How to start a Holding Company

In this episode, I am joined by Michael Girdley, Chairman and CEO of Girdley Enterprises, as we discuss how to build a HoldCo. Michael shares his frameworks and best practices for structuring HoldCo’s. Episode Timestamps: 00:00 Intro 02:25 What is HoldCo 07:22 Types of HoldCo 09:45 Why go HoldCo 12:56 Types of HoldCo Pt 2 15:27 Frameworks for structuring your HoldCo 19:16 7 steps of starting a HoldCo 23:47 Why HoldCo’s are awesome 36:12 HoldCo’s are antifragile 43:16 Make sure HoldCo’s are right for you 45:16 HoldCo Conference 1) What's a Holdco? It's owning multiple businesses but not running any of them day-to-day. Think Warren Buffett lite - you're the maestro orchestrating a portfolio of companies. 2) Why go Holdco? • Diversify risk • Create asymmetric bets • Design your ideal lifestyle • Leverage your passions Girdley: "I tap dance to work every day, even when things are sucky." 3) Types of Holdcos: • Roll-up (same biz, diff locations) • Platform (related businesses) • Pure Holdco (unrelated businesses) • Conglomerate (big daddy version) Pick your flavor based on your interests & expertise! 4) How to start your Holdco journey: 1. Have a plan 2. Define your goals 3. Design your org structure 4. Consult lawyers & tax pros 5. Build your all-star advisory team 6. Execute & iterate 7. Optimize for happiness! 5) The secret sauce? 🤫 • Low-cost tech makes it easier than ever to incubate new businesses. • Girdley: "You can do that same business they built off the ground for a few $1000" • Asymmetric bets FTW! 6) Centralize or nah? • Depends on your asset types & personal strengths. • Girdley keeps it "radically decentralized" - know thyself! • "Don't try to do things that I know I suck at." 7) Who's it for? Not everyone! But if you: • Love variety • Hate micromanaging • Want to build long-term wealth • Crave a custom-designed career ... Holdco life might be your jam! 8) Ready to dive in? Start with ONE successful biz, then expand. And if you're serious, check out Girdley's Holdco conference in Utah next spring! Want more free ideas? I collect the best ideas from the pod and give them to you for free in a database. Most of them cost $0 to start (my fav) Get access: https://www.gregisenberg.com/30startupideas LCA helps Fortune 500s and fast-growing startups build their future - from Warner Music to Fortnite to Dropbox. We turn 'what if' into reality with AI, apps, and next-gen products https://latecheckout.agency/ BoringAds — ads agency that will build you profitable ad campaigns http://boringads.com/ BoringMarketing — SEO agency and tools to get your organic customers http://boringmarketing.com/ Startup Empire - a membership for builders who want to build cash-flowing businesses https://www.startupempire.co FIND ME ON SOCIAL X/Twitter: https://twitter.com/gregisenberg Instagram: https://instagram.com/gregisenberg/ LinkedIn: https://www.linkedin.com/in/gisenberg/ FIND MICHAEL ON SOCIAL Michael Girdley’s Website: https://www.girdley.com/ X/Twitter: https://x.com/girdley LinkedIn: https://www.linkedin.com/in/michaelgirdley/ Youtube: https://www.youtube.com/@Michael-Girdley

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  I describe holdcoing as you own multiple businesses and you don't run any of them is the way I think about it and the way most people practice kind of this idea of being in a, being a holdco entrepreneur. And you have to understand if you're going to get into holdcoing or entrepreneurship or anything like, you know, what drives you in terms of your passion, right? And then how do you craft the business around making sure that why and that mission that you've been put on this earth to kind of create like that, that portfolio of assets or that job for you like reflects that and makes, makes it so you can live your best life, which like I'm super stoked to hear you saying you're living your best life. So kudos to you.

• 0:57Greg Isenberg?

  Michael Girdly, one of my favorite people and I run a holdco, but I'm actually new to this. I've only been doing this for four and a half years. I feel like when I, when I need some banger advice on what to do with holdcos, Girdly's my number one call. What are people going to learn today by the end of this episode?

• 1:15Speaker 00

  Yeah. Well, I think number one, I think we'll go through and kind of expose people to the holdco strategy. It's a different strategy from the way most people think about entrepreneurship, talk about, I think the different types of holdcos. We'll be able to talk about how to put your own holdco together. If you decide you want to do this, we'll talk about some of the mistakes I see people make. And like you, I feel like I'm still learning a lot. This year has been, you know, let's say a humbling year in terms of dealing with a lot of stuff going on. And I've learned a lot about holdcoing this year. So we can talk about that stuff. And then we're talking about some of the just tactics that I've seen people do in terms of, you know, who do you need to have around the table? Who are the right advisors? All that kind of stuff. So that's a lot to try

• 1:59Speaker 00

  to cram into 45 minutes, but we'll see how far we get. If very least, if I could just expose more people to understanding that this is an option. And if it's right for you, it's right for you. That's great. Then I'll consider this a win and hopefully we'll have fun too. That's also goal number one.

• 2:14Greg Isenberg?

  Of course. All right. Well, let's get our hands dirty.

• 2:18Speaker 00

  By the way, this is the first time I've ever prepared slides for a podcast. So great job picking like a good topic and giving me homework. I think it's really good. So call this holdco one on one, 101. So let's move on to the next slide here.

