Host: Today's episode is a fun look at the Holdco phenomenon. Why so popular and why now? Are they even a good idea? My guest is Kelsey Larik, co founder and CEO of an E Commerce holding company and co founder of the Holdco conference Holdco Conf. Our conversation is anchored around a survey of Holdco operators that Kelsey and his team recently ran. A bunch of interesting findings here and Kelsey, as a guy who is both a Holdco entrepreneur himself and the guy who runs a conference on the topic, brought lots of anecdotal color to the conversation. Also, check the show notes where we've linked to all 12 Acquiring Minds interviews with Holdco entrepreneurs. Please enjoy this interview with Kelsey Larik of 365 Holdings. Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it. I want to share an update on the Acquisition Lab. As you know, the Lab is a highly vetted cohort based accelerator and community for people serious about buying a business. After going through the Lab's month long intensive, you have ongoing access to almost daily Q and A sessions with advisors, regular live deal reviews with Walker Deibel, author of Buy, Then Build Potential Deal team introductions and a very active Slack group with other searchers on the path. Well, the update is that the Lab recently passed 60 businesses acquired and for well over $100 million in aggregate transaction value. Also, all members now enjoy lifetime access to the Lab because when you buy a business it's often just the first of many and the Lab wants to support you in every deal, not just your first. Lastly, check out my recent interview with Shane Ursum, episode 105. Shane acquired a business with over $1 million in EBITDA in just six months and he attributes a lot of his deal success to what he learned in the lab. Check out acquisitionlab.com or email the lab's director, Chelsea Wood. Chelseauythenbuild.com Kelsey Larik welcome to Acquiring Minds.

Guest: Good to be here Will. Thanks for having me.

Host: Kelsey, you are the co founder and CEO of 365 Holdings, a holding company of E Commerce DTC businesses. You were an early guest on Acquiring Minds. You are also a co founder of Holdco Conf, the unconference for Holding Company Operators and Entrepreneurs, and as part of the conference you recently surveyed Holdco entrepreneurs to better understand this whole phenomenon of small business Holdcos. Today we're going to hear what you learned from the survey results. But first, Kelsey would You give us some quick background on who you are, please.

[3:07] Guest: For sure. And again, thanks for having me back on. A number of years ago my business partner and I bought our first e commerce business. Prior to that we had some small companies but never really achieved much scale. If you fast forward from that first e commerce business to today, we've got a sizable team and a sizable portfolio of various e commerce businesses selling mostly direct to consumer. A little bit on Amazon. We tend to get lumped into that e commerce aggregator world. Although we have not raised any outside equity capital, we're self funded and bootstrapped. We are an e commerce platform that buys and operates e commerce businesses.

Host: Do you share revenue numbers across the entire portfolio? Is that something you can do?

Guest: Revenue typically not the headcount. We're just over 100 globally and we're heavily vertically integrated. So in there we have everything ranging from executive kind of leadership all the way down to production workers and global contractors doing things like customer service or accounting. We're incredibly heavily vertical in our supply chain so we make some of the things that we sell and we also pick back and ship many of the things that we sell to reference multiple eight figures of revenue.

Host: Okay Kelsey, and so tell us about the genesis of Holdco Conf.

Guest: A couple years ago I met John Wilson, I think also who has been a guest on your show the Wilson Companies here in Northeast Ohio. And I realized John and I had some similarities. Similar point in life personally with like family and age and kids and similar businesses. Revenue was in the neighborhood, headcount was in the neighborhood. All of our problems were certainly very similar. Whether it was financing or shared services or acquisitions or hiring like we just became fast friends and we met, you know, through the magic of the Internet and we realized that we both went to various industry conferences. I would go to E commerce events, he would go to plumbing or H vac events. We'd both find our place ourselves at things like SM Bash or Capital Camp. But there really wasn't a specific home for holdcos. If you kind of identified as a primarily multi business entrepreneur. If you said, you know, I own multiple companies, I'm the founder of a portfolio of businesses, I'm not really private equity, but I'm also not just a SaaS entrepreneur, I'm not just a restaurant owner. Whatever, whatever category you might be in, there just wasn't a home for that. So we set out to launch the home for that called holdcoconf, which is an annual event where holding company founders, executives, investors, entrepreneurs meet for two and a half days of fun and learning because the challenges of running a portfolio of businesses are different than the challenges of scaling. Even a roll up just in one industry is just very different. And the topics that we cover for a couple days of Holdco Conf is trying to bring the best and brightest together from small business holding companies to share best practices, build relationships, have a lot of fun while we do it, and kind of support small business hold codes.

