.

I like to call it good boring.

I mean, it's great.

Yeah.

You, it's, it's not going to, you know, it's not, I mean, it could

be feel like a shiny object to some people, you know, if you like

boring stuff, which is awesome.

But yeah, it's

Well, let me just say, it's always funny you, you know, in a perfect

world, you go to a cocktail party and you get to tell everybody, you

just created the coolest new AI robot and everybody gathers run.

When I go to the cocktail party and say, we just bought

a pool cleaning company.

They go, I'm going to the bar.

Yeah, talk to that guy over there.

Yeah.

That's right.

I mean like AI is fun, you know, and, and we're both

in it in our own ways.

And like you said, it's very challenging.

You know, it was just hanging out in San Francisco the other

week with Delphi and the founders and team, and I was like, man,

there's just like a whole different way of thinking and the vibe.

I mean, I know you went to Stanford and spent a lot of

time out there, but yeah, it's a different feeling, you know?

And then.

Well, it's funny, I was saying to someone yesterday

that venture decades ago.

Was more like the vibe I'm in now.

It wasn't, I gotta go shout to the world and we didn't

have the platforms to shout to the world, right?

And everything was about attention grabbing.

It was, let's go be super entrepreneurs and create

something that's so cool that we're gonna sell a lot of it.

It wasn't what I considered to be kind of a different game today

of can I. Create this cool pitch deck to raise the most money to

somehow throw spaghetti against the wall, make it stick, and then

walk away with lots of money.

And that's like the goal.

Yeah,

And it, it feel.

Now that's not true for everyone, you know, but much

more than it used to be.

And even, and even, I'll call 'em the kids, even young adults

who are going into it, or they take a different mindset.

I'll go for six months.

My options look like they're doing well.

Great.

Otherwise I'm moving on.

Ah, yeah, yeah,

Right.

That's a different mindset, right?

I'm, I'm now, you know, back in the day it would take a couple

million bucks and you'd have to spend two years writing code.

Literally, like, think about that.

Like Cody's being written like that.

We, we really, it was all engineers in the beginning

Yeah.

just to get a viable product.

It's, uh.

a long time,

A long time.

A lot of money, a lot of, you know, hard disk drives,

Yep, yep.

Big ones.

right?

And that was actually part of the defensibility,

Hmm.

Yeah.

right?

Because not everybody, everybody knew there couldn't

be too many competitors,

It's like, no, who's gonna wanna do this?

Or can, yeah.

right?

Or like who's got the money to buy all those servers?

And so, but so I like being around that ethos.

Of this, you know, search funds are one kind of low end private equity.

I should just for, for definition sake, for setting a, yeah,

let me just say when, when I'm talking about this, I am talking

about we invest in companies two to $5 million in ebitda.

Mm-hmm.

So maybe they're 15 to $40 million in sales.

Okay.

And they are not.

Generally tech companies, they might use some tech.

Now everybody's using tech, but generally they're not trying to

be a 10 to a hundred x return.

I mean, you mentioned a pool company, right?

Oh, I get meter readers, street cleaners, plastic

parts, you know, you name it.

And um, and, and whatever small business you can think of.

Right.

That's, that's really what we're, um.

That's what we're buying.

And,

and it's in our first fund, which we closed last year, we're gonna

have 200 of these types of companies

Wow.

Okay.

across 150 industries

Got

across North America.

So, but if you just, it's funny if you drive down the street,

you walk down the street.

I did this yesterday with someone, I said, you see that,

that post, somebody's making it.

Uh huh.

Yeah.

see that light, somebody's making it, and the things in that light,

somebody's making it, the bolts holding up that pole, and you

don't, you don't think everything.

Uh, and a lot of it's from a small manufacturer.

And, and by the way, every, there has to be people who install that.

There have to be people who do the warranty work on that, that like,

Yeah.

that's all right.

And Amer America's really good at this stuff.

That's, that's the thing.

I travel a lot and part of the reason I travel is

just to get perspective.

I've been close to a hundred count countries we're most people are

itching to get into this country.

Why?

'cause they go, if I work hard and follow the rules, I can get ahead.

That generally is not true in the rest of the world.

Right, that's true.

Restrictions or whatever.

Yeah, just,

CU cultural women.

I mean like there's a whole bunch of reasons.

Graft.

I mean,

Mm-hmm.

this country, we don't need to make America great again.

We just gotta make sure the middle class and small business crush it.

And they are.

Yeah.

And what we have is hundreds of thousands of 65 year

olds whose kids, unlike the previous generations.

Are not interested in taking

Right.

And so they have to exit.

They have to find, they don't just have to sell their company.