• 2:34Speaker 00

  So you know, the way I talk to people about what holdcos are is it's a unique entrepreneurial strategy and it's something that I think a lot of us have been exposed to by seeing some big corporations like Berkshire Hathaway and stuff like that. But I started to get into it when I started to see people doing this kind of unique entrepreneurial strategy that's different. And the way I kind of describe it to people is that the classic way people have gotten into entrepreneurship is you own one business and you run that business. Right. And that's the way most of my friends are, right? They own a business. 98% of their net worth is tied up in that business. They're the CEO of that business and they wake up and every day they work on that.

• 3:13Speaker 00

  I describe holdcoing as kind of the opposite of that, right? You, you own multiple businesses and you don't run any of them. Is, is the way I think about it and the way most people practice kind of this idea of being in a, being a holdco entrepreneur. So yeah, so you have like, I think the spectrum. So most of us are familiar with Warren Buffett. You know, he's somebody that everybody espouses to kind of be like. You know, I have some thoughts about the mystique of Warren Buffett. I think a lot of it is really crafted. I think there's a lot of BS there that people buy into. That he has this holding company and he doesn't really have to work very hard. Like, that's great. But for the rest of us, we have to work hard. Especially those of us that don't have the benefit of being in business for 90 years like he has. But

• 3:56Speaker 00

  the other end of the spectrum and like where I play is this kind of idea of a personal holding company. And I think you, you have the same kind of idea, Greg, as you think about your universe of stuff.

• 4:05Greg Isenberg?

  Yeah, absolutely. Yeah. I mean, the way I see it is I set up my holding company with the thesis that

• 4:13Greg Isenberg?

  community-based products outperform non-community-based products. So when you start with an audience and you build a community, that's just the, a great way to create a mo, have customers lined up and all of our businesses are based on that.

• 4:28Speaker 00

  Yeah. Super genius. My stuff, and we'll talk about it because I think I have a different kind of thesis around stuff is just a hodgepodge of things that I like working on. That's the core thesis. Whether that works or not, we'll see.

• 4:42Greg Isenberg?

  Well, I mean, what's the scale of your holding company if you're, if you're able to talk about it?

• 4:48Speaker 00

  I tend to talk about it these days in terms of employees. So across all the businesses are about 600 people working there.

• 4:55Greg Isenberg?

  Right.

• 4:56Speaker 00

  Yeah.

• 4:56Greg Isenberg?

  So it's working.

• 4:58Speaker 00

  Uh, it's working.

• 4:59Greg Isenberg?

  Something's working.

• 5:00Speaker 00

  Something's working. There, we still, there's still 600 people with jobs that are good jobs. So I'm excited about that.

• 5:07Greg Isenberg?

  Cool.

• 5:08Speaker 00

  So yeah, I've gotten out of like, a lot of people, and maybe you have an opinion on this, a lot of people on social media like, talk about like revenue numbers and stuff as a way to measure scale and impact. And like, I've really gotten away from it just because I find it so disingenuous. And also people are kind of numb to it. So anyway, that's why I don't talk about it that way anymore.

• 5:29Speaker 00

  So this, I pull up this slide here and it's cutting it off. So let me see if I can fix that. But basically the idea here is the difference between like, like being a VC where you like, or an angel investor, where you invest in a lot of things and being in a hold code to me is hold code like has a significant ownership stake in all these businesses. And you, as a whole co-owner and a whole co-operator, like you might own 30% or 60% or 80% of individual businesses. And you have either a controlling interest or you have a significant amount of influence on that business. So kind of the difference for me from somebody that's like an angel investor or VC versus like an actual hold co-operator is like,

• 6:12Speaker 00

  you are in these businesses, like you're a real owner of these businesses, or at least a, either majority or a big significant stake. And like, if it's not like, you're not a whole co-owner if you're like a 0.5% owner of 42 different startups, which I know a lot of people are, and there's nothing wrong with that, but that's totally different from, from this.

• 6:31Greg Isenberg?

  Shh, don't tell anyone, but I've got 30-plus startup ideas that could make you millions, and I'm giving them away for free. These aren't just random guesses. They're validated concepts from entrepreneurs who've built $100 million-plus businesses. I've compiled them into one simple database, compiled from hundreds of conversations I've had on my podcast. But the main thing is, most of these ideas don't need a single investor. Some cost nothing to start. I'm pretty much handing you a cheat sheet.

• 7:12Greg Isenberg?

  The Idea Bank is your startup shortcut. Just click below to get access. Your next cash-flowing business is waiting for you. Okay, and just to clarify one thing. So when I talk about startups, I do like mostly tech startups. We do do some agency stuff, but it's mostly tech startup stuff. I think a lot of the stuff that you do, you have a mix of non-tech and tech, right? So my question to you is, holding companies, what type of businesses can be in them?

• 7:51Speaker 00

  Yeah, so it's a pretty blank canvas in terms of how people want to approach it, and it's a big label. When I talk about holding companies, I think you can have all kinds of different businesses in there. You can have different asset classes as well. So in my world, like I own not only like big chunks of real businesses, and I'm on the boards of those, and I'm in there with the management, supporting them and that sort of stuff. There's also like real estate assets. So like I have a big portfolio of real estate that I control, and that's not being an investor in somebody else's fund. That's like literally stuff like you go look at the deed and like my name's on it. So you know, when I look at the definition of a holding company, and we'll talk about the different types here in the next couple of slides,

• 8:34Speaker 00

  you really have a lot of freedom to define what sort of assets you want to have in there, and you're holding basically equity. Right, ownership of those things. So those could be a portfolio of high growth startups. If you figure out a way to own big chunks of those things, you know, where you're not, not a passive investor in them. Like you could totally do that. If you want it to be agency and services businesses, you can totally do that. If you want it to be a mix, a mix of different stuff, whether it's tech, tech and non-tech like I do, you can totally do that as well. It all kind of ties back to the world you want to create for yourself, which is kind of the fundamental theme of, of hold going for me. Like, like ultimately, I think a lot of people create a situation where they let their business dictate the lifestyle they're going to have.

