(Ep.110) The Acquirers Podcast: Linda Lebrun – Substacking: From Portfolio Manager To Fintech, Fintwit And Substack

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In this episode of The Acquirers Podcast Tobias chats with Linda Lebrun, Director of Finance & Investing Writer Recruitment at Substack. During the interview Linda provided some great insights into:

  • From Portfolio Manager To Substack
  • Insiders That Own A Lot Of Stock
  • Family Owned European Stocks
  • The Quality Brand Mittelstand
  • The Benefits Of Being Female In Finance
  • Making Your Best Ideas Public
  • As An Investor, You Get Humbled By The Market
  • Recruiting FinTwit Writers & Bloggers For Substack
  • Google Killed The RSS Feed

You can find out more about Tobias’ podcast here – The Acquirers Podcast. You can also listen to the podcast on your favorite podcast platforms here:

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Full Transcript

Tobias: Hi, I’m Tobias Carlisle. This is The Acquirer’s Podcast. My special guest today is Linda Lebrun. She is Director of Finance & Investing Writer Recruitment at Substack, I have said it twice, it’s a great conversation. She’s a former small cap manager who’s now working at Substack, not writing a Substack, should be coming up right after this.


Recruiting FinTwit Writers For Substack

Tobias: You have been a portfolio manager for a decade and now, you’ve moved across to Substack, not writing for Substack as many folks have, but you’ve joined Substack, and your mission is to recruit writers from FinTwit really to start their own Substack. Let’s talk a little bit about what your role is now, and then let’s learn about the path. What are you doing right now?

Linda: My job at Substack is writer recruitment primarily, and then there’s a development aspect to it as well. The idea at Substack is that we want to become the home for all kinds of writing online. The place that people come if they want to communicate with and cultivate an audience, build a community, where we’re going to provide the easiest way for them to monetize that community after they build it or once they have it. My initial approach to Substack was based on the fact that it had become a strong brand. They had gone out into the communities of journalists and cultural critics, and reviewers, and many people were going on, and they’ wee having a ton of success, building free and paid email newsletters. The finance and investing vertical surface had just been scratched. There were some people who were doing super well, but you and I know and the listeners of this podcast know, there’s a colossal ecosystem of finance and investing content on the internet. Some of it is of institutional quality, and is read and paid attention to by institutions, some of it is not, and is still very popular.

There’s not only a tremendous diversity, there’s also a challenge in, “Oh, right, I have this blog, but it’s trapped. I’m only posting my information here. How do people find it? How do people pay me for it?” Substack had a really good answer to that question. The scope of my role is evangelizing Substack for this community, the finance and investing community that has its own attitudes and its own needs, and really to show them a path because Substack is not a publication. It’s a technology platform. It’s a way for them to build their own business using a really innovative set of tools.

Tobias: When I started, it felt like everybody had a blog. Everybody started out writing on blogs, and then many of the bloggers transitioned to Twitter. Is Substack the sort of next generation? Why is it sort of so attractive from a writer’s perspective, to the point that I think it’s superseded blogs, everybody’s sort of seems to have a Substack, rather than a blog?

Linda: Yeah. It’s incredible how online content goes through these phases and phase shifts. There’s a journalist who writes a monthly, it’s actually a Google Doc that he updates, and it’s called notanewsletter.com. He wrote about the fact that email comes in and out of fashion in and out of trend as a way for people to communicate with an audience. There was a time if you look back to DailyCandy, and when Thrillist started, communicating with people in the inbox is not new, that became fashionable, and then it went out and you couldn’t really get a lot of venture capital and interest in email for a while. Now, it’s come back with a vengeance because it’s turned out that the inbox is a really resilient way people control it themselves, versus relying on me to go to a website or destination or an app. You’re looking at your email, almost everybody’s looking at their inbox every day. It’s been a really resilient way to communicate with people.

