2023 Tiny Ltd. Annual General Meeting

morning everyone. >> If we could just ask you to take your seats, we'll get started here in another minute or so. notes. Are you Another way. Okay. says that I got a goosebump. to go. >> Good morning everyone. Welcome to the tiny limited annual general meeting. I would like to begin by acknowledging that we gather here today on the traditional territory of the Luangian people, also known as the Song and Esqimalt First Nations communities. We acknowledge our traditional hosts and thank them for their graciousness in welcoming us and for allowing us to live and work on their lands. My name is John. I take care of investor relations for Tiny Limited. I will sort of be hosting in terms of the Q&A period. So, in terms of the uh format today, there'll be a formal portion of the meeting that'll be about 15 minutes chaired by Andrew, which I'll pass over to in a second. If you could save the bulk of your questions for the end of the meeting, we'll have, you know, call it an hour and a half or so for for sort of a wholesome Q&A session, which is really the uh the reason I'm sure all of you are here. So, at that time, I'll I'll give you instructions. There'll be a mic in the center there, but for now, I'll pass it over to to Andrew to kick off the meeting. >> Hey guys, how's it going? Can everyone hear me? Okay. Yeah. Awesome. Um, well, this is a truly bizarre experience. So, 17 years ago, this business that you guys are all now shareholders in was a desk in my apartment and I would work at it in my underwear. So, this is a very strange thing to suddenly wake up 17 years later and have thousand, you know, over a thousand employees and 35 plus businesses and have all of you here and be a public company. I mean, Chris and I are just kind of pinching ourselves. This is really cool. Um, so we really appreciate all of you coming out. >> I have nothing to add. >> No, >> we were just going to say that um, you know, >> should we do this first though? >> Oh, yeah. Okay. So, let's do um we've got to go through the uh actual official AGM business, which is where I read a script and we approve everything. So, we're going to do that now. Uh apologies if it's a little boring. So, we'll we'll do that and then we'll get to the um Q&A. So, uh good morning ladies and gentlemen. Welcome to the annual general and special meeting of the shareholders of Tiny Limited. My name is Andrew Wilkinson and I'm the chair of the board of Tiny. In terms of our agenda today, we will be dealing with formal business of our annual general and special meeting as described in the proxy materials that were sent to shareholders. Prior to starting the meeting, I would like to introduce the directors and officers which are present in person at the meeting today. Carla Matson, director. Let's get a hand for Carla. Uh Tim Mlane, director. >> Tim, please stand up. >> Please stand up. >> Stand up and give us a bow. >> Yes. There we go. >> Uh Shane Parish, director. I've got uh my co-founder, co-CEO, and fellow director, Chris Sparling. Uh David Cheron, our chief financial officer, and Aier Chan, our president. >> >> The meeting will now come to order and I shall ask Steve Seville of Fascin Martino, council to the corporation to act as secretary of the meeting and Irene Lee of Computer Share Trust Company to act as the scrutiner of the meeting. That's a wonderful word, scrutiner. Uh the purposes the purposes of this meeting are to receive the audited financial statements of the corporation for the fiscal year end uh December 31st, 2022 together with the auditor's report therein to fix the number of directors of the corporation to be elected at the meeting at 5 to elect the directors of the corporation for the ensuing year to appoint to appoint the auditor of the corporation for the ensuing year and to authorize the board to set the auditor's remuneration. to consider and if thought advisable to pass with or without variation an ordinary resolution as more particularly set forth in the corporation's management information circular dated May 12th, 2023 related to the re the reapproval of the equity incentive compensation plan of the corporation and finally to transact such other business as may be properly brought before the meeting or any adjournment thereof. Specific details of the matters to be put before the meeting are set forth in the corporation's management information circular. The secretary has provided me with proof that the notice calling this meeting and related materials were facts were mailed to tiny shareholders on May 17, 2023. I direct that proof of service be annexed to the minutes of the meeting. I will dispense with the reading of the notices of the meeting. Before proceeding with the business of the meeting, I would like to take a moment to discuss the voting procedure. Each holder of a common share is entitled to one vote for each common share held. I propose that all votes or matters before today's meeting be conducted by a show of hands. If as chair I feel it is appropriate, I may ask for a poll on resolutions to be taken. Similarly, a shareholder or proxy holder may demand a poll. In such case, we will break so that each shareholder and proxy holder can register his or her vote by ballot with the scrutiner. Once all of the votes have been registered, we will take a moment to tally them so that the results of the vote can be announced before the next matter on the general the agenda is considered. The bylaws of the corporation provide that a quorum of shareholders is present at a meeting of shareholders if one or more persons are present holding or represented by proxy at least 10% of the shares entitled to a vote at the meeting of shareholders. I have received the scrutiners report showing that there are in in attendance at this meeting in person or by proxy 110 shareholders holding 152,251,167 common shares according to the total representation at this meeting by shareholders present in person and by proxy is 85.89% of the common shares of the corporation. Therefore, I declare that there is quorum present at this meeting. With the appropriate notice of the meeting having been given and a quorum being present, I declare the meeting duly constituted and ready for the transaction of business. Certain persons have been asked in advance of the meeting to make certain motions. This is in no way intended to discourage any discussion, comments or questions from the floor. Should any shareholder or proxy holder wish to speak on any matter, please do so. I would ask that shareholders or proxy holders identify themselves by stating their name so that will they will be recognized by the chair prior to speaking. I welcome all guests but would ask that any non-shareholders or non-desated persons to refrain from voting. The first item of business at this meeting is to receive the audited financial statements of the corporation for the financial year ended December 31st, 2022 and the report of the auditor therein. and I shall ask the secretary of the meeting to present these financial statements to the meeting. A copy of the financial statements and the report of the auditor thereon have been posted to the corporation's website in addition to the corporation's seedar profile. Each registered and beneficial shareholder has had an opportunity to request paper copies of the financial statements and the report of the auditor to review these documents. I do not propose that the auditor's report or financial statements be read at this time. The next item of business is to fix the number of directors to be elected to the meeting. It is proposed that the board to be elected at the meeting shall consist of five members. I shall now request a motion to fix the number of directors to be elected at the meeting at five. Okay. Excellent. All those in favor signify in the usual manner by raising their hand. opposed. All right, the motion is carried. We will now proceed with the election of directors. Five directors will be elected at this time to hold office until the next annual meeting or until their successors are elected or appointed. the only persons who have been nominated to stand for election as directors of the corporation. In accordance with the procedures set forth in the advanced notice provision contained in the corporation's bylaws are the nominees set forth in the management information circular for the meeting. May I have a motion to elect the directors of the corporation. All those in favor please signify in the usual manner by raising your hand. Any opposition? No. The motion is carried. I now declare Andrew Wilkinson, Chris Sparling, Carla Matson, Tim Mlane, and Shane Parish to be duly elected directors of the corporation to hold office until the next annual election of directors unless their office is vacated or a successor is appointed in accordance with the bylaws of the corporation. The next item of business is the appointment of the auditor of the corporation. The management information circular and the instrument of proxy prepared for the purposes of this meeting contemplated the reappoint of KPMG LLP chartered professional accountants as auditor. Could we have a motion with regard to the appointment of the auditor until the next annual meeting? And could this motion provide that the auditor's remuneration be fixed by the board? All those in favor signify in the usual manner opposed. The motion is carried. The next item of business is to approve and adopt the resolutions in relation to the reapproval of the stock option plan of the corporation. Excellent. All those in favor signify in the usual manner by raising your hand. opposed. The motion is carried. Is there any further business to be brought before the meeting? As there no further As there is no further proper business to be brought before the meeting, I declare the meeting terminated. All right, now to the fun part. So, um, here's how this is going to go. Um, we're gonna literally just have a mic there. Anyone who wants to can line up and grill us like grilled cheese, ask us whatever they like. Uh Chris and I will stay here as long as there's questions. Um and yeah, we welcome them. And uh I'd love just to start with a show of hands. Who here is from Victoria? >> Okay, awesome. Good contingent local. Uh who here flew more than three hours to be here? Amazing. Who here threw flew more than five hours? Who here flew more than eight hours? Who here flew more than 10 hours? Who here flew more than 15 hours? Who here flew more than 20 hours? >> Oh my god. >> Who here flew more than 25 hours? Wow. Oh my god. Thank you. Let's get a round of applause for those two guys. Wow. And just just so we know who Hold your hand up if you actually own the stock. I'm just curious. Very cool. Okay. Awesome. Well, thank you guys. We um at the end of the day, a stock certificate is a ownership share in a business. You guys are our partners. Um so, this is an opportunity for us to, you know, answer questions. Uh talk about whatever you guys want. You can ask us about life, love, business, you name it. Uh go for it. >> Yeah. So, the mics the mic's in the center here. If you want to line up to ask, I just ask you if there's a long lineup, leave it to maybe one question and a follow-up and then reue. But for now, it's it's over to you. >> And if you guys just want to, if there's people with questions, just maybe cue behind Dan. >> Good morning, guys. Dan Chan from TD Securities. We've heard a lot about AI. It's the uh buzziest thing talking about now. You guys have some businesses that I think could be impacted from it, both positively and negatively. Can you just talk about how you're thinking about AI, what the risks are there, and what the opportunities are, and how you're positioning your companies to play in that space? >> Yeah, I would say that we own businesses that are somewhat uh potentially affected uh and we own other businesses where we believe that they could be profoundly uh you know, more profitable, faster moving, and that there's a lot of opportunity for us. So, um to be honest, we really don't try and shadow box and figure this out. the end of the day, we really try and stay disciplined, buy businesses for reasonable prices. And when we're playing in a world where things can be disrupted by AI, we just have to be that much more careful. Um, you know, when technology, we kind of think of businesses as sand castles on the beach and the further up the beach they're safe, you know, the more safe they are, but at the end of the day, a storm can always come and wash them away. And so we have to be very very disciplined and cautious in how we play in the technology world. And our way of handling that to date has been by uh underwriting to very quick payback and conservatism or buying long duration businesses that we feel have extreme stickiness, high switching cost and that kind of stuff. So, you know, while we're very aware of the AI risk, we think there's some benefit and uh you know, we are going to have certain businesses that are disrupted, but uh I think that those businesses will uh pay back far before they get disrupted. >> Anything Chris? >> Nothing to add actually. No, >> no one behind me, so I'll ask another one. >> Sure. >> Totally unrelated, but we we know you got that PE fund. What are your thoughts on how do how that's going to fit into the entire company? Any plans for it? How we should we be thinking about that? >> Yeah. So, um the history on that is during COVID um we felt there was going to be a lot of disruption and opportunity to buy technology businesses and we had um you know we really wanted to load the elephant gun and prepare for opportunity and so we raised our first ever fund. Uh we have an all-star cast of incredible investors and then we sat on our hands for a year. there was nothing to do because co uh surprisingly actually boosted technology companies. Um so we we've now had the fund for what four years something like that. >> Yeah about three I guess >> and uh we have some wonderful businesses in it and the probably the most confusing thing about our business is that we have this private fund sitting beneath it and so we're trying to figure out how to do that and we don't know um you know how we're going to resolve it. Um, but we know we own wonderful businesses, uh, and that shareholders benefit from the carry in that business. Uh, I'd also