In this episode of the 20 minutes VC podcast, Harry Stebbings interviews Andrew Wilkinson, managing partner at Tiny Capital, a firm known for buying, building, and investing in internet companies. Andrew shares his journey from running a tech news site in high school to becoming a successful entrepreneur and investor, highlighting his early insight into leveraging design in tech and the profitability of agencies facilitated by geographic arbitrage. He emphasizes the importance of sustainable growth, profitability, and acquiring businesses with competitive moats, akin to "New Zealand" in their quiet success and independence. Andrew also discusses the impact of COVID-19 on his portfolio and the value of experience over formal education in tech. His approach to investment is influenced by Warren Buffett's philosophy, focusing on long-term holdings and minimal intervention. He candidly reflects on his strengths in pace and delegation, his discomfort with implementation, and the personal significance of money as a tool for freedom and exploration rather than material gain.
"Today, Andrew oversees a group of companies within the tiny family with over 300 employees and tens of millions of dollars in revenue."
This quote highlights Andrew Wilkinson's role at Tiny Capital, emphasizing the scale of the operation he manages.
"I started a tech news site, and it just totally took off. And so I started getting hundreds of thousands of visits to this site."
This quote explains how Andrew began his entrepreneurial journey by starting a successful tech news website in high school.
"I became the go-to guy in Silicon Valley to jump in there and basically design people's mobile apps and web apps and marketing sites."
This quote describes Andrew's niche in Silicon Valley as a designer for various tech companies, which led to the success of his agency, MetaLab.
"I started multiple SaaS software companies while I was running the agency and used the profits from the agency to fund those."
This quote shows Andrew's strategic move from agency work to starting SaaS companies, leveraging his existing profits to fund new ventures.
"I founded Tiny, which is our holding company. And what we do is we acquire wonderful Internet businesses. We make a few small improvements. We plug in CEO, typically, because often the founder wants to leave and do something new, and then we hold them for the long term and we don't mess with them."
This quote succinctly describes the business model of Tiny Capital and Andrew's approach to acquiring and managing companies for the long term.
"New Zealand is located in the middle of nowhere, and nobody's paying any attention. It's quietly successful, it's profitable, and they have a reasonably good economy, and it's not where other investors are looking."
This quote explains the strategy behind Tiny Capital's acquisition approach, likening it to the success and obscurity of New Zealand in a global context.
"We try and find quiet, sleepy fishing holes off the beaten path where there's only one or two other fishermen, and we just quietly enjoy ourselves."
This quote explains the investment approach of seeking out less competitive markets where there is more room to operate without facing intense competition.
"And so what we do is we basically pay a fair price based on where the business is at, and that's typically based on what earnings are expected to come out of the business over the next five to ten years."
This quote highlights the strategy of basing the purchase price on the projected earnings of a business, taking into account the inherent risks.
"So, like anybody else, we don't know what the second and third order consequences of the lockdown will be."
This quote acknowledges the unpredictable nature of the pandemic's impact on businesses and the economy.
"We really exclusively buy profitable businesses, or at the very least, businesses that can be immediately pivoted to profitability."
This quote emphasizes the priority given to profitability and sustainability in their investment decisions.
"We really just try and focus on individual companies and buying wonderful companies."
This quote reflects the approach of prioritizing the acquisition of strong, enduring companies over diversifying investments.
"I would absolutely do that. I would be calling benchmark and Excel tomorrow."
This quote shows a willingness to partner with venture capital firms if it aligns with the needs of a business.
"Well, that's a really tough one. Like, you think about Meetup.com, for example, which is a business that we looked at buying, and we just couldn't wrap our heads around it."
This quote illustrates the complexity of deciding between investing in niche social networks versus larger, more established platforms.
"Maps. And suddenly Google Maps has better data and blows Yelp out of the water."
The quote illustrates how advancements in one company's technology can disrupt the market position of another, using the example of Google Maps surpassing Yelp.
"I have no idea how long that'll exist because LinkedIn can easily come along and start adding remote jobs as a feature."