Blogs certainly went through a long, long phase where they were the way, but even if you think back to the way people who were old enough how you use the internet 10 years ago, you might go and look at Gawker, and scroll through Gawker, and you might go to half a dozen sites, the blog roll and see what you were interested in. Whereas now it’s become restricted into just a few sites, where you’re in this endless algorithmic depth battle to even get your content to be seen by the people who intentionally following you. So then, that’s what spurs something like Substack to come and say that there is no algorithmic battle with us, if someone subscribes to your work, and you have an agreement in a relationship with them to pay for that work, it’s going to be in the email inbox. I think these things ebb and flow reactively to each other. I hope that Substack, I think it has a lot of promise to have a long because that email inbox being a critical place to communicate with the audience, it seems to be turning out to be resilient.

Google Killed The RSS Feed

Tobias: I think the thing that pushed me to Twitter originally was Google killing the RSS feed.

Linda: Yes.

Tobias: That was a great way of find a great blog, just added to your RSS and it was very, like receiving an email. I have all of my Substacks and all of the other newsletters shifted across to its own little email box that I can go and read, and that was a little bit like having that RSS feed, put all of them in. Maybe this is just a return to that functionality where you don’t have to go out and seek it. It comes to your inbox. It seems to be the caliber of folks you’ve got writing is pretty high, you’ve got ladies and gentlemen, you’ve come out of pretty good hedge funds and the writing’s pretty good. What do you think they have been attracted to this model as opposed to writing a blog or monetizing some other way?

Linda: Part of it is the ease of use. You can go on Substack.com and hit write and be set up, and moving with a Substack email newsletter in under 20 minutes. People I have talked to who have used methods other than Substack, or tried methods, people shop around before they commit, what they have expressed is that it’s very, very easy. That was an extreme focus of the founders when they built it. I think another thing is that advertising creates malincentives on the internet, and you get to the extreme of , “I want my content to be shared with people.” People might write for a website. then they go and look at the thing that they worked hard on, that’s a writeup on a stock. It’s got a bunch of ugly, algorithmically created ads being served up on the side that have nothing to do with anything and you didn’t choose. It denigrates it, and it’s not fitting with the brand that people who are trying to create an elevated caliber of content really want to have.

Whereas Substack is based on– you can have a free email newsletter forever, but if you’d like to have it be paid, the way that people are compensating you is not by looking at an ad, it’s by paying you monthly or annually. There is no advertising. I think that just matches the vision that people have for what they want it to look like. I won’t name any websites that have a lot of distasteful advertising, but they like the cleanliness. The last thing I’ll mention is that because people are starting to know what it is to have a Substack, everybody knows when you put in your email address, or when you put in your credit card number, what will happen next, so the friction is a little bit lower than if you went to a login page or something where you don’t know what’s behind it, a Substack you know a little bit what’s behind it, that is helping as well. I think that those are the things that make people choose it.

From Portfolio Manager To Substack

Tobias: Let’s talk a little bit about your transition to Substack because I know you through FinTwit and as a small cap manager, and you’ve seen this explosion, I guess, in Substack and you’ve actively sought them out. What was that process like? How did that come about?

Linda: Yeah. I was working as a portfolio manager for a long time, along with the team managing small cap portfolios US and global primarily. Just to give the 30,000-foot view on that, I still am very fascinated by capital markets, and I had the good fortune to work with some terrifically smart people. The joy in life is always the people you work with, and the people were terrific. My issue was with headwinds in the industry due to structural shifts that are not going to be a surprise to anybody. In the US, you have 50% of all assets being managed passively. Canada is always behind the US in trends, but in Canada, it’s about 30%. What that creates is this feed pressure, where it’s harder to attract assets and harder to build a business in fundamental long-only active management, which is what I was doing than it was 20 or even 10 years ago.

It was an environment where it was tough to build and there was the eternal challenge that short of reading transcripts, reading 10-Ks, if you’re trying to invest fundamentally, you are by and large, using the same information to everyone else’s. The question and allocator or consultant will always pose is, what is your edge? Why should I give my money to you and not someone else? Why should I believe that you are going to generate alpha and not someone else? There’s this great chart– CFA society tries to suppress this information, CFA Institute, but the number of charterholders per security, you can go on Michael Badnik’s website and see the chart. The number of CFA charterholders per stock has gone from 5 in the 90s to 50 now, so [chuckles] you have this group of very determined bright people perennially combing over the same. This is why I wanted to do small caps, because I do buy into the idea that small caps are less examined, less loved in many cases, part of the market, but still these trends are going on. If you have a lot of career left, if you’re not near retirement age, you have to sort of sit back and say, “Is the growth going to be more or less or the same as time goes on in this industry?”

