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Sandro Mina – From Camera World to Relay Investments: Capturing the Early Days of a Search Fund

Sandro is a co-founding partner of Relay Investments, a search investment fund based in Boston that began in 2015. Prior to Relay, Sandro and his partner, Martin launched their own search fund after graduating from Stanford’s MBA program in 1991, acquiring and eventually exiting three companies.

Episode Description

My guest in this episode is Sandro Mina. Sandro is a co-founding partner of Relay Investments, a search investment fund based in Boston. Prior to Relay, Sandro and his partner, Martin launched their own search fund after graduating from Stanford’s MBA program in 1991, acquiring and eventually exiting three companies.

Sandro delves at the company he ran called Camera World and explains what this world of search funds looked like in the early Nineties. During our conversation, we discussed the history of search funds, how searchers should think about transitioning ownership from the seller to themselves, and how searchers can construct and utilize a great board for their company.

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Clips From This Episode

What value have you changed your mind about?

What's the best business you've seen?

What college class would you teach?

Due diligence

Investor relations

Working with sellers

Live Oak Bank — Live Oak Bank is a seasoned SMB lender providing SBA and conventional financing for search funds, independent sponsors, private equity firms, and individuals looking to acquire lower middle-market companies. Live Oak has closed billions of dollars in SBA financing and is actively looking to help more small company investors across the country. If you are in the process of acquiring a company or thinking about starting a search, contact Lisa Forrest or Heather Endresen directly to start a conversation or go to

Hood & Strong, LLP — Hood & Strong is a CPA firm with a long history of working with search funds and private equity firms on diligence, assurance, tax services, and more. Hood & Strong is highly skilled in working with search funds, providing quality of earnings and due diligence services during the search, along with assurance and tax services post-acquisition. They offer a unique way to approach acquisition diligence and manage costs effectively. To learn more about how Hood & Strong can help your search, acquisition, and beyond, please email one of their partners Jerry Zhou at [email protected].

Oberle Risk Strategies– Oberle is the leading specialty insurance brokerage catering to search funds and the broader ETA community, providing complimentary due diligence assessments of the target company’s commercial insurance and employee benefits programs. Over the past decade, August Felker and his team have engaged with hundreds of searchers to provide due diligence and ultimately place the most competitive insurance program at closing. Given August’s experience as a searcher himself, he and his team understand all that goes into buying a business and pride themselves on making the insurance portion of closing seamless and hassle-free.

If you are under LOI, please reach out to August to learn more about how Oberle can help with insurance due diligence at Or reach out to August directly at [email protected].

(Transcripts may contain a few typographical errors due to audio quality during the podcast recording.)

My guest in this episode is Sandro Mina. Sandro is a co-founding partner of Relay Investments, a search investment fund based in Boston. Prior to Relay, Sandro and his partner Martin launched their own search fund after graduating from Stanford’s MBA program in 1991, acquiring and eventually exiting three companies.

Sandro delves at the company he ran called Camera World and explains what this world of search funds looked like in the early Nineties. During our conversation, we discussed the history of search funds, how searchers should think about transitioning ownership from the seller to themselves and how searchers can construct and utilize a great board for their company. Enjoy.

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Well, It’s great to see you, Sandro. Thanks for coming on the podcast. I’m excited to chat with you about your search that took place in the earliest search fund years. I’d love to hear more about that. And then your direct search investments.

You’ve had some time working in a buyout fund. There’s tons of experience I’d love to dive into. Can you start with just where, from how you grew up and what your focus was early in your career and up to now?

Sure. And thank you for having me. This is a great way to share knowledge with the community, and I’m very appreciative to be part of it. I’m actually from Europe originally, I was born in Stockholm, Sweden, and I grew up in mostly Scandinavia, however, in the English system. So it went to Anglo-American schools in those early days. And then my family moved to Italy when I was a teenager and I spent my middle and high school years in a German school in Italy, where I also graduated. It was actually a European baccalaureate, similar to the French baccalaureate, but was some German twists. It was all part of the EU system, which was in its early days still at that time. I decided I wanted to come back to the English system in terms of the level of education and decided on Imperial college in London, which is an MIT equivalent.

It’s probably the best school for engineering and computing and all those types of subjects in Europe. I spent three years in the UK studying computer engineering. And when I graduated, I was lucky enough to get a job with the United Nations in Geneva, working very closely on their computer systems. I would say a high profile job, but a very stressful job in that the entire United Nations system in Europe, which covered organizations like the world health organization, the high commission of refugees, the labor organization amongst others, that their computer systems were all tied into us. And whenever there’s an issue with the computers, there were two or three of us called duty officers. And we would have a device that would go off whenever, typically in the middle of the night, letting us know that there was a problem and we’d have to rush into the office and try to fix it and restart the computers.