• 9:18Speaker 00

  And what they're going to be doing every day and all that kind of stuff. And like you, for example, Greg, are like super passionate about community. You talk about it all the time. Like the amount you, you write about it on Twitter, like clearly you're super passionate about community. So like you've created a world in which your hold code like ties into your passions. And the same thing for me, like I'm passionate about a bunch of different spaces and I've created a world for myself as a whole co-owner where like, I get to work on all those types of businesses all the time.

• 9:43Greg Isenberg?

  Which honestly, people ask me like, you know, how are you enjoying doing a hold company, holding company? And the truth is I've never had more fun in my entire professional career. And it's because it's the most creative I feel like you can get. Cause you've, you design a world for yourself where it's just, oh, I'm really interested in all these businesses. And I just get to come in, be creative and then almost be like a fun uncle instead of a parent. Which is a good place to be.

• 10:13Speaker 00

  Yeah. Let me jump ahead because I think this really, I mean, this is a really good topic. Like for me, for me, I think that when you do hold going, you really craft a world for your business where it serves you in terms of how you want to be living your everyday. So like, I think you just described, like you love like advising the, the GMs and CEOs that run the businesses. You love, you know, working on something that's very passionate, passion for you in terms of community. And then tying that back into supporting those folks. But I don't think either you or I is really passionate about being in there, like making the trains run on time and optimizing those things. And you know, I think that's one of the key things I talk to people about is like,

• 10:56Speaker 00

  you have to understand if you're going to get into holecoing or entrepreneurship or anything like, is that really, you know, what drives you in terms of your passion, right? And then how do you craft the business around making sure that why and that mission that you've been put on this earth to kind of create like that, that portfolio of assets or that job for you like, reflects that and makes, makes it so you can live your best life, which like, I'm super stoked to hear you saying you're living your best life. So kudos to you.

• 11:21Greg Isenberg?

  Thank you. I only say it, and I say it only because I want more people to, to do this. You know, I think there's probably a bunch of people who are in jobs or starting companies that are a bit bored or whatever. And I didn't know this was a viable option until I just stumbled into it. And that's why you're here.

• 11:41Speaker 00

  The, I mean, the funny thing for me is like, I stumbled into it as well, right? And the reason, um, the reason I got there was I was owning and operating a single business that was doing really, doing really well. And like, I wasn't fulfilled, right? At a certain point, like more money doesn't make you happier and all that kind of stuff. And like, I realized I wanted to be living in a creative space. I wanted to be teaching. I wanted to be helping other folks and I got more joy out of helping people like, say, for example, like finding a CEO role in one of my companies and like, being very excited for that role and growing and being their best self, right? And then being there for them to help them grow, help them when they had really hard problems and then support them kind of in their personal vision for their life.

• 12:27Speaker 00

  And like, that is what makes me super happy. Believe it or not, Greg, there are people who find a lot of joy out of like grinding it out at one business and being in the details and like making the trains run on time. I am the opposite of that person. And like, so for me, my journey to get into holecoing, I didn't even know the term. It was just like, I was bored AF in one business and I needed to go be creative and start, you know, doing other stuff where I felt like I could be my, my best person, my best self. All right. So anyway, I, I jumped all over the place. So yeah, so there are different types of holdco. So we talked about what you're doing like thematically tech businesses around a specific platform. That's where I would kind of describe your business. So the slide I have here talks about the four different types of holdcos.

• 13:12Speaker 00

  So a rollup, most people are pretty, pretty, pretty much understand that. I think our, my Twitter buddy, I don't know if you're connected to him, Reg Zeller is one of these folks. He has a portfolio of non-fairish foundries that he's bought over time. He's a former investment banker, got out of that whole thing, lives up in Minneapolis, great guy, and he owns just a portfolio of these businesses that are regional, non-fairish foundries. So they like produce like the types of metal fabrication for a local area and like there's like five, it's five to 10 guys in a like a, basically like a warehouse, like taking orders and producing parts for manufacturers or different businesses and stuff like that.

• 13:55Speaker 00

  So I would describe him as a rollup, which is something where they have just basically a commoditized business or type of service where each entity in the business of the holdco is the exact same thing.

• 14:07Speaker 00

  And then I would describe your business as this platform type, which is like you have a, you have multiple categories, but they all kind of group around this single idea, right? So your single idea is this idea of community and how do you like drive your, your knowledge there and your experience there as something that can create a platform where all the entities like went together? And I think that's really strong.

• 14:30Speaker 00

  There's a couple of other types here. I live in this kind of peer holdco thing, which is basically like your Berkshire Hathaway idea, which is like you own two, three, five, 10 businesses and like you supervise those and coordinate amongst them, but there's no theme, they're just kind of like a, a set of holdings and you know, I'm in everything from kind of fireworks to software to media now. So, but the good news, I'm passionate about all of those things. So that's where it is.