say it's going to be fully deployed probably within the year. >> Thank you. >> Yeah. Hello. Hello. Um, so I've got like a personal well not like a personal question just for me and then another question about Dribble and how you think about like acquiring businesses. First is I might be buying an online business. Do you know a business lawyer that can help me buy >> Steve? Steve Seville right there. >> Okay, let's chat after. >> Ask him. He's awesome. >> Um, and then my my real question is when you how do you think about the future risk of like potential customers not being there in the future when you're buying like an online business? Like when you bought Dribble, what gave you the confidence that in five, 10 years from now, um, there would still be demand for those templates, there would still be clients there. like how do you how do you think about that? Because that's one of the things that I'm worried about uh for the company I might be buying is that I'm just not sure how to price that in or how to even like have the confidence to know that in three, five, 10 years from now there will still be demand there. So just so everyone knows so dribble is a social network that we bought uh what seven seven years ago something like that. Um and it's a place where designers congregate to share their work. Um, so people go there and they post uh whatever they're working on. They share their portfolios and by doing so they get to connect with other designers. Um, and they also find clients, they find new jobs, all that kind of stuff. And so it's a really interesting social network. And Chris and I kind of think of it as we always joke it's like an airport business, right? A whole bunch of people congregate somewhere and you can sell them all sorts of different things. And so when we bought that business, we were um you know, we knew it intimately. I was a designer. That was my original job. And we started with a web design agency. Um and so we had a relationship with the founders. Um and we were very confident that this is something that had profound value to designers because we were designers. Um and we had actually found a lot of our early clients on it. And so as far as we were concerned, as long as the design profession existed and as long as we didn't mess it up and abuse the community, we felt that people would keep coming back. And that's certainly been true. Now, when we buy a business, often we are thinking about ways to derisk ourselves, right? So if we're going to pay 10 times earnings, we're going how do we double earnings in the next two or three years in order to pay ourselves back quicker to derisk, right? And depending on the quality of the business, we will pay a larger multiple potentially or be more comfortable with that. Dribble was an example where we went, this is an exceptional uh unique business with an incredible network effect where almost every designer in the world um either has a Drupal account or visits, you know, once a week or so. Um and so we felt very comfortable deploying capital into that opportunity. >> Yeah. just add like I I really I really think that like there's the aspect of like practice doesn't make perfect, practice makes permanent. And you can really fall into analysis paralysis if you're digging into a business. When it came to dribble, we really just did napkin math and we structured it, you know, where it's heads we win, tails we don't lose much, if at all. And we did that by negotiating a really good price and understanding the levers that we could pull to unlock value, but not paying necessarily for that. And so when it comes to the business that you're looking at, I think if you can structure it on a price basis where it's, you know, heads you win, tails you don't lose much if at all. Um, and you're not necessarily paying for the value you're going to bring to it, then >> so for example, with Dribble, it was run by a designer and a developer, Dan and Rich, wonderful guys. And they, we always say to a man with a hammer, everything looks like a nail. For them, it was they just wanted to design and develop. they wanted to make the product better, but they really didn't like marketing or sales. And so when we found that business, we realized that they didn't have an ad sales team. And so we went, okay, so we're going to pay um, you know, 10x for the business, but we're going to add in an ad sales team, and we think we can sell an additional $250,000 a month, and that there's some opportunities for optimization. And so we just implemented that, and that derisked our investment significantly. >> Yeah. I'm I'm really just trying to say like don't do a ton of work trying to convince yourself to buy it. You probably have a good sense. >> The only And then the other thing I would say is make sure your first attempt is a no-brainer, right? So what you don't I see some people go out and they buy a business and it's a mediocre business and they overpay. It's really hard when you burn your hand on the stove the first time. You know, you don't want to go in the gym and lift 300 pounds on day one, right? you want to go in and take some little baby weights and, you know, do some bicep curls first and build up. >> Well, I think I can pay I think I can get my investment back within two years if things just stay the same and then I can also get rid of some contractors, take on that work and then pay my self faster. So, that's my thinking behind it. So, >> you want to partner in this acquisition? >> Do uh well, it's kind of small but sure. >> Yeah. >> Great. Thank you. Okay, thank you. >> Oh, we might have to lower the mic stand here. Oh, >> hi, I'm Dan from Austin, Texas. I want to know how you came up with the name Tiny and what gave you the confidence to create Tiny? >> So, for I'll answer the first question. Um, so Chris and I looked around at all these companies that buy companies, you know, we would have lots of private equity firms reach out to us and it was always these weird names like Black Rockck, right? They just sound evil. They sound like pirates or something. There's another one. What was the debt fund? >> There's always a Oh, uh, greywolf. >> Greywolf, >> which sounds like a spider, right? And we just wanted something friendly and we thought tiny was kind of humble and at the time we were tiny, frankly. Um, and so yeah, it was just kind of self-deprecating. Um, >> we debated all the usual suspects like what streets did we grow up on? Uh, what neighborhoods and everything like that. But >> yeah, and then um the courage to grow it. I mean to be honest, we never planned this. You know, if you'd asked us asked us even 5 years ago, would we be a public company? Would we be doing the level of revenue we are doing now, we would absolutely uh have no clue that this was coming. Chris and I really had humble ambitions and just kept staring at our feet and walking forward and then we looked up one day and we climbed a mountain. So, yeah, it's uh there's no plan. >> Yeah, I'd say we're flabbergasted by even all of this right here. It's it's amazing to think of >> from Derek from Montreal. Longtime listener, longtime caller. um 2021 uh sorry 2022 look like a really good year for tiny the margins the growth if you're looking out let's say 3 5 7 years from now does the future of tiny look a lot like 2022 in terms of margin profile and on that how much of this IBIDA margin you wrote in the letter which is a great letter by the way thank you how much of that converts to cash >> so um if you email David he could give you an answer in terms of that I don't do public math Um, but I would say that our businesses are mostly digital, so they don't have a lot of reinvestment and capex and that kind of stuff. Um, so you know, generally it's post tax is what's left over that's investable for us. Um, David, any thoughts there? >> Yeah, it's a pretty good proxy for free cash flow. >> Okay. And margin profile, would it be mid30s would be good to think about the future? Is that something in the current form of tiny without future M&A? is mid-30s margins something that >> to be honest we don't manage to a percentage or anything like that but we want to maintain businesses that are highly profitable >> okay >> when logical and there may be times where it's logical for us to reinvest in the businesses and reduce profit margin in order to grow you know in year 2 3 4 um but yeah >> and how important you've been doing this a fair amount of years but how important is the founder the person I mean you say you do the napkin math and I agree with you it's great and I guess you must be relying a lot on the person, the people. If you just maybe outline a bit how you get comfortable with that them, do you hang out with them? Do you call around? Like what's some of the people due diligence you do in that process? And >> well, the the biggest thing, I mean, the Buffett thing, you can't do a good deal with a bad person. So, the first thing that we're looking at is do we have friends in common? What is this person's reputation? Do we get creepy crawly vibes? Do our stomachs go off when we talk to them? And generally, that's a fast no if there's anything like that. And then um through that, you know, ultimately we do two type two types of deals. Either the founder stays and they're kind of recapping out old investors or they just want to derisk or they want to partner. Um and if they stay, then we really, you know, it's very very important. We're going to be in business with them for the long term. Um, on the flip side, sometimes the founder wants to go and that's what they love about us is they can pass us the keys. We'll work with them to plug someone new in and they can sail off into the sunset or they can join the board. They can really do whatever they want. Um, but the number one thing is we have to do business with good people because, you know, we've been in business for almost 20 years. We've had negative experiences. We've worked with bad people before and life is just too short. We always joke that you could come to me and tell me that there's some horrible crisis and if I look around the table and there's good people, everything will be fine and I feel great, but if there's bad actors, everything is hell. >> And then just one more. >> Yeah. Yeah. >> You're new to being a public company CEO, Chris. Chris as well. And how often do you think you'll travel to meet investors, be on the quarterly calls, if you hold any? I'm just curious, is it going to be Berkshire 2.0 and Mark Leonard 2.0, or is it something new you guys are going to do? and go hold a conference once a year or this is it maybe the age >> I think this is it I mean you know they they have Woodstock for capitalists we're a little younger maybe Coachella for capitalist I don't know but um at the end of the day I mean we well we don't want to spend our time flying around the world doing investor relations that doesn't mean we're not going to talk to our investors if anyone wants to talk to us they can always email us we're happy to meet people here in Victoria um but we just don't want to be we don't want to be spending all of our time doing that we want to spend our time investing investing and operating the business. So, I would say we're very much in the Buffett Munger kind of camp. >> Okay, good to hear. Thanks. >> Thanks. I'm William from Adelaide, Australia. Um, and I was wondering, I've got two questions. One similar >> Oh, you're the you're the 25 hour travel guy. >> Slightly over 20. Okay. >> If you include layovers. Uh, so I guess given technology and internet businesses have sort of a history with um a lot of disruption in that space. How do you take that into account when evaluating a business, especially given that you want to hold it for the long term? >> Sorry, what do you mean disrupted? >> How do you Sorry, disrupted. >> Disrupted. >> Disrupted. Yeah. >> So, how do we think about business that could be disrupted? >> Yeah. And make sure that what you're buying you think will be a durable and sustaining business. >> Yeah. I mean, I'd say the the the more of a sand castle moat that you have, so the more vulnerable the business is, the cheaper we want to pay for it, right? So there's there's there's a right price for everything. Um, you know, we joke that we've bought oil tankers that are sinking in the middle of the ocean, but there's $10 million of oil in there and we can buy it for a cent. That's a deal we might do. Um, but in order to but what you know, we'd much rather buy a cruise ship that's sailing to Hawaii all day, every day. I want to be buying cruise ships, boarding them, enjoying the sund deck. I don't really want to do the oil tankers, but every once in a while there's one that's so swashbuckling and exciting that we'll go do it. >> And this Thank you. Um, and the second one was I guess it's been a short amount of time since we commerce and tiny went public. Has that changed sort of how you see things, how you operate? I know sort of Mark Zuckerberg was famous for saying that it brought a sense of maturity to the company that he wasn't expecting >> sort of too early. I think um I think there's something really nice about having a board of directors and forcing ourselves to kind of on a quarterly basis zoom out and get a sense of everything that's going on and have people to bounce ideas off of. Feels like more of a team sport whereas Chris are kind of like we're like tennis partners or something and now we've got a little bridge club or something going. Um so that feels really good. Um and I'd say that you know going public getting public is uh what did I say? Um the best problems are interesting, challenging and fun. Uh going public is uh challenging uh difficult and uh and and hard, right? And and important too, right? You don't want to mess any of this stuff up. So, you know, we would be looking at phone size books of uh you know, stock options and all these things that define our future that where you can only do it once. Um, and that was really stressful, but now that we're through it, we're really excited to be investing. >> Thank you. >> Okay. Good morning. Uh, I just bought uh eight shares today, so I don't know if I'm count I count as a shareholders. Uh, but >> security. >> Yeah. Oh, well, after this question, I can go. Uh, so basically my question is I think there are a lot of uh founders uh business people