At the same time, I was very interested in– I was seeing, being exposed to on Twitter, people who worked at tech startups, and people who are solving problems using tech, so not being a technical person myself, I admired the fact that where an investor is always by the nature of their work, sitting in the stands, watching the action of businesses, watching operators, operators actually on the field in the game. So, there is something attractive about saying, “Well, could there be a way to be on the field?” People listening may partly relate to this, part of the– you have to figure out with the domain knowledge that I have, with the subject matter expertise that I have, that I build up, what do I have to offer? Then this is sometimes it’s a question of somebody who has been doing one thing for a decade, and then you say, “How do I go and move into something else?”

I started to, here in Toronto where I live, network with tech startups and try to meet people who were founding things and running companies. I’ll make a specific recommendation. There’s a lecture series called TechTO here in Toronto, and I started to go to those events. When you go, they’ll have a break, and they’ll say, “Okay, now we’re going to do networking, and you have to meet the person to your left, that’s your right.” “Oh, my God, this is awful. How can I? Just go hide in the bathroom.” I would go and do it and try to meet people.

As I was casting about for ideas, that was when I thought about Substack, because I did know a couple of people who had achieved really good success, building their own business by having a Substack publication and turning it into something that cash flowed enough that it could be the only thing they did. I thought that Substack also, okay, so this is maybe someplace where I can use my domain knowledge and knowing a bit about finance and investing content, and who the players are, and where there might be a win-win situation, where it could be good for Substack because they are attracting more people, and good for the writer because he or she has a better way to monetize and make it a sustainable business.

That was when I made my pitch. I sent a cold email to one of the founders of Substack, to Hamish, and said, “Here are some ideas that I have about things that you could,” and none of them were rocket science. It was things like, “Go on podcasts that are relevant in the industry and talk about Substack.” Things that that they were not doing partly just by nature of being a startup company and not having endless numbers of employees to do these things, but just to say, “Okay, I am somebody who is passionate about these topics, passionate about this area. Maybe I could help get the flywheel going,” which is what you want to try to do as a startup to get people interested in and thinking about what the opportunities are. That’s how I ended up hooking up with them.

The Benefits Of Being Female In Finance

Tobias: Can we just go back a little bit earlier? How did you come to be an investor? How did you get that job because that’s a path that a lot of people who listen to this podcast are interested in learning about? Particularly because you’re a woman, it’s a tougher path. I think there are fewer women represented in the asset management industry. What advice do you have for young people and young women specifically who are seeking a path into investing?

Linda: For women, the first thing I’m going to say is something encouraging, which is that even though there are typically fewer women in the room, and if you’re in an interview process, you may be one of the few women in the process, they will remember you. They will remember you more by your being relatively unusual. I do always try to encourage, if I talk to women in their 20s, who were interested in the investment business, were interested in finance, there are so many great opportunities, there’s so many men and women who will want to mentor you, if you reach out and if you ask. Yes, there are barriers. I would say the important thing, I make fun of CFA society, I just earlier in this conversation did, but getting the CFA charter was pivotal for me because this varies by city. I think in Toronto, people really like credentials. I think it’s maybe less the case in some other places in the world, and maybe less the case in New York. So, don’t anybody go out and sign up for CFA just because of what I’m saying now.

For me, I think it was important my undergraduate degree was in political science, so I needed to have something that said, yes, this person has essentially the skill set to be able to do this type of work. That was important, and not to go into my life story, but my very first job in the investment business was an administrative role working for a woman who was a retail broker. After doing that for a few years, I got a job on the sell side. The sell side at the time, this is before the 2008 financial crisis, on Bay Street, which is the Canadian version of Wall Street, there were a lot of resource mining and oil and gas financing. So, it was sort of a time like right now, it was a time of growth and a time of hiring, and getting a job on the sell side was a really good way to learn about financial modeling, and to get some first mentors. I got laid off from that job in the 2008 financial crisis.