[6:06] Host: Awesome. Kelsey, two follow up questions. First, interesting to hear you say that part of the ingredients of your chemistry with John is that you found that the problems that you have were similar. What you'll often hear about blue collar businesses, field business, you know, field crew businesses, is that if you look under the hood of these businesses, you know, be it plumbing or H vac or foundation repair or disaster remediation, that there's a lot of similarities. Like there, there's a lot of overlap and the problems are the same. But I wasn't ever sure that that actually extended to other categories of business. So interesting to hear that an E commerce holding company, a quote digital business, and John's business, which is plumbing, plumbing actually do under the hood kind of have a similar problem set.

Guest: I forget who to credit it to, but somebody refers to the everything tastes like chicken layer of business, meaning that finance is finance. You gotta reconcile your books, hiring is hiring. You gotta have a process for bringing in good people, leadership and management and accountability. Whether it's something like EOS or just some other system of daily operations, those transcend industries. So certainly John and I might disagree on the finer points of how he tightens a wrench on something or how I, you know, run a Facebook ad. And that's where our topics diverge. But that everything tastes like chicken layer of running a company really is homogenous. And my opinion, I think in his and others of the experience of being an entrepreneur running more than one business. There's a lot of commonalities there in my opinion.

Host: That's great. It's really interesting, Kelsey. And then the second question was Holdco's are hot. This I've had many Holdco entrepreneurs on this podcast. Those episodes always really perform well. But the idea of owning multiple businesses, businesses without, you know, applying this label to it is nothing new. Just like I guess search and buying a business is nothing new. But why do you think that it kind of became trendy in the last year? 2, 3.

Guest: There's certainly a pocket of the Internet that has some overlapping influences. I think you and I might have emailed about this but there's probably an intersection of like Tim Ferriss, Robert Kiyosaki and like Berkshire Hathaway or value investing. And if you put all that into a blender, you might get an entrepreneur that wants to run like a lean portfolio of businesses that can compound retained earnings. And it's certainly easy to see some big names that have holding companies, many of which have been guests on your podcast. I could rattle off the list of well known names like Andrew Wilkinson at Tiny or the Higgins at Chenmark or Brent B. Sure at Permanent Equity. There's a, there's a long list of, I think people that have aspirational holding companies. Enduring Ventures is on that list. There's others of they publish content on the Internet, they've been on podcasts. And it's very easy for somebody interested in ETA to, when they approach buying a business to say, hey, one is fun, but two or more sounds like a real party. We should, we should do this portfolio thing. So I think that there's an intersection of kind of culture and I do think literally it comes down to the media that many of us might have consumed over the years, both financial and otherwise, and then the prevalence of some really aspirational, really impressive stories being told about doing this at scale. There's also plenty of stories in any given industry about living one big business. But I think there is an awareness that deals are hard to find and it might be easier if your target is some revenue metric, call it fifty or a hundred million dollars, whatever it is, it might be easier to get there, cobbling together a group of things than to find the one sports car, the racehorse that you can grow to that level or take to that level. So I think there's kind of a confluence of factors that makes it popular for holdco entrepreneurs. And it ranges from culture to these impressive names that are building in public to a degree and sharing some of their successes.

[10:03] Host: I agree with all of that and I'll just add to that. Kelsey, I mean, I really liked what you said about, you know, if one is good, two is better sort of thing. I think just with the increasing popularity of search and the idea of ETA buying an existing business, it's, it was inevitable that people would eventually say to themselves, you know, further along the path, more mature in the business that they bought would say to themselves, well, can I buy another one of these? And what does it look like if I, if I really scale this pattern of buying a small business and you know, do it again and again. So it's almost like less trendy and more just inevitable. I mean it's, it's kind of the next step as a, as a, as a business buyer that you're going to kind of arrive at.