And so generally high profile, but being in an exciting place as a first job, but also a very stressful type of, of a job in a lovely location. Geneva’s just an incredible city. I could only do that for three years and after three years, it was just getting too much. I ended up applying for a job with an American company with its head office in Zurich, Switzerland, this European head office in Zurich, Switzerland. And this time I was trying to move away from the programming side of things. And so this next job of mine was more on systems engineering. I was the sales support. So the salespeople would go out selling products in the computer space. So these were disc drives and tape drives that were attached to large mainframe computers. And my job was to explain how the devices worked.

I was well paid. I was enjoying my job there. And I had a very close friend who had also gone to Imperial college and had spent a couple of years at Bain in Munich as in the early days of Bain. And at some point, he reached out and said, had I given any thoughts to business school, which I had to some extent, but not really in the three to five years in the most recent three to five years at that point. And he was telling me that the other people at Bain were adamant that he should go and that he should apply to Stanford. This was at a time when there was no internet. And I had heard about Harvard Business School, but I did not know much about any other business schools, but I trusted him. And the advice of the higher-ups at Bain, that it was a good school.

We both were big skiers. And so we were told that there was some good skiing nearby. We both decided to only apply to Stanford. And we were both extremely lucky to get in, which really got me connected to the search fund space. My first year I was taking the classes just like everyone else. And I was torn what to do about my next career. Part of coming to business school was to move away from computing and from technical-type jobs. And one of my dream jobs was to get involved in, on Wall Street somehow, and to work for a large investment bank or bank out east and Martin and I, my friend, we both decided to apply to Goldman Sachs and we both got jobs called the summer jobs at Goldman Sachs. Those summer jobs taught us that we did not actually want to become bankers after all.

And Martin was pretty clear to me that consulting was not something that I would likely enjoy. And so we were a little bit in a quandary when we had to pick classes for the upcoming semester at Stanford. And one of the hot classes was Irv Grousbeck’s class on search funds. And I didn’t know anything about what it was, but it sounded interesting. It sounded entrepreneurial. And I have entrepreneurship on both my dad’s side and my grandparents’ side. And so I thought I’d take that class. And that class really changed everything for me. I decided that I wanted to pursue a search. How could I not want to buy and run a small profitable business and having come from Europe that thinking didn’t even exist at that time? So it was just such a concept that was just very inspiring and exciting.

And the two of us decided to pursue a search. And so that launched me into search funds. And the two of us ended up connecting with a third individual and he was another Stanford MBA from a few years ahead of us, another European transplant in the US. And we all decided to acquire small profitable businesses because there was actually a fourth one, those fourth individuals, another Stanford MBA friend of the third, who were both in the class of ’85. They had bought a small business. It wasn’t a great outcome, but they had decided that they wanted to keep buying businesses and running them. The four of us initially started off together. One of those four of us decided he wanted to start his own business, which he did. And that left the three of us to look for an existing business to acquire Martin, my original friend.

And I mean, the original guy who got me to Stanford, he sourced our first company, which was an alarm monitoring company in Birmingham, Alabama. It was one of those companies that we had singled out, is a good business to acquire. It took strong recurring revenue, no customer concentration, and a huge number of small customers who were paying monthly fees, at those days was probably 9 or $10 per month on an ongoing basis. And it was just the type of business that he’d thought we would do well. Acquiring as young entrepreneurs, I sourced the second company, which was Camera World, a company that sold cameras at camp quarters, mostly through the internet. Oh, no, sorry. Through catalogs at that time. And then we sold out of the first company and Martin sourced, our third company, which our third partner joined him in to manage.

And that was a company in the bill presentment space. So think of companies that would send utility bills, say, or bank statements nowadays on a monthly basis electronically in those days, they were sent out in envelopes and printed on paper. And this company took electronic data, converted it into paper, printed it and folded it, and sent it off in envelopes. And another good, strong recurring business. The one I bought was not a recurring business. It was more of repeat business. People who buy cameras tend to come back to buy lenses, come back to buy bags, straps, you name there’s a lot of upgrading their cameras to more recent technology. The reason we particularly liked that business was that photography was going through a transition. It had been an analog business for decades. If not hundreds of years where you took your pictures, you couldn’t really see what pictures you had taken.

