Invest Like the Best with Patrick O’Shaughnessy
Business:Investing
My guest today is Justin Ishbia. Justin is the Founding Partner of Shore Capital. Shore is a private equity firm that invests in microcap businesses within industry niches. With $7 billion in capital deployed but an average transaction size of just $12 million, Justin has worked to build a system to drive success for hundreds of businesses through replicable operating procedures and championing young professionals.
The firm has created a moat around volume with nearly 600 acquisitions over the last three years, some of the highest numbers in the world. We discuss identifying growth prospects, constructing a meaningful board, and the business mentality behind "main street," not wall street, as Justin puts it. Please enjoy my conversation with Justin Ishbia.
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For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.
Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.
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Show Notes:
(00:03:10) - (first question) - “The system is the star” and how it applies to Shore Capital
(00:07:10) - Shore Capital’s origin story
(00:12:48) - What the perfect type of deal looks like for Justin
(00:16:34) - The historical rates of return for their deals
(00:18:12) - Shore Capital’s defensibility and strategic advantages
(00:22:13) - Their board system and incentive structure
(00:28:20) - Why they focus on the industrial subsector
(00:31:21) - Overview of thesis evaluation and generation
(00:37:24) - What they’re looking for during the diligence stage
(00:40:45) - The bad reputation of levered rollups
(00:43:57) - What he’s learned about negotiations
(00:46:39) - The weak points of Shore Capital’s system
(00:48:59) - The Innovation Stack; Thinking about stacking unfair advantages
(00:52:11) - Selling a business and what buyers are looking for
(00:55:08) - Heavy focus on operations and their portfolio performance group
(00:58:00) - Why nobody above an associate level has ever left Shore Capital
(00:60:46) - Lessons learned becoming the owner of a major sports franchise
(01:03:56) - What’s surprising about how the league functions
(01:05:05) - Key people and firms he’s learned the most from
(01:07:17) - Where Shore Capital’s system could improve the most
(01:11:06) - The kindest thing anyone has ever done for Justin
Gaurav Kapadia - Everything Compounds - [Invest Like the Best, EP. 269]
Marko Papic - A Multi-Polar World - [Invest Like the Best, EP. 268]
Garry Tan - Unwrapping the Gift - [Invest Like the Best, EP. 267]
Eric Mandelblatt - Investing in the Industrial Economy - [Invest Like the Best, EP. 266]
Sebastian Kanovich - Powering Emerging Markets Payments - [Founder’s Field Guide, EP. 56]
Frank Slootman - Narrow the Focus, Increase the Quality - [Invest Like the Best, EP. 265]
Tim Flannery - Simplifying Fund Closing - [Founder’s Field Guide, EP. 55]
Joey Levin - Building an Anti-Conglomerate - [Invest Like the Best, EP. 264]
Peter Chernin - Betting on Passion - [Invest Like the Best, EP. 263]
John Pfeffer - Adapt and Evolve - [Invest Like the Best, EP. 262]
Geoffrey Moore - Building Gorilla Businesses - [Invest Like the Best, EP. 261]
Gavin Baker - The Cyclone Under the Surface - [Invest Like the Best, EP. 260]
Sam Englebardt and Richard Kim - Investing in Immersive Worlds - [Invest Like the Best, EP. 259]
Ricky Sandler - Building an Investment Compass - [Invest Like the Best, EP. 258]
Orlando Bravo - The Art of Software Buyouts - [Invest Like the Best, EP. 257]
Nick Saltarelli - One Foot in Front of the Other - [Founder’s Field Guide, EP. 54]
Jenny Johnson - Seven Decades of Investing Expertise - [Invest Like the Best, EP. 256]
Doug Colkitt - The Evolution of Markets - [Invest Like the Best, EP. 255]
Bill Gurley and Philip Rosedale - Back to the Future - [Invest Like the Best, EP. 254]
Francis Davidson - Design-led Hospitality - [Invest Like the Best, EP.253]
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