That's part of it.

They have to do it in a way that preserves the legacy,

takes care of the employees.

And so people are like, well, there's more money

coming into your sector.

Yeah, that's like saying I'm going to the beach and I used

to bring a teaspoon of sand and now I bring a bucket of sand,

but I'm still at the beach.

You know what I'm

Got you.

Yeah.

Yeah.

The, the opportunity set is that big.

Yeah.

That's wild.

And, and you're right, because this is, and I've, I've had some

previous chats here talking about the, the retiring folks right now.

And like, and like you

Yes.

Silver tsunami.

it, it really is in, in all industries.

And maybe you could list like, so what are some of these

industries that you, that you see being opportunities?

It's so broad.

Joe.

Joe, it's so broad.

I mean, but I, I mean, I can list.

A 50 you said.

Yeah.

Yeah.

But I mean, it's, it's literally going down the street and looking

at the companies doing those things.

It's med spas, it's dental clinics, it's accounting firms,

it's bookkeepers, it's uh, machine shops, it's car repair shops.

It's, uh, the company that brings horses, literally horses

in from out of the country.

There's like six of 'em.

And you gotta know what you're doing there.

I mean, there, it's everything.

Whew.

It's just like, like you said, it's a tsunami and I don't think

a lot of people are even thinking about it, obviously, you said Yeah.

They're trying to retain the employees, the workers there

because, and, and obviously

Well, because there's, partly because it's,

it's relationship, right?

I mean, it's, it's a, it's reputation, it's brand,

it's these relationships.

I mean, that matters.

yeah.

but what's interesting is there's now several podcasters and good

promoters that are out there.

You, you know, in my day when I was growing up, it was no money down.

You can buy real estate all day long.

And as you know, there was some truth to it, but there

was also some things that they never really told you.

Right?

a lot.

Yeah.

And, and.

About, you know, one or 2% actually did it.

Learned it, figured it out, and what was working and what, and did great.

But most people didn't.

They, they, those guys made their money off selling

tickets to the seminars.

Right?

Right.

Now you have a bunch of people going, they're saying

the same thing I am, which is the silver tsunamis here.

Kids don't wanna take it, blah, blah.

And they're saying, you should go buy a business.

And so I have a lot of friends now saying, I'm gonna go buy a business.

And I roll my eyes.

It's so hard.

Yeah.

Yeah.

So we're,

and and go,

yeah, it's messy.

People lie, they mis reset, represent, they don't keep

great bo I mean, there's a a thousand re they change their

mind, you know, like a th They're

Yeah.

people both.

So, yeah.

what we do is we only invest.

Where there's a system in place, a system that thinks about

all the things that could go wrong and puts guardrails in,

that's what search funds are.

That's what, uh, there are institutional funds out there

that have created following kind of a search fund playbook,

but there aren't very many.

Interesting.

we believe that you got to, if you want the ch, if you really wanna

create the outsized returns that we have seen historically, you've

gotta do it with this playbook or something similar to this playbook.

There are variations on it.

People are coming up with new models, but the the sole guy

who says, I'm gonna keep my day job, and on the weekends

I'm gonna go to a broker and see if I can buy a company.

Uh, good

Good.

Good luck.

Good luck.

so you have your own fund Agate.

I get has.

Yeah.

Agate Hound.

And cool name, by the way, and, and I know you have a story behind

it, so I do want to hear it.

And so, yeah, I, I, I guess, yeah.

I wanna understand, okay.

Search funds as a whole, how you're playing in it

as well with your own fund.

And then also Yeah, just how others here as we're listening, watching,

going through this, like, you're getting some knot, like, yeah.

Okay.

I get what Jon's putting down here.

How could they get involved in whatever fashion that looks

thankfully if they're willing to spend a little bit of time, and

I don't mean a lot, it's pretty easy to get up to speed to a

certain level, at least the basics.

I, I will say, having done this for six years, having

gone to 15 search fund conferences, I'm still learning.

I'm still understanding how it all works, but in a, at a most

basic level, let, let me say how it works and I'm gonna use search

funds and I'm using that somewhat generically, I believe search fund

as a proxy for a well thought out playbook to buy low, uh, uh, pe,

Uh,

sort of like two to $5 million pe.

But when you hear private equity, that's generally

speaking, funds that buy 10.

50, a hundred, $500 million EBITDA companies, we are purposely

playing below them because we know we can buy inexpensively.

And on average we buy four times ebitda.

But then we are selling eight to 10 to 11 times EBITDA because private

equity, we're getting it ready.

We're a farm league for the major

I like it.

Okay.

And they'll pay up.