This quote highlights the precarious nature of niche businesses when larger platforms can easily integrate similar offerings, threatening the smaller business's existence.
"I'm very urgent and I love doing things quickly. I love ideas. I love strategy. What I don't really like is implementation and follow through and managing people."
Andrew explains his personal work preferences and why he doesn't fit the traditional CEO mold, emphasizing his love for the initial stages of business activities over the long-term execution.
"I find one company, for me at least, isn't enough. I wanted more diversification of thought."
This quote reflects Andrew's desire for variety and his inclination towards managing a portfolio of companies rather than being tied to a single entity.
"You're not there to be a buddy. You're there to actually ask probing questions and to rub their nose in the consequences of what could go wrong."
The quote emphasizes the responsibility of a board member to challenge the CEO and ensure they are aware of the potential risks associated with their decisions.
"You can't dictate what they need to do. You can only guide, and you can set guide rails."
This statement underlines the advisory nature of a board member's role, highlighting the importance of guidance over direct control.
"We always say every CEO has a superpower."
This quote introduces the concept that each leader has a distinct area of expertise that they should leverage.
"You want to double down on your strength, but then you also want to be able to identify and know enough to know what the people you're going to delegate look like."
Andrew suggests focusing on one's strengths while also understanding enough about other areas to ensure effective delegation to the right people.
"We're looking at their resume and going, have they done this before?"
Andrew emphasizes the importance of past experience in assessing a candidate's suitability for a role.
"Just hiring people who have done it before, but for some reason we don't do that because we don't know what those people look like."
This quote suggests that hiring based on proven experience is a simple yet often overlooked strategy due to a lack of understanding of what successful candidates look like.
No verbatim quotes provided for this section in the transcript.
So I grew up in Vancouver, and my dad was an architect, and money was always really tight... And so money was always this thing that my parents fought about and we were stressed about.
This quote highlights Andrew Wilkinson's challenging financial upbringing and the stress money, or the lack thereof, brought to his family life.
The only thing that had an impact on my happiness was not stressing out about rent, knowing I had enough money in the bank that I was comfortable for two or three months.
Andrew Wilkinson reflects on how financial security, rather than material wealth, was the key contributor to his happiness.
I look at money first and foremost as a way to protect my personal freedom.
Here Andrew Wilkinson explains that he views money as a means to maintain personal freedom and avoid undesirable situations or commitments.
One example of that is podcasting... And so I went out and I bought a top indie podcast player.
Andrew Wilkinson shares an example of how he uses his financial resources to quickly enter and engage with new industries, in this case, the podcasting sector.
So lately it's been the Tao of Charlie Munger, which is just a collection of quotes of Charlie Munger, who's Warren Buffett's business partner.
Andrew Wilkinson reveals his favorite book and implies the significant influence Munger's wisdom has had on him.
I would say my superpower is pace and delegation... My weakness is follow through.
Andrew Wilkinson outlines his ability to initiate projects efficiently but also acknowledges his struggle with ongoing management and execution.
I've always thought that Jason and David from basecamp have it made.
This quote expresses Andrew Wilkinson's view of success, highlighting the balance between enjoyment and profitability in business.
My number one piece of feedback to people is get experience. If you want to be in business, start a business.
Andrew Wilkinson advises against traditional business education, emphasizing the importance of hands-on experience in the business world.
My biggest insecurity is probably if I'misinterpreted in some way.
Andrew Wilkinson shares his fear of being misunderstood or erroneously perceived as unkind due to his directness.
I think just showing people that there's a lower risk alternative to venture backed startups that can still make you very rich.
This quote indicates Andrew Wilkinson's desire to highlight less risky yet still lucrative paths within the tech and startup industry.
I would hope that we own more wonderful Internet businesses and that we still are enjoying our day to day life.
Andrew Wilkinson shares his short-term aspirations for his company Tiny, prioritizing the acquisition of quality businesses and personal enjoyment over long-term planning.