here. um as you grow your business uh what's kind of lessons you learned uh during the way I mean it's already very hard to manage like a small team but now you have like a team of like a thousand people it's obviously very different uh from uh when you were very small yeah that's kind of my question >> well I'd say two things um you know businesses are just groups of people and people are complicated um so we are I would say Chris and I are more therapists than business executives a lot of the time and that incentives really really matter. Over and over and over again, we see that when incentives are aligned, when people think like owners or when they're incentivized based on the things that we care about, the behavior follows suit and that works out very well. And when there's a misalignment of incentives, things don't generally go well. Um, what what else, Chris? Well, one of the I'd say one of the learnings has been um going from being very operational and being able to jump in and just see a problem and solve a problem is very satisfying. What's hard is um kind of having to step back when we have so many different CEOs and so many different companies and having to sit on your hands, storytell with them, and let them make their own mistakes and let them burn their hands on the stove and hope that they'll learn the right lessons, but without jumping in and being prescriptive. That's a fundamental shift of being operational to what we do now. That's been an interesting learning experience, I'd say. >> Yeah. We I remember we had dinner with Charlie Mer and we asked him, you know, this exact question. Don't you get frustrated, you know, when you see a CEO not doing a thing that's highly logical? And he said that, you know, he'll go to the Coca-Cola headquarters and there'll be billions of dollars of opportunity for very simple things, but that he's learned not to exert that to ultimately choose the CEO, let them do what they're going to do. And I remember saying like, do you think you can change people or change people's mind? And he said, absolutely not. Right? So, we accept that when we hire a CEO, we have to think they're a good person and we have to align with their direction where they're going and we have to leave them alone. And there's been instances where a CEO does something that we might not agree with and we have to bite our tongue and be supportive and sometimes it works and sometimes it doesn't, but it's uh it's kind of interesting. >> Thank you. Uh what's your favorite restaurants in Victoria? >> Uh part and parcel. >> Parcel. It's very good. Hi. >> Hi, Rufaro from Maker Capital. So, this is a question more about your journey. So, I was curious as to in the early days, how did you scale sustainably and also what was your northstar and how did that change over time? >> So, um we scaled sustainably by not having access to bank debt or venture capital. Uh and what I mean by that is that if we didn't grow sustainably, we would be bankrupt. Uh so Chris and I spent a lot of time uh you know negotiating the price of coffee beans and desks and uh you know trying to get the cheapest office space possible and run a really tight P&L and that was kind of a blessing. So that that forced an operational mindset where we always wanted to run profitable. And as we started seeing other people's businesses, we would meet other agency owners and people that ran digital businesses. We would be shocked and appalled when we would look at their P&L and see the amount of waste and bloat. And so that kind of created this tremendous opportunity for us um to start implementing our approach to these businesses. >> Perfect. Thank you. >> Thanks. Hi Chris and Andrew. Uh thanks for hosting us today. This has been uh great so far. Uh my name is Amir Rahani. I'm from West Vancouver. Um I had a question with regards to risk. So Warren at Berkshire says the chief role of the chief executive officer at Bergkshire is to be the chief risk officer. Um now this is where the insurance business is very similar to the investing business. you try and come up with the odds of something happening and charge the correct premium. Uh, a good insurer will try and come up with the odds of a building being blown up by a terrorist using bombs, as an example. Um, a brilliant insurer will try and daydream and come up and think about something that's never happened before. What about a passenger plane flying into a building? Sorry for being so dark, but it's never happened in the history of the world, but the brilliant insurer will think about that on his own. and then he will charge the correct premium based on that as well. So it'll be a higher premium. Now in the investing game, it's also very similar to that too. So for 50 years, if you owned uh long-term parking garages near airports, right? For 50, 60 years, that was a good business. Cost you a few hundred bucks to put someone there, make sure people pay their tickets, whatnot. And some guy in a garage somewhere in California comes up with Uber. You're out. You're toast. Your business is up. So my question to you is as chief risk officer at Tiny, both of you, do you daydream about, you know, things that have never happened before in the history of the world because they seem to happen all the time? >> Absolutely. I would say that's all my girlfriend can attest to this. I I think like only the paranoid survive and I spend all of my time reading about financial history and trying to understand just how bad things can be, right? >> Uh you know, right now I'm reading uh the rise and fall of the Third Reich, right? Oh my god. Could Could a new Hitler take over and wipe Tiny out? I don't know. I'm I'm just constantly thinking of all the ways things go wrong um for better or for worse. And Chris does the same in in different ways. So I would say that is something that we are fixated on um constantly and you know we're always examining the bridge and making sure that it won't fall down when we drive our family in the minivan across it. >> Yeah. Okay. And follow-up question if when you read the the rise and fall. Uh do you ever read it in public? Because it's such a terrible book to read in public. >> I was just thinking that. So this book I don't know if you've seen it. It's about this big and it has a massive swastika on the front of it and I I left it out. Oh, I was reading it in front of the fireplace last night. I left it out and I went, "Oh my god, is my cleaner going to see this and think I'm a Nazi?" It's a little >> I read it at the library and I Someone came up to me and said, "You're disgusting." I was like, "Oh my >> Thank you so much. >> Yeah, but it's an amazing book." Chris, do you have any thoughts on any of that stuff? >> I'm just thinking this is how we get cancelled. >> No, I'm talking about just to know it's a important piece of historic history about the how it happened and how to avoid it in the future. Just so >> William Shire, great book. Thank you so much, guys. I appreciate it. >> Thank you. >> Hey guys. Um Kristoff Apple. I'm from South Africa but recently moved to Victoria so easier commute this time. Um I have two questions. The first one is relates to Aeropress and if you guys can just chat about that a little bit because it's one of the bigger acquisitions for the company and uh you mentioned that you guys tend to take sort of an advisory role with a lot of your CEOs but with a company like that you got some very specific strategic decisions that need to be made up front. So you've got your independent retailers, you've got your direct to consumer channels, and then you've got your big box guys. So the interplay between those three channels and the the decisions you guys made in terms of strategy upon acquiring that entity and what role you played versus the CEO played. So that's just the first question. You can talk about that and also how's your press doing? >> Yeah, so uh we hired an incredible CEO, Gerard Meyer. He ran SodaStream. He was the one that scaled it in the United States. Uh very similar in a lot of ways. uh he's a total coffee fanatic, an amazing guy and at the end of the day we are when we meet somebody we are looking for uh alignment and alignment of vision and Gerard is very logical and cares about product innovation and he has a lot of experience with brickandmortar retail and then what we kind of layered in was the e-commerce side. So, we have um one of our investors, John Becker, who's here who's scaled some massive ecom businesses. Uh he co-invested in that business and is kind of advising the business as well. Uh we've sprinkled in a little bit of talent on that side. And um I'm very optimistic about e-commerce in that business. >> Where do you see the ultimate like sales percentages coming from? Big box versus direct to consumer versus independence. >> Well, our hope is to diversify away from entirely being in retail. I think I want to walk in in 10 years. I want to walk into any cafe in the world and see Aeropress. Um, and that is what happens. I mean, people will be in India and they'll send me photos of Aeropresses on the shelf. Um, but we also want to sell direct. We want to have a direct relationship with the consumer. Um, and you know, our margins are better. Uh, we can directly email them. There's a lot of advantages to that. >> Uh, the second question is a little bit more personal. So, maybe Chris, you can handle this one first because you tend to be the quieter one in the group. Um there are a lot of business partnerships between individuals that fail. >> You guys have been working together for a very long time. I assume it started from a business context. It's become a friendship. It's now on a public platform with a a publicly listed company. What do you guys do in order to make sure this relationship works? Um and what are you guys going to continue to do to make sure the relationship works? Both from like an investor standpoint, but also like personally. You guys live in the same town. You have a lot of similar friends. Um, I'm just intrigued to know for any of us that do work with co-founders, partners, or if we're looking at getting involved with someone in a business, how do you guys stress test the relationship? What do you guys do on a on a therapist standpoint like you do with some of your CEOs? What do you guys do with each other? >> Yeah, it's funny because we have we've done therapy together. But, uh, >> we actually have >> I assumed some. Yeah. >> Um, I find I find it interesting like, you know, I I keep thinking a lot of people kind of reach out and just ask how to find a great business partner. And I always think starting off looking for a business partner almost sets up to fail because you guys might outgrow each other sooner than you think. Andrew and I really did start off uh just kind of as co-workers and even now I don't know if I'd really say you're a friend, but um we're really good mutual acquaintances. But I I can't stress that enough actually is like starting off um working together, building trust, and getting kicked in the teeth together over and over. And adversity builds memories. and we've had a lot of adversity together um where we've struggled and anytime we're kind of bickering at each other or fighting, we have that hardship to always fall back on to. It does feel almost like a a spousal relationship when it's like that. And I'd say we both are constantly growing and reading more books, which makes us better and more effective communicators with each other when it comes to conflict. And so, yeah, I kind of think if you're looking for a partner, if anyone's really looking for a partner, I think step one is just go and start doing things. don't look for the partner and when you find someone just naturally gravitate towards and push yourself to still grow and be a better and better communicator and I think that's what works here. >> So Chris, I went into I was clueless financially. I didn't understand anything about how to read a P&L when I first started the business and I would look at the bank balance on day 30 and go, "Okay, it's bigger than on day one. Things are good." That was my level of accounting proficiency. And I knew that I needed to get somebody in who actually understood accounting and finance and that whole side of the business. You know, at the time it was only like seven or eight people or whatever. And I go into the bank to get a credit card. And they say, "Oh, um, you'll have to go back into Mr. Sparling's office." And I expect to see some gray-haired man. And this guy is, uh, 20. I mean, now he's 37 and he looks like he's maybe like 25. Look like I'm dying. >> And 9 years old. and he's wearing this big baggie suit and he's infectiously friendly and we we start chatting and on the wall I can see you know uh employee of the month over and over and over again just like really he's just got this really great energy and we hit it off and at the end of the meeting I say Chris like you know are you going to work at the bank long term what are you thinking and he says well I was thinking about going into accounting and I just blurt out do you want to be my CFO now I don't recommend that kind of hiring strategy doesn't work most of the time. In this case though, it was this incredible partnership that got launched and the way that the partnership developed was um we would have I would I would have problems, you know, in the business and Chris was the over and over and over again the person that would be in the boardroom figuring it out with me. We felt like we're in the foxhole together. Yeah. And over time, Chris started expressing interest in actually not only just being a shareholder, but buying into the business and putting his own money at risk. And so, it felt equal in that way. And so, that's part of the reason we run the business as co-CEOs. We've always been about this idea of total equality in in how we manage. And when we disagree, we will fight. But there's always this feeling that at the end of the day within 24 hours we will resolve it and we will hash it out. We have this very nerdy system of kind of writing out okay what do we agree is true and we go through it all. Um but it really is like a marriage. >> Yeah. >> Could you expand on that conflict resolution piece? >> So there's a great book called Making Marriage Work by John Gottman and uh it's it's really useful but effectively they have