If they've seen that this one worked, they'll pay up.

So we do.

We earned that.

Right?

But, but lemme go back to how can people learn about it?

Your question, if you go and look, it was invented at Stanford

and Harvard Business Schools.

If you Google or email me at Aen Hound Fund, if you look for

the two Stanford papers, the Stanford Primer on search funds.

It'll take you 15 minutes to read it.

It'll explain all the pieces and I can go into a little bit of it.

And then the Stanford study, Stanford has updated the

financial returns every two years for the last 40 years of

every search fund ever done.

And by the way, the number is 35% net returns.

I, I literally know of no other asset class.

That's better over that period of time.

no.

Um, and.

That's a good start.

That's a really good start.

There's podcasts on this.

There are books on this

Yep.

it doesn't take too much to finally, oh, I see what they're doing.

I see how they're creating a mentoring group for the CEO.

I see how they're using bank debt.

I see how they're using seller financing.

I see the criteria for the types of companies they're buying.

I. I see how they put a board together.

I see how they hire.

I see what they do in their first nine, blah, blah, blah, blah.

Okay?

But it's, it's a playbook.

And I keep saying that you've gotta have a great entrepreneur as a CEO.

You be gotta be buying the right kind of business at the right price.

And then you need the guardrails of a really good

support system around you.

And it takes all of that.

To be successful?

When you say a system around you, is that, is that the

company itself or actually around

No, I mean, I mean, no, it's the people that you are investing

with, you who are adding value,

who are on your board.

It's the EOS or EOS type system, you know, entrepreneur operating

system that is being used.

It is.

Uh, it's your advisors, your mentors, your

coaches, your teachers.

All of that has to come into play

Got

because this stuff is hard and messy.

And in the search fund model, just to go only slightly deeper, we're

taking straight outta business school graduates, 32, 33, 34 year

olds who have never run a company,

Uh,

but we're, but we're putting 'em into.

And training them how to use the system.

Wow.

Got it.

So you're literally inserting people, new folks, like literally

fresh out of graduate school and

They're hungry, they're gritty.

They've learned the program and they, and they have people they

can count on as part of the journey that are aligned with them.

Alignment, alignment, alignment.

Venture doesn't have alignment anymore.

So many of these asset classes don't have an alignment.

Most fund managers aren't aligned with their LPs.

This has created unbelievable alignment with the investor,

the seller, the CEO, the align.

When you have alignment, you're gonna get a lot more done when

everybody's going up the hill pushing at the same direction.

And that, and, and this really has created a very structured way to

do that Now, search funds, use the straight out of business school

program, been extremely successful, but we also invest in other models.

We think people who are seven years outta business school,

we'll have a little more experience that can work.

We're in a, we're in a fund that does that.

We're in another fund that takes 50 to 60 year olds.

Who've had careers, but they've never maybe run something

or maybe they ran something, they just wanna keep doing it.

Who haven't a so there's, there's mo but all the models we invest in

all have an overreaching playbook.

They help 'em find companies, they help 'em buy companies,

they help 'em run the companies.

I want all of that as part of my overall model before I'm investing.

I had a guy call me today.

Yeah.

He goes, this is a great company.

I mean, I, but I wouldn't even say what it was, but it was,

he wasn't doing it full time.

He was just talking about the financials.

He'd never run anything and that deal might work out, but

that's not gonna be my bet.

Right.

You want the full, the full thing, like

I want the, I look as Warren Buffet always said, you don't

have to swing investing's.

Great.

It's not like baseball.

Right.

You can, you can wait for your pitch,

that's right.

right?

And, and if you like fastballs, you should, you

should ask for a fastball.

So

I, I, we like fastballs or slow balls.

We just want a big fat one, and we know the characteristics.

Yeah, so that's why you could do this at scale.

'cause that was gonna be one of the questions is like, okay,

you just, you, you said 200 companies in your last fund.

Well, and again, we're investing in funds that invest, so it's

an overall portfolio and, and honestly, there aren't that

many of these companies that are getting acquired in the types of

funds we're I'm describing, and they're hard to get into access.

I mean, the reason I created this fund is I was having, as an

individual, hard time getting in.

And so if I, I knew if I had created a little bit of scale

that I could go to some of the best funds and say, Hey, I've

got a 2, 3, 4, $5 million check.

Would that be interesting to you?

Right.

I am the biggest investor in my own fund.

Speaking of alignment.

Because I did this, because I wanted to have exposure to

it in my overall portfolio.

And also this is what I want to do every day.

I want to talk to these entrepreneurs.

I wanna see if I can be helpful.

