Mason Myers Transcript

 Mason Myers, Greybull Stewardship

Thanks Mason for joining us. I’m really excited to have you here. You’re one of the longest operating small company investors that I’m familiar with, and so I’m excited to hear about your experience and the learnings over the years with Greybull. I’d love for you first to dive into your background and share a little bit about how you got to where you are today.

Well, thank you Alex for having me. And by saying longest, you mean I’m one of the oldest people that you’ve interviewed?

Not oldest, but certainly the most experienced at least the project you’re working on today.

Excellent. Thank you. Well, I’m very happy to be here. I guess the most important thing is when I graduated from college I wanted to be a journalist. I really enjoyed the research and so forth, and I did it about a year of writing for newspapers and quickly realized like a lot of people that the internet was going to change the journalism game a lot. And so I moved to Silicon Valley and eventually did a startup out in Silicon Valley.

But just as a little sidebar, one of the things I love about investing is it has the very similar features of being a journalist, research and thinking and analyzing and so forth. And so I’ve been able to find that interest being fulfilled in investing that I was interested in journalism.

But back to Silicon Valley, I did a startup with a friend of mine and we focused on building a website or a meeting place for college students in the mid 90s called The Main Quad. The Main Quad was like the central quad, central meeting place at our college, and we wanted to build a media entity online and we thought that college students would be the earliest folks online. So we focused on them and started The Main Quad.

And we quickly realized reading content as one thing online, but doing things is way better and suited to the web. And so we had many things like a homepage builder and web-based email and all this stuff, and we bootstrapped it, but we did the traditional, a bunch of interns in a big house in Mountain View, California, and all that sort of thing. And we did really well. We grew it, bootstrapped financing just for a couple of years, and eventually merged it with a company called Student Advantage, which was a membership discount card for college students.

And Student Advantage had a really nice offline business model, we had the online component, and we put the two together and we raised 20 million in venture financing and we pretty quickly went public in the dot-com era of the late 90s. And my job became doing M&A. So we were buying small businesses that were serving students or colleges, and then I was managing a portfolio of those businesses for Student Advantage.

And so that was really, I would say, even though I knew Berkshire Hathaway and I was focused on that and wrote papers about Berkshire Hathaway while I was in college, this was my first experience managing a portfolio where we had these small businesses at Student Advantage, and I really learned that not only did I like the sort of financial component of investing, I really liked working with the management teams and supporting them and helping them do their best work. So that was a really important chapter for me and then learning what I wanted to do next.

Excellent. So how’d you come to Greybull then?

After that experience, I realized that startups are fun, but it wasn’t necessarily my first choice. I liked it when the businesses were a little more mature and the challenge was really just sort of growing them, making them better and bigger and so forth. So I went to business school at Harvard after Student Advantage with the sole purpose of buying one business. And then after, if I like that, then hopefully building a portfolio of businesses over time.

So I did an independent study project in my second year at Harvard and focused on education businesses because that’s what I knew and that’s where my contacts were from Student Advantage and focused in on postsecondary education and health and wellness for sort of obvious demographic trend reasons, and found a massage therapy school in Northern California that was for sale. It had been owned by the founder for 25 years and she had done a great job. So I wrote a paper in my independent study project, the first half of which was sort of about the education space theoretically and where we should focus our search, and the second half of the paper was about the National Holistic Institute, which was the name of the school, and how I could buy it, how I could finance it, and what we would do with it once we owned it.

And so that’s what I did. I graduated from business school in 2002, and closed the purchase of National Holistic Institute in 2003, bought it with a good friend of mine from Omaha, Nebraska.

I’d never heard of anyone who actually bought a school before. How are the economics for a school?

The first thing that comes to mind is it’s not as awesome as other businesses because it’s cyclical. There are years where you have more students than you know what to do with, and then there are years where everyone has a job and you don’t have many students. And I’m talking mostly about vocational schools, entry-level skill building schools like NHIs. But what I liked about the schools is it’s what I liked about being a journalist or media companies, is that when you do it well, it can be not only a good business, it can be a force for good in the community or in society generally. And I tend to be attracted to those things where you get that double payoff, where you have a good business, it’s making you and the people in it a good living, but it also has a positive influence on what’s happening in the community. And schools can be that way.