They sit up on a roll in your camera, which you have to be very careful to extract from the camera. If you’d deliver it to some photoshop and they would take a couple in Europe, they would take maybe up to a week to return the pictures here in the US. You could get them back as early as 24 hours later, and then inevitably half your pictures or blurry. And half of them, you got something wrong and one or two might be great pictures that you would, you’d be excited to see. But while I was at Stanford, one of our classmates had shown us a very basic rudimentary digital camera that opened my eyes to this new technology. Of course, I had more of an electronic or engineering fence to me. So I just thought that be being able to see your pictures before you develop them, or before you print them and being able to delete them and have the ability to keep taking pictures and more pictures, and just seemed like such a great novelty that now that was two, three years before we bought camera world.

By the time we bought the camera world, the technology was still in its infancy, but it was a lot better than the quality was still grainy, but it was at a level where you could actually print something, especially smaller photographs, and show them to people. And, with every year the technologies were improving. And so we felt we were buying into an industry that had been growing very slowly over the years, and, but had the likelihood of increasing that growth dramatically, as people shifted to digital. And as with all things digital upgrading your camera was something you might start doing every year or two, as opposed to every 20 years, which people had been doing with the old-style cameras. So very exciting to be involved with that. I’ve always loved photography. So it was one of those win-win situations and an opportunity to become the CEO of a recently large company.

This was a company with 50 million in revenue, but very tight margins. So the free cash flow was close to a million, which was the zone that we, as searchers, had been instructed to look for. And at a time when photography was changing. And so it was three years of high growth and lots of excitement and a shift from mail order to e-commerce and internet. And so we were really at the forefront of a new generation of buying and selling and commerce. And it was just exciting times. And then having sold camera world, we soon after sold the third company that Martin and my third partner, and then we shifted our strategy into more of a traditional buyout fund. We raised our first fund in 2001. And at that same time, I started investing in searchers who would seek me out.

So my investing career started at the same time as we pivoted our company into a traditional buyout fund. And I did the two in parallel for a number of years, it was reasonably easy to do. And that in those early years, there were very few searchers who were reaching out. And so I could spread the time as the years went by more and more searchers was coming to me. And the search fund space, in general, was growing and growing. And it became harder to have both jobs. And so I had to make a decision to stay as an investor, as an active investor in the search fund world, or continue to invest in larger and larger deals through our buyout fund. Larger and larger deals have started off being the same types of companies that we bought as searchers. But by the time I left, these were four or five times the size of the companies that we would be looking for as searchers, much more competitive, many more broken deals. It just wasn’t as fun sourcing those companies for me, as it was supporting searchers in sourcing their deals and being helpful to them. And that led me then to launch Relay Investments, which is the fund that we’re in now that has two, two successful funds behind it. We’re launching into our third fund at this point, hundreds of searchers later.

Well, congratulations. That sounds like a lot of fun. On-Camera World. So was Camera World the business itself? Was it, it was the catalog that went out, you sold it or sent out, or you mailed it to different businesses or retail stores or was the business mostly a catalog. And then people would call and then if they would order a camera, then you’d go contact the manufacturer and send the camera to them. How did the whole process work? Can you explain that model a little more?

It was actually more basic than that. They didn’t actually have a catalog. One of the value ads that we saw going in was adding a catalog, but the way that they solicited business was they would take ads in the back of magazines and the key magazines back then maybe they’re still around the now popular photography in Peterson photographic. I still remember the names of the magazines themselves, and they would be at the back of those magazines with maybe 10, 15, 20 pages of no prices. They’ll be camera after camera. And it would be a golfer’s price because they couldn’t advertise the lower prices that they were charging in order to get the advertising dollars from the photography companies. And they needed those advertising dollars to have all those pages of ads. So it was a very interesting space. Camera World was one of the few companies that had a great reputation in that industry.

Most or many of the competitors were I would say almost bait and switch type thing where they would, there’s a concept called great products where for example, you might think you’re buying a Canon Rebel camera, which is one of their popular cameras, which in Europe might be called something else, Canon, I don’t know, visual or something. And so you would order the Canon Rebel and you’d get the, can it with the exact same camera, but it would have a different name to it. Something went wrong. You couldn’t take it to your local camera store to say, I bought this camera and something went wrong with it because they would say, you didn’t buy it in the US. And you say, yes, I didn’t. No, you, you didn’t. And it was just messy. And so some of those larger competitors would get bad reputations for that Camera World was one of the rare companies that would only sell products that were destined for the US with a slightly lower margin as a result, but great reputation and great repeat business.