When you get laid off in the investment business, which is a very normal thing to go through, that is when the network that you built before that becomes really relevant. There’s a great book by Harvey Mackay, the business writer that I read years and years and years ago called Dig Your Well Before You’re Thirsty. If anything is great advice for young people to say, your network– and it’s so frustrating because you go out and you contact people on LinkedIn or you try to do these cold emails and people aren’t replying. Or, if somebody does reply, they say, “Good luck.” You feel like, “What did I get out of that?” It’s a marathon, not a sprint and it’s over time that those relationships pay off. To speed up the story here, so I got a job on the buy side–

Tobias: Please don’t, we’ve got plenty of time. [crosstalk] -this is a podcast.

Linda: [chuckles] Yes. After doing the role on the sell side, being laid off, but then getting a quite junior job on the buy side, the other way, I would say, that you move up in the investment business or that I have observed and some people do so is, when somebody leaves to put up your hand and say, “I can do that job. Why don’t I make your life easier? Don’t hire anybody. Let me do it.” That was how I was lucky enough to move up to be a portfolio manager. Then we’re almost to today, then the role that I did, when I left, that was a high-net-worth business, then I left to go to a smaller startup investment boutique because I was really attracted to the opportunity to set up a corporate culture and structure at a firm in cooperation with a team the way that that we really thought was best. The job that I did most recently, before going to Substack, I had really a boss who was an extremely important figure in my life and a mentor, and we worked together. That was another really great thing to do if you get the opportunity in the investment business is to work at a smaller firm, where you can have a seat at the table to form and shape what the process is and just make it the best that you think it can be, and to have hand in hiring and all of these things there. It’s very satisfying, and it can make you more excited to go to work versus working at a large bureaucratic shop where everything’s already baked in, and you don’t get a chance to paint your picture as much.

Making Your Best Ideas Public

Tobias: I also think it’s a good idea to have some sort of a writing place like Substack or a blog or Twitter where you’re recording, at least showing your interest, because it’s hard to cold email someone and get them to respond or to respond hopefully. But if you can demonstrate some value or at least some enthusiasm and interest through a Twitter account, or Substack, or a blog, or whatever the case may be, you’ve got at least a track record or something you can point to and you’re going to meet people by virtue of the fact that you do that. If I started again, that’s how I do it. That’s how I did it for a blog. I just wanted to know a little bit about– so you’re Canadian, that’s like being Australian and resources, the culture that you come up in. When you’re an investor, presumably you’re outside of resources, because it seemed to have had a very good boom in the early 2000s, until probably the bust. It’s been very much not a resources sort of universe for the last 10 years. Your own personal investment style or the way that you invested when you’re with the firms, how would you characterize that? Are you a value investor? Are you growth? Where do you put yourself on the spectrum and how do you think about investing?

Linda: I think that I went through the same wringer that a lot of people go through where they start thinking, “I love Warren Buffett, and I’m going to be like Warren Buffett.” When you don’t know how to do something, you try to emulate the greats. I am going to buy $1 for 50 cents, and try to buy things that are cheap and unloved and buy net nets. At the beginning of my career, I would say I more identified as a value investor. I have always throughout my career used and worked on teams that used a discounted cash flow model as a tool, not something that gives you the exact right final answer to two decimal places, but as a tool, and had the idea of trying to buy things cheaply. As time goes on, you do– and these are the markets that we’ve had recently too. Every investor is the product of the environment and regime in which they’re trying to invest, and sort of realizing as time went on that– this is this is the Chuck Akre, Three-Legged Stool approach of return on invested capital matters, return on incremental invested capital matters even more.

You get to the point where you would like to say, looking backwards is going to spit out things that are cheap versus what they’ve done in the past. But more and more as time has gone on, I’ve realized that you have to have some kind of vision. I’m choosing my words carefully here because it’s hard to come up with a formulaic or algorithmic way to figure out who is going to be able to keep that high return on incremental investor capital. I’m sure as I’m talking, some people will be thinking you like Michael Mauboussin and how he’s done work on it’s really the ones that are able to maintain it and that’s really the toughest thing that you puzzled over that you want to try to be able to figure out which ones are going to be able to. In retrospect, of course, you can say, “Well, it’s very obvious which ones were going to be dominant.” But it’s difficult to puzzle out prospectively.