There’s a lot of people out there who aren’t served by the traditional schooling system or may not be best served by a four year college degree, and this really does provide a really nice way for them to become productive, healthy citizens in the community.

And so NHI is a good business though. I mean, it’s been basically profitable every year and it’s growing and it’s been growing for, I don’t know, however many years, going on probably 40 decades at this point. So it’s a good business, but it’s also cyclical. There’s good years and bad years.

Excellent. And then how did you acquire the next business after this one?

My arrangement with my friend, Tim Veitzer, from Omaha, who now runs NHI and related companies, was that I would find the business, I would negotiate the price and close the deal, and then manage it by myself for a year or two while he was exiting a family business in Omaha, Nebraska. And then he would move out, we’d run it together for a while, and then eventually he would run it. And that’s pretty much what we did.

So I ran that business for six or seven years. The last part of that, Tim was out there with me, we were running it together. And then in 2009, we turned the business over to him, and I started Greybull in 2010. But the NHI experience was great, it was many good people. The founder, she was a massage therapist, but she was a very savvy business person. And she built systems and structure and all these things that made NHI a very compelling business and it just had amazingly good people in it, and it still does today. Which made it like I thought it was going to be good when I was writing a paper about it in business school, but it was even better than I expected and more rewarding than I expected and more rewarding on a lot of different fronts other than just being a reasonably good business.

And so while I went to business school thinking I might want to eventually have a portfolio, it really solidified that idea for me. It solidified, this is awesome. I love these size businesses, I love the force for good that they can be in the communities, there’s good returns to be had in these businesses. So that’s what led me to then want to form a fund structure or some bigger holding company type of structure, where I could do the same thing that I did at NHI. Buy these smaller businesses, give them a great home for a long period of time, and grow them and have a rewarding experience as an investment, but also in the people that you interact with and getting to know the business over a very long period of time.

So it sounds like the benefit to the community is a big driving force for the companies you invest in and the companies you look for, what are some examples of companies you’ve acquired since then that are an execution of that idea and thesis for you?

Almost every business, if not every business, that we’ve done has that component to them. We’ve done several education businesses, so they have that component that we spoke about. We have several franchise businesses, which also fall into that in my mind because your job really is to support the franchisees and make them as successful as possible. And you’re building a community of like-minded folks who are trying to accomplish the same things. And the way a really good franchise company supports their franchisees is very similar to the way I want to support our investee companies.

So I really enjoy the force for good that those companies can be not only in serving the ultimate end customer, but in the livelihood that it provides the franchisees, et cetera, et cetera. So those are really good.

And then the software businesses, I mean, what they do for their customers is usually do something more efficiently or better or faster or more automation, and that can have a big payoff and payback for those customers. And so I love that component too.

But yeah, businesses are great when they can provide a good living for the employees, provide a great service for the customer. And if you can then even feel better about what it’s doing in the world, it’s the best situation possible.

What do you think drove that focus for you on being a force for good in business? Was there something in your time before your MBA and your… with the education business, or is there some other point in your life where you decided that was something you wanted to focus on?

I’m not quite sure. I mean, I believe in the market system, I see all these business people who are doing really great things for their customers and for the employees. And I sort of believe that most businesses have a very positive impact on the world. I’m not quite sure where that came from, but it’s been played out in my life experience. I mean, I see it every day, and that positive impact shouldn’t be ignored.

The thing that I think is interesting about it is smaller businesses have that impact and yet the financing options for smaller businesses are quite limited compared to larger businesses. So part of what I saw when I founded Greybull was that there was a need for these business owners who had a good business and wanted to keep running the business and wanted to grow it. There wasn’t that many great financing options. I mean, banks don’t really lend to small businesses and these business owners, they may not want to sell their business to a competitor or sell it to somebody who’s just going to have to flip the business in four years. And so I really wanted to provide them a better option for capital, a better place where they could get the capital that matches with their desires and interests with their business and that we could support them and help them continue to be a force for good.

So what does that support look like and what did it look like initially? So how have you evolved your ability or the methods and ways you help small business owners as you transition them? How has that evolved for you?