• 14:58Speaker 00

  Cool, a hold co. I mean, obviously a situation where it's advantageous for a hold co-owner. You know, you can do some certain stuff that's that's typical in terms of good business hygiene, providing corporate shield, making management easier, you can maintain ownership and things. So just talking about kind of the structure of how people typically do this, you know, you create an entity and then that owns portions of other entities, whether those are, you know, limited partnerships or corporations or any of that kind of stuff. Cool. So then this is where I think I start selling people on why it's cool to do a hold co. But is there anything like that comes to mind for you that we should talk about before I can go into that?

• 15:36Greg Isenberg?

  How do you think of, you know, and I'm talking to mostly the American founders here, but how do you think about LLC, S corp, C corps? I know you're not a lawyer or anything like that, but do you have any any framework for thinking about how to set up some of these businesses?

• 15:54Speaker 00

  Yeah. Yeah. So definitely have a framework for thinking about. Number one, talk to a lawyer. That's my number one framework all the time. So, but but in terms of how to do those, the way I'm actually personally set up is everything rolls up to me personally. Like I don't actually have a Berkshire Hathaway style, Berkshire Hathaway style hold co. Because like there's no reason to like it's just another tax return I would have to fill out and it's just annoying. So. But there are other situations where say you're like, you know, Siava and Xavier from enduring ventures where you would want to have a C corp at the top tier. And in their case, like they have outside investors, you know, at the very top of the hold co.

• 16:36Speaker 00

  And then there are individual entities that are either pastor entities or C corps that live down there. So, you know, at a high level for North American folks, you have to make a decision based on the outcomes you want to have for your hold co. As to how you structure things and allow cash to move between different entities. And there are certain types of situations in which you would want to have a pastor entity, which is a subchapter S entity.

• 17:05Speaker 00

  Under the US rules, and there are times in which you would want to have a C corp, which is a subchapter C corporation. So, most of the big corporations are subchapter C corporations. And then the way, I feel like I'm getting ready to give a legal lecture on this stuff. So, this is why you should call a lawyer. I'll listen to some guy at a podcast. But there are times in which you want to have passor entities and there are times in which you want to have C corps. And that it all ties back to what the cash flows are going to look like, what the owner strip structure is going to look like, and then what the eventual exit for that individual holding or the holdco in general is going to look like. So, I think maybe I'm explaining it in a way that my number one message is talk to a lawyer

• 17:49Speaker 00

  and talk to your tax, talk to your tax advisor. And actually, most people, Greg, that are doing, doing holdcos, they end up like, you don't go it alone. Like, one of the things I talked about when, when, you know, I put together a course on all this stuff. But talked about like this all-star team of people that are folks that are there to help you make these decisions. Because there's a complex set of Legos that get put together to establish how your holdco should work. And that's like a CPA and accountant, a tax advisor, structuring attorney, transaction attorney, if you're going to be buying and selling things and so on. So, you know, there's no like black or white, do it. The one thing I would tell that is that most people tend to way overcomplicate it.

• 18:33Speaker 00

  Like, you can keep it as simple as I have in terms of kind of how you structure stuff or things just flow up to you individually rather than having like a bunch of LLCs and stuff like that. But anyway, I don't know if that's the most direct answer other than it's complicated.

• 18:48Greg Isenberg?

  Well, no, I think it's helpful. I think it like it, that's kind of like the world of options for you. But the bottom line is, yeah, speak to a lawyer, figure it out, have a team, have a team around you that's advising you. Obviously, you're not going to have this all-star team of advisors on day one or day zero. But this is something that you like build towards for sure.

• 19:07Speaker 00

  Yeah, and we kind of put them, we put them in order of where they tend to show up.

• 19:12Greg Isenberg?

  Yeah.

• 19:13Speaker 00

  And, and go from there. So. Cool. So, all right. So let's talk about how most people put together a whole co and get into it. You know, it's interesting. And I don't know if you've seen this, Greg, but like, things tend to go in waves of kind of excitement and social media and the population stuff like. I mean, I think there was a time where everybody wanted to be a VC. And then, you know, that was kind of like the mid 2010s. Do you remember that?

• 19:43Greg Isenberg?

  Dude, I was, I was like, in there, you know, I was fighting every ounce of my body was fighting not to be a VC. I was actually a venture partner at a fund, two funds, actually, because I was like, oh, maybe I would like the VC thing. But realized it was just kind of like pure, a bit of peer pressure. And so, yes, I remember that very vividly.

• 20:06Speaker 00

  And then, yeah, so I believe it or not, you, you're stronger than me. I, I raised a couple of VC funds. So, and I'm still, here's the thing people need to know about getting into VC, especially if you're a good person, like the life, the life cycle of those funds, like, especially with how elongated it is to exit these days, like, you're even your good investments where you're like, returning your fund and stuff like that. Like, as a VC, you're going to be working on those deals 10 or 12 years, sometimes 15 years after you make them, and before they exit, right? And so, like, I'm still working on a fund on a regular basis for deals that we did back in 2014. So like, 10 years on, and some of

• 20:49Speaker 00

  them have no, no time to exit any time soon. But they're like, return the fund type deals, because that's the other thing about PC, like, your, your, your bad deals tend to fail quickly. The deals that are going to hit, like, they take a long time, and they keep compounding, and then eventually they hit. So, anyway, that's, that's something people need to understand about PC. It's not like you could just quit. Like, you raise money from people, you have to keep working on things for a decade plus. So, anyway.