But yes. So to get back to your point, most all callers. So we had a call center. We had maybe when we bought the company, there were maybe five or six individuals who would come in at maybe 8:00 AM and until 6:00 PM, they would just be picking up the phone. And in those days, people would be calling for price and they would say, what’s your price in the Canon Rebel III, whatever, with this lens and a bag?” And you would say it’s $329. And the person would say, okay, I’ll take it. And they would take the order and they would ship. And the product would be in our facility at a warehouse, and it would get shipped out that same day, that evening. We also had a store in downtown Portland. When we bought the company, the warehouse was in downtown Portland.

It was an old dentist’s office building. So there were people running up there, one elevator and stairs, and people would say, okay, we need three Rebel III. And one Nikon, whatever. And people go, oh, that’s on the fourth floor, backroom doctor. So, and so’s office because the names of the doctors are still on the doors and they run up and run down and pack it and ship it. And so one of the things that we changed with that company was, we found a real warehouse space, little outside of Portland, and set it up with proper machinery. We had one big place for all the cameras where it was just professionalized pretty dramatically between the original business and the one I ended up with. And that allowed us to really grow and we went from 50 million in revenue to 120 million when I’d left. So it was quite meaningful growth over the years.

So what did search as an industry in space look like at the time of your search? So how many searchers were there actively searching for companies? What kinds of investors were there? Obviously, it probably wasn’t as institutional and large as it is today. I’d love to hear just a little bit about what that environment

Was like. I don’t think outside of Stanford, that there were many searchers at all. I think there were probably some self-funded searchers just like that, probably for decades and millennia, maybe even, but in terms of an actual Irv Grousbeck had taught a class at HBS for a couple of years before he came to Stanford. And the first searchers were HBS graduates. But once he moved to Stanford, my understanding is all searchers were amongst the students he had taught. And in a typical year, there might be one or two search funds coming out of his class. And then some years, I don’t think any of his students became searchers. It was not easy. These were the days when you printed lots and lots of letters to company owners, you spent a lot of time in the libraries trying to handwrite the names and addresses of companies that might be in books, in the library, which, and those books would’ve been from a study done maybe three to five years earlier.

So it’s dated information. And if you’re lucky enough that typically they won’t have EBITDA in there, but they might have a number of employees. And so you’re guessing what they have between 10 and 30 employees, they might be of the size that I’m looking for. And you rush back to the office and enter all that data in an Excel spreadsheet. And then in word, write a letter. And yeah, there was the technology to copy over the names and addresses of the individuals from your spreadsheet. But there is very little technology to help you do all this. So you might get a hundred letters out in a day, on the day where you’re printing the letters, and then you start calling those individuals and seeing who you got through to. So it was, it was very time-consuming. It was a lot of midnight oil burning as they call it.

And it was a lot of, and then on top of everything else, we had a company name for ourselves. It was very hard to pronounce: Sverica was the search entity, whose roots are from Sweden and Swedish. Cuz two of us were from Sweden for a number of years afterward. I’d wake up in the middle of the night saying S as in Sam, V as in Victor, E-R-I-C-A because that was the only way we could get the name across on the phone, right? So all was done by phone and you travel, you call up, you try to meet up with 3, 5, 10 business owners and say, look, I’m coming to your neighborhood. The first Tuesday in October, if you’re around, it would be great to meet up for a coffee or something. And you try to meet up with people.

So it was very time-consuming. It was hard to get the names they were typically out of date. You spend a lot of time rewriting the same letters to the person, misspelled names, and all the rest of it. So it was not easy. Same thing with the investors though, it was a small number of investors who now we know. We’re traditional investors back then, but it was not known, no one had websites like they do now where they list out their 5, 10, 15 investors. You just had to guess. So the way we got to our investors was mostly going through the alumni databases and seeing the names of people who look like they might have the wherewithal to invest in two or three. In this case, for Europeans who are trying to buy a business here in the US, it’s hard work.

So I think today there’s a lot more competition, there’s a lot more searchers. It’s a lot easier to reach out to company owners. And so the same company owner might get solicited by 3, 4, 5 searchers and other intermediaries and all kinds of people trying to buy their business or offering to buy their businesses. Back then I think those, some of that but much less. So it was harder to get there, but once you got there, I think there’s more receptiveness by the owner to actually talk to you once you got through to the right person.

And what year did you launch your search?

The intention was to launch when I graduated, which was ’91, states me a little bit Martin and I got distracted by startups in the bay area for the first year. And while we had taken a few startup clubs that suggested that most startups fail, these startups seem too good to pass up on.

