Why Personal Holding Companies are the Hottest Trend

What's up, everyone? Welcome back to another episode of Founders Journal, my personal diary made public for the world. I'm your host, Alex Lieberman, co-founder and executive chairman of Morning Brew. Today I am talking about personal holding companies, what they are, why they're becoming popular now, and how they work. Before we hop into the episode, please share Founders Journal with your network. It is the number one way that we grow the show, and the show has been growing like crazy the last few months. Without further ado, Let's hop into it. Over the last 12 months, it has become sexy for individual entrepreneurs to launch or become active owners in multiple businesses at once. Some call it a personal holding company; others call it a personal venture studio. My buddy Greg Eisenberg calls it being a multi-preneur. And I can count nearly a dozen people that I know personally who have built up their own little personal holding companies. Hunter Hammonds has built a company called Assembly, which is comprised of Off Menu, a design agency, Hey Friends, a YouTube growth agency, Viral Cuts, a short-form video agency, and several others. And he has launched all of those businesses in partnership with Twitter creators in the last 18 months. Then there's Sean Peery, who is, you know, one of the hosts of My First Million. He has Milk Road, which is a crypto newsletter that he sold after, I think, roughly 12 months of working on it. He is an owner in Support Shepherd, which is an offshore executive assistant agency, and he has an e-commerce business. And then his co-host Sam Parr has Shortsy, a video agency, Hamptons, a CEO membership community, Viral Cuts, which is another video agency, and Copy That, which is his copywriting course. And so there may be a few obvious questions that you're left with as you hear of these examples, and maybe you hear of personal holding companies for the first time. First, what's a personal holding company exactly? Second, why is it happening now? And third, how does it work? So let's go through all of them. What is a personal holding company? The easy way to think about it is it's where a single individual has a portfolio of active businesses simultaneously running under them. The other way to think about it, and this is how I think about it as someone who's building a personal holding company, is it is where a person, an entrepreneur, thinks about themselves as a product and their customers are a number of companies that they serve. So let me start by sharing why I am building a personal holding company. Today I have just one company in my holdco, which is StoryArb, my executive ghostwriting agency. But long term, I'd like a full portfolio of bootstrap businesses that I co-found, but I am the CEO of none of them. You may be wondering, why do I not wanna be a CEO? Why do I wanna have a portfolio of businesses? Well, my journey with Morning Brew taught me so much, and most importantly, it taught me what gives me energy in business and what depletes me of energy. Building a personal holding company for me is my best attempt at filling my calendar with energy-producing activities. So it allows me to optimize for the things that I know that I have really enjoyed in my entrepreneurial journey. That includes ideating and creative thinking, selling, building and evolving a product until it gets to product market fit, building an audience, and coaching founders. Those are the things I love. I also, over the course of building Morning Brew, learned about the things I don't love. I don't love operating a business, especially once it's hit product market fit. I don't love managing people, which is an interesting insight for me because I love coaching people, but I don't love managing people. And I don't feel as much passion for a business once it becomes more about company building and less about product building. And so this structure allows me to ideate and incubate businesses, find co-founders and CEOs to launch them, and focus on the things that I enjoy. So the next obvious question is, why are personal holding companies becoming a thing now? Right? Why today versus 2 years ago? I believe that there are a number of trends all happening at once, some that are specific to entrepreneurship, some that are more global or macro in terms of just where society and culture are going. All of these things working together as tailwinds for this movement that is building holding companies of many businesses under you. So I just want to run through some of these trends. The first is that more emphasis is being placed on lifestyle balance and health than ever before. Why? Because I think you have people on social media like Bryan Johnson with— he's building Blueprint. He's the guy who spent $4 million to effectively avoid dying. He talks about longevity all the time. I think that has gotten people interested. This The celebritization of people like Andrew Huberman or Peter Attia. I think you have this long-term trend of fighting work-at-all-costs culture that is very specific to America. And as society gets more advanced, as technology gets better, and I think just more people, more of the people on planet Earth move up Maslow's hierarchy of need from survival to self-actualization and self-esteem, people are spending more time thinking about how to be their best self. The second trend is that second-time founders are lazy and they just don't want to do all of the work. I am probably partially in that camp. The third is that companies are more modularized than ever before. What that means is there are more options than ever before to have work done for your company. Traditionally, especially pre-pandemic, it was you have a full-time workforce in person in a single office. Now you have remote workers, you have global offshore workers, you have automation tools like Zapier and Make, so workers don't even have to do the work. You have generative AI that just continues to get better and better. And so what that means is you can stand up a business faster, you can delegate work faster, and it is generally less expensive to run a business. We're going to take a quick break, but more from Founders Journal when we get back. Next trend is that a large portion of founders like the early stages of business more than the later stages. I am definitely in that camp, and I think because more founders are talking about that on social media, it is a counter-narrative to kind of like the, the longtime idyllic founder of like a Bill Gates and Elon Musk or Jeff Bezos who built their business from idea through IPO, ran it for 20 years, and that became kind of the model that people had in their head of what it means to be a successful entrepreneur. I think things are becoming kind of more customized than that one model. The next trend is that there is a shift away from feeling the need to build venture-backed businesses. There was a social allure for a very long time to raising a lot of money, and I think that's going away partially because we're not in a decade-long bull market anymore. So it's harder to raise money now. There are less companies that are