Guest: One of the debates I've had about this notion of Focus versus HoldCo. So I have a friend who has a very large, very successful financial publishing business and we just had a fake Twitter beef about this. It was kind of fun. But throughout the dialogue of giving each other a hard time about him focusing on a very big, very successful business I admire a lot and him kind of teasing me, I realized that in many small businesses I would include the ones that we own and operate. You can get 90% of the results with 10% of the effort and yeah, a hundred percent of the effort can get more than 90% of results. But there's some breakdown of that marginal effort. And for a high strung entrepreneur that is trying to maximize their time, you might find yourself running a $3 million septic business and you realize you can do it in 20 hours a week or you can do it in 40, but the financial result is within, you know, a small percentage point. Maybe you should work half time and go find something else. I've certainly seen it happen in my business. Where could we put more effort? Yes. Is it marginally accretive? No. It should probably move on and capital allocate that time or those dollars to the next project. Because many small businesses have a constrained total addressable market. You can only grow it so profitably and so inevitably if you want to grow, you end up diversifying.

Host: I love that point and I'm going to say kind of a similar point, but not from the kind of the resource allocation perspective, but from the ego perspective. You know, if you're, I think that an ambitious entrepreneur who has big plans for him or herself, you know, to, to buy, to operate a 3 million dollar septic business, that can be fantastic and great, but they might have a larger appetite or a larger self image than that. But they still love this kind of world of small business and they love, they love the idea of buying that business, that first step. But a Holdco Path or a Holdco Vision is a way to play in small business, but do something big, not do something small. And so it kind of scratches the ego itch. I think for a lot of really ambitious entrepreneurs as well, I would also

[12:46] Guest: just maybe add the mathematical reality of if you do go fishing for bigger businesses and you're competing with independent sponsors and smaller private equity, maybe even the success ratio of stringing together a handful of 1.5 EBITDA businesses could be a lot easier than finding one that is 3, 4 or 5 million of EBITDA. There's a lot more buyers for those that are a lot more sophisticated and have better access to capital and resources. There's a lot of reasons that will push people to wanting to build a Holdco. We're going to better survey that next year. That was one of my learnings from this year's survey.

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Guest: For sure, it's focus. The canonical thing people point to is like the thought you have in the shower and you can only really do it for one business when you're, when you're not thinking, what is it you think about? What is the epiphany that you have at the gym or again in the shower when you have five minutes? And if you have two, three, four, ten businesses, statistically speaking, you're just less likely to find that online. And so I do think if you have a platform business that has really scalable levers and really, really high quality attributes, a single business with a hundred percent of an entrepreneur's focus can go farther than a Holdco and can be a better decision based on your opportunity set, your risk appetite and your skills. And I fully agree, that's a good thesis on the, on the other side of the argument,

[15:29] Host: and I'll add to that too, that one of the things that I see the detractors say is a lot of people are kind of putting the cart before the horse here with their, with their Holdco vision. Let's buy that first business, make sure the transition is okay, learn how to operate. You know, there's a lot there's buying that first business is extremely challenging as this as this podcast talks about ad nauseum. So let's make sure you can do that and indeed like and want to do that before you talk about buying 10 of these. 10 of these guys.

Guest: Yeah. We've gone through iterations of Hold Co vision up, down and sideways. Anybody that's followed like my journey at 365, it's been an interesting road. There's been some very recent people I look up to that have on hold code and kind of focus down on a single business. I would agree with your assessment. If you're listening to this as a searcher, leave the holdco thing second. Just like find a company first and let's talk about business number two once business number one is chugging along.

Host: Great. All right Kelsey, so give us a minute. Just on set the context of this survey methodology, who you pinged to participate.

Guest: Yep. I looked back and realized that there's many organizations or communities that I follow or I'm a customer of that produce a report. So in E Commerce I'm a member of E Commerce Fuel. Each year Andrew Darien publishes the State of the Merchant and if you're in E commerce you're going to read this thing. I submit survey data. So do hundreds of other people. I read it like, like it's a very important document. Stanford Search Fund in your world is very popular. The guys at SIG did the self funded survey. If you're upmarket and you're raising capital, you might read the McGuire woods survey. There's industry surveys everywhere and I realized that in this pocket of entrepreneurship called holdco's there was a lot of questions that were the same. People would come to our conference Holdco Conf seeking some of those things. I'd see it happen in Twitter conversations, I'd see it on Search Funder and just the conference isn't enough to handle that. So we wanted to publish a report and begin to annually collect some data from self identified Holdcos and try to get some consensus on some of these things as a better North Star or a way to point people towards an answer.

Host: Excellent. And yeah, I think that they are really powerful kind of stakes in the ground marketing tools for the organizations that put them out. So well done on jumping on it.

Guest: Thank you.

Host: So all right, so so tell us kind of what are the aggregate aggregate response data set look like, how many people responded so sure. Real quick.

