I’m a firm believer that more & more entrepreneurial ‘builders’ will evolve their operating company into a HoldCo

Scaling initial capital light successes (like a service co) & redeploying cash flow into concentrated bets leveraging existing know-how, infrastructure, & expertise

Why?

- lower barriers than ever to building asset light/capital light co's
- existing co infrastructure makes acquiring/building another co easy
- more non-dilutive funding options available
- talented operators/investors can use brand, capital, & know-how to scale meaningfully
But first… what is a HoldCo?

It’s fancy term for “holding company” which is an entity that owns/controls the assets of other different companies
Most HoldCo portfolio companies operate autonomously... with their own team, balance sheets, systems, processes etc.

Major capital allocation decisions are performed at the “TopCo” (ie, primary owners of the HoldCo)
Most HoldCo’s are C-Corps due to structural/tax advantages, but sometimes you see them operate as LLCs

Distributions to shareholders are less common, w/ free cash flow used instead for new acquisitions, spinning up new products/services, or using for existing portfolio co needs
How do HoldCo’s get their start?

A common route is starting w/ a capital light co & using excess cash flow to invest in new companies or spin up new products/co's under same entity

Its a natural evolution of owning a great company where excess cash is put to best use outside co
What are the benefits of the model?

- FCF can be effectively deployed to highest value-creation activities

- Stronger dealflow/network/resources due to spending a lot of time in a given service/product/space

- Capital deployed in co's/industries you already understand deeply
I’m always blown away by PE firms flipping companies so quickly… they spend all that time to know the team, company, & industry...

... yet they flip in 2-5 yrs to then start all over again by selling and moving onto the next investment
What are HoldCo examples?

- Tiny Capital
- Chenmark
- Berkshire Hathaway
- SureSwift Capital
- Social Capital
- Constellation Software
HoldCo’s can be all shapes and sizes, but what separates the good from the great:

- expert capital allocation

- ruthless focus (industry, business models, trends)

- have an edge in driving value creation

- typically wear two hats... dynamic operator + good deal nose investor
Most HoldCo’s execute on a playbook of building expertise & distribution before product…

1. Start, acquire, &/or scale an asset light/capital light service co
2. Discover pains/needs/wants in that industry or type of model
3. Deeply understand where the industry is going
4. Productize and brand your know-how through existing co
5. Acquire & build new products/services to add scale and diversification
6. Rinse/repeat through effective capital allocation
For those interested in being a co-founder within a HoldCo focused on digital assets in the pet space… shoot me a note!

DM or contact info here: https://t.co/KIwrnugHsD
I love 'arming the rebels' & its a unique opp for someone who wants to:

- loves building great (effective) product
- looking for a capital allocator/biz builder to supplement technical chops
- stay entrepreneurial but sophisticated investing
- build a LT portfolio+own economics

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Should we go into the details of these 125 years?


SA is built on the exploitation of labour. That labour has functioned on alcohol unfortunately. Very few people consume liquor purely for enjoyment unfortunately. When SAB opened its doors 1895 workers were paid in alcohol- the dop/tot system. 2 years into SAB's establishment

The Prohibition Act is introduced. This means black people are barred from buying your wines, beer etc. So SAB's products are exclusively for white people. But during this period beer brewing by Black women is the norm. Ayinxilisi ncam ke this type of beer. Apparently it had some

Nutritious elements to it. Now some of the context around drinking culture during this time is migrant labour to the mines, further land dispossession, the Anglo-Boer Wars, Rhodes corruption (our first state capture commission if you will) which leads to his resignation.

This context plays a role in how our cities and small towns are constructed, how they lead to the confinement and surveillance yabantu. Traditional beer brewing is identified as a threat because buy now mining bosses have identified that there's money to be made here.

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Great article from @AsheSchow. I lived thru the 'Satanic Panic' of the 1980's/early 1990's asking myself "Has eveyrbody lost their GODDAMN MINDS?!"


The 3 big things that made the 1980's/early 1990's surreal for me.

1) Satanic Panic - satanism in the day cares ahhhh!

2) "Repressed memory" syndrome

3) Facilitated Communication [FC]

All 3 led to massive abuse.

"Therapists" -and I use the term to describe these quacks loosely - would hypnotize people & convince they they were 'reliving' past memories of Mom & Dad killing babies in Satanic rituals in the basement while they were growing up.

Other 'therapists' would badger kids until they invented stories about watching alligators eat babies dropped into a lake from a hot air balloon. Kids would deny anything happened for hours until the therapist 'broke through' and 'found' the 'truth'.

FC was a movement that started with the claim severely handicapped individuals were able to 'type' legible sentences & communicate if a 'helper' guided their hands over a keyboard.