The Joy & Pain of Buying a Tech Business

Thank you. Sorry. Well, one more thought. There is. Yeah, we're not, I mean, I think investing heavily and, and being more cash constraint makes more sense when, when you're thinking long term.

Right. Like Antonio and I are not looking to tell a beautiful story today because we're not looking to sell. So I'd rather reinvest everything and have, and have a low free cash flow number to show for because I don't need to show that, you know, we're not, we're not showing things to anyone because we're holding this hopefully for as long as we can. So we'd rather reinvest everything that we…

I keep hearing you say, or you've shared with us a few times this concept of a long term hold. So can you say more about that?

There's a study by one famous or well known search for investor called Will Thorndike who interviewed a ton of, you know, search fund companies, exited, interviewed the first buyer after the search fund, interviewed the second buyer after a search fund and came to a conclusion based on I think sufficient data that a, the value that's created in years six and seven, and I think these are the right…

What that means is the compounding value of your decisions early on will become fruitful or you know, will show in years six and seven. That's a sort of like exponential curve and then from there on it's really crazy growth because you're compounding again a series of small decisions over the years that start showing in the future.

So for Antonio and myself, tying again this long term hold with the way we think about Beecker and how we want to reinvest everything, it wouldn't make sense for us to sell the company this year or next year when we're putting all of our eggs back in the basket to get to that exponential growth. It's just a strategically different point of view than paying dividends, paying down debt and exiting…

And Felipe, how did your investors think about that? Because traditional search funds have broadly a similar expectation to a private equity hold five to seven years and that there will be a liquidity event. So how did, how did you explain to your investors that this might be a longer ride?

The crude answer is there is no binding time frame to sell the company. Right. Everyone comes into an investment knowing that this may be a 1 year, 5 year or 10 year or 20 year hold and anyone can sell their units whenever they want.

You know, I mean, there's a process obviously and there is drag alongs and tag alongs, but I think it helps to set it, set expectations when the rules of the game are clear that, you know, we don't know what we don't know and we don't know how long we're going to hold this. But the, the, the more fair or the more appropriate response would be that we try to align expectations with our board.

If the boards align with what we're trying to build, usually investors will follow. And candidly, none of our investors have asked about an exit. Or when we think about selling, we have voiced our interest in holding this for a longer period, but it hasn't really been a concern for our investors.

Maybe in year five or six, some people may start asking, hey, do you foresee an exit? The future. But so far that hasn't been the, the case. Yeah. Great. Well, the point about compounding, Felipe, of course, what, what you described there and Will Thorndike's research, I always kind of took for granted.