Yeah,

I want to, I want to, my pa, I'm still passionate about tech.

I did tech for 30 years.

I want to be thinking, how can I help them think about AI tools,

there you go.

right?

How could I.

to expand.

Yeah, for

Right.

How can I add value to the ecosystem?

Yeah.

I'm not gonna say I'm not, I don't have the personality

to go, okay, here's my bets.

Go do whatever you want.

I mean, I'm gonna, of course they're gonna run their companies

better than I ever could, but experts as managers, I'm not.

But I'm also gonna think about, well, how can I help too?

And we're doing a bunch of things.

I'm thinking about ai.

I'm helping 'em get AWS credits if they need it.

I'm helping 'em get credit cards that make sense

for small businesses.

We're putting together a charitable pledge program so we can all be

thinking about giving back too, and share the community around that.

So these are things I am thinking about as I wanna think about.

How can I add value?

That's cool.

And it's more fun too.

And it's obviously, it's going to, I mean, it's all about having fun

and I know you're all about that.

We'll talk about some of the

A HF, you thought it stood for Agate Hound Fund.

Always have fun.

Ah, look at you.

I like it.

I mean, and that's what it seems like this is built for, like

you said, your hands are dirty.

At least you choose to do that.

You know, you're not just hands off, you know, raising a bunch of money.

And then deploying it somehow.

But, um, is, I think this leads to a question.

How do you, how do you select the companies to work with?

You know, like, is there, I'm sure there's a whole bunch of criteria,

my main selection criteria, because we invest in the

funds, is thinking about how I ask that question to them.

How do you select?

And the nice thing about the search fund playbook or the playbook

that the funds we're investing in, are using is the general

criteria, a fragmented industry.

We like that.

'cause if.

You can create one company doing well, maybe you

can add on or bolt on.

No, no co No one company is dominant so you're not

gonna get crushed by them.

You don't want too much customer concentration risk.

'cause if you lose that customer could be very bad.

We generally don't do a lot of companies that are subject to

government regulation 'cause that can change as we know.

Uh, but we're looking for companies that have proven product market fit.

Have growing profitability kind of in the size we talked about.

And at that point, you know, we do our background checks

and we make sure the numbers.

That's it.

I mean,

It's something that can last for a while.

Like you said, a

what has lasted going to last.

Right.

But you know, that, that accounting firm in Topeka or the, you know,

flood, the flood restoration company in Oklahoma City.

They're, they're, they're gonna be around.

They've been doing it, you know, technology's not gonna right.

And their competition for that plumber, for whatever is

probably some other aging out guy

who isn't who.

Yeah.

So your competition.

We're putting this 34-year-old in who's like, let's go, let's go, man.

I got ai, I got spreadsheets.

I'm not using a fax machine.

I've just been through the best management program.

I'm gonna implement that.

I got people coaching me on this.

It's a different energy.

It's a different skill set.

It's a, it's, uh, your competition are people that may be doing well

and have a couple homes and a boat golfing a couple days a week.

Not bad.

Yeah,

Good.

Right?

But I love that as my competition.

If I wanna take things to the next level.

Hmm.

I like it.

I, I think the thing that rings true the most is like, you're,

you're, you literally have so much support for the new, the, the

CEO that's coming in and the team they're bringing in the advising.

I mean, especially going into a whole new space.

Yeah.

if you think about it, no successful company is an island.

Every single, I mean, think about all the support.

That A CEO gets even at Microsoft, they have coaches, they have board

members, they have advice, right?

Why shouldn't you bring that to this too?

We know it works.

YPO started the thing called the forum, right?

The YPO forum.

Why?

Because you do better when your peers are sitting there

objectively holding you accountable, objectively giving you feedback.

It, this is not, this is not rocket science.

We know it works.

It's a best practice.

I'm just thinking.

I'm like, why is this not more, I mean, it's not

more known, but it will be

it it will be known, but it's hard to do people.

It's, I just, I, and again, the opportunity set is so big right now.

Yeah.

but you gotta do it right.

And like anything, you know, they're good brokers and bad brokers.

Right, right.

So you gotta know which ones, which ones do you like working?

Which ones do you trust?

All the funds we invest with have been doing this for a long time.

They have their trusted peeps, right?

They know who they like to work with and who like to work

with them, and who's gonna give 'em the inside scoop.

Yeah.

All of that builds up to this result.

Yeah.

That's, that's interesting.

So how's it been going with, uh, so you closed the first round, you

know, your, your first fund and you know, we can talk about a gate too.

A gate.

Ha ha.

Yeah.

A gate to good funds.

Yeah, see I was like, because I had the visual of this gate

still for whatever dang reason.