• 21:15Speaker 00

  But you're stronger than me. I ended up, ended up doing it. And then I decided I didn't want to be a VC anymore, which is totally fine. Okay, so people ask about like, how do they go from like zero to hold co? And like, this is the seven step process that, you know, I highlight for people. There's a way to get there, which is kind of the way I got there, which was like, I had one business and I started to just like, get into a second business. Then I got in a third business and a fourth business. And I looked up and said, I am in a whole co. You know, I encourage people to actually step back and try to have a plan of how they're going to work their way into whole co-ing over a number of years. It's a long-term wealth building strategy. It doesn't just, you know, it's not just like, start a company, sell that company. Like that's, you know, you're, you're building up a portfolio of things over time and letting them compound.

• 22:00Speaker 00

  So these are the seven steps I tend to run people through, like have a plan, figure out what you want out of the whole plan in terms of owning multiple businesses. Start to put together what your organizational design is going to be, run it by your attorney, run it by your tax advisor, run it by other folks. And then ask yourself like, is this really going to be making me happy? Cause I think ultimately, a mistake I see a lot of hold co folks make and entrepreneurs in general is designing to have a successful business, not to have a successful life. And I think hold co-ing done right needs to be like Greg, you're passionate about community. Reg, who I talked about before with the non-fair is foundries is like passionate about that blue collar kind of backbone of America. Me, I'm passionate about a bunch of different stuff because I have whatever ADD or whatever it might be.

• 22:44Speaker 00

  You don't want to be in a situation which your business is creating a life that you hate. And I think by planning it out this way, I encourage people to really be, you know, thoughtful about that. So you end up in a good place.

• 22:53Greg Isenberg?

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• 23:36Greg Isenberg?

  They're so confident in their approach that they offer a 30 day sprint with 100% money back guarantee. Who does that nowadays? So check it out. Highly recommend boringmarketing.com.

• 23:47Speaker 00

  Uh, let's see. Okay. So let's talk about some of the fun things to do with um.

• 23:53Speaker 00

  Why a holdco is awesome. So number one, I think it's pretty clear, like you and I have a ton of fun doing it. Like, I really enjoy it. Like, I tap dance to work, feeling like I'm working on really important stuff. I'm doing high leverage things to create opportunities for other people and like.

• 24:10Speaker 00

  Getting to work with CEOs who are inspiring, right? Um, and this idea of leverage for me is super fun. Um, and it it's this. The reason I like it is with a holdco, you get to often do what I call these asymmetric bets. Other people call it too. I didn't make up the term, but basically like the idea is. You can invest in something like you've invested in creating several businesses, Greg. So I consider these asymmetric bets. Like you can invest a hundred thousand dollars to get a business off the ground. And that may turn into a business that could generate you a million dollars a year in net profits, right? That's an asymmetric bet and the the worst thing that can happen is you lose your hundred thousand dollars and some time. And so as a holdco operator, you don't just necessarily buy things and bring them into your portfolio.

• 24:52Speaker 00

  You can also create things and given what's happened with the prices of assets over the past decade. I have spent a bunch more time incubating and creating new businesses than I have trying to go buy them. Just because I can get so much more leverage by making these asymmetric bets where, you know, I invest a few hundred thousand dollars or. Or whatever to get something going and then hopefully that multiplies and becomes something really big over time. Um, and I've had a number of these kind of go that direction where like my annual return on that initial investment is 100 or 200%. Per year, right? And that's like the fun of asymmetric bets.

• 25:28Greg Isenberg?

  Yeah, I think uh, the other thing to note here is. The cost of starting a technology-enabled business and that could be a service business, that could be a marketplace, could be a consumer social mobile app, could be a D to C company, you're standing on the shoulders of giants and you're able to just to use things like Shopify and use things like V zero and Replit. So the cost has gone down dramatically. So it is, my opinion, a really, I mean, you agree with me, but it's probably more cost-effective to incubate right now, especially if you're doing tech-enabled stuff.

• 26:12Speaker 00

  A million percent. Well, this is where, you know, I'm 49 years old. So I like, I came of age in tech, like in 1999, so 25 years ago. And my wife had moved out to the Bay Area to work on like an early version of like hotels.com, like a booking engine for, for stuff. And she took me into their office at one point and they had like this massive office. They'd raised tens of millions of dollars. And before they even had satisfied their own like first customer, they had built out an entire like mini data center in this San Mateo office building, like in California. And it was just like two or three of the

• 26:55Speaker 00

  millions of dollars went to servers and building out a tech stack and, you know, different middleware and all this kind of stuff. And today, like, man, it's like Shopify and all this kind of stuff. It just makes, it makes the startup costs. And doing some of these businesses that are really low capex, like, like you can do that same business, you can get that same business they build off the ground for a few thousand dollars, right? Between AWS and the, the stuff you can just turn on and stuff that's already built. It's just a different planet. Sorry. I had to, I'm almost 50, so I kind of start have to do and Greg, the like back in my day talks. So it's, it's, can't help it. So.

• 27:33Greg Isenberg?

  But this is true. Yeah.

• 27:35Speaker 00

  When, when did you start your career?

• 27:37Greg Isenberg?

  I mean, I've always like, as a teenager, been doing, you know, tech stuff, but like, I moved out to SF in like Silicon Valley in, you know, the early 2010s. So.

• 27:53Greg Isenberg?

  That era was the era of the App Store coming out and there's an app for everything. And in that era, it was, it costs you like a million dollars to get a mobile app out the door. Minimum, minimum. So, you know, I just spoke to someone, like a 21 year old kid, actually, basically who, you know, built a mobile app using AI. I mean, you hear these stories and then it gets, goes viral on TikTok and it's like, you know, he's making a hundred K a month, MRR, and then he incubated another one, now he's incubating another one, all of a sudden he has a hold co. So I think you're going to start hearing more and more of these stories.

