Joys of Compounding

One of the most fun JOC conversations I can recall. Loved learning from AJ about what makes @thomabravo able to sustain its greatness, why lots of software still wins in the age of AI (and why tennis is the best sport on earth) @eightsleep @portraitanalyst @colossusmag @PaulBuser

So proud of my friend Brad Gerstner @altcap! He's been tirelessly (and selflessly) working on this vision for years. To put the joys of compounding to work for every American child. 🇺🇸 We all owe him much respect + gratitude. Thank you BG! 💙 #lovewins #joysofcompounding

Will Thorndike - The Rise of Long Duration, Serial Acquisition Holding Companies Our @joyscompounding teacher today is Will Thorndike, co-founder of @CompoundingLabs and author of acclaimed book, The Outsiders. This is one of the most foundational JOC sessions we’ve ever done because of how much Will has shaped our combined teaching and investing vocations. 🥰 The Outsiders is considered one of the most impactful business books of the 21st century. Lauded by @WarrenBuffett and so many others, it profiles eight CEOs who dramatically outperformed their peers by focusing not on charisma and cult of personality attributes, but on the more quiet and unconventional craft of resource allocation—measured, rational, often contrarian decisions that compounded to extraordinary heights over time. But Will’s influence goes far beyond the page. He is a pioneer in the private equity and search fund worlds, having founded Housatonic Partners in 1994 and also helping originate the modern search fund model—backing early-career CEOs to buy and grow businesses with long time horizons and radically aligned incentives. Since then, he has invested in the majority of the top 20 search fund outcomes to date, including @Asurion, which he recently profiled on his podcast 50X. You may not have heard about Asurion but it is likely the greatest private equity investment of all time, generating a more than 5,000 times multiple on invested capital. 🤯 In more recent years, Will’s taken the best of what he’s learned from the PE and Search worlds and is now developing what we think may be an ENTIRELY NEW ASSET CLASS - long-duration, serial acquisition holding companies. Here are some of the structural and operational features of these businesses: - These are newco formations that are effectively capitalized on day 1 at book value - They focus on buying & building recurring revenue businesses in niche markets - Radical equity efficiency - with often just $10 - 25 million of equity capital deployed forever - An ethos of exceptional resource allocation → very much aligned with the Outsiders playbook - The harnessing of both organic AND inorganic growth with a focus on improvability with the assets they acquire - And, very importantly, these are investors backing founders with an unlimited time horizon and with a focus on ‘multiple on invested capital’ rather than IRR The alchemy of these attributes are companies that don’t exist to be sold but rather to eternally flourish ♾ – an asset class that harnesses the joys of compounding better than anything else we’ve come across. 📈 I hope you enjoy this class on the rise of long duration, serial acquisition holding companies with our friend and mentor, the eternal outsider, Will Thorndike! Links in comments.