Six Questions for Brent Beshore
Brent Beshore is one of the most impressive people I’ve met. And I had to dig around to learn that, because he’s also one of the humblest people I’ve met.
Brent runs Adventur.es, a private equity firm that owns family run businesses for the long haul, pooling profits from existing businesses to fund new acquisitions with little debt. As Brent says, he’s “cultivating a disaster-resistant compound interest machine.”
I asked him six questions.
What’s a piece of commonly accepted business wisdom that you totally disagree with?
Have a plan. — It’s commonly accepted wisdom that serious business endeavors are backed up by thick strategy documents and intricate financial models. My experience is that plans create tunnel vision and false confidence, reduce creativity, and encourage rigidity. At adventur.es, we’re constantly planning, but we don’t have a plan. We never model out an investment because if the math isn’t good enough on the back of napkin, it doesn’t get better in a fancy spreadsheet.
What do investors frequently misunderstand about running a business, and what do businesses frequently misunderstand about being an investor?
The second question is easier. Once money has been made, there’s a decision around what to do with it. That’s investing and almost all businesses, especially smaller ones, are terrible at capital allocation. I call it the bladder problem: the more money you have sitting around, the more likely you’ll piss it away. Disciplined thinking in terms of ROIC and IRR is rare, and operators need to be optimistic which harms them in allocating capital.
Most investors don’t realize how little “ideas” matter. Company executives aren’t starved for good ideas; they’re desperate for execution. The concept that a person with very little experience in the field is going to offer up a game-changing idea is absurd. I guarantee you it has been considered. That’s why it cracks me up when activist investors put together slide decks of everything the company is doing wrong, or could be doing. I imagine the company executives sitting around having a good chuckle. Hard work, focus, reliability, and professionalism creates outsized performance, not magic bullets.
What have you changed your mind about in the last decade?
What I value has changed dramatically. When I was 24, I put ambition, cleverness, and raw intelligence above all else. I was impressed by high-flyers, smooth-talkers, and game-changers. I idolized those who had grand plans. But over the past decade I’ve watch virtually all of those people fade away. Their grandiose companies exploded on to the scene, then imploded under the weight of outrageous expectations and false hopes. I’ve come to appreciate reliability, integrity, grit, and hard work as the necessary ingredients of long-term success. Everything worth doing is going to be brutally hard and take far longer than could be expected. Only those who treat people well, do what they say they will, go to work even when they’re temporarily dispassionate, and grind, grind, grind have a chance at success. These people aren’t flashy, or impressive, but their results are what everyone wants.
What do you want to know about business that we can’t know?
I want to know what motivates people. I want to know why and how people chose their career, their spouse, and their hobbies. I want to know their fears, prejudices, and anxieties. I want to know their expectations, what they consider “fair,” and how they arrived at them. The problem is not that they won’t tell me, because they will. The problem is that none of us know the truth, even about ourselves. The only thing to do is watch someone over a very long period of time and try to piece it together.
What do businesses put in their pitch decks that they think you’ll be impressed by but you actually shake your head at?
That’s an easy one — projections. There’s an obvious and understandable bias any seller, or seller’s helper, would have towards optimism. But come on, most of the projections we see are absurd. The business has been growing at 5-8% with deeply experienced leadership that is perfectly aligned with ownership (owner-operator). But because there’s new ownership and a disruption in leadership, the business is going to start growing 12-20%? When looking at an opportunity packet, I usually just rip out the projections and throw it in the trash.
What would you be doing if you weren’t running adventur.es?
That tough. I really don’t have any idea. It feels like my personality and talents were tailor-made for what I do. But, I could have been a lawyer, or worked at a big company, although I’d be a terrible employee. I enjoy traveling and learning about different cultures, so perhaps something in business overseas? I might be out in Silicon Valley, either working at a tech startup or a venture capital firm. Or, I might be at a non-profit. My minor in college at Washington and Lee University was poverty studies and I am passionate about helping those with the least comfort, stability, and opportunity.