• 28:37Greg Isenberg?

  And I know a lot of people hate those stories because they're like, you know, you got lucky or whatever it is, but it's, it's the big reason, the two big reasons why you're going to hear more and more of those stories is one, it's cheaper than ever to incubate. Two, the distribution is, is on the, on the phone, right? Like you, you just have to tap into it. I mean, easy for me to say, just tap into it. That's very hard to figure out how to create distribution, but if you can, you know, it could go gangbusters. And what does this mean in the context of what you're talking about? It means that your ROI could be quite good.

• 29:12Speaker 00

  Yeah. A million percent. Yeah. And so I do think, so we've talked a bit about the people like doing low capex or low capital requirement kind of businesses as a whole co strategy, right? You build a portfolio of things that don't take much capital or you can bootstrap your way off the ground. So like there's a portfolio, like Jesse Tinsley, who you may, you may have seen him on Twitter. He's a friend of mine. He has a whole portfolio of low capex recruiting and kind of recruiting process optimization businesses. So like he's started to acquire a bunch of stuff. I think he has recruiter.com is the domain name, so don't quote me on that, but he's built, he's built quite the, the thing there, but he's been able to do it all from his

• 29:57Speaker 00

  personal capital, just because the businesses he's in don't require a bunch of capital to get off the ground or to even acquire. But there's this other end of the spectrum where people need greater access to capital to buy some of this stuff or to build a portfolio around some of these things. And so some people as a path to kind of build their their hold co will go and get outside capital. So the Enduring Ventures guys, Siava and Xavier have done this, right? They raised money to go get their, you know, to get things started. And then you will actually see also folks who will access capital to leverage their personal, personal holdings. And so what what that means is, so for example, like Tiny, so Andrew Wilkinson's business, like they have their businesses that are owned as a hold co,

• 30:42Speaker 00

  but then they also have a fund management business that they run where they raise money from outsiders to go buy businesses that they then oversee as part of their their hold co operation. So there's this idea when you do a hold co, it can provide great, there's potentially greater access to capital. People will can potentially buy equity in the hold co itself. They can buy equity in the deals. They can be partners in those deals and those sort of things. And then the other thing is, that's pretty cool, is if you look at some people with hold co's, you can start to basically become a better or a more attractive borrower to lenders and other folks like that. So for example, let's say that you, you know, are a roll up of a bunch of foundries

• 31:26Speaker 00

  like Reg Zeller is. If you wanted to go buy an additional foundry and bring that in, you could maybe finance 100% of that because you have the equity in your existing business and the track record there to where a bank might give you enough capital to go and buy one of those new businesses without having to inject any, any capital into your business at all. So basically, you get some of these economies of scale, you get these ideas where you can be more attractive to the different types of funding sources that are out there.

• 31:52Greg Isenberg?

  Yeah, we have a, we have a line of credit that we can draw down on if we want. And I think, yeah, a big reason why a bank feels comfortable doing something like that is that, yeah, they look at it and they're like, this isn't just a tech startup, you know, that Google changes their algorithm and it's done for them, right? They see a diversified holdings of businesses. And because of that, you're right, they do feel a bit more comfortable and the rates aren't crazy. And now, to be honest, I don't like drawing down on that line of credit for a lot of reasons, but the basic reason is I just don't like debt in general.

• 32:33Greg Isenberg?

  But you know, sometimes you look at something and you have an unfair advantage to incubate something and it just requires capital. And you might not want to just go, you know, not many people talk about this, but like pitching investors, equity partners takes a lot of time and energy. So you might just want to draw down a little bit, invest and then pay it over time.

• 32:55Speaker 00

  Yeah. You know, I think you're right. I mean, people, people really discount it's, oh, it's easy to raise money and put these things together. People really discount how much time you have to spend like managing those investors and relationships and dealing with conflicts that arise. You know, weren't you doing the things the way I wanted to them? Or if a deal goes south, right? Like, like managing investor relationships and some of that stuff like I'm with you. A lot of times just like, oh, this would be so much better if I just was doing it by myself because the fewer phone calls.

• 33:31Speaker 00

  Super cool. So the other thing, just it's one of these economies of scale. I talk to people about it, like a hold coat can provide you ways of having tax savings. There's, you know, there's in the U.S. There's typically active earnings and passive earnings. Those are different, those, you know, if you, if you have passive losses, you can use those to access offset passive gains. If you have active losses, you can use those to access active gains and that sort of thing. The nice thing about it is say you have a portfolio of businesses and one of them loses money in a year. And then another one earns money, like you could potentially use that to offset those things and have some tax savings and tax efficiency around the whole thing.

• 34:14Speaker 00

  So again, contact your tax advisors and if it's not in the U.S. There's different rules. I know Canada has stuff that involves maple syrup rules around this stuff and Molson beer, but anyway, that's just a Canada insult, sorry, but.

• 34:28Greg Isenberg?

  I was waiting for it. I was waiting for it, to be honest, and it exceeded my expectations, honestly.

• 34:34Speaker 00

  So hilariously, you know, I don't know. You mentioned that you had interacted with one of my teammates, Greg, and you liked the person. Well, I didn't mention to you, he's a Canadian.

• 34:49Speaker 00

  Of course, you guys got along. Perfect.

• 34:51Greg Isenberg?

