Tailwinds Edition #7

Brent Beshore on Marketing and Branding

September 7, 2019


The name “Tailwinds” has a threefold meaning; 1) If you’re looking to build something special, like a business or permanent capital, you should position yourself where there is a tailwind at your back taking the form of changes in the economy, culture, cities, demographics, or some other factor. 2) Buying an existing company, rather than starting your own, gives you momentum and a head start, a proverbial tailwind. 3) The concept of positioning yourself in front of a tailwind relates to a Charlie Munger quote about fishing where the fish are, rather than a crowded shore or dock. Private company investing is a space with opportunity that most investors and institutions cannot touch, and that leaves the door open for smaller investors to build portfolios.


I recently did a brief interview with Brent Beshore on marketing as I’m an admirer of his marketing and branding strategy. Besides learning about how he thinks about marketing, I was also wanting to hear how he designed his role at Adventur.es to suit his marketing background and play to that strength. Finally, as a follow-up question, I asked about how effective his inbound marketing efforts have been and he said, “Our deal flow doubles about every 18 months in terms of quality deals.” A big takeaway here is that marketing and content isn’t complicated, it just takes a long time to build up momentum to the point where it is driving deal flow, five years long in Brent’s case.

Knowing that your business strength leading up to creating and running Adventur.es was marketing, how did you design Adventur.es and your role to play to that strength?

Marketing is certainly an odd path into private equity, but has served us well. We think about the private equity business, and Adventur.es in particular, like any other business. You need to find customers, have a better product, and reduce the friction to a transaction.

For us, that means keeping our customers (advisors, sellers, and leadership teams) in mind always and optimizing our process for their benefit. It’s nothing radical, but it looks very different than a traditional PE process. We scale conversation through content, have long-dated and flexible capital that allows us to buy with no intention of selling, use little-to-no debt, keep leadership teams intact post-close, perform due diligence in-house, draft most documents in-house, and focus on being great partners post-close.

How do you think about marketing Adventur.es and communicating your message to different audiences like business owners, employees, investors, intermediaries, folks who are just interested in what you’re doing? Is there a core message you’ve developed that works with each of these groups, or do you need to formulate a different message/presentation/wording for each?

We slightly tweak the emphasis for each audience, but just try to be us. We’re not right for most sellers and we want them to select out before they ever even contact us. Same goes for investors and intermediaries. Selection bias is extremely powerful and either works for you or against you, depending on the clarity of your messaging. Our goal is to attract the right people and repel the wrong people.

How should other new permanent capital firms think about building their brand and marketing to these various groups? How can they communicate what makes them different from other buyout firms?

Keep it simple. Say it simply. Repeat it often. It’s really just that easy. But, it takes time. We felt like we shouted into the darkness for the better part of five years before we got any traction. Direct sales moves the needle immediately, but ultimately scales linearly. Inbound marketing is slow to get started, but scales exponentially. It just depends on time horizon. It’s steak dinners versus content marketing.

Finally, how can these firms develop inbound deal flow effectively over time?

Have a perspective and explain it clearly over a long period of time.

Capital Notes

HBR: Why You Should Buy a Business and How To Do It

“I think that, when you’re an entrepreneur, the responsibilities really do end with you. In a way, you don’t feel they do when you’re part of a large organization and responsibility is on many people’s shoulders. So when you’ve had a bad day, you’ve made everybody you care about’s life worse– yourself, your family, your investors, your employees. And that really feels terrible.

Now conversely, when you’ve had a good day, you really feel like you’re at the center of it all. And so these emotional ups and downs that entrepreneurs report having are really big. And you have to be able to handle that as an entrepreneur. You have to look inside yourself and say, yeah, the great offsets the bad, and I am perfectly comfortable managing those emotional oscillations.”

Brent Beshore: Investors and Operators: Lessons I’ve Learned from Both Worlds

“All businesses are loosely functioning disasters, and some are profitable despite it.”

Andrew Wilkinson: Howard Stern is Getting Ripped Off (my favorite of this week)

“In podcasting, the host is the brand. If you love Howard Stern, you can’t replace him with a cheaper alternative. This is why Sirius pays him so much: people are committed to listening to Howard Stern, and they can’t listen to him anywhere else, so listeners are willing to pay for an expensive monthly subscription. What’s more, they can charge a high price and continue to raise prices every year. This is what’s called pricing power.

Joe Rogan and Howard Stern are like Coke, except with even higher profit margins. There’s literally no substitute for them. The only risk to the “moat” is them getting hit by a bus. As long as that doesn’t happen, they have one of the world’s greatest businesses, practically immune to disruption.”

The Time is Right for Permanent Capital (paid; if you register with your email you can access the article for free)

“There’s a general recognition now that there is this permanent capital alternative out there which has become much more prevalent in the last few years,” says Julie Corelli, partner at law firm Pepper Hamilton. Corelli receives more inquiries from non-clients on this topic than any other: “We’ve set up numerous permanent capital vehicles for our clients - more in the last five years than in the whole prior 10 years.”

Byron Trott: The Billionaire’s Banker

“Today that firm has carved out a lucrative niche by reimagining an old concept, the merchant bank—a financial outfit that advises powerful clients while investing alongside them. BDT works exclusively with what Trott calls “billionaires with businesses.” The merely rich aren’t of interest, and neither are institutionally owned, professionally managed corporations that are well served by bigger firms. Instead, the 56-year-old Trott, who is trim and a perpetual grinner, caters to the unique needs of families with names like Walton, Pritzker, and Wrigley by earning their trust the way he did Buffett’s.”

Inside Shake Shack’s Secret Innovation Kitchen

“Many fast-food chains spend years on R&D and focus groups, and millions of dollars, before testing out a new menu item.

Shake Shack favors an approach more in line with iterative design. It moves quickly, sometimes bringing an item from the kitchen to customers in its NYC test restaurant in a matter of weeks.

Once an item is on the menu upstairs, it collects real-time feedback (through questionnaires, qualitative observation, and sales data) and uses it to fine-tune things. If the item performs exceptionally well, they may opt to release it in a few other restaurants around the US, in markets where they perceive it could hit.”

If you found an interesting article, podcast, or interview that I missed, please let me know, I’m always looking for interesting stuff!

Photo courtesy of Brenda Stonehouse