[18:09] Guest: I have a printed copy of the survey for anybody that's watching on video. But if you want to download the Survey, go to holdcosurvey.com you can download it, it's free. That's where you can go reference all this. In the intro we break down the aggregate of the survey respondents. We had just over a hundred survey respondents and most of it was a little bit of marketing from social media for the Holdco brand and some outreach that John and I did, asking people directly if they would participate.

Host: Great. So let's get into some of the. The key findings. Kelsey.

Guest: Sure.

Host: Kind of take, take us through what was, what was one of the. The findings that jumped out at you for sure.

Guest: The first thing is that most hold codes are smaller than we think. So it's easy to go on the Internet and see a giant name like Constellation Software or Permanent Equity or insert your favorite, you know, successful hold code that you're following and then you get down to somebody like a Kelsey or John Wilson or even an anonymous Twitter account and you see all this content from survey respondents. Most Holdcos or self identified Holdco entrepreneurs are much earlier in their journey and are much smaller than even I imagined. So a couple of insights. The survey was obviously done over the Internet and it was anonymous. So we sourced respondents from Twitter, LinkedIn, search funder and outreach to our networks. And our survey sample size is a function of our outreach. So there are obviously many more hold cos or entrepreneurs that didn't respond. And we're only working off the data that we have. We have some survivorship bias there. But out of our a hundred plus survey respondents, half weren't even eight figures in revenue and some of them only had one business. So to the average search funder or Acquiring Minds listeners, you just assume every hold co is obviously eight figures, obviously has two or more businesses. Yet we had people responding to a survey where many of them were much smaller in revenue and not dismissing them by business size, they're just anecdotally smaller. And some legitimately called themselves a Holdco with only one operating business. Now, certainly their business plan is to grow, but again, today they are functionally a single holding Holdco.

Host: Yeah, well, I guess that ties back to our point about how much aspiration there is swirling around this concept. People kind of self identifying as Holdco entrepreneurs even though maybe technically they don't qualify.

Guest: It's super easy to get the echo chamber of listening to the Acquiring Minds podcast and everybody's rolling up everything and all multiples go to the moon and there's no businesses left yet. The reality is most of these hold cos that we're all following, myself included. Might be smaller than you think.

Host: Mm, fascinating. And. And does that square with your kind of anecdotal experience of the. Of the folks who came of the attendees at Holdco Conf last year?

[21:04] Guest: There's definitely a distribution of small to large and our survey set internally for the conference last year anchored slightly larger. That also might be some outliers to the top pulling that number up.

Host: What about I hear I see here in our notes that you had an observation on Headcount for sure.

Guest: Back to your comment earlier about John and I having a relationship and even starting a conference together and having very different businesses in a guy in a truck business, which I would call John Plumbing, H Vac, all those traditional service businesses. Revenue per field employee is a great metric and many people overly simplify that down to just revenue per employee. And so you might look at Google's revenue per employee or Facebook's revenue per employee and it gets to be incredibly deceiving. So we tried to use many insights in the report as a measure against size and so we, we reported against sometimes headcount, sometimes against revenue, sometimes against number of portfolio companies. But we're breaking down these insights and we realized this is headcount is just very deceiving. Some businesses just have lower revenue per employee or higher and that tends to get into a function of like do you own restaurants or do you own software as a service? That metric gets to be incredibly deceiving unless you're very much apples to apples. It's just not a very insightful way to compare things.

Host: And did you come to one metric to rule them all that you liked?

Guest: We ended up defaulting more often than not to global revenue as the best way to analyze that.

Host: Looking at our notes here, one of the other things that you observed was how you know it's not just do you have one business or do you have multiple. There are, there is a spectrum like, like with anything of. Of Holdcos and things change depending on the size of Holdco that you are. What did you find there?