As An Investor, You Get Humbled By The Market

Linda: I would say as an investor, you get humbled by the market. I realized that to just buy things that appeared sort of banged up without too much leverage that– people say value trap. Value trap means cheap for a reason. That it might be of more merit to try to find things that could do better for longer. This is where I encourage people where if they do have particular domain knowledge of an industry where they’re going to be able to figure out which companies were the best because of some particular insight they have because of scuttlebutt or having a vision of what’s going to work, that’s where it can be better than just somebody who’s sitting with 10-Ks and transcripts and is trying to puzzle it out. It’s not really talking about inside information. I’m more talking about the mosaic of putting together what you know about a stock that tells you that is going to be able to sustain adding value, having a higher return on invested capital than their cost of capital for a longer period of time, which is like the holy grail of capitalism, that according to the textbooks you’re not supposed to be able to do forever but we’ve seen the companies that have been able to do it for a long, long, long time. They’ve been very outperforming stocks.

I’m sure a lot of people who come on your show sort of resist bucketing themselves as value or growth because many investors would just say, “Well, that has no meaning because I just try to buy good stocks and buy things that are going to go up and I don’t want to slap myself in.” But the biggest missing piece, when you just say I just want to buy good companies is the second-level thinking of what is your variant view because if it’s a rosy outlook from here, it’s probably all priced in, and you’re just going to make your discount rate, and you might as well just have owned an index. The question to grapple with is always, what do I think different from others? It’s an arrogant project, because you’re trying to assert that you know something more about that question than all the other market participants. Yeah, that’s kind of a long meandering answer, but what I would say is the market resists– I would say the market in recent years has resisted any formulaic value approach, that’s for sure.

Insiders That Own A Lot Of Stock

Tobias: Small caps has been a particularly difficult place to be, small and micro has been a particularly difficult universe to invest in. What’s your experience been like in small and micro? How did you outperform? How did you survive in small cap land for the last decade?

Linda: The firm that I worked at when we were focusing on small caps, we typically didn’t go below $1 billion US market cap. A lot of people would say, “Okay, great. You did mid-caps.”

Tobias: That’s a good question. What’s your definition of small cap? Where do you see small caps?

Linda: Well, I don’t know. It’s a question with no answer, because you have to define it for yourself. It illustrates the difficulty in professional investing, that you cannot really just define that question on your own, you have to look at what everybody else is doing because if you’re going to call yourself small cap, the allocator will look at your average and the range of market cap sizes, and you had better be judging yourself against an index with approximately the same parameters. If you’re not, it’s a mismatch. It’s not a fair– what you end up doing is finding an index, seeing what that index says small cap is, and then you govern yourself within that. Now, that’s not how any of us would really wish to run our own portfolio. We would wish to be as unconstrained as possible, and there’s academic evidence showing that the more unconstrained you are, the better. You should be able to just buy what you want, when you want, but that is not what works when an allocator is trying to fill a sleeve in an institutional portfolio. We appreciate that.

In my investing career, I found that the neighborhood between say $1 billion and $7 billion call it, US market cap, the nice thing about these public companies is, there are a lot of them, where there are insiders who still own quite a lot. You can go on whatever platform you use your Bloomberg or Capital IQ and you can do a search for high insider ownership, always find that a fruitful search. You tend to find things that the insiders still owning a lot means they generated so much cash flow, that they didn’t have to be diluted down that much as they grew. It also means that now you have to do a little bit more work and figure out if the person who still owns a lot is, he’s 85 years old, he’s completely out of the business, and he has no impact on what’s going on in the business anymore, then you may not really get the benefits of having high insider ownership. But if you find that the person who founded it, he or she is still at the helm, and they own a lot of stock, gosh, this is just the best skin in the game ever. You can find that in small caps and what you might call these mid-caps more often than you can at– with the very largest companies leaving aside somebody like a Mark Zuckerberg, particularly if they’ve been around 100 years. The people who are running them become shareholders by being handed options, which is very different than if the person was the founder and still owns a lot of stock. It tends to be a happy hunting ground when you look at things with high insider ownership.