The evolution for me on that front really starts with, I was very attracted to the Berkshire Hathaway hands-off method of supporting business owners. And in our cases, many of the business owners they’re really good at what they do, they know their business way better than we do, and our best job is to support them, get out of their way and let them do their very best work. And I sort of start from that end of the spectrum.

I’ve evolved to notice that a lot of those business owners that very well may be true generally, but there are pieces of the business where they welcome and request help and assistance. And so we’ve learned how to sort of navigate that and allow them to ask for help and not get in their way too much, but then really bring help when they need it. And we have things that we can help them on from the basics of governance and accounting and doing that properly to key metrics and really analyzing their business and analyzing their growth prospects.

And probably the most important thing for these smaller businesses is they usually have a ton of options for how to grow their business. So the problem is not generating growth ideas, the challenge is picking among them. And this is something that we love doing, we’re really good at, we’ve done it over and over and over again, so we can really help them pick the growth initiatives that have the best paybacks, not just financially, but with competitive advantages and so forth. And so we selectively now have really built up a tool kit and an expertise at helping these businesses when they want it in the areas where they want it.

I have got you. And does that help come from a team or have you built a network over time of people you know in different areas of focus who can help your portfolio companies if need be?

All of the above. I mean, our team is pretty small. We have five people, but we have two strong investor types. We have an attorney and we have a CPA. And so we have very core experts on the very core things that you would need. And then we’ve built what I call, a network of experts. So people that are really good at sales and marketing or incentive programs or equity programs or whatever it might be that the business needs and wants. And we have that capability. We also have a really strong group of LPs.

So our limited partners tend to be business people themselves. Maybe they’re still running their business, maybe they’ve exited their business, but they tend to, when you look at the group of them, there’s almost every industry that’s covered in almost every function that’s covered. So if there’s a unique challenge or issue or opportunity that a portfolio company is facing, our team, our network of experts, our Lps, can bring to bear a lot of wisdom and experience to help these companies.

And since Greybull is hands-off and has managers and CEOs at each portfolio company, how do you build the pipeline to make sure those talented people are still coming into Greybull, and do these LPs and this panel of experts, do they help with that process?

Definitely. I mean, the thing that we found is in the space where we invest, which is companies that have less than 5 million in EBITDA, there’s a ton of companies out there that are really great companies run by really talented people who want some capital for growth initiatives to take some chips off the table or whatever it may be, and there’s not that many options for them. So we’re psyched to be an answer for some of them in providing capital in their circumstance.

And so finding these businesses has not been a challenge because there’s so many of them out there and I find that more and more people are founding all sorts of businesses, it’s not just the Silicon Valley Google’s that you would hear about, people are founding all these very great businesses out there. And so we have a steady pipeline of opportunities, we have plenty of capital, so we can handle a really nice pipeline. And it’s exciting. Like it’s a really fun part of the job getting to know these businesses and these founders and management teams who are running these businesses. It’s like the favorite part of my job, second to supporting our existing companies.

And so when you have a new portfolio company, how often do you have to replace the person who is operating the business? Is it mostly the owner-operator at the time, or are you buying companies who have found operators who aren’t the owner?

It’s a mix. I would say most of the time we like management teams to be in place, but there are circumstances where that’s not going to be the case, the person wants to retire. So we’ve done, I can think of two scenarios of our 15 investments, where we knew the person was going to retire and we had to replace them. And that was fine, we’ve been able to find folks. And then we also had one where a gentleman was later in life and he was ill and unfortunately, he passed away, so we had to find a replacement for him too. But that was part of his motivation for working with Greybull is that he knew his business would be in good hands, even when he wasn’t around.

So most of the time we work with the existing management teams, but if it’s a situation that requires us finding someone new, we’re happy to do that as well.

So is that then a filtering mechanism for you, when you look for a new perspective portfolio company, as they have to have these generally speaking, a management team already in place, you don’t want to have to solve that for them?

It’s a preference, but it’s not a absolute. So I just find it’s a more pleasant experience when you know that the management team believes in the future of their business, as opposed to someone who may see a problem two curves down the road and they just want to unload the business now. I find that that’s a much more difficult scenario to understand when your incentives aren’t aligned. So I like the situations where the management team has equity, they want to keep a lot of equity, and they believe in the future of the business. That’s my preference.