a fight resolution framework and you can use that. We often use that um when we've got an employee or a CEO who's feeling frustrated. I'll use the same methodology. Chris and I use it. Use it with my girlfriend. It's incredibly valuable. >> Yeah. Thanks a lot, guys. Appreciate it. >> Just a fun side story. I'll never forget my very first day with Andrew. I was dressed up to the nines um for myself at least, which is not that dressed up. I'm standing on the street corner of Fernwood Road in Gladstone in uh the neighborhood Fernwood and Andrew rolls up 30 minutes late, screeches to a halt, jumps out of his car, pops open the trunk, grabs all these papers, and hands it to me. He's like, "I'm so glad you're here. I'm so glad you're here. Why are you dressed up? You don't have to dress up. I don't have room for the apartment. Uh so I rent to do a basement suite two doors down. Just knock on the door, introduce yourself. I'm late for something else. I'm so glad you're here." And he jumps in the car and rips away. And I it was one of those moments I had to buck myself up, knock on this door and say, "Apparently, there's a basement suite for me." And the whole time I'm thinking, "I'll go back to the bank. I'll get my job back. This is not going to work." And uh it really was though the first year I feel like learning the business together. But yeah, it's amazing I've stayed >> and we're glad you did. Um hey guys, it's uh Milan from LRA. Uh nice to see you guys. Um, so I'm going to ask another tiny capital question because I I I do think there is a good amount of shared interest with the Pubco because you're both getting the carried interest as well as probably the largest share largest LP in the fund is the Pubco, >> correct? >> That's right. Yeah. >> So then when you look at that and you're saying, okay, we'll finish deployment sort of by the end of the year. What do you sort of set as expectations in terms of that fund returning capital to the Pubco as well as to the other LPs? Is that sort of a 5year 10ear time frame? And then sort of your expectations on carry from that for the Pubco shareholders. >> I'd say the large majority of the businesses that we've acquired in the fund are cash flowing and we will over time issue dividends. And as we issue dividends, not only will the Pubco receive some of those dividends for its LP stake, but also receive carried interest as well. >> Got it. And then do you set a target of a sort of a multiple of invested capital for the fund or for the uh for your you know that you would look at it in that way or you don't really look at that way. You just look at from from a cash flow standpoint. >> Pretty simple. Yeah. We just try and buy businesses that cash flow and uh where we can pay ourselves back quickly and we don't really think about exit a lot. And I think that the open question for us is we've got what is it? Five I think we have a fiveyear investment period and a 10-year fund life cycle. So we do have to figure that out with LPS and we have a duty to figure that out. So we're going to resolve that with LPS at some point. >> Okay. So you probably thinking about it as more of the towards a tenure you could add extensions. I think it's going to depend on what the LPs want to do. I mean, at the end of the day, we want to raise the fund and we've got a duty to them to deliver whatever the best return is going to be for them. And so, it's going to be consultative, >> right? And then last question would be around you know I always thought the act I you know I kind of think of that fund and it this would be the perfect time to raise that fund because you know that sort of thesis around VCs that want to get rid of their portfolios that aren't doing well. They're selling them off selling them off pretty cheap for the ones that they aren't going to get their returns on. And that's where you guys have done a great job of being able to turn those companies around turn them into cash flowing entities. So I was wondering are you guys seeing that opportunity sort of like you know maybe if you could talk to the girl boss story which I think is very was in that fund and you know could be a lot of those not big checks but there are great opportunities. Yeah, there's there's businesses just to speak in broad terms, there's businesses that we've acquired for next to nothing because the VCs are going, "This business is burning cash. They can't raise more money." And we look at it and we go, "Underlying that business, there's something really great there. There's some great assets." And so sometimes we'll go in and we'll buy these businesses for pennies on the dollar of what's been invested by the venture capitalists. the venture capitalists are just glad to have it off their plate to be off the board and be done with it. And then also sometimes we can offer the founders if they want to stay on kind of a a rescue package where we say look you know we can turn this business around together or you can leave if you want. Um so no I mean we are let's just put it this way uh our appetites are bigger than our stomachs right now. there's a lot of distress uh starting to appear. Uh and I think that most of the venture businesses probably still have 6 to 12 months of cash. Um but we're getting it's really interesting. I've been an angel investor for probably 15 years. Just you know I'll give someone 50 100k here and there when I meet someone interesting. And I didn't get any investor updates for the last three or four years. And all of a sudden in the last two quarters, everyone's giving investor updates. Hey, remember me? Hey, how's it going? So, I know there's there's, you know, it's coming. >> Yeah, you guys are going to be very well positioned if you can stay sort of focused on that playbook. Yeah. You know, and I guess the one question will be >> so I think the how do you do that with the public company versus the fund and how are you going to select have you guys already worked through >> that sort of committee of like how which one goes into this bucket? Which one? because you could just do the same deal for the font. I mean, >> we have so we have a variety of platforms beneath head office and if we commerce for example wants to buy a Shopify or e-commerce business, they just go buy it. And if Beam wants to go buy a digital services business or whatever, they go buy it. But if there's a net new acquisition, that goes in the fund until the fund's fully deployed. The fund has, I believe, 53 million American left. Um, >> which is about half of it, I think, right? >> Uh, it's 150 million fund USD. >> Yeah. So, about 200 million Canadian. Yeah. >> All right. Thanks a lot, guys. >> Yeah, you bet. Good to see. >> Good to see you. >> A little tall. Hi, my name is Britney. I'm from Victoria. Um, I am going to go to my plan B. I was going to ask about how you made your partnership work because most of them I hear >> you kiss for them. I think they want us to kiss. >> No kidding. >> Can someone uh hit a hit a glass or something? >> Um so I'm just wondering if there's any businesses that are on your like do not purchase list. >> Um if you want to share that. >> Uh well we own some restaurants personally and I'd say often those are should be run as nonprofits. Those are very hard. Uh I think any >> any business that a lot of people want to get into is a hard business. There's a great saying by Charlie Munger, fish where the fish are. And what he means by that is if you see a fishing hole, but there's a thousand aggressive fishermen and women and they're all elbowing each other out of the way to catch a few big fish, you don't want to go to that one. You want to go to the tiny little uh fishing hole off the beaten path. And I think that finding riches and niches is great. I know your business, I remember we had coffee and you're doing the MRI clinic and I think there's a nice regulatory mode. It's not something a lot of people are thinking about. I think that kind of business is great. The not sexy business. A lot of people look at our businesses uh that are in tech and they say, "Well, you guys aren't in AI or drones or crypto or any of this exciting stuff." Um, but we think boring is beautiful. I mean, we own businesses that are kind of cast aside or misunderstood. Uh, we we love those businesses because there's not a lot of competition. >> And to be more granular, like do you actually have an internal policy that says like do not buy, you don't have to answer the business, but like do not buy this business. >> No. >> Maybe like businesses in the um >> we don't like wholesale transfer pricing risk. So if we buy a business, we once invested in a business where uh it was dependent on the price of zinc. This is years and years ago. It was a stock that Chris and I bought and uh the price of zinc went down and the business went bankrupt and we lost everything in the investment and we didn't understand that risk at that time. So we really avoid anything with uh big wholesale transfer risk. >> Okay. So like an example of wholesale transfer price risk is um you know why are there no New York restaurants where the restaurant that have existed for more than 25 years where the restaurant tour is not also the landlord and it's because over time the restaurant tour will improve a space becomes a very popular destination and the landlord ends up being the net beneficiary of that long time over the long term and so we we do tend to try and avoid those but even then uh at the right price I've very much followed the Howard Marks approach right price for anything we'll look at thing. So, yeah. >> Thank you. >> Thanks. >> Hello. My name is uh PJ. I'm coming from New Brun New Brunswick. >> Oh, no way. >> Cool. >> That's awesome. >> I had a question. I was interested in your thoughts on fostering a culture of uh innovation uh within a company. What specific uh incentives or practices do you believe are crucial in encouraging creativity, risk-taking and uh continuous uh innovation among employees? Well, >> I'd say freedom really uh giving the CEOs freedom to do whatever they want to do. Um at the end of the day, uh we, you know, there's businesses where we might want them to innovate more. There's businesses where we might want them to innovate less because we don't want the R&D expense, but at the end of the day, we leave the CEOs to make a lot of those decisions. Um, and then also I'd say most of our innovation actually comes from very small teams. So we find it uh often you get into the innovators dilemma. You've got, you know, a 5,000 person company and you say, "Hey, uh, turn the cruise ship. Let's go check out AI or something." Uh, generally our approach has been to take two or three people, throw together a little team, spin up a new business to try and do that and uh, and allow that business to grow versus trying to get the existing business to innovate. But it really depends on the business. >> Can you give a specific earlier uh you talked about incentives and you said they're very important. Can you give a specific example of uh senior management? How are they incentivized in order to align uh their interests with the companies? >> Chris, do you want to take that one? >> No. Um, what what we keep realizing is just how hard incentives end up being and how easy it is to out outsmart yourself and just how often we end up creating unintended consequences with incentives. Um, some of our senior management is we're kind of mirroring the constellation approach right now uh with a return on invested capital. Um, so we're kind of very much measuring like, you know, what are they running, how much has it been invested, uh, you know, organic revenue growth within that, a personal multiplier and the return on invested capital. In other cases, um, you know, we're kind of going to them and and, you know, prescriptively making them just buy stock. And so we're we're kind of all over the place on what we're trying. Um, but it keeps going back to like incentives can be very hard because you can easily outsmart yourself. The simpler we make it, the better. We've tried um you know full-on stock options which have a lot of pros and cons. Uh we've tried equity grants. We've tried profit share. We've tried bonuses. You know, we've tried having people just buy the public stock. We've tried giving loans to people and then they buy stock. We've tried so many different things. They all have their pitfalls or structuring issues. Um and so it was and again like we met Charlie Munger. He said like Charlie like what's the best incentive structure and he goes we have hundreds hundreds of different ones and it's so hard to figure out what's going to work and what's not going to work. Um but at the end of the day if if somebody is delivering on the thing you want and it's within their control I find incentivizing them on that thing. So, let's say that we care about net profit after tax, saying to that person, hey, you know, your target this year is X, and if you hit that, you get $100,000. And if you double, you do double that, you get $200,000, and next year that's going to be 15% higher because that's our growth rate, right? There's a million different ways to do it. Um, but it's important and it's probably the number one thing that I see people miss. Um, you know, I was recently talking to a friend and he was getting frustrated because all of his employees, they didn't care as much as him and, you know, they weren't excited to try and hit numbers and I just said, "Well, did any of them get paid when you win?" And they didn't. You know, everyone was just paid a flat salary. So, I think it's a critical thing that a lot of people miss. >> And just the last question, any public company CEOs currently other than Warren and Charlie that you like and admire? >> Uh, well, there's a very wise man named Mr. Steven Mhill Jones who runs the Daily Journal Corporation somewhere around here. Uh I don't know where he is. He's Oh, there he is. There he is. Let's get a a round of applause for Steve. Uh Steve Steve's actually based here. Um so he runs a company for Charlie Munger. Um we love Steve. Uh I've known Steve for 15 years or something. Um we follow um you know IEC. I think we've learned a lot from uh Joe Steinberg and Lucadia and Jeff. Um, who else do we like? >> Mark Leonard at Constellation. >> Yeah. Um, you know, all the usual suspects. >> Yeah. >> Thank you so