00:40:14 · Mikk
[00:40:14] S0: Before we hit record today, you said obviously you're extremely busy. A lot is going on. But for some reason you coming on the show, I heard about you and your story, I think, like seven, eight months ago. So in order for you to attract those special individuals, you have to become more public. So what is your view when it comes to what are you going to share and what are you maybe keeping private? Where will be the line and where is the line?
00:40:48 · Frederik Brandis
[00:40:48] S1: So yeah, I'm becoming more public by also speaking to you today, which to me is an obligation. So I'd rather not be more public just because I'm not a character that wants to be in the somewhat public light. But obviously, showing presence in ecosystems, spreading the word on what we're doing is extremely important to kind of be on the radar for founders and people who want to do this kind of roll ups. So that's why I'm becoming more public. Generally speaking, I'm a huge believer in execution. It's not rocket science what we do. So I would say, especially comparing ourselves to traditional private equity, we are more open and more sharey. We syndicate our investments often with co investors, not always, but often. You know, we're just looking at a new deal. We have a co investor asking like, Hey, guys, we have our CEO. We haven't really have a strong view on this. What did your DG say? And we're happy to share. So I'm a strong believer in excellence and execution. So we are, relatively speaking, more open and happy to share. I mean, as a concrete example, mentioned Aven Academy before. These people, they don't have to take money effectively from us. We're still happy to share and support them. I strongly believe the kind of positive value contribution to the ecosystem. And I think there's so much to be built. And I also don't mind competition because I think the potential is so huge and kind of educating the market. I think there's rather positive synergy by having a bit more competition. So generally speaking, I'm more open than than, I guess, many of our private equity peers. Having said that, I mean, I don't want to, you know, like, I don't need to print on my forehead on what we do. But it's also not a state secret.
00:42:47 · Mikk
[00:42:47] S0: Now, thanks to this account, thanks to Twitter, I see just so many young and talented professionals are leaving large firms to build something, to build a roll up. But many of them, after a few years of searching or having an unsuccessful deal, they go back to where they were before, if they can. So again, extremely competitive. Can you maybe add something here what you have seen, which could be some of the reasons which those folks maybe not succeed? Is it just that they're giving gave up too early? They ran out of money, savings? Is there something else what you've seen?
00:43:38 · Frederik Brandis
[00:43:38] S1: So you know, giving up too early, you actually asked a question before about luck, which I think I didn't really answer. I think, you know, luck is part of every journey. You need to just be lucky that you have to find the right company in the right time. But if you try often enough, luck will come your way. I think it's hard to kind of say generally, you guys don't try hard enough. And I'm in no position to judge that. You can do a, you know, a search phase, if you want, in a search fund terminology for two years, and it doesn't work, it doesn't mean that you didn't do well enough. You can also just have been unlucky. The three companies that you found, in every case, the seller decided last minute to not sell for any random reason that is outside your control, And then it fails three times, and then you're out of money and you to go back to a job. I think that's just the reality of life. And I don't think that I could generalize and say people don't try hard enough. And I, like, I don't know how to put this. This will be controversial anyways. But, I mean, I want to empower people to obviously be entrepreneurial and, like, fight for their own luck. But at the same time, I also see many people that want to be an entrepreneur for somewhat the wrong reasons. You know, it's like, hey, I want to be my own boss. I don't want anyone to tell me what to do. And I also see cases of people who in their character maybe shouldn't be an entrepreneur still want to do their own journey. And I don't think not kind of being made, like if you're not wired to be an entrepreneur, it's not good or not bad. Like you can do whatever you want, and every journey is respectful in itself, But I would just ask, like I would tell people to be kind of reflected on yourself on what you're good at and what you're willing to give. If you're successful as an entrepreneur, it won't be easy. It will take all your time, will take all your energy. It is risky, you will sleep badly. It is just a recipe to it. Any entrepreneur who has just a chill time is probably at least in our definition of financial returns, not successful enough. And again, that doesn't mean bad or good. It just needs to you need to make sure what you prioritize for.
00:45:56 · Frederik Brandis, Mikk
And if you enter any sort of entrepreneurial journey, just be aware of what it will, how it will impact also your private life and what it will take from you. [00:46:06] S0: It's July 2020 '6. If we sat down ten years from now, what would have to happen for you to say, Aven became exactly the investment firm you hoped for, you hope to build?
00:46:21 · Frederik Brandis
[00:46:21] S1: Yes. So traditionally in private equity, people start with small funds They invest, and once they're successful, they raise a follow-up fund where they have a bigger fund, and then they have to deploy this fund. And given that the fund is bigger, they typically then buy bigger companies. The advantage for them is you get more fees because it's percentage on the capital you manage. The disadvantage is for investors because the larger the companies that you already buy at entry, the more expensive they are to buy and the lower your returns are. And however, investing into these very small companies as we do, as mentioned multiple times in this call, it just takes a lot of time, it takes a lot of effort, it takes a lot of energy. So what we strive to build is we will never go upmarket as an investment firm. We will also want to build bigger funds further down the line. We don't want to grow like crazy, but we want to forever keep the same capital efficiency by buying the same size of businesses. And our fund size will always be determined by us thinking or analyzing how much capital can we deploy efficiently with kind of the capabilities and resources we have. And to answer the question, in ten years from now, if we've managed to scale in size, but have, as I just outlined, have stayed kind of loyal or stayed true to ourselves in buying these small businesses, returning funds four to five times, which is our goal, and having built that operating system, these processes that I've mentioned, to enable incredible entrepreneurs to do these roll ups at scale, I'll be extremely happy. And that's our goal and vision.