Guest: I think one of the questions, especially if you're maybe in the acquiring minds audience and you're one of those smaller operators buying your first business. You're trying to get tape figures. One of the common questions is likely when do things change? When do I graduate from SBA financing and I go get, you know, a big boy bank loan with no pg? When do I hire a High highly compensated head of finance. When. When does my business really evolve in growing a Holdco that's easier to answer industry specific. If you're an E commerce you can go join an E commerce community. If you're in plumbing you can go to industry conference. There's a better trodden path of just growing a single service or product business, of industry norms, of when successful competitors have done things. It's less obvious when that happens in the Holdco space. And that's one of the things we wanted to key in on is what are the revenue benchmarks when you should start poking your head up to make meaningful changes in the business. So a couple things happen. According to survey Data really around 50 million is a good place to start thinking about meaningful changes. And then certainly these changes are ubiquitous at nine figures. I had thought some of these things happened earlier. We frankly as an organization are not at 50 million yet. We've tried to make some of these changes. I thought they happened at 20 or 25 or 30 but really it's 50 million when a couple things happen. So one the presidents of outside equity. In all of our survey insights you're much more likely to have outside equity over 50 million of revenue. The sophistication of your debt stack goes up dramatically. Many sellers staying on post close and operational rules looking maybe more like a traditional private equity kind of rolled equity scenario. Leadership positions having like tangible real equity grants, not just profit sharing or synthetic profit interests of some kind and then hiring executives to lead M and A. That handful of things like really is incredibly rare below $50 million in global revenue.

[24:58] Host: Your point about the outside equity at 50 million do you think what do you think the, the direction of causation is there? Maybe there is it. Holding companies only get to 50 million. To get to 50 million you probably need to have worked with investors and brought in outside equity or once you get to that level you're kind of a sophisticated enough business that you're just gonna. It's just from pure kind of capital allocation math you're going to start seeking outside equity to. To accelerate your growth.

Guest: I don't know that I have a precise answer to that because it is a bit chicken in the egg and it's a bit a function of the strategy of the hold co founder. So I don't know that I have a conclusive answer to that. I suspect it's a bit of both.

Host: Okay, onto the next finding. Chelsea.

Guest: One of the other main topics that is a constant conversation is how to build a team, how to Hire and incentivize and train leaders or operators and this entire notion of hr. So you're scaling Holdco, what services are at the parent company, what services are at the opco? Are we doing shared services? What level of seniority? There's just this kind of how do we staff this machine is an ongoing topic. What was a surprising insight is that even some very small holdcos, again those seven figure hold cos report using profit sharing and phantom equity to incentivize compensation of leaders. Even early on in the journey, which I would not have anticipated being the case. Quite frequently the first real executive hires tend to be either finance or operations. That's not surprising to me. At least once those bases are covered, marketing and HR are the ones that quickly follow. The takeaway to me, if you're listening to this and you either have a business and you're trying to go Holdco or may have a very small Holdco is as you're thinking about the things you can delegate as an entrepreneur and the way you can staff up, what it the data seems to say is the first move is finance or ops and the second move is marketing and hr. Meaning as a founder you need to retain marketing and HR longer and you need to be more comfortable running those functions yourself until you can afford to hire somebody to help with those.

[27:13] Host: That's an interesting thought or observation because a lot of people in this world come from financial backgrounds and so interesting that the data suggests that that's also one of the first things offloaded to to to an employee.

Guest: Theoretically it's the place where HQ as it were can add value to the operating companies. So if you presume that you have a decentralized model and you have operators making decisions on things like hiring, things like marketing spend, and maybe those decisions are perhaps pushed down. The place you could add value at the senior level or at HQ is through high level CFO, COO type of work.

Host: At 365, what was the sequencing of these leadership positions?

Guest: That's a good question. I think for us it would go marketing first because E commerce tends to be a marketing forward business. Finance was retained a little longer. HR was the last thing we brought in for us. Ops and supply chain has been kind of a winding road. But again E commerce native, I think you move marketing to the front end in my world. I think that's probably different for some others.

Host: Great. Now one of the things you've already touched on it, one of the things that comes up again and again in thinking about hold codes is a centralized Model or a decentralized model. Centralized being where the mothership or corporate or whatever, you know, where kind of where the Holdco operator founder sits is providing shared services to all of the Holdco to all of the Holdco port cos the portfolio companies logic being that you should be able to get some scale from that. So if you have one HR person to, you know, manage hiring at your four different portfolio companies. Yep, it's a great use of resources because you just have to do that one hire for four businesses. But then you'll, you'll hear detractors to that logic as well and that it just isn't ever quite as clean as the logic would suggest.

Guest: So what did you see here in the data? Nobody reporting large revenues. So going to go back to that $50 million bogey. Virtually nobody there is using any semblance of vertical integration. The trend of building a decentralized hold co where operations are pushed down is very much in the data. Many leadership teams are very small, just two or three people. So I think the canonical reference being, you know, however many people are in Omaha you can, you know, feed them on a couple pizzas at Berkshire. Seems to be true of scaled hold codes in the small business space.