much. >> Thanks. >> Hi there. My name is Joelson Pabof and I have a two-part question for you guys. I just wanted to know what's your guys' main every one of you guys' main city of residence right now. >> Uh, we both live in Victoria. >> Everybody lives in Victoria. >> Dave is in Toronto. >> Toronto. He's half Toronto, half Palm Springs >> as you can see based on the tan. >> Nice. >> Um, so >> and Vancouver. >> Vancouver. Okay. So, all in Canada. So, I went to uh My First Millions not too long ago and I actually saw you, Andrew, and these gentlemen right here actually running it and they did a great job. Um, and in part of that, you guys were letting people bring up business ideas to you and they were mostly Canadian ones. Um, and that you guys live in Victoria or in Canada, you get a lot more visibility to obviously Canadian businesses and that excites me because 85% of your your stock owners are here today. So, that's a real big grasp in Canada. Do you guys see obviously a more influx in Canadian businesses that you see that you're dealing with and that you're getting, you know, opportunities with that you wouldn't if you were, you know, living previously in California or anywhere? And does that help or hinder you guys living in Canada and trying to run a tech business? >> I think it's a huge advantage for us because for the reason I I shared with Taran earlier, which is it forced us to be disciplined and profitable. I think if Chris and I were based in San Francisco, we would have started a startup, we would have sold to Facebook and we'd be two miserable guys who worked at Facebook right now. Um, so we're glad that didn't happen. Um, in terms of Canada, I mean, I find Canadians are a little more down to earth. Maybe I'm biased. Um, so I like dealing with Canadians and whenever we get an opportunity to buy a Canadian business, that's obviously wonderful. We have a kinship with the with people that are Canadian. Um, but I would say we look globally. So we're looking at, you know, businesses in New Zealand, uh, Australia, Europe, you know, you name it. >> Perfect. Thanks for everything. >> Thanks. Hi, my name is Carlos from Victoria and uh I've got a question. I'll get that right. Um with the economy coming, uh you mentioned that you have an elephant gun and going to maybe deploy some capital in the next year or so. Um you know, you said the investment newsletters are coming your way and I think the monetary supply, the money supply is shrinking, credits tightening. Are you guys battening down the hatches or are you, you know, loading up or making room in the oven to put more stuff in there to grill or is does the big picture, the macro picture change anything that you guys are doing? Like what where do you think we're going and how are you kind of putting the basket out or not? >> Well, we don't really manage to the macro, right? Um, we mostly focus on individual businesses. So, I think if the business is dependent on macro success, so for example, would we buy a home builder right now? right? Uh maybe if it was in a region that didn't have a lot of homes, but in general, you know, we're kind of not going to want to bet on a macro super cycle or something like that. We've looked at some businesses um in more conventional brickandmortar world where they have very inflated earnings right now because they have been in this super cycle of everyone renovating their house during COVID or something like that. Those are businesses we are very very cautious on. Um we are kind of barbell. So, we are both paranoid and terrified and totally aware of all this stuff and we are also licking our lips and excited to go shoot some elephants. Uh, and there's a lot of really wonderful businesses out there where I think founders and VCs have been overconfident for a really long time in terms of potential outcomes and now everything is kind of coming coming back down to reality. So, I think that gives us a lot of opportunities. >> Thanks. Hi, good morning. Uh Jeremiah Katz uh 35 minute uh plane ride together. So um first I've been in the public markets for uh over 20 years. Um and uh I haven't seen an event like this. So thank you very much. I think it's pretty cool and uh I'm it'll it'll be pretty interesting if uh if other companies uh start doing this more and definitely on the smaller side. Um uh my question I have is why public and why now? >> So we've always wanted to be public. Um Chris and I have always admired Warren Buffett in Berkshire and we've always felt that eventually we wanted to go public and for us when we did we commerce that was us dipping a toe. We had never done anything in the public market and in fact we'd actually never raised outside capital. Our first capital our first outside capital uh was Bill Aman. We had lunch with Bill Aman and he said, "Hey guys, I really like you. If you ever do anything, I'll back you." And so when we saw the opportunity to do we commerce, we went to Bill uh and we did it. And we were terrified that we're going to have a terrible experience, but you know, hey, it's not our core business. It's this secondary thing. And we actually loved it. We had a really great time. And we felt that we benefited massively from being able to access capital markets, access debt, uh better debt markets, uh you know, being able to issue stock, be able to buy back stock. So I think if you're a true capital allocator being public is the optimal thing. Um and so that that's why. >> Great. And uh other question is for back here in 10 years what does tiny look like? >> Very long beards. Uh I don't know to be honest. I don't I don't um you know if you'd asked me 10 years ago um what will your business be because it wasn't yet called tiny I would have said oh I'm going to have uh 10 you know project management SAS businesses and my design agency. So I just don't believe in being able to predict that. What I can predict is that we're going to keep compounding uh and buying more wonderful businesses. Um but that's about it. I don't know how we're going to evolve and change over time. >> Yeah. Good. Thank you very much. Yeah. Hi. Uh, I'm Daniel Stoyak from North Van. Uh, so my question is >> we need to get a taller mic stand for you. >> Yeah. My question is what is your guys strategy for retaining talent at Tiny? Like what do you look for for when you hire people? >> Well, I think um really just treating people well is probably the most important thing in terms of what we how we retain people. I mean, we've had employees that have stayed with us for I think we just had someone leave after 16 years. Um, so we've been lucky. We've retained people for a really long time. And at the end of the day, I think providing people a work environment where they have a lot of flexibility and freedom and treat them well. Um, on the and then you asked how do we what do we look for in talent? >> Yeah. What do you look for in talent? >> Generally, I would say we look for people who are uh switched on. They're reading. They're a good writer. They're a good communicator. Um, and they're low drama. You know, I love working with people where, um, you know, we can just be on the same page and get stuff done. And I think that, uh, over time, we've kind of identified how to, just like with CEOs, we've identified how to hire great people and what to look for. Uh, the only other thing I'd add is just finding people who have already done the thing you want. Right? Now, with Chris, I got incredibly lucky. Right? But generally when you're hiring a C CFO, you want to hire someone who's done it before and has done something at the scale that you want to grow into. And so um for example, if you are running a $10 million ARR SAS business and you want to get to 20 million ARR, you should hire the head of growth who's taken a business in the past from 10 to 20. So that's kind of how we think about it. >> Cool. Thank you. >> >> Ryan from Vancouver. Thank you for putting this on today. Um I'm actually involved in a really boring business. Uh garbage. So turning garbage into money. Um now with um climate reporting standards coming out u one of them being the 51107. So all publicly listed companies need to report on their our climate reduction strategies. How does how does Tiny um anticipate kind of um uh I guess improving this metric, showing showing emissions reductions? Um I noticed that a lot of tech companies, whether it's Microsoft, Amazon, Shopify, are starting to invest in companies that actually produce carbon credits to to to hold those on their balance sheet. What's what's Tiny's strategy for this? >> Well, I think we're going to solve climate change. No, I'm just kidding. Uh I we um we are doing all the you know mandatory reporting around ESG and climate and all that kind of stuff but to be honest it's not something we've really spent much time thinking about. Most of our businesses are not producing emissions. Um you know perhaps Aeropress would obviously the production so I think we'd consider something there and if you have any thoughts I'd welcome an email. Um but uh most of the businesses are nerds in front of computers and internet connections. So hopefully not producing too many nox noxious gases or anything. >> Every company that actually uses data is going to be subject to carbon pricing uh post 2025 in Canada. >> So um any company that's got um that's focused on logistics has lost miles of logistics. They're focusing on some sort of climate reduction. Most of it's just optics right now cuz it's a mess. Totally. I email me. Would love to talk about it. >> Thank you. >> Cool. Thank you. >> Hey guys. >> Hey. >> Hey. How's it going? Um been following the company for a couple years now. So glad to see you guys are public finally. Um question on culture. So what's the culture like over at Tiny? Like what's it what's the vibe like in the office? >> Well, we don't have we've always been a remote company. So, we've been running remote for 15 years. Like when COVID happened and everyone was like, "Oh my god, I can work in my underwear." We were like, "Hey, we've been doing this for quite a while." And Chris and I historically actually worked out of a cafe. We didn't even have an office. And over co uh we rented a house. And so now we have this house that we work out of. Uh but it's very random. So nobody nobody shows up necessarily every single day. Uh I still like working from a cafe. Chris sometimes works from there. uh you know different people from the investment team are there um but most of the time we're not in an office most of the business is actually run via iMessage and email and asynchronous communication uh we do you know zoom meetings and phone calls and stuff um but yeah we we don't really have an office culture as a result >> how do you manage a remote culture then because that's totally different ball of wax >> um well I mean it's really a culture of autonomy right so we generally Uh, you know, again, treat people well, pay them fairly, give them interesting work, um, talk to them when they're upset and, you know, validate feelings and all that kind of stuff. Um, when there's conflicts, we have conversation and discussion and debate. Um, but yeah, to be honest, we we didn't really our goal with head office is always to keep it incredibly small so that we don't have to do one-on- ons and, you know, all those kind of more formal stuff. Obviously in the uh the larger businesses they have HR teams, they have more traditional people operations and stuff, but at head office it's you know Chris and I really only interact with maybe five people on a day-to-day basis. >> Okay, I had enough. It's all good. >> Thank you. >> Thanks. >> Hey guys. Um this is awesome to be asking you a question here in this forum. Um super sweet. >> This is Rejie. This is one of our oldest friends. >> Hey guys. Um, so my question to you guys is, so as a founder of a company, anyone who's a founder knows what it's like to get emails from PE or uh, funds or whatever trying to invest or buy a piece of their company. And it's usually um, some company called like Sigma Force, you know, Sigma Sigma Force Ventures or something with a boilerplate website with a gleaming glass tower and, you know, some guy in a suit or whatever. Um, and it's a crowded field. I personally get like five of these emails a week. Uh, how do you guys stand out in that crowded field? Um, what's Tiny's unfair advantage in terms of the pitch to founders? Why, you know, when a founder is getting five of these emails a week, um, how do you get them to to take your call and be excited about selling to Tiny? >> Totally. I mean, our Tinyu is really born out of our own experience. I think the best businesses often come out of a problem that you personally have and then there's that moment like in the infomercial, there's got to be a better way. And Chris and I, after reading about Warren Buffett, we kind of went, wait, why do all these guys make this so complicated? You know, Buffett is famous for one phone call, one page contract, uh, you know, do a billion dollar deal in a week. And at the end of the day, founders are very high high-paced people. And so we would get so frustrated. We we had probably five or six different private equity firms bid on various businesses over the years. And it felt like a bait and switch. It always was like um you know, imagine if on the first date I said, "Hey, are you Catholic? It's really important that you're Catholic." And they say, "Oh yes, I'm Catholic. I go to church every Sunday." And then six months later the partner, when it finally gets to the partner, when you've signed all these documents, when you've been through diligence, they say, "Actually, I'm a Jew." Right? It's there's this really frustrating thing and they just draw it out for so freaking long. And so Chris and I just try and differentiate by being nice and normal. We don't wear suits to your office. We don't, you know, we're not we don't speak in Wall Street terms and we just try and move really quick and get to know or yes uh within a day or two. And so if someone emails us, hey, I've got a business that makes a million dollars a year. It's growing at this rate. This is the industry. We might even just fire them back a letter of intent and say, "Well, here's what we'd pay and see what happens." Um, so we try and just get through things really quick and treat people like people. >> Be the