Um, but yeah, like, 'cause your, your model obviously

it's, it's working.

So you're doing what?

The second one now and

are in a few weeks.

in a few weeks.

Okay, gotcha.

So I guess, yeah.

But, but I think, so if I was, I don't know where you're going with

that question, but let me, but it brought up something for me.

We, we focused entirely on search funds in the first one.

Yep.

And what I realize now, having done a lot of this and living

a day-to-day, is that it's not just the search fund

model that's going to work.

That's a great model.

That's a flavor of.

This playbook of entrepreneurship acquisition model,

like I think about entrepreneurs who wanna go acquire and run and, and

the model that, that for low NPE.

And that's really what we do.

That's a mouthful.

So I need, if anybody listening has a good, uh,

moniker for that, I'd love it.

Uh, but, but that's what we're doing and that's both.

Obviously a great place to play, but perhaps not as obvious in that.

It's a, it's a hard thing to do.

Well

Right.

that, that's, that's why when you're saying, I, God, why is it more,

more people are going to do this

I think you nailed it though.

There's a lot of components and there's, like you said, there's a

playbook, but that means there's a system that it's people too.

It's not, you can't do it alone.

I mean, I guess you could try part-time, but

good luck with that, you

Well, think about it.

The other thing, like, I'm gonna say something that's

obvious when I say it.

You go in and you buy a company that's 20 years old,

you are replacing the CEO founder and who are you?

Every, you, you walk in on day one and people are

looking at you like, who?

Who's this guy?

Yeah, for sure.

Does he or she have my back?

Do they know my skills?

Are they gonna change everything?

You gotta build the trust.

You gotta take a culture, continue to improve it.

But that's, I, I'll tell you, I went to business school with some of the

best and brightest, uh, less than half my class has that skillset.

I don't have that skillset.

It takes a certain type of person.

What I love is that the people that we're working with, I

actually sat with 20 CEOs who have acquired yesterday,

Wow.

and this was a random question that came up, but I thought,

I'm gonna ask this question.

How many people here had some kind of paying job by the

time they were 12 years old?

Every hand went up.

Wow.

Okay.

Early entrepreneurs or

Yeah.

Or they just understood work.

Maybe they were forced.

Some were entrepreneurial, some needed in their families,

but they understood early what it meant to put hard work in,

to get a payoff from that and have to work with people and.

You know, kids today, and I am sorry to be that guy, but a lot of

kids today just aren't interested in that hard work paying a due.

So the people we work with, not exclusively, but generally are

often first generation immigrants, grew up in some very small

village and some remote place.

Maybe none of their family went to college, but they did.

Right.

Or someone who was in the military who learned.

A system,

Discipline or system.

Yeah.

right?

Or someone who grew up in a family where a small business was

discussed around the dinner table.

So you're comfortable with that.

'cause some people, this is really a risky thing to do.

I mean, the CEOs we work with, they're all in, no,

they're I, I mean really from an equity standpoint,

from their, they have to be.

And so that also is a piece of the model.

it's people selection, it's, it's knowing they

prove themselves.

Yeah.

huge.

And so the funds we invest in, we talk a lot about that.

Yeah.

But one of the nice things is using the funds that do the search

fund model, a lot of the funds teach the class, so they get

to source their best students.

Even better.

Okay.

It's built into the whole thing.

Yeah.

The

system as it should be.

I mean, you're, you're supporting the students who

are grinding and paying a lot

through time and money.

and so yeah, there's almost a, a different mentality.

Yes, people wanna make money, but there is this coaching,

mentoring, teaching piece of it that we all, everybody I know

in the search fund community and beyond enjoy that piece of it too.

It is not just for money.

It's about feeling like we're part of a team.

We're really driving towards a goal.

Tangible, tangible.

Yeah,

That's a big piece of it.

it makes sense.

And, and like this showed up what you said 30

years as you were already

40,

40, 40 years.

So the backstory is I went to Stanford Business School and I just

coincidentally had a professor.

Who invented search funds, but they weren't called search funds.

Then.

In fact, the name search funds is so confusing to people.

They changed it.

The class is now called ETA Entrepreneurship

through Acquisition,

Ah, okay.

but Irv is such an amazing guy.

And six years ago as I was looking at venture capital

thinking, I don't know that I like venture capital and I don't

know that venture capital likes me, meaning like, I'm not sure.

I wasn't sure how to.

Do it anymore, and there's so much noise and

misalignment, blah, blah, blah.

I just went, Irv, I'm, I'm not ready to retire.

And I remember you did those things called search funds.

They've done incredibly well.

I think I'm gonna start to do those.