  Totally. His breath smelled like maple syrup. So I knew I liked him.

• 34:56Speaker 00

  He's a great guy. He's a great guy. That's, that's one of the secrets I think people are sleeping on, especially if you're hiring remotely. Like, and I've been doing a lot of global hiring over the past few years, as I know you are. Like, I think people are sleeping on Canadian talent. And especially if you need to have people that understand North American culture, whether it's through writing, or, you know, being able to really connect with people in that way, like Canadians, especially, you know, Greater Toronto area folks, like amazing, like, opportunity for American companies to hire.

• 35:27Greg Isenberg?

  Yeah, we have tons of teammates in Toronto and Montreal. And first of all, it's literally $1 US, as we're recording this, is $1 US is 1.39 Canadian. So you get a 39%, like, on the financial side, you're getting a 39% discount, basically, right there. So there's, there's, there's an opportunity also to arbitrage a little bit. And then, yeah, I mean, for example, Toronto, if you need them to come into New York, or LA, or San Francisco for a meeting, there's like, probably like 10 flights a day, you know, a day daily, right? So it's, it's, it's different than, you know, getting someone from a far country or something like that.

• 36:13Speaker 00

  100%. 100%. Okay, so we had talked about trying to do 45 minutes. So let me cover one more thing, which I think is really interesting about Holdco's, and then we can close however, however it makes sense. And then I'm happy to make this deck available to folks. And then my team also told me we have to promote our conference. So we have 30 seconds to do that. That'd be great. They yell at me because I forget to self promote. So anyway, that's why we do it. So last thing I want to talk about that's cool about holdco is like, I think it's actually a good strategy to make yourself more resilient in terms of having risk avoidance, right? So like if you own one business and something bad happens,

• 36:56Speaker 00

  somebody steals from you, or you know, something happens that can cause that to all fall apart. Well, if 99% of your net worth, which a lot of people who are entrepreneurs, that's the way they're set up. 90% of their net worth is in that one business. Like by having a portfolio of businesses and having a diversified set of things that you build through a holdco, you can avoid some of the risk that normal entrepreneurs have. And that's where one of the strategies and one of the things I like about holdcoing is you can try to have things that potentially like, you know, avoid cyclicality, like they can be in a situation where if one is very weather dependent, like the other, another business can be not weather dependent. Or if you're dealing with something where there's kind of one business in decline,

• 37:40Speaker 00

  you can try to balance that with having businesses that are growing. So I think it's a really good way to build a more resilient life cycle or a lifestyle for yourself, though there are ways to still get yourself in trouble, just like in business, like leverage, leverage, theft, all those things are over leveraging, theft, all those things are still challenges that a holdco has, just like a normal business has. But the cool thing is when you have a portfolio of things, potentially you can de-risk your lifestyle and de-risk your future by having a more, you know, kind of differentiated set of stuff that isn't necessarily going to be, you know, all come down at once through regulatory changes, tax law changes, societal changes, the technology distribution or changes.

• 38:22Speaker 00

  Like all those things, like I think it's a cool thing when you have a whole co-portfolio to be able to kind of de-risk yourself and have a more stable kind of income base and asset base over time.

• 38:34Greg Isenberg?

  It's interesting that you have integration between portcos because from my understanding on the Warren Buffett, Andrew Wilkinson type model, they don't do much of that. They keep it very separate. What's your thinking on that? And are they, you know, why are they so anti-coordination between and collaboration between companies?

• 39:04Speaker 00

  Yeah. So I think, I think a couple of things. One is, I think that the level of centralization you should have totally depends upon your asset type. So let's say you build a holdco where you have 14 restaurant franchises, right? And like, let's say seven of them are Burger King and seven of them are Wendy's. Like, this is, this is a very common American holdco style where there's families that are multi-unit operators of franchises. They have built great businesses this way and they're making millions of dollars a year. It would be stupid for you to have an HR person and a marketing person in every single one of those like stores, right? Like, you should centralize that kind of stuff.

• 39:49Speaker 00

  You should centralize your bookkeeping. You should centralize your ordering. And so, to me, the level of centralization that makes sense, where you have like interaction between the individual portcos, where you're centralizing stuff at headquarters, that totally depends upon the types of assets you have and what you need from those assets, right? And so, the more homogeneous those assets tend to be, the more you can centralize stuff. And so, the, you know, the other end of the spectrum is you decentralize those things. You push things out to the edge into the individual portfolio companies and you let them do that stuff. And you don't centralize things like purchasing, ordering, best practices, HR,

• 40:30Speaker 00

  finance, all that kind of stuff. And so, you know, I think what you're seeing with Andrew or what you're seeing with, you know, with Berkshire Hathaway or any of the, you know, Roper or any of the kind of big Danaher, big holding companies is, they have built a level of centralization that ties to the asset type that they have. And it makes sense for them to not centralize so much. And you know, I think there are tons of big case studies where like I talked about with the franchise thing where people have centralized things to great effect. Our buddy Red Zeller has a lot of stuff centralized around how he's doing, you know, HR, finance, marketing, all that kind of stuff with all these different assets that he's acquired. So it really just

• 41:12Speaker 00

  ties back to the type of asset you have. And for, for those guys, it makes a ton of sense. And for the other folks, you know, being centralized makes a ton of sense, but it all just, it depends on the type of asset you have.

• 41:23Greg Isenberg?

  And just curious, you know, in your, in your empire, how centralized or decentralized are you?

• 41:28Speaker 00

  Radically decentralized.