buyer that we originally wanted to find and just doing that over and over, but it it's harder than it sounds. >> Cool, guys. This is really cool. >> Thanks, dude. >> Hi, guys. Uh, Isaac Kit. Uh, I'm originally from New Zealand, but call Victoria home now. Um, first of all, congratulations. Uh, Andrew, I wanted to ask you on your trip to New Zealand. Uh, were there any trends or frontiers that you kind of saw that was sort of leading edge as opposed to Canada? Um, that kind of took you by surprise. An example being you might have noticed the coffee culture. We didn't give Starbucks the middle finger, but you know, independent coffee shops really re supreme down there. So, um, I joked that when I went to New Zealand, I fell asleep on the plane, woke up 10 hours later and landed, and I thought my flight had been redirected, and everyone that I talked to was Canadian and had just had a stroke and talked funny. Uh, it's very similar to Canada, and so I immediately felt at home, absolutely loved it. Um, I think New Zealand is very interesting because it's some a very small market and there's actually a lot of businesses that have grown up independent of the rest of the world. So, I was surprised you don't see Home Depot, you know, they've got their own Home Depot, they've got their own uh Best Buy, etc. Um, and I think there's a lot of opportunity in a market where everyone's dismissed it as too small. And so, we're we've actually had a lot of really interesting meetings with founders in New Zealand. Uh, I love visiting. It's a beautiful country. I definitely want to go back. Um, and there's a lot to like there. >> Awesome. Thank you. And secondly, uh, sort of curious, you know, going public on the venture exchange and Victoria being home, uh, is there a sort of change in the feeling of wanting to invest locally versus sort of casting the net a little wider now that you're public? I know you say we buy beautiful businesses, but is there a second flowchart where it's like let's keep it BC or is it really sort of anything's on the table? >> I mean, we would love to buy a Nebraska furniture mart in Victoria, right? Like we'd love to find some incredible business that's right under our nose. Um, but we so far we haven't found something like that. And to be honest, most of our investing activity is more philanthropic or you know, we own some restaurants. uh not within tiny but personally just kind of for fun because we like the businesses and we knew the founders but it's not a way to make money. It's more about stimulating the local uh you know food culture and that kind of stuff. Um so yeah I it's not a focus for us at this point. >> Awesome. Thank you. >> So Glenn Van Arsdale from Los Angeles a few capital allocation kind of macro questions for you. So you bootstrapped a company up to an enterprise value of 8900. Um and it at the IPO is valued about 17x and you've talked at least on podcasts about liking to buy things at five to 6x. Um because you bootstrapped it up, you guys own the vast vast majority of the company. So from a capital allocation standpoint, that valuation difference between what you want to buy and what you own, how do you think about that? I mean, is this share issuance? Do you so forth? >> Well, we don't want to play the um the conglomerate arbitrage game, right? So, we don't want to be trading at 17 and then issue stock at four. I I think we've just if you look at financial history over the last hundred years, you've just seen blow up after blow up trying to do that strategy. Um, so to be honest, when I when when I say on a podcast, we like to buy businesses at 5x, the way I really think about that is I wanna I want to pay back pay ourselves back in cash in five years. That can mean that we pay 10x and we double the business or triple the business or whatever it is in order to achieve that profile or it can be buying a business incredibly cheaply. So as shareholders of 35 companies, we don't have that kind of look through ability. So how should we think about a 17x valuation versus a 5x valuation in terms of the context you were just talking about? >> Well, I think we own a lot of incredibly high quality assets that if you did I mean just for example um as part of the process we did a fairness opinion and the businesses were valued. We may have bought some of these businesses cheaply. Um, often we didn't pay 5x. You know, for example, there's businesses in there where we paid 10x, 15x, but we've managed to get a payback in five years by growing them. Um, and I think that if we were to sell, if we were to split the business up and sell it all to private equity, I think we would be getting much higher multiples. So, I would not I would not and I would not think most of the businesses are worth 5x. So then and you've also talked about um you know how you're maybe not indestructible but if you hadn't been built for sustainability you wouldn't still still be in business. So when you bootstrapped you did it without debt and now you have not insignificant amount of debt. Uh talk to us a little bit about the safety around that or what you're seeing. >> Charlie Mer has a great quote. Um he says debt is like a knife on the steering wheel. you have to be a good driver. And so we are very very cautious with using debt. Uh we're thinking a lot about interest coverage and we've structured our debt so that not only are the interest rates hedged so we are locked in, we're not exposed to interest rate risk, but they're also uh ring fenced so only the subsidiary that um has the debt is securing the debt and they're separated out between two different entities. Um so we're feeling quite comfortable about it right now, but we want to continue to pay it down. So, and back to the the capital allocation question and just a little more color on it if you don't mind. So, if if I'm to interpret what you said correctly, there is runway for changing the multiple in each company at whatever the current price is. Is that correct? For the most part, >> no, I would say sorry, just can you clarify that a little bit? So if we as shareholders are buying now say at 13 14x or whatever there's runway just like you're thinking when you buy a company for 10x actually in three years it's 5x because you've grown the company. >> I would hope so. >> Yeah. And how much of that is dependent on acquiring new companies versus what's already there? Denovo. >> I think that if we stopped um acquiring businesses we would continue to see earnings growth. >> Okay. Thank you. Hello Joanna from Seattle, Washington. I have a few simple questions. I'm just curious out of all your acquisitions, how much is usually inbound versus outbound? >> So, um, I would say that almost all of it is inbound. Um, and so, you know, we go on podcasts. Uh, we have, you know, a loud kind of Twitter following, that kind of stuff. Um, but every once in a while, you know, you see the beautiful person across the bar and you have to go talk to them. So that's how Aeropress happened, for example. That's how Dribble happened. Um, some of our best acquisitions have actually been things that are right under our nose where we get excited. Um, but a lot of them are people actually opting in too tiny. Um, and I think that's one of our greatest advantages is that we have this incredible deal flow. We're not having to employ a 25 person team of analysts and uh, junior people to go reach out to companies. >> That makes sense. And that actually leads to my second question. So, I knew Dribble, but are there any examples of other companies that you've invested in or you have purchased where you were a customer yourself? >> Aeropress is the best example that you should go. >> Yeah, I mean, I was literally making my morning coffee. I've been using Aerop Press for over 5 years and uh there's a guy Alli Bosworth at the office in MetalB who brought in this strange contraption and it just made such a bloody good cup of coffee that I started using it at home. And one morning, Chris and I, we've been having a lot of conversations about trying to buy a brickandmortar business. And so I was looking at all the products in my kitchen. And as I'm using it, I look down at this thing and I go, "Man, I wonder who owns this." And typically when you do that, the answer is, you know, private equity, whatever. And I was shocked to see that the uh founder who is in his 80s, Alan Adler, uh still owned the business and that he was the creator of the Aerobi Frisbee. Uh so serial inventor. and we emailed him and he goes, "Uh, I don't hear very well, so you're going to have to fly down to Palo Alto to meet me." And so Chris and I went into this little he had this funny little office in a a strip mall kind of office park in Palo Alto. Uh, and he was an awesome guy and we just built a relationship over the course of I think three or four years before we able we were able to convince him. >> Oh wow, that's very cool. And then just a personal question, I'm curious, have you ever invested invested in or thought about investing in fashion? Hm. >> Uh well, Frosty. >> Yeah. So, we we do tangentially. So, we own a agency called Frosty. They do um basically fashion and branding work and marketing work for um you know, Calvin Klein and all sorts of large fashion houses and stuff like that. Um so, we sell pickaxes to gold miners in fashion, but we are not participating necessarily. We don't own fashion businesses. I think part of the challenge with fashion is simply that um it changes so often. It's very unpredictable. Um, >> outside of our investment in Endure >> or Outweigh. >> That's right. That's right. We do have an investment in Bob's sock company. If anyone got the tiny socks, those are made by Endure. Sorry, Outway. Sorry, Chris. You Outweigh. And they have a business called Custom Lab where they can make your company socks. So, if your company needs socks, go to customlab.com. Is that right? All right. Great. >> Thank you. >> Hey, dude. How's it going? >> Uh, yeah, good to see you. Uh this is really fun. Thanks for putting it on. Um as you know I run an agency up island and um you guys have a portfolio of agencies. A lot of great agencies we've worked with. What kind of advice are you giving to the founders of the other agencies sort of to like um deal with this coming change in the market and you know a lot of anticipated distress. Well, I think that um for a long time being working with startups was incredibly attractive because they were flushed with cash. They needed work quickly. There was constantly new startups coming. And over the last five years, we've really encouraged our agencies to focus on long duration contracts, try and move up market, work with the Fortune 500. Um and so we've we and we have made that transa um transition largely in many of the agencies. Um, so that that's really the advice I would give is try and find uh companies that will exist without venture capital. >> Yeah, that's great advice. Thank you. >> Hey Matt. >> Hey. >> Hey guys. Put this up just a little bit. Take this out. Um, question about the won't surprise you. My question is about hiring CEOs. Um, do you have a general sense of how long a CEO or what what the timeline you should give them to see the results before you potentially will make a change or has that changed since that you're now a public company? >> Well, I think it really depends. I'd say that we generally like to hire fast, fire fast. So, if we feel that um we we were we were actually talking to a founder about this the other day and we we we gave him the advice. He said, "If you think about firing someone, you probably should because you never ever think, should I fire this person about superstars?" You know, there's people at Tiny where I just go, "Oh my god, we'd be lost without them. We would never even think about it. It would never cross my mind." It's the people where you wonder where it usually doesn't work out. Um, so that's generally what we do. Um, but we're very loyal. So, we work with people for a very long time and if they're doing a good job, we're not going to, you know, nitpick over, you know, should they be doing 5% better, uh, when we like someone and, uh, we think they're doing, you know, a good job, we will leave them in place for a very long time. >> Cool. Thanks, guys. >> Thanks. >> Hey guys, I'm here again. Um, sorry. So, like in the late 90s, um we we're talking about greed, envy, all those human emotions that are terrible. We all know about them. If uh some fund manager didn't buy pets.com at 80 times earnings, um and the guy down the street did and he's making 40 50% a year, uh he would get fired for sure. And um my question is, I know you know Howard Marks, right? Um and Howard wrote this uh brilliant piece on how Warren became Warren and was allowed to build Bergkshire and it's all the stuff that we already know. You know, he's a prodigy. Uh you know, he has a temperament, all those great attributes. But, uh Howard said that the most important thing that allowed him to build Berkshire is uh he can never get fired. Warren can never get fired. So, I'm wondering uh are would you guys ever be able to get fired? Like, is is that something that's on the table? cuz he owns all the the A shares and that's how it's structured. So I'm wondering like how is Tiny structured? I'm sorry if I don't know this by reading the annual report. >> I believe so. I think Chris and I hold 81% of the vote. So I think it would be very challenging. I mean Steve Seville can help you uh do a proxy and take over if I take your word. No, no, I take your word. I I'm just wondering so you can sit in your tiny office and not buy pets.com and >> Yeah, we don't worry about that. And I I uh you know the the best defense is hey look look how aligned we are right we have we have pretty much all of our net worths in this stock as do everyone at tiny um and so when someone you know we've we've had this situation before with investors where they say you know what the heck you're sitting on cash shouldn't you be moving and we just you know the best defense is it's my money too and I've put in you know just as much or the same amount as you as you have and I have just as much to lose. I think that alignment uh really solves that problem. >> It is it is a small detail but it's so important. Yeah. So thank you. Thank you. I appreciate it. >> Especially for decision- making. I actually