At the same time, there’s other unique circumstances where you can get comfortable that it’s a good business and they don’t know something that you don’t know, and it does make sense to find a new leader.

You mentioned it just a moment ago, but the current management team’s own equity stakes in the portfolio company, is that part of your incentive package for them, or how do you incentivize these managers?

Absolutely. In every case, the management team or the primary CEO or founder has a significant amount of equity. And absolutely, if they’re not the founder, if they’re not coming to us as part of the business arrangement and we’re putting someone new in, that’s something we absolutely do, is because we want them to think like an owner. And we love it when everybody thinks like an owner. That’s what we’re trying to set up.

Nice. I like it. I also realized we never talked about the structure of your funds. So how have you made it evergreen fund owning these businesses in a more permanent way?

I mean, we’ll get to the how it’s done here in a second, but the why we did it that way, I think is really important. And I mean, there’s a couple of reasons. Number one is, I grew up in Wyoming in Omaha, Nebraska, so I knew of Berkshire Hathaway from a very early age. And I was always attracted to the idea of a place that could be a home for great businesses and that it wasn’t just a place where you were trading the businesses or flipping the businesses. And I just saw the benefits that accrued to Berkshire. They tended to attract certain types of businesses where the owner really cared about where they go. And those, my opinion, tend to be the very best businesses, because someone really has put their heart and soul into it and they care more about, than just the highest purchase price, they really care about the home.

And I was always attracted to that. And it was logical to me too, that some businesses may not want to sell to a Wall Street private equity situation or to a competitor, or as what they call a strategic, but usually it’s a competitor in some way. It was obvious to me that this third option should be available to many businesses. And so I wanted to create that home.

Number two is, I thought about it because I was an entrepreneur to start, I thought about what would an entrepreneur, what would a founder want in a financing partner. And what you don’t want is a bunch of constraints and mandates and things you have to do that reduce your ability to make and grow a great business. And so, one of the most fundamental things is an arbitrary timeframe to sell your business. It just makes no sense. It’s like business rule number one, don’t be forced to sell your business at a bad time. And so like, why would you ever take on a financing partner that’s just going to make you sell it on a timeframe that you have no control over? So like as an entrepreneur, I would have never wanted that. I wanted to provide a good solution to that problem for entrepreneurs.

And number three is, you make better financial returns. When you have a good business, there’s nothing better than being able to own that business year after year after year. It’s almost a travesty to have to sell a really good business and then go find another business to put that capital back into. It sort of makes no sense. You got a bird in the hand, why sell the bird in the hand? And particularly with smaller businesses where a lot of their value creation is often to the future, to double the EBITDA from 1 million to 2 million, okay, that’s nice and good, but if you can wait and give the business time to get to 5 million or 10 million or 15 million in EBITDA, you really get a lot more value creation, and you already did the work upfront, why not get the benefit of all that future value creation?

So it seemed very obvious to me that the whole existing way of doing things didn’t make any sense at all. And so I set out to find a way to do a Berkshire Hathaway like structure, but I also knew that I was going to need to gather other people’s capital to pursue the dream. And I found a structure that had been started by Yale’s endowment in combination with a venture firm in Silicon Valley and it’s an evergreen structure, so it lasts in perpetuity, but operates on four year cycles where people commit capital for a cycle, you invest during the cycle, and then at the next mark between four year cycles, there’s a time where new people can enter if they want, existing people can exit if they want. And it’s sort of like the stock market’s open for business one day, every four years. It’s a way to help people come in and out. And it’s worked awesome.

I mean, our structure has been attractive to a lot of great businesses that we’ve been able to invest in, and it’s worked great for our investors. We’re making good returns, and I think a lot of them really appreciate the structure and the difference between us and traditional private equity.

What would you say over this time with this structure has gotten easier and then what’s gotten more challenging? Has this structure continued to be helpful as the model has scaled or had there been adjustments you’ve had to make along the way?