And then he was willing to talk to me through a, a period of, of

follow ups and I said, why isn't anyone doing this fund to fund idea?

He said, somebody should.

You should do it.

Wow.

That just like that.

Yeah, it was just like that.

And you know, it's like I got into the wine.

So it's funny, I, you know, my, one of my side life stories was 18

years ago, I went to Argentina and I ended up meeting a classmate and

drinking a bunch of great wine.

And, and on the, almost on the spot said, why isn't anyone doing

high-end malbeck from Argentina?

And so he, my.

My, my partner Santiago said, you should,

I love it.

The start of every group is

yeah.

Well, yeah, and, and so that's how, I mean, honestly, that's how me

getting into search funds happen

Yeah.

I'm having more fun.

I'm having it is, I, it's, I wake up in the morning thinking about it.

I go to bed thinking about it.

I love sharing the story about it.

I, you know, I'm completely biased, but I don't know why.

If you've got some money, you don't have exposure to it.

I now have created a way for people to have exposure to it.

I mean, look at family offices or high net worth individuals.

I think you've got your stock market.

You've got maybe your tech, your venture, you've got your real

estate, maybe you have crypto.

But here's this thing which I'm just calling low end private equity.

It's not correlated to that.

It doesn't go down.

It's had outsized returns.

Okay.

Maybe 20% a year isn't sexy, but I think it's really sexy.

I mean,

is pretty damn sexy.

you the magic of compounding interest.

One of the great eight magics of the

right.

world.

I mean, so I just like, part of me is just funny.

When you look at the world and you go, it's obvious.

We start looking at the math too, and then it's

Oh my God.

No.

I know.

There was a guy this weekend when I was at this conference, he said,

well, I just think about math.

He goes, you know how many people here know at eight to

the fourth power is 4,096?

And, and you forget that if you compound, it's, it's crazy.

It grows very fast or

it.

It does and what doesn't.

If you think 15% a year isn't sexy, go out 40 years.

Mm-hmm.

Mm-hmm.

I'm telling you to tell my teenage daughter, save now.

Just keep saving

even if you, you know, be.

And so that's what I'm doing.

That's where I'm at in my life.

I don't need the a hundred Xs at this point.

Sure.

They're fun, they're exciting, and so is going to

Vegas, but you know, right.

Like

At least you know you're getting at there.

Yeah.

Right.

Well, and that's, I think that's the cool, that's, yeah.

The reframe maybe when it comes to investing, especially with when

the word fund comes, comes around.

Yeah.

Typically it's correlated to VCs.

Honestly, I don't know if everyone totally understands

even the fund concept because it's, it's not like it's just,

uh, advertised for everyone,

No, it's true

you gotta kind of know the right folks, right.

You, you do.

Um, and there are variations on a fund, but.

You know, in our case, what we said is, let us be stewards.

Let's let us figure out within this asset class the best investors.

Let us make sure that we're tracking them, helping them,

reporting on them, keeping them honest, if you will,

Yeah.

and you don't have to think about it.

We'll do all that work for you

Yeah.

from the financial work.

To the selection, to the curation, to the, um, ongoing

management, to the value add.

That's what we do.

And, um, and it, what it leads to in our case, is a very diversified,

almost index fund, like, or ETF, like portfolio of small, of

great small American business.

Like you said, 150 different agent, uh, industries.

That is in the first one you

Right, right.

And second one will too.

But, but we're just, we're like, if you believe in American small

business, this idea is probably a pretty interesting way to do it.

Mm-hmm.

Mm-hmm.

I, I, I mean, so I. People listening here at like where, how are you

having these conversations, I guess, and obviously we mentioned Delphi.

That was one of the reasons why you even reached out to

Yeah, they should let, they should talk to me on my Delphi, uh, avatar,

Seriously, that's Yeah.

a hound fund.

I, I guess you'll have show notes maybe.

Um, and people can, um, you know, I've got an email on

there if they wanna reach out.

I've got a number of papers and podcasts and, and

resources on our website.

Um, I can recommend books.

It's, it's, it's, it's not hidden.

We, there's a lot of information.

It's really fun to get into.

The best part for me is hearing the stories of the entrepreneurs.

I.

Well that's why I was gonna like you have in, it's kind of

like why I have this podcast.

I get to learn new things.

I get to.

Ideally it's giving value to, to everyone who's, you know, yourself,

but also listeners and watchers.

Uh, but it, it keeps me fresh.

And it's like this, yeah.

You're constantly, oh, wow, that's a new problem to solve.

Or that's a, that's a business doing, like

creating a immense value.