Host: Just a handful and just using your, your own Holdco again Kelsey, maybe E Commerce is different again because you know, there's less moving parts in some sense if you're doing your own, you know, picking and shipping. Picking, packing and shipping. That adds a whole nother element certainly. But what have you found in terms of your attempts at centralization?

[30:06] Guest: Yeah, we've had fits and starts on our decision making there. Historically we've been very centralized and very verticalized because that um, there's a thesis around that. I think that our opinion on that has evolved and we're looking to fragment the brands into some more like divisional structures as we go. So we are Moving More decentralized at 365.

Host: More decentralized. Yes, you're moving more decentralized. Okay. And let's turn to the next finding for sure.

Guest: Again with a diversified portfolio of businesses there are certainly some roll ups in our sample. So I only buy landscaping or I only buy SaaS or whatever my, my thesis might be. Many Holdcos are industry diverse and we have some, some stats on that in the survey. But I wanted to get a sense of kind of expectations or trends for 2023, kind of an economic outlook. We're recording this in August. The year's half over. We started the survey back in January but I think it's indicative of small business entrepreneurship writ large. There is several hundred portfolio companies represented in the a hundred plus survey respondents. And again our, our survey respondents are these aspirational small business entrepreneurs. So I thought it'd be an interesting place to get a diverse pulse on small business. One trend we wanted to talk about was global hiring. I think you can't, you know, listen to a podcast or scroll a Twitter feed or anything without hearing about, you know, hiring a VA in the Philippines. And so we asked about that. What was interesting is we had overwhelmingly strong response. People said they many people were doing it and nobody was dissatisfied. However, 76% of survey respondents who were globally outsourcing stated they were still figuring it out. Meaning it wasn't perfect, it wasn't terrible, they weren't throwing it out. It was a common trend, it was a growing topic in their business, but it was not figured out. Most of the talent is being sourced from the Philippines and more than half of survey respondents had global talent. We assumed our audience was US based entrepreneurs. So that hype apparently is real. The success is in progress for most small business hold cos. Have you guys

Host: used talent in the Philippines or elsewhere? For sure.

Guest: We have scaled that up ourselves in the last two years and we can, I would say, um, I'd like to think we're better than still figuring it out but like many things in our business, we're still figuring it out and I'm a proponent of it. I think it's a good thing.

Host: And, and when you guys were solidly in the still figuring it out bucket, what was the hard, the hardest thing or two to figure out?

Guest: Cultural adaptation for our US team of how to effectively leverage global resources and to document, systematize and build process for a part of the team that's not physically present and has a different operating cadence and culture than the in office physical co located team.

[33:22] Host: So could I distill that to the one word of kind of communication which is often, which is often the sticking point in a intercontinental operation.

Guest: I've got one more insight on the expectation. I wanted to just get a really rough economic forecast if you will. And so the survey shook out from respondents. 11% expected a downer flat year on revenue. However, 56% are worried about a recession and soft demand. So said differently, a very small segment of the survey thought they'd have a bad year and everybody else said they were growing. Yet more than half said recession or soft demand which seems to be counterintuitive. So I'm not sure if Holdco CEOs or optimists are risk takers. Or if they answered that saying you know what, I'm going to buy some more revenue this year and my whole portfolio will inevitably grow and I can outpace a recession or I can outpace soft demand. With all the talk about interest rates and cost of capital, that was the lowest rated concern on the radar for Holdco CEOs. Again, maybe we're all just risk taking daredevils or maybe the 1% gyration really is not that critical in the grand scheme of things. It's hard to tell but soft outlook economically paired with a non concern for interest rates and expected revenue growth is kind of the summary for the economic forecast.

Host: Do you think the lack of interest rate concern is because if you're HOLDS co recognizing that a lot of these respondents are Holdco aspirants, not not actual holds goes is that versus a lot of my guests who have one business in SBA loan and you know their debt to the debt ratio is, is, you know it's a much tight, it's a much tighter, tighter tolerance there. If you're a holds code, you got 10 million, 20 million, $50 million of revenue. You know, you just got more cash to play with so it's not going to asphyxiate you if the, if the interest rates move.

Guest: In theory, if you're a Holdco, that's five years in and you've bought one company every year, you are slowly delevering, diversifying and de risking. And yes, interest rates are a real cost of doing business. But as time goes on and your balance sheet gets better, they have potentially less of an impact on your operation.

