Podcast Notes: Andrew Wilkinson & Tiny
Tiny & Andrew Wilkinson: The quest to be the next Berkshire Hathaway
Notes from this podcast
What is Tiny?
Tiny is a long term holding company for internet businesses - profitable, simple, often boring. They take majority stakes, often from founders. Design firms, services businesses, podcasting, online job boards. etc.
What are they at now? The scale of Tiny is now anything but tiny. Let’s call it~$80-95M revenue per year (double digit millions is what he said), with highly profitable companies. Invests the free cashflows into acquiring new businesses.
We have 350-400 employees across about 20 companies. We are hands-off with our CEOs. We are making a few assumptions and a couple of ideas for future growth over the next 2-4 years. We are hiring a CEO who we have high confidence in, give them the playbook, and then ask our CEOs to send 1.) a financial report once a month 2.) A SWAT analysis once a quarter 3.) Call us immediately in an emergency
Who is Andrew? Entrepreneur-Investor based in Victoria Canada who originally founded started Metalab, a product design lab, and then in 2013 when he hit around $7M in profits he started using the free cash to buying small internet businesses. Andrews investor profile: Disciplined. Focused on margins. Believer in the 'only the paranoid survives' Andy Grove.
Originated at disgust at PE bros and their process. His description of the standard PE process: spend 2 hours on the phone with an idiot kid who just got out college, then you are based to the partner for 5 hours of calls, then they fly to you and reveal themselves to be a bunch of Wall Street douche bags wearing suits who speak in weird financial terms we didn’t understand at the time. That takes a month. Then they get you the term sheets and at the last moment then they renegotiate the entire deal, taking any other 2 months, and lock you into an earn-out.
Andrews investing insight: Buffett makes deals in 7 days, why can’t we do that? These businesses are way less complex. Founders are fast-pace and don’t want to be dragged along. You don’t have to follow the Private Equity playbook. They do ridiculous things and waste time. Why the fuck can’t we run it from a small town in Victoria?
What he looks for: We take over management fully. Founders can have some equity if they want to, they can stay if they want. These types of business can disappear quickly with algorithm and consumption changes so we price accordingly to ensure we get paid back quickly and ask what is the moat?
Andrew's management insight and transition from CEO to holding company: Entrepreneurship is delegation. As a founder at first, you don’t trust anyone but over time you hire shitty people and it makes your life worse. I hired a bunch of the wrong people and then kept rehiring and then eventually I’d hire the right person and I saw the business explode.
You can incentivize people on how high to jump. Investing is the next level of delegation.
What is his perfect cashflow company? Dribbble.com is his favorite. The business is like New Zealand: in the middle of nowhere, no one is paying attention to it, it’s quietly successful, it’s totally independent, and it’s away from nuclear war. I don’t want any intermediary.
Dribbble is top 1000 site on the internet. The destination for designers. It’s a massive community of super bought in people. There are unlimited ways to monetize this group of people as long as you are providing things that people want. It’s going to be 10x better. We’ve been investing in R&D
Doing the Canadian Arbitrage: Canada arbitrage is like 60% of the cost of the Bay Area with currency, benefits, and cost of living adjustments. We’ve had some success with reformatting a bloated company from the Bay Area and going remote.
Economics of job boards: Indeed.com and Tinyboards.com weworkremotely.com
Best historically to be in was newspapers for classifieds. Then craigslist and then job boards sprung up. In theory, they are great businesses if you have traffic and you have a great community and a niche. At the end of the day, you are just selling a link. A long list of job, with a filter. Software, a developer can whip up in three days. Low cost to operate. You can charge a lot for a job posting, $100 - $300/posting. In the Dribbble you can charge more. A captive audience is incredible.
The largest network always wins. I don’t know how long the job board model will continue to exist. Remote work is growing like crazy. Many of the others have petered out. I don’t understand why The Hustle doesn’t have a job board.
Things that you are interested in buying? Things you are on the lookout for?
I’m super excited about no-code. No-code takes a front end and lets you build back-end into it. Hire a no-coder to build it. Something that would require a month of dev can get done in a day. It will get you, your first million in revenue and then you can build the deep code. Proving out MVP ideas it’s perfect.
What is exciting is businesses don’t have to be as complicated and expensive to run as they are right now. Strip out all the engineering costs. It allows you to build smaller businesses that are actually profitable.
Subscription Podcasting. It looks like a SaaS business. Margins are crazy.