• 41:32Greg Isenberg?

  Yeah.

• 41:32Speaker 00

  So, yeah. And I think there's another thing about it. Like, I'm actually a pretty crappy operator. And by operator, I mean, somebody that's like, good at not chasing shiny objects, staying, you know, making, making the boring stuff happen that is essential to every business running well. I am incredibly good when there's, you know, the create, the creative juices get flowing, I get excited about it. And by the third time, I have to do something that's feels rote or uninteresting, like I kind of phone it in, or sometimes I'll just forget about it. And so because of that, like, I don't have, like, the personal confidence to be like, I'm going to create this centralized, like, finance thing and the centralized, like,

• 42:16Speaker 00

  sales thing. And, you know, all these kind of things where I have to operate something in order, weld in order to succeed. Like, I'm trying to build a universe that, like, plays to my strengths or weaknesses. And I'm very aware of, like, hey, like, don't, don't try to do things that I know I suck at.

• 42:34Greg Isenberg?

  That's fair. And I guess, you know, the way to think about this, it sounds like, is it's a spectrum. So, you know, you could be mostly decentralized with a couple of things that are centralized, or you can be mostly centralized with a few things that are decentralized.

• 42:51Speaker 00

  Yeah, I think it's exactly right.

• 42:55Greg Isenberg?

  Cool.

• 42:57Speaker 00

  Let's see. Okay, so we're running out of time.

• 43:00Speaker 00

  So, you know, I'd love to share these slides. If anybody wants them, there's a bunch of stuff here about how to operate a hold co. I have some really strong views about all that kind of stuff. And if anybody wants to get into all this type of stuff, you know, I'd love to share it with them. Look, and I think, I think there's two types of people out there. There's people out there that go and they're like, hey, I think, I think there's this one way to live and I think you should do it. I don't think hold goings for everybody. I think it requires a certain set of skills. I think you and I are some somewhat unicorn-y and not feeling like we need to have our hands to control every single thing. And like, not everybody's like that. And I think this, if this is the type of lifestyle somebody wants to have, like, I'm a huge fan of it.

• 43:42Speaker 00

  And it's the best thing for me and I tap dance to work every day, even when things are sucky. And, and I double tap dance when things are great, but I think I would say, hey, this is, this is a possibility for the type of career somebody can create and the type of wealth building strategy somebody can have. And if it's right for you, great. And if it's not right for somebody, like, no problem. But, you know, just know it's out there and, and do what's best for you. Most of my friends, as I told you before, they own and operate one business and they're very happy doing it. And universally, they all take me to lunch like once a quarter and they're like, how do you do what you do? Why do you do it? Because it's not right for them and they want to understand why it's right for me. But if it's right for somebody like, great, know about it. And if it's not, well, people should just do what's going to make them happy. I don't really care.

• 44:24Greg Isenberg?

  Totally. I also think that if you, if this excites you, this idea of becoming, you know, I call it a multipreneur or hold co, hold co-preneur.

• 44:36Greg Isenberg?

  The first step is just building one idea, building one project that turns into a product that turns into a company that's profitable. And then, once you get to that point, then like, like some of your buddies could, could be like, you know what, I'm actually going to go acquire another business and then kind of build my own ecosystem. Or you know what, I'm going to take some of our profits and reinvest it in this opportunity. So, don't think that you need to start a hold go from day one.

• 45:06Speaker 00

  Yeah, the key to doing is you need to have at least one successful business before you have two successful businesses. So

• 45:14Greg Isenberg?

  That's fair.

• 45:15Speaker 00

  It's crazy how math works that way. Okay, so my team told me I have to do this if I can have 15 seconds. We're doing a whole conference on this, on this wealth building strategy, you know, hold going as a lifestyle. We have a bunch of speakers signed up and because I love skiing, we're doing it at Utah next spring. Some folks had been doing this hold go conference in Cleveland and we're, we're, we're working with them to take it over and we're moving to Utah. And it's John Wilson and, and a number of other folks have been involved in this. And so if anybody's interested, please come, we're, we're about half full with the conference. It can be pretty intimate, 125 people or so, and they'll be skiing, hold co talks and a bunch of stuff to, you know, leave with understanding how to do this whole

• 45:59Speaker 00

  thing even better. So if people are interested, we'd love to have you. It's not cheap, but it's going to be awesome.

• 46:04Greg Isenberg?

  Honestly, I'm interested. Like this is, this sounds fun, you know, so I'm interested. Let's talk about it offline.

• 46:13Speaker 00

  I think I'd get you a discount, man. Yeah, special, special Greg deal.

• 46:16Greg Isenberg?

  Cool. Awesome. Dude, thank you so much for, for taking us through this. I know

• 46:24Greg Isenberg?

  I asked you to prepare slides, but that's only because I wanted it to be focused and I wanted people to be able to see this and be able to take notes. And I really appreciate it. Girdly, where could people find you online?

• 46:38Speaker 00

  I am on girdley.com and there's links to everything. So last name Girdly, G I R D L E Y.com. So I do a twice weekly newsletter. I do Twitter posts like crazy. I'm a LinkedIn guy now and video, but links to everything is a girdley.com. So you can go to my website and sign up there. So I appreciate it.

• 46:59Greg Isenberg?

  And we'll put it in the description for people who want to start a hold code, but don't know how to spell Girdly.

• 47:12Greg Isenberg?

  That's the reality. Okay, that was hold code 101, Michael Girdly. That's the pod. Thank you for joining us.