And of course, they did fail. And so once we learned the hard way we decided, okay, we’re launching into our search now. So that basically 1992 fair was created as a search entity. It was self-funded because it was just too hard for us to find those investors on a timely basis. It would take pretty sure it took 12 months for US-based searchers to raise their search fund. And for us as transplants, we just figured it would take at least 12 months, maybe longer. And then there were three of us instead of the traditional two. So we decided to take on a consulting project or two for one or two of us while the other one or two would be full-time searching. That’s how we made it through the search. Once we found the companies, we started reaching out to some traditional and some investors that we’d found through the cold calling from the Stanford databases. But it was a lot of work.

Yeah, it certainly sounds like it. So when you would, obviously today, if you reach out to a company it’s very likely that company is at least heard from private equity, maybe even from searchers, when you talked to owners in the early Nineties, had they heard from I’m, I’m assuming they hadn’t heard from any searchers but had they heard from private equity or other types of buyers, what did, what kinds of folks reached out to owners back then?

Some had not been reached out. And I think those were the ones who responded and the ones who did not respond were ones who had received, I think more from brokers than anything else. I don’t think many private equity funds were phishing in our pond. These were too small and too see businesses for private equity. Even now doesn’t really come into the space where the searchers are, unless they’re looking to buy, looking to acquire an add-on investment, but generally, private equity has come down market. So they’re often the buyers of our searchers companies, but they were rarely approaching these business owners, more likely to be a competitor that they might be selling to, or just be a son or daughter or someone within the firm buying them out over many years.

So it was when Irv Grousbeck taught us, his feeling was that there was no real alternative for a lot of people to get some liquidity from their businesses. And that we would present them with a unique opportunity to keep the business going, maybe build and grow it into something larger than they had created while also paying them a reasonable price, maybe not the highest price they could get, but a reasonable price. And I think that holds true now too. I think the valuations were lower back then, but back then we were typically buying it four or five times, and now searchers might be buying it five to six times. It hasn’t gone up as dramatically as the valuations when our searchers exit. When we exited the hope was to get six to eight times. And now we’re sometimes seeing 14 to 16 times EBITDA. So the dramatically higher exit prices now than anything we would’ve even imagined back then.

Certainly. Do you remember what roughly your response rates were from sending these letters and then trying to call owners? Like I’m just fascinated. What kinds of responses did you get from owners from that type of work?

More or less? I believe for every hundred letters we would send out, we might talk to three to four, typically admins, very rare that we actually get through to the company owner, and out of those three to four people we spoke to, we might be lucky if we got through to one seller. So it’s really a grind. Now you can send out a thousand emails and yes, you have to get the data and put it into outlook and then create some sort of a larger account and you’d click the send button. Then you’re sending off as many emails as you want, and you can resend them. And you can add not sure if you saw this email, but so just resend. Yeah. All those things were pretty easy back then. It was, you had to buy the paper. You had to get the toner.

Toner would run out. The printers were not as good as they are now. They would break. And it was a lot of moving and tackling just to get these letters out and then to keep track of who you had called and then you’d get, sometimes we would always encourage people to call us that we didn’t get many inbounds, but every now and then you’d get an inbound and then you’d be scrambling. Let the person think they were the sole recipient. And you had sent this letter because you tried to make these letters sound like the individual was the only person in tracking this person, this company. And I wanna buy your business and I love the industry you’re in, but of course, you’re sending these to hundreds. If not thousands over time and someone would call and say, yeah, I got your letter.

And I was really impressed by what you wrote. And you’re scrambling to think cool and watch and say, I mean, remind me, you’re based in, okay, it’s in Texas. Well, we sent off a whole bunch, Texas letters 10 days ago. So that’s, let’s see where this person might fit in and no CRM systems or anything to keep track of. Who’s calling from what email and I’m sure some of that is still the case. Now the volumes are bigger and I’m sure some inbound you just have to scramble just as much as we did back then.

Absolutely. I’d love to hear a little bit about how just with your own, but also with the searchers you’ve invested in, how do you teach searchers or just based on your experience too, how do you teach searchers to handle that transition from the seller to you as the new CEO taking over that business?

I feel that a huge amount of the risk that we as investors take when we’re backing a young individual, who’s signed a letter of intent and has now acquired a seller’s business. Our risk is that in that transition from the seller to them, a lot of things can go wrong. And this is why one of the characteristics we look for in our searchers is humbleness and respect for other people. And being able to listen to some extent, say the right things. And these are typically sellers who are older, maybe usually less sophisticated. Who’s built this business up from scratch. They may or may not have a Master’s degree or a higher education degree. Often some are blue-collar type individuals. And so one of the messages we give to our searches is you really need to respect what they’ve done.