Let's, let's make it create more,

Well, let's, let's make it create more, but also.

I think people are overwhelmed with the change that is

happening and is coming.

Hmm.

How do you.

and what I mean by that is tariffs today.

Tariffs tomorrow.

Who knows?

Uh, globalization.

De-globalization, right?

Jobs.

No jobs, right?

I mean, it is.

We are in the midst of probably the greatest change

in the history of our world.

Certainly in business.

We've never seen anything like that.

And so how do you, you know, in the 1960s or seventies,

you said, I'm buying a house.

I know it's gonna be worth more.

I don't know that today,

Right, right.

but what I do know is that for the next 10 years or so, American

small business is gonna be solid.

what, what, why do you Yeah, like what's the, what's

the story in your head?

Like, what's that thing that that makes you so confident?

Because these services are essential services.

You're still going to need a plumber.

You're still going to need a pool cleaner.

If you have a pool, you're still gonna need your teeth.

Like

It's just investing in the roots of everything.

Yeah.

The foundation.

the basics, right?

It's really not sexy at all, but it is sexy.

Yeah.

When you're like, this needs to happen, so.

And you've got this great transition.

Hmm.

You've always had some transition.

There's never going to be a transition like

this one in our lifetime.

Again,

That's true.

Population numbers.

Just say it

demographics, demographics, demographics.

Yep.

Yep.

That's wild.

And so, you know, from all your travels, a hundred plus countries,

you said, you know, America being like this unique bubble that Yeah.

If you're here, like are there opportunities like this you see in

Yeah.

Oh, so that's a really interesting, so let me tell

you a little bit about that.

So, 14 years ago, two schools taught search, ETA, this, this thing.

We're talking about two business schools, Stanford,

Harvard, today, 25.

Business schools teaching six continents.

There are schools and see, so it's, I had last night on the train ride

home from the airport, spoke to the first woman, she, she's the

first searcher, happens to be a

Mm-hmm.

in Taiwan.

No one had ever used this model to buy in Taiwan.

There's a couple in India, there's a couple in Japan.

Europe has certainly gotten bigger.

There's several business schools in Europe, so the

Ads Canada, it's quite large.

Mexico, Spain.

So yes,

it's the demographics are true throughout the world,

Yeah, it's just, again, it's a playbook, right?

It's the model, which ironically, yeah, you're, uh, you're Delphi

well, explains that really well, actually, I was typing, I was just

like, okay, some of these terms.

So this is a hint to anyone listening and watching.

We will link, uh, your Delphi and go to town because

there's, it's incredible.

Yeah, the amount of, and I know what we put into it.

It was a lot of direct.

we put in like 300 plus documents and videos and, right, right.

Which is amazing.

It, it is, and I gotta thank you because that's not, everyone

creates these as, as robust.

That doesn't have to be your content.

It's stuff that you would reference and point people, people to.

Anyway.

Stuff I've been learning about.

I mean, it's the same source material that's taught in

the business school is taught in these classes that the

podcast I've been learning.

So yeah, it's just nice way to aggregate it and, and you can go,

you, you can go in any direction with the avatar and the Delphi.

And it's really fun.

I actually love showing people.

I even, I even go, you know, someone said, I asked your favorite

wine, and it said Your wine.

I said, yeah,

As it should.

Really nice Malick.

Yeah.

Well do I guess like in all these, I don't know.

Yeah.

'cause I'm curious about the whole vineyard thing too.

Like does this happen often where you're just like.

I'm gonna start another business or like through this fund

or, you know, fund of funds.

Sure.

I mean, no, I mean, the truth of the matter is I am an entrepreneur.

I like, I like starting things.

I like being at the beginning of things.

And it's more where I look at the world and I say, nobody

else was gonna have Santiago, this incredible wine maker.

The, the land in Argentina was rich, luscious, amazing vineyard land.

That was one, 100th.

The cost back then of Napa.

So they're the arbitrage by, right.

Um, it, I don't wanna say it was always a dream of

mine, but it's, I love it.

I love, I went to Napa being at Stanford, uh, a lot.

I like the beauty of, I like the, I'm a foodie, I like the culture,

I like the people involved.

All of that combined.

In my mind, I'm always saying if I put this with this, with

this, and you know, it's funny, I did the wine by the way.

I have to, uh.

What do you got?

You got a little bit.

Ah, there you go.

Hand of God or

God for those, for those soccer fans.

Uh, might know, might know a good Argentine reference around that.

Um, but, but what I was doing is I was saying, how do I combine

a bunch of my passions because we're only so many hours in a day.

Only so many minutes in our life are we doing the things that really hit

a bunch of buttons at once for us.

