Over the coming decades, we aim to build a family of super-compounding, serial acquisition holding companies. If the principles above resonated and you find this somewhat unusual lexicon intriguing, consider joining the movement by reaching out to [email protected]. We look forward to hearing from you!

Ambition- Perhaps the biggest difference from our peers is in the boldness of our aspirations. Measured by targeted net multiples of invested capital, we are unabashedly ambitious. While most of our private equity compatriots shoot for MOICs of 3-4x, we aspire to (and in some cases have already hit) triple-digit MOICs (not a misprint).

Talent- We love fanatics. You’ll get along well with our team if your idea of a great Sunday afternoon occasionally includes reading rare old annual reports. We believe personal attributes are generally more predictive than prior career experience, think it’s ok to have some occasional life imbalance and hire intentionally for lifelong partnership.

Decentralization- There is an asperity in our culture. Our ethos is lean and slightly feisty. We believe most public and private consolidators are over-equitized and over-staffed. Although not a panacea, we think the “messy energy” of decentralized organizations often breeds dynamism, ownership and entrepreneurial vigor. And while we pride ourselves on being deeply responsive partners, we prefer to let our companies compound uninterrupted—rarely initiating contact with our CEOs outside of board meetings, occasional special projects or (quite renowned and lively) in-person events.

Improvability- To put it crisply, equity value creation at our companies is a function of entry valuation, prudent leverage and what we refer to as “improvability.” Drawing from such varied models as TransDigm’s 3-Ps, Capital Cities Broadcasting, and Bob Fifer’s work, our CEOs work assiduously to increase free cash flow in the 24 months following acquisition (and thereafter).

Equity Efficiency- We believe in an equity efficient approach to business building and speak of the equity “paleo” diet as a staple in our worldview. We’ve evolved an unusual vocabulary and regularly use strange sounding terms such as “Flywheel” (funding inorganic growth with no incremental equity) or “Triple-E” (the point at which EBITDA Exceeds (invested) Equity).

Frugality- We are deeply committed to an ethos of pragmatic parsimony (“smartly frugal” as one of our 20+ year CEOs likes to say).

Long Termism- Our preferred holding period is decades long—“decadal” as we like to say—and this is no abstraction. The principals are currently invested in 5 companies with 20+ year durations (one celebrates its 30th birthday in July). We believe this long-term ethic offers profound advantages to business owners and employees.

Home Cooking- We invest our own capital (no institutional money of any sort)—and believe this nicely sharpens our thinking and provides the purest form of alignment with our CEO partners.

Omnivorous Curiosity- Intellectual curiosity bordering on voraciousness is central to the culture at CL with incessant reading, listening, sharing, and debating of all forms of content (both new and old). To that end, we recently hired a full-time staff historian and regularly perform (and sometimes publish) our own proprietary research (check out the @50XPodcast). We are deeply committed to learning from the best CEOs and investors and gratefully stand on their giant shoulders.

The UnCola- In a 1970’s advertising campaign, 7 Up famously described itself as “The UnCola,” emphasizing its uniqueness relative to its much larger rivals, Coke and Pepsi. Similarly, we view ourselves as the UnCola of the private investing world, offering sellers and talented employees a fundamentally different flavor of investing, ownership and partnership.

A Renaissance- In this regard, we are not unlike pioneers in fields such as craft brewing or organic farming, returning our pocket of the business world to its simplified essence. Like those kindred spirits, we are building businesses the old-fashioned way, caring deeply for our customers and employees. Also like them, we eschew artificial ingredients (or their equivalents in our case)—consultants, unnecessary bureaucracy and short termism of any kind.

Craft- There is a sense of artisanship to our work at CL, of building businesses for the very long term—for the compounding not only of capital but also of other critical life attributes such as loyalty, kindness, learning and reputation. Channeling Charlie Munger, we are very intentionally trying to build webs of long duration trust.

At Compounding Labs (CL), our approach to company building is distinctly (maybe even radically) different from the so-called private equity “model.” The product of many years of lived experience, it is happily iconoclastic and, as Henry Singleton would say, “it is NOT copied.”