Tobias: Yeah. As a general counsel of a public company for a while, I saw that internally that the two guys who founded it were just so much more aware of everything that was going on and had such a strong opinion on– they would just not let certain things happen because they had a view, and as they transition away, you see that higher standard is just not there anymore. I’m sure that that applies to even to something like Amazon where if Bezos is in there and he’s maniacal about what is happening, has a process the moment that he steps away, I’m sure that the standard inevitably must stop. That’s a very high signal owner-operator in a small cap. Do you have anything else that you like to see in– It doesn’t have to be small cap, in any sort of prospective investment?

Linda: There’s nothing original here but generating a lot of cash flow is good. Not only because it may indicate the businesses of a higher quality, but because it will skate you past the tough times. What you really want to see, and again, I know that people are listening and saying, “Okay, just because there’s a lot of cash flow doesn’t necessarily mean anything good. It could be short term. It could be that they’re overearning, it could be a million things.” If you see very strong persistent, high cash flow yield over a long period of time, and through your analysis, you believe that that is going to be sustained. If you look back at the past decade, and you see that every year of the past decade, or every year through the cycle, they were able to generate cash flow. You see that they didn’t have catastrophic fumblings when there was a recession. That is going to be what makes a resilient business. It always is helpful to think of from the point of view of what if– and again, this is an old thought too. If you personally own the entire thing, would you be happy and satisfied with how much cash it’s creating?

Sometimes, you will see people pitch a stock, where they think that the cash flow has been very poor in the past, but they think that big cash flows are coming. You just have to, in that situation, be very sure that it is coming because if the stock has been a dud for many years, and you’re expecting a big turnaround– again, it can be, but in many cases, that is clawing your way uphill, whereas certain businesses, we know that businesses that consistently have higher margins and consistently better cash flows, they just have an easier time in the tough times and more chance of staying alive. Now, everything I just said does not necessarily mean that it’s going to outperform any index ever if it’s fairly priced. But for all of us as we’re managing our own money and thinking about our own retirements, just living to fight another day, it’s a very important trait.

Family Owned European Stocks

Tobias: Yeah, that’s one of my favorite things that I look for, because I always think that he who hops and runs away lives to run away another day. That’s one of the most important things in investing. You also manage global portfolios, what was the universe?

Linda: The universe for that was developed Europe, and then Japan, and I would never claim any knowledge of Japanese stocks. European stocks also, there are a lot where there are– European stocks are famous for having families involved. It was fascinating, because there’s a– I don’t want to make too heavy of a generalization, but often with European firms, there would be more of these types of firms where it would be a holding company with lots of different divisions, lots of different things going on, there have been acquisitions over time and the acquisitions are not flattened into the brand and style of the parent. They are allowed to continue to be headquartered in a small town somewhere and be flourishing and have high margins and generate lots of cash.

Whereas I feel with US small caps, there’s a lot more of an optimization mentality, again, speaking very generally, always think of exceptions. Where in the US, if you are running something that way where you have all these different silos, that each has a lot of ability to behave as they wish and purchase as they wish, you are vulnerable to an activist coming in and saying, “Well, we have 25 MBAs and they are going to optimize the heck out of this thing, and that’s going to evolve you, and you are fired.” There are different ways of coming out how to– it kind of educates you. They’re just different ways of coming out how to build a great business. You can savagely and ruthlessly optimize, and maybe that is why US businesses go all over the world and dominate. But there have also been businesses that remain mid-caps and allow there to be more of a distributed power and less decentralized style, and have done really, really well. Still, once again, you have to look at, how did the business do over an entire cycle, not just the past five years. Then, you have to make thoughtful estimates and forecasts of how the business is going to do over the coming cycle, to make a DCF without making a forecast. I don’t know how you do it.

Tobias: In a European context, is a family owning or controlling the company, is that a positive in your view, or is that a negative?