You need to show appreciation. You may not agree with everything they’re telling you, but you can’t tell on point-blank. Why did you, I can’t believe you invest, you hired this person, or you invested in that kind of technology. You’ve got to be respectful for some people that comes naturally. And for some people, that’s really hard. The other part of the transition is besides the owner, you’re in a way inheriting a group of employees. And what I’ve seen over the years is that there are two mindsets. And again, it goes back to that same humbleness and respect, and emotional quality that we need in these searchers to have a good transition. Some individuals will feel and stepping back for a second. Our searchers have typically been top in their class. They’ve been outperformers in their sports teams. They’ve been super hard workers.

They’ve gotten into the top of undergraduate schools. They ended up in the jobs that they were looking for, surrounded by other smart equally skilled individuals going into top business schools. And now they spent two years searching. They’ve raised all this capital, they’re riding a high. And now they’ve got a group of employees. Some of them may not have graduated from high school, but they’re important pieces of the pie that they know what they’re doing. The business that we’ve acquired depended on their passion and their support and their work over the years leading up to it. And that’s what, sometimes there’s a lack of understanding. It’s almost like two different cultures that either you learn to adapt and live with each other, or you, you just, there’s a culture clash. And that’s where you can have a high turnover of staff. People just don’t understand what’s going on.

They came through the small family business because of the owner, and now they’re these individuals who are talking a foreign language. I mean, it sounds like it’s English, but they’re talking about profits. They’re talking about EBITDA, they’re about cash flow. They’re talking about costs. And all I know is that answering on the phone and sending off the fax because that’s what I’d be told to do instead of an email to certain suppliers or vendors, whatever it is, right? So the transition can go wrong so quickly. If the searcher sees now, CEOs are not prepared properly to come into it with that type of understanding. And so in about 10%, maybe even 15% of cases, ultimately the CEO doesn’t get there. And it’s not just the interactions with the employees. It’s not just the interactions with the seller. It can be in different areas, but it can also be in communication with investors.

It can be communication with the board, but in 10 to 15% of cases, the CEO is asked to leave. I think some of those can be avoided, by just being better prepared on both sides. But there is a growing community of coaches out there, executive coaches who, when I’m on the board. And we’ve had a few situations where things weren’t working out before taking that drastic step of asking someone to leave. We will bring in a coach and we will, again, as, with everything else, some people are more amenable to it and recognize that they can learn and improve. And others won’t really dive in and work with a coach to improve. And often it’s areas that our hearts improve. For some of us, it’s hard to teach an old dog new tricks, right? And these are not old dogs, but they’re dogs who quote unquotes, who have been taught a certain way. And now they are having to adapt or having to recognize that the way they say things might not be understood the same way as they’ve always been understood up until now. And so there’s this certain type of personality that is required to have that successful transition. And I think that is where some of our loss is, there’s a small percentage of companies that ultimately return less than capital. I would make sure that a meaningful percentage of those are tied to a poor transition from the seller to the searchers.

You mentioned boards a little bit earlier, too. I’d be curious to hear more about how you coach or you teach searchers to construct, but also use their board as a group that you can bounce ideas off of, or get feedback from on your performance or these, especially in these transition points where things are a little bit more delicate. How should searchers think about constructing and then using a board of directors or a board of investors?

The board to largely send, other than that successful transition, the other huge important piece to the pie here is your board. The whole premise with the search fund industry is you don’t have a lot of experience in expertise in building and growing a small profitable business. And so you do need a team of advisors and that’s your board in this case. And that goes back to when you raise your search, you typically restrict it’s to your investors. When you’re picking your board members, you need to think about your board already when you’re picking your investors and that you want investors who have the capacity to join boards, you want investors who have different skill sets, different expertise than you do, and that can be helpful to you when you acquire business. And because you don’t know what type of a company you’re gonna end up with, you’re gonna want a reasonably diverse group of investors who have those different skill sets, so that when you hone in on a business that you end up acquiring, you have a group of individuals within your investor group that can help you forward.