IPOing now, which is oftentimes where venture-backed businesses aim to get to. There are more and more examples of bootstrapped giants that are being talked about publicly. Companies like Mailchimp, Atlassian, ButcherBox. I mean, I was listening to a podcast about ButcherBox the other day. It's crazy. This guy basically raised no money. All he did was did a launch on Kickstarter, They raised $200,000 and now it's a $600 million a year business with 200 employees. And then the other piece is you have a lot of public figures that are championing sweaty businesses or cash flowing businesses or lifestyle businesses or bootstrap businesses over venture-backed businesses. So you have people like my friend Jesse Pujji, who's all about bootstrap giants. You have my friend Cody Sanchez, who's all about Main Street over Wall Street. And so I think creators talking about this is creating interest for people who follow these creators. And then there are 2 more trends. The second to last is that there are now more marketplaces than ever before for people to buy and sell small businesses like Acquire.com. Full disclosure, I'm an investor in that business. So people are now being incentivized to build and flip small businesses as a full-time career. I know a lot of people now who are engineers who literally will create a Chrome plugin or a web app. They'll get to some level of scale. And then they'll sell the thing and then they'll start their next thing. And then the final trend is that the cost of failure in entrepreneurship has gone down a ton. Testing ideas are cheaper and can happen faster than ever before with platforms like Kickstarter or Product Hunt. The shame of failure, which I think is a big— is actually like the big invisible cost of failure, especially in American startup culture, is becoming more and more destigmatized as more entrepreneurs are publicly talking about shutting down their businesses on social media. And then the final piece to that is the the actual cost of getting a business going is just less expensive also, which means the risk is lower. If you want to make money as a newsletter creator, all you need to do is get a monthly subscription to Beehive. If you want to start an e-commerce business, you have Shopify. If you want to start a software business, you don't even need to know how to code. You can use no-code tools like Bubble. And so those are all of what I believe are tailwinds contributing to this idea of starting many cash-flowing businesses, setting up the infrastructure in a way where you can spend your time exactly as you want to. All of that to say that building a personal holding company is not the right strategy for everyone. I would actually argue it's not the right strategy for most people. It's, it's not the right strategy for most first-time entrepreneurs because there are 2 major risks to it that you have to really intentionally think about. The first risk is that you become unfocused and spread yourself too thin. This is the biggest risk in any business, as like at Morning Brew, it was the biggest risk as we grew from a single newsletter product to many products was how do we maintain focus at doing all of these products well when for the last 4 years we just focused on doing a single product well? I feel like that risk is only compounded or magnified when you're thinking about that risk across multiple companies. And then the second risk is not having a compelling enough product to offer, which means you get uncompelling upside in these businesses or you attract underwhelming talent. So I'm just going to talk about how I'm dealing with these risks. How am I not getting unfocused, especially as someone who is easily distractible and gets unfocused easily? The short answer is I'm trying as hard as possible to go slow to go fast. And that sounds cliché, but I'll just describe what that means in practice. I launched StoryArb about 4 months ago now. I don't plan to launch another business until StoryArb hits product market fit, because the stage from ideating a product to getting to product market fit is the highest risk stage. It's also the part in kind of like the holding company journey where I'm most involved. So when a business I'm working on goes from ideation to product market fit, let's say on average I'm spending somewhere between 20 to 40 hours a week on it. And then once it's post-product market fit, then it's 5 to 10 hours a week, mostly focused on coaching the CEO and on helping scale distribution. So very simply, it's like I'm not setting any goals about how many businesses I need to launch in a year. So it really is like I'm just working on one business right now. The only reason I'm saying I'm building a personal holding company is for 2 reasons. One is that's my long-term intention, and the second is makes me think proactively about the infrastructure that needs to be in place with my first business in order to give me the time and mental capacity to even think about incubating a second business. And then the second major risk is how am I making myself a compelling enough product to get significant upside and great talent? I view myself as a product, meaning I'm launching these businesses, but I'm not being the CEO, which means I need to be providing value in another way that makes my upside in these businesses exciting enough to spend time on it and makes my businesses that I'm launching compelling enough for talent to leave their companies and come join. And so for me, what I'm doing is I'm focused on being great at just a few things that I can provide to my companies and the CEOs that I launch these businesses with. And it's very simply having a built-in audience on, you know, between Twitter, LinkedIn, TikTok, and Instagram. I have 500,000 followers who are entrepreneurially minded, and that leads to customers, but more importantly, that leads to employees, potential partnerships, and product feedback as we're ideating and iterating the initial product. The second is strong chops in the negative 1-to-1 phase. So my view is like, I'm good at, and I want to continue to get better at, the phase from ideation to incubation and finding product-market fit. And then the third is CEO coaching. I've started coaching. I really like it. I want to invest in my own growth as a coach, and that will allow me to help my co-founders scale as the businesses scale. That's largely kind of what I'll spend my time on once StoryArm and any of my future businesses hit product-market fit. So that is the personal holding company. Again, it's not for everyone. For a lot of people, if you want to just make $10 million, I would say focus on one business for 10 years versus 10 businesses at the same time. But I think it is for some people who are very intentional about why they're doing it. So we spoke about what a personal holding company is, why it's becoming popular, and how I am thinking about doing it in a way that leans into the things that I love and leads to a great outcome for my companies and for my co-founders. As always, thank you so much for listening. Make sure to share the show and the episode if you have gotten value from it, and I'll catch you next episode.