Each year we revalue all companies we control. This investigation leads me to write somewhere between ten and twenty five pages per company. I then edit the valuation memos down to five to fifteen pages each. With so many new companies this year’s valuation memos took longer. This cut into my blog writing time. In total, I published 150 pages in December for a very small audience. Then, I dove into my 2019 Annual Letter to partners, where the audience has grown to thirty-nine. It is a mere twelve pages but it receives extra attention because the audience cares deeply (or so I like to think.) A few minutes ago I pushed a blog post to the inter-webs that had been lingering in my “should I publish this?” pile since last summer. Its publication officially breaks my blog writing seal open again. Here is the stream of consciousness that follows.
In between the above actions I also wrote “Playbooks” for about half of our companies. This is important because –somewhat related to my most recent post (link)– I restructured a few situations to simplify our interests and employ necessary clarity. These actions began in June 2019 but the concerns arose in my mind (and writing) perhaps a year prior. I won’t go into all the gory details on here, but needless to say, buying twelve companies in three years, six between January 2019 and July 2019 was near the edge of my comfort level, and potentially way beyond the comfort of some of our teammates.
I like to write. It helps me learn. I see my thinking spelled out (or not.) I write down nearly all of my investment ideas, and most of them are silly and with low probability of success. However, the situations might change and so might my interest in recalling them. I store them in a way that they can be searched and shared. I want them tested. The best are often quite simple, like our 20/20/20 plan:
Some bank survey said 20% of business owners are pondering a sale. Only 20% of this group will actually consummate a transaction within 12 months. Our plan is (was?) to do 20% of the deals in a tight geographic region and tip the market in our favor. We can (could?) then get a look at all the deals.
The above is a simple concept, written out plainly. It’s an operating strategy, too. It’s also an investment thesis. And for the most part, it worked (the “all deals” goal was a bit lofty.)
Writing does not guarantee results. A lot of the time the plan simply isn’t followed. Other times the concepts and principles are too vague, and the operational decisions are too hard to translate.
I’ve run businesses. I still do. I know it’s hard and the vague platitudes are not enough. But what’s the alternative? Function without principles? Go without a plan? How do you know if you are doing your best? What is the true north you are aimed at?
I’m an independent thinker and I like to create situations where people can excel. I don’t like easy problems. I like big, hard problems. Only in those can you be excellent.