think more than even a fear of Buffett being taken away. I think that permanence in mindset is really powerful. >> Absolutely. Absolutely. Thank you guys. >> Howdy. Howdy. My name is uh Spencer and I run a local dog walking business. Um my question is unrelated to that but it seems like Tiny is the buyer of choice in uh many of the markets at Targets. Uh and you're seeing a lot of money flowing into similar sort of holding co- opportunities sort of like tiny with terms popularized by like Warren Buffett and yourself. Um if you see found founder friendly terms sort of becoming a commodity, how do you see that affecting Tiny's long-term position as a buyer of choice and the markets that operate? Um, and do you think there's enough quality assets in that market to sort of support um the Russia buyers into niche internet businesses? >> I think it's fascinating. I mean, you look at Warren Buffett, he's got what is it 60 or 70 years of doing what he's doing. And if you actually look at how many people have actually cloned what they're doing, it's very small because most people are trying to get rich in the short term, not in the long term. And I think this strategy is much more of a long-term approach. Um, so from my perspective, I'm not super worried about, you know, everybody implementing these terms. And at the end of the day, I mean, terms are one thing, but actually who you are and reputation and how you are with people, I think makes a big difference. And so often >> and the fact and the fact that we're bootstrapped and even now being a public company, there's no gun to our head to ever have to sell anything. And I think that really resonates with a lot of founders, but >> yeah. Yeah, I agree. >> Okay, gotcha. And my my second question was given Aerop Press is sort of like a cult-like business um and businesses like that especially in sort of retail presence um the purchase orders often sort of look like an annuity um would you agree with that and um do you see more opportunities going forward in more traditional businesses for tiny >> we didn't look at it as an annuity I mean we understand that every month you know a coffee shop can decide whether or or not they want to order from the distributor. Um, so no. And what was the second question? >> That was it was it was just uh it was pretty much the question, but um >> what's your dog walking business called? >> It's called Victoria K9. Um I also work for Mike Cherelli for Smelly Dogs. >> Um >> Cool. Great guy. Small world. >> For sure. And thank you very much for taking the time. >> Thank you. >> Hey guys. Hey, Rob here. Um, yeah, actually similar to the first question from the last uh fellow there, just curious how you think about the brand appeal to the sellers, like to the founders or whoever selling and how that's changed over time in the last few years as you've gotten significantly bigger now that you are public. Um, do you think that's going to narrow your market as far as, you know, do you have to look for bigger deals? Like you've heard Buffett say it's like super hard to deploy that much money that he's deploying, but as you get bigger, how are you thinking about still maintaining the appeal to the sellers? >> Well, I mean, I think if they can do it, we can certainly do it. I mean, they're what, uh, a trillion dollars almost at this point, and they still seem to be able to do it. Um, you know, when we were with Charlie Munger, he told us a story about how he said, um, they wanted to make an investment to and they had made a commitment to the founder and it was Friday and he said to the lawyers, "It has to be closed by Monday." And they said, "That's impossible. There's just no way." And he said, "I don't care. That's just what has to happen." >> He said, "Your job is not to say that." I think, right? >> Yeah. >> And they and they got it done. And I think often there's kind of false constraints on some of these stuff. Now, does that mean that uh we're going to have to continue to grow our scale and that we're going to prefer over time to invest large amounts of capital versus small amounts of capital? Absolutely. Um but I think the ethos has to stay alive and we fight every day to keep that alive and to not, you know, get bogged down in some of the public company stuff. >> Yeah. Just just to follow up to that one. Um, as far as the companies who are venture-backed and and not growing fast enough uh for the VCs, how many of those have you done? I know it's at least one or two, but also what how is that different than a founder, a bootstrap founder selling? Like is it is it less about the relationship and more about >> Yeah, it's less less about the relationship and it's more an incentive mismatch where you've got a venture capitalist who's invested their portfolio in 20 businesses. they have to get a 20 or 100x to to feel a win and they look at this business and they just go, "This is a zero to me." We look at it and go, "Oh, wow. This is pretty incredible." Um, and they just don't want the headache. So, there's just an incentive mismatch often in those situations and I'd say we're mutually beneficial. We have lots of uh venture capitalists who send us deals because they know that we're going to be straightforward to deal with. >> Are you seeing are you seeing more competition in that space though for other for other buyers? >> Not Not currently. I think a lot of people are scared. >> Sweet. Okay, thanks guys. >> Hello. Um, William again. Um, to take an example from the world of VC and I understand there's a difference, but firms like Andre and Horowitz will back multiple people who are the same trying to do the same thing, whereas firms like SoftBank will just back one and go sort of all in on that. What is Tiny's approach to um investing in and acquiring companies which have maybe competing interests or mandates? Um whether or not you want to sort of look for synergies between them or want to limit stepping on toes. Um yes. What's your approach on that? I guess >> we're very I'd say we're very cautious when it comes to any of that kind of stuff. So first of all um synergy even when logical is very hard to execute. I mean we have here's an example. So we have some very large digital service agencies and we have some small ones and trying to convince them to share leads even hard because why would they right so we really don't insist on any of those things and what we try and do is just connect people and if they like one another they're welcome to work together but we're never going to force them to work together we're never going to say everyone has to use the same credit card processor and we're going to negotiate the rate globally or something like that. Um, so yeah, that's how we think about synergy. Uh, what was the other question? >> Um, yeah, I guess it I mean that sort of answers it really. I guess it was in terms of um not like li wanting to not acquire companies which might tro on each other's toes or if you're okay with that. >> Well, I would say we're not ruthless. So I'd never, you know, I don't want to take, you know, buy Aeropress and then buy another coffee press company and pit them against each other or something like that. But I would say you know we would consider buying another business in the coffee space and you know >> Yeah. Thank you. Um and a second one and whilst you two own the vast majority of the company what is your concern with and maybe it's what good one for your investor relations manager as well. What is your concern with or how concerned are you with wanting to what your shareholder sort of audience is like in terms of their characteristics and what they look for in the company? Um, and I guess to the extent that you're concerned about that, what are you doing to sort of shape that narrative? >> You mean how like what kind of shareholders do we want or cultivating? >> I kind of think you get the investors you deserve and our whole plan right now is like we're just focusing on the long term and we're not trying to shadow box in the near term at all. But >> yeah, I would say that we want people who think long term. Um, you know, who are not freaking out about week-to-eek aberrations in stock price. um people who could be partners and um you know and good people. Like I said in the beginning, I love looking around this room and seeing so many people that seem lovely. I mean, I know a lot of you don't know others. Um but yeah, ultimately we're really looking for people who are going to think long term and we'll uh treat treat us right, we'll treat them right. >> Thank you. >> Morning Andrew and Chris. Uh my name is Kendra. I'm from Koala Lumpo, Malaysia. I have uh two questions. The first question would be how do you build and recognize your circle of competence and my second question is do you see tiny spawning new businesses from within or is it just going to be acquisitions moving forward? >> So the test I always have is could I explain this business in one or two sentences to my parents and if that's true then that's something I probably want to invest in as soon as it gets really really complex and muddy. Um, you know, we don't love that. We like really simple business models. Um, and I think that the circle of competence, you know, we very very gradually expand it, right? We'll learn new industries. We'll make small investments in an area and start learning it. And sometimes we'll burn our hand on the stove or stick a fork in an electrical socket and not do that again. Um, you know, for example, we bought um we bought some jobboard businesses. We bought one jobboard business and it was incredible business. We still own it. we work remotely.com and we had this thesis that oh we'll go and buy five more of these. These are amazing. Well, it turned out they're actually really hard and we had lightning in a bottle so we don't pursue more. Um in terms of starting businesses, um I would say that Chris and I are both very entrepreneurial and that we have ideas or different people within the company have ideas. So, we actually have a little studio within the company where when we have an idea, we'll launch it. We just launched a um basically like audience building for um you know influencers and social media um foundry uh launched that two days ago. Um but it's really us just tinkering. We don't know if anything's going to come of those. Uh and we're not spending a lot of money. We're just, you know, putting 50K into an idea and seeing if it goes somewhere. >> What about you, Chris? How do you build and recognize your own circle of competence? I think Andrew actually kind of covered it well, but honestly I I I keep thinking the only way to really learn is to keep doing new things and at the same time reading books and it's really tough to just learn from reading or anything like that, but doing and reading in tandem is a great way to cement lessons from other people. And so that's all I t typically do. >> Thank you. Thanks. >> Hi, my name is uh Philip Nelson. Oh, sorry. Sorry. Sorry. Just just so you guys know, we got about 15 minutes left, so if you got a question, jump up there because we'll close it down after that. >> Hi, uh, Philip Nelson. I moved to Salt Spring from Alberta about two years ago. I'm a filmmaker raising for my next film project and have been increasing my luck surface area over the last two years. And I noticed you were at attended the Oscars this year and I'm curious if you have any particular interest in the film industry or entertainment industry. >> Oh man, no. I mean, I I love watching movies. Um, but I think investing in film is a great way to have your kidneys harvested by Hollywood. Uh, we there's a long list of really smart people who have gone into Hollywood and bought studios and all that kind of stuff and it never seems to work out. So, I'd say for uh Tiny, no, we steer clear of that. Um, and no, I'm not I'm not that was just a fun silly thing. How about uh technology in the entertainment business like um 3D cinema and VR and things like that? >> Well, I just don't think we know very much about it to be honest. I mean, I think we're going to participate in VR and AR via our digital services businesses like Metalab. They're very very keen to start um playing with Apple Vision Pro and all that kind of stuff. But in terms of buying businesses in that space, it's not somewhere that we have deal flow. It's not somewhere we look at. It's not something we understand and I look at that as almost like deep tech, you know, it's something a little further down the line. Um, never say never, but it's not something we're thinking about actively. >> Sure. >> Cool. Thanks. >> Thanks. >> Hey guys, thanks for putting this event on and thanks for the uh free swag. That's good. Uh, mirrored reciprocation. Uh, just quick question for you. Capital allocation was mentioned quite a bit in the letter. How do you measure your capital allocation and your performance? Thank you. Well, ultimately we want to grow earnings per share. That's it. >> Thank you. >> Hello. >> Hi, I'm Kim Yuan. >> Oh, maybe a little closer. >> Good height. So, I'm an app developer dating app right now. And I was just wondering there it's a competitive space. A lot of your companies are that you acquired are in competitive spaces like they're going against Shopify or other places like that. What makes you choose them? Like what about them is different enough for you to say they can hold their own space within this space? >> I'd say usually it's in the boring corners. So for example in Shopify the way we started was we started building themes for Shopify and there's no venture capital participating in that right it's not something that there's a lot of competition over time there's been more and more um but those are the kinds of areas that we like to play or we like to find a business that has some sort of uh moat so like a high switching cost or something like that where people get trained on it their staff are trained on it they're embedded it's recurring revenue they don't want to rip it Um, so we'll look at stuff like that. I think it's very, we've looked at a lot of Shopify businesses over the years. Um, and a lot of them are very commodity, so it's very easy for a competitor to come along, offer the exact same thing, and they can switch in 10 seconds, and pay $2 less a month. That's the kind of stuff we're trying to avoid. >> Thank you. >> Hey