So critical is you’re looking for an individual on your board, who is in your investor group, who has the capacity, who recognizes that this is not a four times a year job. This is an ongoing sounding board, high intensity, typically for the first 3, 6, 9 months until you, the searcher, are reasonably comfortable with what you’re doing and feel less of need for the, Hey, this happened what do I do? Which could be a month after the board meeting, or two months after the board meeting, and individuals who are gonna stay with you through thick and thin. I just had a conversation the other day with another investor in our community, who is complaining about the fact that there are investors out there who will join boards, but things are not going. This looks like this company’s gonna end up as one or maybe half times our money, as opposed to three to five times.

I don’t want to be part of it. I don’t wanna waste my precious time, helping a company exit at a mediocre outcome. So you really want people who are gonna stick with you through thick and thin. Who’s going to view you as a true partner and, and you need to view them as a true partner, and you need to be transparent with them. You need to be open and sharing just the same way that you hope you’re expecting them to be available for you pretty much any time of any day in the month, which is not always so easy. So that is as our industry grows, one of the areas of scarcity is good board members. And so it is critical for these searchers to make sure they have done a lot of diligence on us as investors to make sure that they have people in their investor group who can act as those board members for the time when they do find a business.

And what are some effective ways that searchers can conduct that due diligence on board members? I assume part of it is simply just calling other searchers, who that person has been on the board of, but are there some other ways perhaps that are also effective in getting a sense for if this board member is gonna be with me, even if it’s not necessarily going that well?

I think the best way is to talk to other searchers who’ve been through it. And the more the merrier we will encourage when an individual comes to us telling us that he or she’s thinking of launching a search, or they, we will suggest to them that they talked to at least 30, maybe even 40 searchers, who’ve been through different phases. And we pushed them to focus. Initially on searchers, who’ve been unsuccessful and unsuccessful could be, they spent two years and they were unable to close on a business, but it could also be someone who bought the business that ultimately wasn’t a successful business, both to know what the downside case is before you launch into a search, but also to determine who was helpful throughout those years, I was a searcher for two years, and I didn’t find a company, but A and B and C were always there and raising my spirits and helping me along and, and their ups and downs and their twists and turns in the search phase.

You want those individuals who are gonna be there and support you and help pick you up when you’re down in the search, when you buy a bad business, just as it’s easy to find people who will be supportive and helpful when things are going well. And in fact, people will gravitate to you. I’m on the board of one business actually outside the US, where he had a hard time finding board members. When he acquired the company. Now things are going great. And there are other investors knocking on the door saying, Hey, I’d love to join the board and help you build and grow it, and who wouldn’t at that point, but you’ve gotta be there when things aren’t as clear. So talking to the ones you’ve spoken to the ones who weren’t successful, then you wanna focus on the ones who were successful because even successful searchers have a tough time with some of their investors.

Not all investors are responsive. We’re all on our best behavior. When a searcher comes to us. And especially if they have great credentials we all wanna be part of it. And so we’ll all say what the searcher wants to hear, but other searchers will give feedback on these individuals who are always responsive. When I asked for feedback on this opportunity or that opportunity, they shared it right away. If they didn’t like the deal, they told me upfront, but there are investors out there who just won’t share their hearts to reach. And this it’s very, it’s stressful as it is to be a searcher. And when you finally got a signed letter of intent, you’re negotiating with the lenders, you’re talking to your investors, raising the capital, and you’ve got one or two investors who just never return your emails. They’re just not available for a phone call.

And they have a right to invest their pro-rata amount. But you don’t know if they’re interested or not interested. And if they’re not gonna come in, you might have a gap where you might not be able to raise the capital. And so you do want to have a few investors outside your group who can jump in, but they’re only interested in jumping in. If they know that there’s gonna be a gap, they’re less interested. If you tell ’em, well, I’ve got two investors. They may be coming in. They may not be, I don’t wanna spend my time doing your deal. If ultimately you’re gonna tell me that there’s no gap. Even the successful searchers will have stories of people who were particularly helpful and ones who were, they may not have shared, but if you talk to enough people, then you keep hearing the same people who were helpful. You can get a sense of who might not be as helpful.

Yeah, certainly, absolutely. Moving into some closing questions. What college class would you teach? If it could be about any subject you wanted?

In addition to photography and search funds? One of my passions is really on renewable energy. And so I think if I were to teach a class on something, there’s so many people teaching search funds, and there’s so many people teaching photography, or a much better skill than me, but I would probably want to try to inspire people to be more earth-friendly and think about the environment more. And we’re all aware of the problems, but many, many of us don’t really know how we can change our habits. And ultimately each of us has to change our own habits for the world as a whole to change its habits. We can’t always hope that others will do that and, and we can be dragged along and be part of an ongoing world. So I think that would be a class that I would want to begin on and find ways to inspire our people to be more earth-friendly.