I think as it’s scaled, it’s become even better, because the investors have a more diversified portfolio and that’s better and different than when it’s in the very beginning and you just have one or two companies or something like that. So it has a diversified portfolio. It’s not just diversified by industry or type of business, but by geography, by size, by sort of maturity of the business. And I find that that’s a big advantage. That’s just like sort of Berkshire has that advantage and that obviously different universe of scale.

But I think that’s been nice. I think it’s been better for attracting LPs because the existing LP group helps identify like-minded folks who really appreciate the long-term orientation and the attractive returns that that can generate. And so I think it’s helped with them too.

I mean, it is not for everybody, that’s the one thing I would say, it is a trade-off. The best strategies are a very clear trade-off where you don’t do everything for everybody. And so this, for some people who love the existing tenure private equity venture capital model, this may not be for them, but that’s okay because I like the uniqueness that it’s created for us and it’s generated great returns.

Do you see anybody trying to copy you and copy your model or is there something that you’ve seen repeatedly stop people from copying your model directly?

What this makes me think of is over the years at the Berkshire annual meeting, many people have asked Warren and Charlie, why haven’t other people done the Berkshire thing? And I’m not saying I’m anywhere close to those guys, I’m a very poor cousin, but I do think it takes a while for it to work.

So like in my case, I started with a small amount of capital, $5 million. And when you look at the way fees are sort of normally charged, that’s not enough for even one person to really make a career of. And so I think there’s this time period where you have to have other sources of income or something, or you’re really committed to the long-term picture of what you can create in 20 years where most people just aren’t in a situation where they can, or they don’t have the patience to try and get through that startup period where the compounding hasn’t really created huge numbers yet. But if you can get through that period, then the model is way better. It’s just more stable, creates great returns, et cetera.

So I think that is a fundamental reason why there aren’t more of these type of vehicles or these type of long-term strategies out there in the world. That’s the answer that Charlie and Warren give too, which is you just have to be patient for a very long time before other people can sort of picture the runaway nature of the snowball or the compounding effect of it all.

So in those early days, was there a time where it was particularly difficult for you and there was a hard point you had to struggle through?

Absolutely. I mean, it was a startup, it’s a fund, but it’s basically a startup. And so any entrepreneur can identify with those moments when it’s just you and there’s too much to do, or you spent your whole day talking to people who think you’re crazy or whatever. There’s all those moments happened in spades just like they do in any startup with Greybull for sure. But I also could easily see where we were going and the power of the model once we got the momentum going. And so I could power through those moments, but there were tons of those moments.

And you’ve also built the model around you not having to be an operator. Although you had experience with NHI as being an operator, have you always known that you didn’t want to be the operator for the long-term? And why is that perhaps?

It’s a good question and yes is the answer. I’ve known for a very long time, even back to Student Advantage days, where I knew I can do it and I enjoy it and I love the relationships with people when you’re operating the companies, but I also knew when I thought about my highest and best use and what I could do that maybe not other people could do, it was going to be on the investing side of things. And I love the daily cadence and rhythm that it creates of a healthy dose of learning about new businesses and reading about them and understanding them, and a healthy dose of these long standing relationships with CEOs and managers that you like and respect and you get to talk about fun, interesting businesses.

I just love those daily activities. They’re fun for me. And when I stack those daily activities up against the ones that you need to do when you’re running a company, I’ve definitely found the right place for me.

Excellent. And so what did you learn about being an operator that you took from your operator days and you’ve applied it now to your investing days?

Well, I think there’s a couple things. One is when I was an operator talking to investors about our business, you quickly realize that an investor, when they’re not doing their job very well, overestimates their own intelligence with the business. They think they’re the best strategist, they think they know what’s going on, when they really are not very close to the business. And so I think trusting the people who are in the business in a better place to make decisions, and maybe you need to kick it around a little bit because the investor has a different perspective on the world than the operator does, but usually it’s better to leave the final decision in the hands of the operator because they’re on the scene and in a better place to make a really high quality decision.

And I think I took that away that a lot of people think that they can, because they can analyze a business or something, that they know the business better than the people running it, and I just knew that wasn’t the case. So I took that away from being an operator.