Host: Excellent. Kelsey. Were. Were there any more or was that it? I wanted to ask you a couple closing questions.

Guest: We can move on to the closing questions. There is a lot to go read in the report. If anybody wants to get all the nitty gritty details go download it. But those are the things I wanted to share today.

[36:00] Host: And give us the URL again.

Guest: Yeah, it's holdcosurvey.com h o l d c o survey.com Great Kelsey, just so

Host: last year's Holtko Conf was the inaugural conference. The second annual is is coming up

Guest: when September 18th, 19th and 20th in Cleveland, Ohio.

Host: Great. So in about six weeks in Cleveland just what, what were some of your takeaways from that first event last year? Just give us a picture for those of us who were not there.

Guest: Yeah, I think John and I set out to have fun and not lose money and we were Successful at both of those endeavors. So proud about that and happy to do it again. We really wanted to build an event that was a lot of fun and very valuable but really built relationships and didn't just have people sitting in a hotel ballroom for hours on end. So we use a non traditional venue. We invest a lot in kind of food and drink and experiences and activities. And the lessons we learned from last year is that we could build a little more structure around that. So last year we had a bunch of keynotes and some small group discussions. This year we're changing up that format to really build some better interaction and problem solving amongst Holdcos. That happened informally last year, but one of the few pieces of critical feedback we got and I tried to get as much as I could, thankfully everybody enjoyed their time. Last year a few pieces of critical feedback was to better structure problem solving. And so this year we're going to try to orchestrate some intentional connections and intentional topics. They bubbled up organically. But in two and a half days with 100 plus people to meet, I think some intentionality around helping people solve the top issues on their mind will increase the value add and the productivity of the time people spend together this year. And so we're excited about that.

Host: You know Kelsey, one of the things that we haven't talked about and I'm not sure it was in the survey or not, but is I wonder what the temperature among Holdco operators entrepreneurs is for deal flow itself for access to more opportunities. Is that, is that something you have any sense of?

Guest: It's a great question. We had deal flow questions in the survey and I don't remember if we talked about that in particular. That might be a good one to add for next year. Okay. Our sponsor for the survey this year was Axial who was our headlining sponsor for the conference last year. They're obviously a deal sourcing platform. There's a recording they we have on our YouTube channel from their talk last year that talked about some really macro data that is kind of interesting. If anybody hasn't seen that and you want to know the deal flow dynamics that was interesting. Obviously that's from the vendor perspective, not from the operator perspective.

Host: And speaking of axial and kind of something you said at the top when talking about the gap that Holdco comp fills. How many private equity types are there?

[39:03] Guest: I would say it's less than 20%. Would be a traditional fund model based private equity. I think all of us call ourselves investors. All of us call ourselves quote unquote micro private equity. I have A Holdco in the Holdco survey, which again, survey respondents might be indicative of the conference, but not 100% the same in the survey. Many of the survey respondents were self funded, did not have outside capital. So I think at Holdco Conf this year, I'm hoping that 20% of our attendees have committed capital, whether it's a fund or syndication that are attending.

Host: Tell us the dates again, Kelsey, the URL and then I think you got a code for the audience.

Guest: I do. So holdcomp h o l d c o c o n f dot com is the website September 18th through 20th in Cleveland. And for listeners of Acquiring Minds, you can use M I N D s Minds off a ticket for a special discount on your ticket purchase.

Host: And can you tell us what that discount is going to be?

Guest: We will do 600 off a single ticket and we need to make a second code off two tickets. So just email in if you need help with that. It's eventsholdcoconf.com but single tickets are all inclusive with hotel and everything and it's $600 off of the website price. With Minds.

Host: Excellent. Thank you for for offering that to to us, Kelsey. And if people want to get in touch with you personally, what's the best way?

Guest: I am easily found on Twitter. My email is easily guessed and on LinkedIn as well. And if it's anything about the conference, you can just email in to eventsoldcom. Com. People have been pinging me about the conference and I've been very politely shuffling them over to the events team. Thankfully we have some good help there this year and I'm excited about that.

Host: Kelsey Larrick, thank you very much for coming on a really interesting look into inside this this Holtco phenomenon. Great. Again, congratulations on a great idea to kind of be the survey around this space. I love it.

Guest: Appreciate that so much. Thank you for having me and appreciate being here. Sam.