One thing that I find interesting is folks who find a cause like renewable energy or something similar, and rather than building a nonprofit focused on it, they’ve created some sort of for-profit business that through the growth of that business will eventually solve the problem. It’s a kind of an odd example, but there’s a Netflix series, called Sex Education. It’s really hilarious, a TV show in Britain that is these students just going through high school and everything that comes with it, but there’s actually some academic paper that came out recently that showed that the show had had positive impacts on sex education among teenagers. And that was part of the mission of creating the show was to broaden sex education among teenagers. And I thought that was really interesting, because if that was a cause that you were passionate about, one way is of course to create a nonprofit that focuses on that. But another way is to create something that through its natural growth, as a business is something that could eventually have that kind of impact that you were seeking in the first place. Have you thought about something like that for renewable energy, whether it’s a business or book or something that through its own existence could help perpetuate renew energy and help talent that people get into space?

I’m not a startup kind of individual, but generally, I do think you’re right. I think that for-profit, sometimes, can achieve things faster and maybe better generally than nonprofits often can. Although having said that I’m a big believer in nonprofits as well and getting inspiring young individuals to push certain causes.

Certainly what’s a strongly held belief you’ve changed your mind on?

I’ve always been a big believer that people need to be face to face. And to the point where Relay has always been, everyone has to be here. In fact, when we were hiring until very recently, all our hiring had to be here in Boston. The individuals we brought in had to be comfortable moving here and living here and coming in on a daily basis. Now I still think face to face is important, but I don’t think you can’t live without it. The other areas related to that is our searchers have always been told once you buy your business, are you going to move to where the company’s based? Or are you gonna become part of that environment? And now it’s turning out that you, you really don’t need to be there. You can have remote companies and remote workforces and they can do just as well.

An example of that is one of our companies, the searcher was based in California. The company’s based here in Rhode Island. It was very important to us that he moved and then of course COVID happened and everything else happened. And the company had a remote workforce and we were pushing him to create a head office and to create a presence. And then all that evaporated. And now he’s building this great fast-growing business and there’s no head office; he’s still based in California. That, I would say is one of my core beliefs that got shattered as part of this whole pandemic.

That’s a cool realization too. Cause it allows you to hire people from anywhere. That’s pretty cool. What’s the best business you’ve ever seen?

Camera World. It will be hard for me not to, I loved every part of it. I had such a fun time. Portland, of course, is such a great city. It was one of these rare opportunity, at least rare for me, opportunities to make a difference, to take an existing strong business and build it into something much larger. And there’s so much low-hanging fruit to be proved. As I mentioned, their warehouse was downtown Portland. It just didn’t make any sense. It was on one-way streets, FedEx trucks, there were delivering cameras and camp quarters and you name it blocking traffic horns honking, and the phone people were on the phone taking orders and a huge mess. And then being able to turn that into a more of a traditional professional business with offices that the salespeople could walk over to the buyers.

There was more interaction. There was just going back to the pre-pandemic days. You could have face-to-face discussions. One of the areas that was always an issue when we bought the company was the buyers were on the first floor. The sellers were up on the fourth floor somewhere and they would run out of certain cameras, the hub cameras, and they would be swearing or they’d be frustrated. And they would have to tell people that, you know what, we don’t have that in stock. And then they would keep on working and doing their other things. And, but they would be stewing fast forward the year when we had everyone in the same place, they could walk over, Hey, what’s going on? The person could say, well, this is what happened. They’re on backorder, but the truck was slowed down. And I don’t know at the port in Los Angeles, but you know what two days from now the product will be here.

And so then they could tell that their customers were outta stock, but in two days it’s gonna be here. It’s already on the truck. That type of thing, communication solves so many issues. Those much less tensions, much less anger between people. People could vent more easily. People could explain what was going on. And usually, it was a good reason for things. So, but long story short, I loved Camera World loved everything about it. It was the first opportunity I had to manage a large and growing group of people. And it was just changed me forever. I think, great business and great returns. Our investors were very blessed to be part of that as we all were. That’s wonderful.

That’s really cool to hear. Thank you, Sandro, so much for coming on the podcast. It’s been so much fun to have you chat about your experience with Camera World and being in Portland, my hometown, and then all your investments through relay and constructing boards and all these other things. It’s been so much fun to chat with you. So thank you for sharing some time.

Thank you, Alex. This was great. I loved it. It was fun and engaging and I was very happy to be part of it.

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