I took away from being an operator also that the capital financing system for small businesses was not optimized for the business, it was optimized for the investor and ironically the structure created bad returns. Whereas if they would have just balanced the structure a little bit more to take into account the needs of the business and what’s better for the business, to have a proper balance between the needs of the business and the needs of the investor, they would get much better returns. It’s almost like the tail was wagging the dog when really they want the dog in the first place. They want good returns, but the structure that they’re imposing on the companies creates worse returns than they otherwise could get.

So it was sort of all mixed up there a little bit, and I realized that when you could bring a better structure that was better for the business, you would get better financial returns.

What do you see as the misaligned structure?

I think it’s forcing the business to do things that are stupid for the business. If you approach it from the perspective of what’s best for the business, then usually the investors and the financial types will do fine in the end. And I just felt like the existing structures are not focused on what’s best for the business. And if you want to take it down a layer, what is best for the business mean what’s best for the customers, for the employees, and for the community of the business. And it’s not good for all three of those constituencies to flip the business every four years. New leadership, new structure, someone else trying to make a return within a four year timeframe, that’s not going to be the best scenario for the customers, it’s not going to be the best scenario for the employees. So by definition, it’s not great for the business, which then leads to less returns for the investors overall.

So you also mentioned that you having operating experience makes you appreciate investors who are closer to the business. So how as an investor today, how do you make sure you’re close to your portfolio companies? Is there a monthly report that every CEO sends to you? Are you on the phone really frequently with each of your CEOs? How do you make sure you’re staying in contact and up-to-date?

What we try and do is create automatic or no work information sharing from the portfolio companies to us. There’s nothing more that I love other than seeing what’s happening in the business, seeing yesterday’s sales numbers, seeing whatever is going on, but I also know that I can’t be calling the CEOs up every 10 minutes and say, “Hey, what’s up?” So we try and find ways. And most, all companies these days have very automated systems to share information, so I love absorbing and doing my best to read that information as it comes in. And then we save our time with the CEOs and the management teams in talking about whatever they want to talk about.

So if they don’t want to talk about stuff for three months, that’s fine. If they want to talk every week because there’s something interesting happening, that’s fine. In most cases, the cadence has turned into a monthly phone call where it’s, I find that a month is frequent enough that you’re sort of in tune with what’s going on and the conversation can get to the productive stuff, as opposed to just the update about what happened and yet it’s not too frequent to annoy the CEOs. And usually, it’s all over the place though. We fundamentally just respect and respond to what the CEO at the company finds most productive for them to do.

What do you feel like Greybull needs to get better at?

I think we’re pretty good at supporting these companies in those areas where I mentioned earlier, but there’s a desire to always be better at that, because if you can be better, it just pays off for the business, it pays off for Greybull. And so I think we’re constantly striving to have more things that we can help the businesses with and to be better at those things that we already are doing. So we’ll constantly strive to do that.

I think I really would like Greybull to be an example of an alternative way of financing these businesses, particularly on the small business side, less than 5 million in EBITDA, that Berkshire has been as an example of a different way to be an investor. Generally, I would like Greybull to do that. And so I think we could do better at getting our word out to the world and talking about what we’re doing and hopefully persuading other people to invest using this type of strategy.

Speaking of getting word out to your world, you have a blog you’ve been writing for a while. I’m assuming that’s of course, scratching your journalist itch. What do you use the blog for? And do you view it as just a journal of your thoughts or is there other messages you’re trying to actively share too?

I think the number one thing is for me was when new companies are getting to know Greybull, I think all investors sound pretty similar to people. These are smart folks, they know what to say to the companies, and they’re good at their job. They come across in a very positive way. And so I was looking for a way for people to help understand or get underneath the marketing messages from investors and really understand the way we think and the way we operate and how we’re different. Because I find that the more people know, the better decision they can make. Either, “Hey, Greybull is not for me because X, Y, Z,” or, “It is exactly what we need for A, B, C reasons.” My goal was to make their decision easier and for me to share more about what we’re trying to do so that people can self-select one way or the other. Either strive to make an arrangement with us or realize that they’re better off somewhere else.

My first closing question is, what class in college would you teach if you could teach about anything you wanted?

