Three types of businesses approach the zero-up phase differently: values-driven private companies tied to the owner's personal mission, mission-driven firms like private-equity funds chasing a specific financial target like a 3x return in 3-5 years, and hybrids like public companies balancing ESG initiatives against shareholder returns. Singular objectives are easier to manage than competing priorities.
Chapters
There's really a couple types of businesses out there. One is a values-driven business and the other one's a mission-driven business. Now, a values-driven business, the typical profile of it, it will be a private company, right, that has an ownership structure to it. And whatever that company is doing is tied to the values of the owner. Sometimes that's giving back to the community. Sometimes it's being parochial with their employees. They want to, they want to look after them. Other times it just could be that the owner wants a big boat. It doesn't matter whatever it is. There's no right or wrong. Generally, you'll find in a private company, the most important value, or one of the most important values, is the dividend. You know, their family and everything is living off of that, and that's what they're going to be driving around, right? And it gives clarity of where the business is going and what they really are looking to get out of it. The second type of business is a mission-driven company, and that company is on a mission to deliver one thing. And the classic example of that is a private equity company. Their mission typically is to get a 3-time return within about a 3 to 5 years. So let's call it a 5-year period on the equity they put in. So for every dollar of equity they put in, they want to get back $3 on it, right? It's a great metric. It's very easy to understand and it clarifies everything with it, right? So if you have a mission-driven company, right, the mission is go get that equity. If you have a values-driven company, right, The value is take care of this community. There's neither right nor wrong within them, but it clarifies it. There's a third type that comes in, which is a combination of those two. You find those a lot of times in public companies where they have both the outside world they need to look at, right? Things that are happening. Maybe it's ESG, maybe it's taking care of a community, but they also have a mission side of it that they need to give a fair return to their shareholders. That many times becomes in conflict with each other. And you'll find these companies, in some cases you'll find them lurching from different priority to different priority. So in the run, you may be about ESG, but in 90 days you got to report earnings and you got to go find that next penny off of it. It really makes the mission, it really makes the value quite muddled, and it's harder to run those types of companies, right? So all 3 are fine. All 3, uh, you can work yourself through, but the more pure of what they're looking at, the easier it is to run.