Linda: I’ll say my own personal bias and this does not reflect on any employers past, present, or future. For me, it is positive just because it is again skin in the game. I’m sure anybody listening can think of a lot of the great European families who run the beverage companies, or food companies, or the ultimate example, the luxury goods companies, and there could now be dozens upon dozens of cousins who have an interest. They probably just all get together once a year. It’s not that they are involved in the business every day, but it gives you a mentality that is of doing something for your grandchildren. I know it sounds like a watch ad in a magazine, but it’s very different. We know that incentives are everything. One of the most important things when you’re looking at any public company we all know is go look at the proxy, see how everybody’s compensated, see what the KPIs are, because that’s what they’re going to do. If you have a management team that is compensated on EBITDA growth, they will grow EBITDA. If you don’t have any kind of return on invested capital metric in the way they’re comped, what do you expect? They will be indifferent to that.

By having these families involved, you could say that there are governance problems and issues too, and it could be insular, but I would say that the benefit of it is simply having that longer-term view. There have been investors who have been very, very successful over the past 15 years, focusing their attentions and their analytical talents on this style of companies.

The Quality Brand Mittelstand

Tobias: Did you have a look at The Private Investment Brief, used to call it the Quality Brand Mittelstand?

Linda: Yeah.

Tobias: Are you familiar with that? Does that factor in at all?

Linda: Great concept.

Tobias: Yeah, isn’t it?

Linda: I would say it does, to the extent that if you have companies where they may not have an aspiration to become the next Amazon or the next giant industrial conglomerate, but they dominate within their niche. I think, also, what goes along with the Quality Brand Mittelstand concept is to be the best at what you do, and to be very fixated on keeping the quality level high, because there’s always the entropy in the universe, especially as you get bigger or grow higher, enter new businesses, will corners will be cut. The attention to quality of a business is important.

To give another example of that, not just public companies, but large organizations often get confused, because they think, “Okay, I need to have a mission statement, I need to have a set of values.” They come up with all this self-expressive stuff from a marketing seminar. If you were to grab one of the employees on the street and say, “Hey, what’s the mission of your company?”, they would just give you the blackest look ever. Whereas I find with small and medium sized companies that do well, the founder, or the CEO, if he’s not a founder-CEO, they will still have this mentality of the values and what we all care about is very clear. Who and what comes first is very clear, and no one would make a mistake about it. Ben Horowitz’s books talk a lot about this, in terms of corporate culture is made by a series of decisions and choices and choosing whether I stay at the Holiday Inn Express or the Four Seasons, everybody thinks, “Oh, I know the answer to that is Holiday Inn Express. That’s the right answer, right?” Well, that may not be the right answer. It may be if you have a salesperson who needs to rest before he does a massive multimillion dollar presentation. You want them to be at the four seasons. The point is, if your corporate culture is intentional, you will know prospectively what the answer to that is going to be.

Bringing it back to public companies, I think that when you read the document, you read the annual report, you read the letter to shareholders that the company writes, and you observe how they act and you observe whether there’s consilience, you can tell whether they have that clear, coherent set of values that probably puts you on the right track for sustainability. If it’s very confused and jargony, I mean, to me, it’s a red flag.

Tobias: Linda, we’re coming up on time. If folks want to set up a Substack or get in contact with you, what would you hope that someone who has listened to this and thinking about that– what would the process be for them?

Linda: Do not hesitate to contact me because I love to talk about Substack. Even if you just have an idea, if you’re doing something else right now, if you have a blog, let’s talk about it because you’re trying to grow. You can send me a direct message on Twitter. I do have open DMs and my name on there is @SubstackLinda, or you can send me an email to linda@substackinc.com. Feel free, do not be shy, good things can come from a cold email. [chuckles] Reach out because I think there are a lot of opportunities.

Tobias, like you were saying, the number of writers that I have spoken to who said the inbound and the networking that they got from having an email newsletter was of more value than the money they made has really surprised me, frankly. It really is a great tool for whether you’re getting a start in your career or if you’re someone who’s listening to this and you’re retired and you’re looking for the next fun thing to do, the scope is broad.

Tobias: That’s fantastic. Linda Lebrun, Substacks, FinTwit Herder in Chief, I guess. Thank you very much.

Linda: Thank you, Tobias.


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