That's what I always try and do.

And so the wine did a little bit, the, the wine, it turns out, and by

the way, we're, I'm selling the wine business after 18 years, so your

listeners, if there's any left, get a big discount if they email me.

Okay.

Well you

for for sure, we only

be going after this.

40 cases left or something, but, but what I did with my wine is

I used it as a way to create community in private equity.

I've done a thousand wine dinners using my wine creating

community, which has led to deal flow and ideation and

other people connecting.

So my, what I'm always trying to do is combine the life

experience into something that's more solid from one, it's the

one plus one equals three.

That's right.

Yeah.

Yeah, yeah.

And why not?

Like you said, we're, we're all living this life our own way.

We have the choice, so.

Always have fun, of course, as is the motto right there in your

chest, but at the same time, yeah, it just incorporate everything.

Especially being an entrepreneur and most, if not all

listening and watching are so we all have the choice.

We have the ability to create these lives, so why the hell not?

Why are you selling it?

I'm curious.

Oh, why am I selling, right?

Yeah, no, it's good.

So I'm keeping a little bit, I'm building a house.

Um, but first of all, someone made me a great offer.

Can't go wrong there.

Yeah.

and I honestly wanna focus on acquisition entrepreneurship

more than anything else.

I'm not gonna lie at my age, carrying the boxes is not

quite as easy as it used to be.

I'm looking, I'm back from Argentina.

And, and let's look at the world like, let's look at the world.

The world changed 18 years ago.

There wasn't, uh, legal cannabis, there wasn't micro

breweries, micro distilleries, non-alcoholic alternatives.

True.

The, the, the competition for vice, if you will,

has quadrupled, lit, literally quadrupled.

And that's hard.

It's noisy.

it's a good point.

Yeah.

And, and, the other thing is.

I hate to admit this, I'm getting older.

I don't enjoy drinking as much as I used to.

I

just turned

40 and I'm already feeling that same way.

right?

So I mean, I used to love it and I'm like, eh, I might have a

glass or maybe I won't tonight.

And it's hard to go to your own wine tasting, say I'm

not gonna have wine pack,

I'm drinking water juice.

Yeah.

but, but I mean it's just, look, it was a good run.

It was a great run.

I'm so glad I did it.

Met great people along the way.

Community.

You build community like,

and that's it.

And I, and I knew that right when we first chatted and you

told me about the dinners, and I think I missed it by a week

when I went to San Francisco.

I was bummed, but

we have more coming up.

We'd love, we would love to host you.

Cool.

Thank you, Jon.

Yeah, this is, I mean, it's infinitely fascinating because

honestly, I kind of purposely went into this without knowing

all the details of search funds and just what's possible.

Definitely.

Your, your Delphi helped answer a bunch of questions for me, but

I'm gonna go to it even further now, and I. Yeah, I mean, and

I'll make sure all the links, so you listening, watching, it'll be

wherever description, show notes.

Yeah.

And check out Jon's, uh, his Delphi.

But how do they contact, I guess shout out your email and your

Yeah, Jon@agatehound.fund or Jon at hand of god wines.com.

Either ones works and, uh, you know, I, I am anytime, well,

anytime with my avatar for sure.

Yes.

but but this is super fun.

I, I, as you can tell, I'm passionate about this and,

and, I think it's, it's really.

Fun when the light bulb goes off for people when I'm talking about it.

Because you know, when you're out trying to explain something

and you're, you're suggesting people might want to invest,

there's always gonna be reluctant.

Like, how could it be that good?

Or why would it, uh, how can you know?

Lots of objections.

Sometimes they tell you the objections, sometimes they don't.

But when they finally go, oh, okay, I got, I got it.

Yeah.

That's, that's very gratifying.

Got it.

Well, that's, and I would urge, yeah, everyone go to

go to Jon and that's JON.

So make sure you're not, not throwing an H in there, in

that e email, but have the voice conversation with Jon.

It sounds just like you.

It's awesome.

And that's what I'm gonna honestly go do.

And just like, you know, 'cause in terms of investing, you know,

there's a lot of places to put our money and I'm not gonna say

tell you exactly where, where to put things, but, you know, Jon's

a pretty damn sexy option, you know, in, in what you're doing.

And.

Thanks.

Thanks, Joe.

It's so fun.

Will you and I are gonna, we're gonna keep, keep, keep doing

this and just help each other and let's keep sharing good ideas.

And if I can be helpful, let me know and let's always, and

let's always have fun, man.

Uh, that's what it's all about.

So a HF.

Thank you.

All right, Jon.

Have a good one.

Thank you.

All right.

Ciao.