guys, Colton Davey from Nimo. It's good seeing you guys. Um I had a question about like in your shareholder holder letter you said that like your portfolio companies you try to like maintain the DNA of them and over the long term how do you do you have like a top down plan to to do that as like kind of like people flow in and out of them >> right >> well I think um we really focus on you know changing the leader at a company is like doing brain surgery. You have to be very very careful. You have to make sure there's a really good match. And so, um, otherwise the patient bleeds out. So, uh, really when we hire a new CEO for a business, we are very thoughtful in terms of making sure that they resonate with the founders's ideals and they're not going to come in and mess with the thing that makes the company great, but only enhance it. Um, so that's generally how we think about it. So you think it's like the it all stems from the CEO or like the leader of >> Yeah, usually. And I mean don't get me wrong like companies are like I said companies are groups of people and if all those people are bought into the vision then naturally the culture will be self- sustaining but at the end of the day the leader will kind of set that culture and reinforce it. Exactly. >> Yeah. So we have to be very very careful. I mean, when we bought Dribble, that was a business where, like I said, it was run by a designer and an engineer, and they're very product focused. And so, when we brought in Zach, the CEO of Dribble, we had to make sure that he had the right background where he'd be able to talk the talk to those people because he was formerly a designer, that was his world. He was in the creative world, but he could also do the business side, which is what we needed from him. Um, so I think we've just gotten good at knowing in our gut when someone's going to be a fit in a certain company based on the kind of vibe of the founder >> and we stay out of their we stay out of their hair. I don't think culture can be prescriptive from the top of the hold code down to an operating company. I think it is as Andrew saying within these each separate distinct groups. >> Yeah. >> Yeah, >> that makes sense. And then the other question I had was when you were pitching to like LPS for your fund, did you like was there a specific thesis you had because like it's it wasn't because it's not like geolog like geographical based, right? >> Well, we basically we basically said look, there's been this huge runup in venture capital and we want to go buy technology businesses uh as there's distress. That was kind of our thesis. Um, but very much the tiny ethos. You know, our deck walked them through different sorts of deals we do, how we think about a capital allocation, you know, all that kind of stuff. >> Was it raised after? >> We raised it before. We raised it in 20 end of 2020, I believe. >> Okay. So, you could kind of like you leverage what you already been doing, right? >> Yeah. >> Okay. Thank you. >> Thank you. Nice one. >> Hi guys. Uh, David from South Carolina. Um, first question is just a clarification question on the fund. What I'm hearing or getting the sense of is that after this fund has been fully deployed, it sounds like you guys don't have appetite to raise future funds after this, right? Okay, correct. >> Um, second question is your philosophy on stockbased compensation. Uh, you know, a lot of tech companies have given themselves a bad rap for using it too aggressively. It's one of the items that you adjust for in your adjusted EBIT DA. So now that you're a public company and moving forward, what is your philosophy on stock base count? >> Well, we love what Mark Leonard does at Constellation. So what he does is he basically has people rewarded on return on invested capital or something some kind of metric that they control. They get paid a big bonus and they commit that they're going to take at least 70% of that money and put it back into the stock. And so we have that incentive structure with some of our leaders certainly in the platforms. Um but on a case-by case basis there are instances where we may use um stock options. Um it just depends on which subsidiary and what's logical. But we are also allergic to silly stock options. We do not want that to be the way that everyone's compensated. We don't we look at them as lottery tickets. >> Yeah. I think the board compensation and how that's changed is a really good indication of our, you know, where we want to see things progress to, which would be individuals actually buying stock on the public market. Gotcha. Okay. Um, in the past few years, the pandemic years, a lot was unusual um in the world, but especially uh but also in you know, how businesses behaved, how valuations behaved. If you kind of think through that period and the investments that you've made, the acquisitions that you've made in that period, do you think that uh some of the your own expectations got distorted on anything that you say, "Wow, we we the moment of that time, whether it was kind of the e-commerce trajectory or um whatever else that you look back and say that was something that maybe we miscalibrated what the world would look like once it started to normalize." >> No, I wouldn't say that. I would say that um you know, we were really shocked. We would talk to founders and they would say, "My I have1 million EBIDA and my company's worth $250 million." And that was kind of where it would end, right? At the end of the day, we have to be able to wrap our heads around the cash flow and the payback. And so it was pretty wild for us and it was a test because prior to that, we'd been in a feeding frenzy where we're just constantly, you know, there's just so many deals out there from 20, what was it, 2014 kind of to 2020ish. and then everything went insane and we kind of felt like frustrated. We were sitting on our hands and waiting um to do deals. So now that there's actually, you know, reasonable valuations coming back, we're pretty excited. Um but no, I wouldn't say that, you know, any of our acquisitions were modeled based on some kind of like insane, you know, the world has changed kind of thesis. >> Okay, I got one more, but I'm make sure >> Oh, no. Go for it. Go for it. Yeah. Uh just one other question which is I think probably related to how you think about the structure of of tiny. Um you announced that you recently kind of grouped your digital services businesses under the beam name and umbrella. Wonder if you could just elaborate on the decision of of doing that and what functionally it means. >> Yeah. So um basically we started with metalab that was the original digital services business. Over time, we realized that Metalab was outgrowing uh certain clients that couldn't serve us anymore, but it still had a lot of leads. And so, we went out, we bought Z1, and we started expanding into a variety of different businesses. At a certain point, we realized, hey, this is a platform. This is something that actually needs its own monitoring and tending to and that Chris and I just can't keep 30 plus businesses in our head and we can't coach and mentor all those CEOs. Do will we pick up the phone for them? Absolutely. Will we spend time as needed for sure, but we can't understand those businesses deeply. And so we started realizing that we needed platforms where we could have a capital allocator and a CEO to monitor the businesses, work with the CEOs, hold the bar, set incentives, and if we if was logical to buy more businesses within and so that's where you'll see um you know Jordan and Praep running we commerce and beam. >> Okay. So, does that imply that there's kind of a some soft guard rails on how far field you could go into other types of businesses? Because if if you think, oh, we should have a platform that has a team that can coach businesses of a certain type, but then you acquire, say, a coffee business or something totally unrelated and you've got to coach them or you need to find someone to coach them. >> Um, I'm just trying to triangulate how you think about how far >> this way. If we um if we bought five more businesses like Aeropress in the coffee space, I think we'd probably form a platform uh for coffee. We just have them focused. Now, I also believe that people who are really really smart and read a lot can learn other businesses. And so, if logical, if Jordan came to us at WCommerce and he said, "Guys, I found this incredible SAS business, but it's outside of e-commerce. I've negotiated an incredible price. I know exactly how to grow it. This is in my wheelhouse." I think we would say, "Awesome. Let's do it." Um, so we don't want to box in the platform CEOs necessarily. And just because we have a platform doesn't mean we're necessarily going to buy more. So, you know, the fact we own seven agencies doesn't mean we're going to buy 10 more, right? >> Okay. Great. Thanks, guys. >> Thanks. >> So, we've got uh Yeah, come come on. So, two or two more people in line. We'll finish up here and if you guys have any closing comments then. >> Nice hair. Thanks. Does it look like I copied you? >> Oh, uh, I'm Stephen. I run a kind of a fledgling media business on the side that's uh from a YouTube channel about tennis into trying to be a media business. And I'm just wondering on your scale of hard to easy businesses, where would you put media like news media? Um and then in 2023, would you focus more on subscription revenue or advertising? And is Tiny going to look at media businesses going forward as it's kind of a hot >> So we have looked at a lot of media businesses. We've bought a couple. they are really hard and I think what works in media is being hyperfocused. Um so for example if you have a newslet there's a guy I know named um Edwin Dorsy and he has a newsletter where he just all he does is he posts uh CEOs who got fired, CFOs who got fired and companies that have proxy battles and that's an email newsletter. And the reason that's incredibly valuable is because there's all these people at hedge funds who are, you know, short or they want to do activist takeovers and they just want to know when that happens. And so people pay $1,000 a month. And so he has a hundred, 200, 300 people paying him $1,000 a month. He's got an incredible business doing a very boring thing. I love that. What I don't love is you going out and saying, I'm going to replace the Toronto Star and, you know, I'm going to make a national news business because there's so much competition for that. So, I think stay local, stay small, stay niche. >> Cool. Thanks. >> Hey guys, my name is Mark. Thank you for doing this. Uh, somebody earlier asked a question in regards to uh, movies and media and things like that. You mentioned it's not something that you're familiar with. Is there an industry or an asset class that you are trying or actively getting yourself familiar with? Now, >> h >> say we're trying to wrap our heads around AI right now, but >> I'd say I mean AI insurance is always really interesting to us. Anything with a float is fascinating. We do actually have float u within some of our businesses which um is kind of interesting. We've been searching for more of that. Um but no, there's nothing right now that we're bashing our heads against. pretty most of the businesses we're looking at right now are very much kind of in our world. >> Thank you. >> Thanks. >> Oh, one more. >> Unstamped if you can. >> Ah, yes. >> I mean, it's been flat in terms of revenue relative to shop. Just curious. >> Chris, do you want to take that one? >> No. >> Uh, Derek, just to be clear. So, you're asking just like a general update on stamped or >> revenue. How's it going? Haven't heard much since Alex left. So, I was just curious since you bought Stamped and how's it going today relative to when you bought it? >> Yeah, I'm pretty Stamped is one of the assets that, you know, especially in the merger um as we thought about like, you know, using Wcommerce as a platform to potentially take Tiny public. Stamped I kind of think is one of those still not well understood understood gems kind of broadly. Um we have a new CEO who's running it who took over a few months ago, Mike Bardo, and he's pulling a lot of really interesting levers in the business. Um, you know, I'd say the ecom category broadly has suffered a little bit. Uh, you could see this really reflected with Shopify and Stamped no different saw an impact when it came to the funnel. Um, but what that team is doing has me very excited. Um, especially over the course of this year. So, it was part of our thinking with the whole deal is a good asset there. >> But I'm I'm not going to speak to the revenue at this point. Sorry. Just in terms of expectations, it disappointed you a little bit on the expectations of STEM from when you originally met them and bought them to today. Looking backwards, >> the part that's been hard has been um when we bought the business, we kind of knew that the CEO, Tommy, the founder, was this solo mountaineer who piled everything on his back and he'd jump into the trenches and do all this hard work. And we kind of identified that you'd have to hire 10 people to replace this one founder. and the way that the deal was structured because he, you know, forced it that way is that he was only going to linger for a very short duration. And so I'd say the one frustration is that it was it took us quite a bit of time to really build out that team. And I'd say that kind of handicapped what the year's growth should have been was just actually rebuilding a whole foundation because this, you know, there's so much expertise in his mind. Um, the team's there. We're really happy with the whole foundation, but that that time did take longer than we were anticipating when we bought it. I >> also think one of the headwinds for that business is that e-commerce at the end of the day is going to keep relentlessly growing. We know that and I think that because of Shopify's stock price, because of some of the pessimism around that world because of the COVID pull forward, I think there's going to be less competition, more consolidation in that space. Um, so we think we'll be a beneficiary there. Well guys, this was very very cool. Uh this was so awesome. Thank you so much for coming out. Uh hopefully uh we'll do this one in the Savon Foods Arena next year. Uh but yeah, that was great. Thank you guys. >> Yeah.