I think the first thing I would want to teach is business valuation. Warren Buffett says, “There should only be one class in business school, which is how do you value a business?” So I would love to do that. It’s what I get to do every day, but there’s always so much to it. And there’s always another thing you can think about, and so that would be one, but I’m going to give you another class too. I also think a class in some history, but I would say in a very broad scope of history. I find that a lot of lessons get learned over and over again by humans, and I think it’s very helpful to have known a very big swath of history and what’s happened over time and to be able to put our little things that are happening today in the proper context.

Is there a particular event or part of history that you think most about?

I would say not really, like I like every type of history, but I do think the history since humans have been forming companies is interesting. From Roman times to whatever Dutch East India or West India company to modern days, I find that how humans self-organize into these things has been interesting to me, but I really like every type of history.

Do you read Investor Amnesia out of curiosity?

I do not. I don’t know it.

There’s this guy, Jamie Catherwood, who writes it. He writes all about finance history and companies. And I feel like you’d really enjoy it if you like history and companies and that sort of thing.

All right, I’ll check it out. Thank you.

Absolutely. What’s a belief you used to hold strongly that you’ve since changed your mind on?

This is not exactly what you’re going for, I think, but I think one of the business judgments where I totally whiffed, which is what this question makes me think of for some reason is, on the early days of the internet, we focused our service on a niche of people, college students, where I realized that a lot of the businesses that really did great in the first five or 10 years of internet time were ones that did a service that focused on all of the internet, not just a little subset of college students, so Yahoo for a broad directory or Amazon or things like that.

And so I think I started off thinking a niche for journalism and media and all that stuff would be an advantage in the early days, whereas I sort of whiffed on that. And I think the early days were all about services that could serve a broad swath of folks. Now, I think it’s a little different today, but that’s for some reason, and maybe because we’re talking about history and all that, that’s what came to mind today.

What do you think you would have done differently?

Well, I would have still loved to do some of the services that we were doing, we called it a homepage builder back in the day, but it was probably a Facebook profile 15 years before Facebook sort of thing. And I would have loved to have done that. We knew that the thing that college students care about most is other college students. So like we knew that stuff, I wish we would have just executed on that idea better than we did.

What’s the best business you’ve come across?

What comes to mind for me is it really depends on the timeframe. Some businesses can be a great business at a certain moment in time and then not so good. But what comes across for me is I think a newspaper business in the second half of the 20th Century was a great business, like Washington Post. Because it’s a good business, it has a network effect happening, so it has a really good competitive advantage. And hopefully, when it’s done well, you’re having some positive impact on the community and society and humanity in general. So I think of those businesses in the late 20th Century.

I would say Facebook is a pretty amazing business right now. It’s got some criticism that’s probably warranted today on the effect of social media and politics and all that sort of thing. But when you look at the competitive advantage of that type of business, the cost, I mean, very low costs generally to operate that because all the content comes from users. Like that type of business or LinkedIn, I think is a really amazing business at this point in time. So those are the ones that come to mind for me today.

Do you see any of those types of companies at the smaller end of the market?

Yes. I mean, I think there’s ones that have elements of those really amazing businesses and they’re probably not fully formed. You can see the competitive advantages are there, to some degree, and they’re yet to be built to some degree. But yes, I mean, there are businesses in our portfolio that have shades of that, even if they’re very young or very small compared to those big businesses today, but yes. And you never know how the future plays out. They might find the unique implementation that really takes them to the moon or they might just be pretty dang good businesses.

Is there one that you’ve come across recently that checked a lot of those boxes for you?

Yes. I would say almost every business that we invest in may not check the 20 boxes that make it a perfect business, but every single one has elements of being a really great business. Most of those come down to some strong sense of competitive advantage today or competitive advantage that can be built over time. Really good economics. So high gross margins, they don’t need a lot of capital to scale and grow. Almost all of our businesses have those really compelling characteristics. It doesn’t mean all of them totally fulfill their potential, but we all go into it with every single one of them thinking they have really good potential.

Thank you very much for sharing your time with us. I’ve been looking forward to this for a while. I’m glad we finally got to record an episode. Thank you Mason for your time. This was awesome.

You bet. I love it. And thank you for doing this podcast, it’s a really nice offering to the community. And thank you for having me.

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