#5 - Brent Beshore - Permanent Equity (Part 1)
Summary:
In this riveting episode of the Tension Podcast, we delve into an in-depth discussion with Brent Beshore, CEO of Permanent Equity. Explore the insightful world of Beshore as he dissects the concept of vulnerability in leadership, shares his unique perspective on communication, and reveals how radical candor could potentially lead to discord. We dive deep into his experiences, the lessons he's learned along the way, and his perspective on how effective communication differs from being brutally transparent. Don't miss out on this chance to witness Beshore's take on leadership, business, and the human element in every conversation.
Links and Resources Mentioned:
Transcript:
Tim Sweetman:
Why do you believe in posture being more important than a goal?
Brent Beshore:
Well, I think this has come through experience and, and a lot through now. I don't read a tremendous amount of business books because it really is all in the Bible when I look the wisdom's there. And so there are these bible verses that say, people say, I'm gonna go here and trade here and do this and do that.
No. It's if the Lord wills it, right, I go and do this. Now I think you can. You can take any Bible verse, lift it out and twist it, and obviously every verse in the Bible needs to be interpreted and read through the rest of the Bible, right? But I think in particular, what God wants us to do is to go and be checked and try to figure out.
Our will. We have the Holy Spirit in us. Our will is God's will unless he checks us and tells us to do otherwise. Right. But with that said, his plan and the work that he's doing is always so much grander and there's so much more complexity to it than we can even imagine. And so if you'd gone back and asked me five years ago, what are your goals for permanent equity, I would've told you a way smaller crappier version of permanent equity than it's today.
Mm-hmm. Like I couldn't even dream. Where we'd be now. Wow. So when you ask me today, the humility, true humility that I have, and this is, it's easy to sort of fake humility, but the true humility I have is I have no idea where God's taking us.
Tim Sweetman:
Hey folks. Thanks so much for listening to the Tension Podcast. My guest today is Brent Bisho. He's the c e o and founder of Permanent Equity, and I love how they describe themselves on their website. Here's what they say. Permanent equity invests in private companies deliberately built for long-term success.
We commit for the long haul with 30 year funds, no intention of selling and rarely. Use debt with permanent equity. What happens next doesn't have to be concerning or complicated. When we invest next means that we serve and support, build meaningful relationships, and roll up our sleeves to preserve legacy and grow without goals.
There's no 90 day plan, no harm and no a holes. This is an incredible company and I had the pleasure of not just spending some time and meeting Brent, but also a few members of his team. It's one of those few companies that I feel like you can meet and get closer to the people involved, and they're even better than you realized.
Brent leads the firm and more specifically leads the acquisition and diligence teams while supporting portfolio company operators. He serves on the Board of Love Columbia Amid Missouri based nonprofit. Outside of work, Brent is raising three young daughters with his wife, Dr. Erica Bisho, participating church activities, and as he says, occasionally enjoying competitive tennis and bad golf.
Brent was a joy to sit down and speak with. I'm so humble that I was able to have this conversation. I hope you enjoy it as much as I did. It is of course, as usual, wide ranging and very deep in some places, but I hope this is encouraging and also convicting to many of you in the same way that it was for me.
You're listening to part one of a two part interview. Tune in next week for part two. So without further ado my guest, Brent, beshore.
Tim Sweetman:
For those who don't know who you are, I wanna go as far back as you possibly can. What's the origin story of Brent Beshore? What's the myth and the legend behind that? And you can go as far back as you want, but you know, you've described yourself as the Forest Gump of private equity. And so what, how did this start?
Where did this begin? Yeah. You know, where are you from? Where, where were you raised? Uh, where'd you go to school and. And how was this thing born?
Brent Beshore:
Yeah, so I grew up in, uh, Joplin, Missouri, so Southwest Court of State, Arkansas, Kansas, Oklahoma border. And my dad worked for the same company for 39 years, was lobbyist in government relations.
My mom was a English professor. I dunno, I always had an interest in business, but I was not one of these investing people. In fact, I don't. You did joke that I'm force gum of private equity. I mean, I, I don't even consider myself to be an investor necessarily today. I mean, I think we're all, God gives all of us resources to stewards.
So from that's perspective, you know, whether it's financial resources or relational resources, certain talents, right, that all of us have from that perspective, we're all investors. I think there's a, when I think of investor, I think of people who like look at spreadsheets and build models and try to be really smart.
We're not trying to be smart. I think we're trying to be focused on people. My background. So I went from high school, born and raised in Joplin, Missouri. Went to Washington Lee in Lexington, Virginia. How in the world does a guy from Joplin, Missouri go to a Washington Lee is because when I looked in those back then it was like books a million.
Right? The big book shop. Right. You know, big bookstore that all the magazines and books and everything. Yeah. I would go in and and look at the college guides that they had and they'd have 10, 12 different college guides. They had all these different rankings and I remember my sophomore year, I was thumbing through.
My dad used to go in there and he loved to read and take me in there and I'd look at him and Washington Lee was the most difficult academically in the country. My sophomore year, it was the number two party school in the country my sophomore year, and it produced the most presence of CEOs of any school in the country.
I. So I was like, oh, that seems like a, and it looked beautiful, right? Little right picture. Like there were black and white, you know, that you could see in the, in the little college books, you know, it looked nice. So I, uh, did a college visit, had a fantastic time, talked to a lot of people, and applied to one school and got in.
I. And, uh, had a great college experience. I got done with my major, which was politics at the end of my sophomore year. Um, I came in with some credit and so I majored in college The last two years was the head of a, a speaker series on campus and was president of my fraternity. Had a great time in college.
Also learned a lot. You know, I think Washington Lee, so the Economist ranks Washington Lee is the number one school in the world for transformational economics. So they normalize the amount of income that a family has or the person projected would have coming into it and what they have coming out of it.
And Washington Lee has the highest transformation of income of sort of future earnings of any school in the world to go to. Wow. Which is just really weird. I, you know, these rankings came out obviously way after I graduated. But going through the system there and realizing, I mean, it's, it's a very much, it's a work hard, play hard type group, but it's also like I have to learn a lot of, it's very social, right?
So it's the number one fraternity and sorority system in the country that's kind of got a bad rap, but there's a lot of value to it. I mean, it's a lot of like tribes and you had to navigate what felt like a little mini version, a safer version of the real world, right? And so the ranking doesn't surprise me.
It was a very educational, transformative experience. Then came to get my law degree in my M B A at Mizzou. Had no idea what I wanted to do. And, um, ultimately decided I didn't wanna be a lawyer. And met my wife who was getting her PhD here. And so I was out one night and had too much to drink, frankly, and agreed to start a business with a friend's wife, and that was a disaster.
And learned. I, you know, I, I joke sometimes with our companies, you know, when they're asking, you're like, oh, I can't believe this happened or that happened. It's like, I feel like that we've seen darn near anything you can do wrong. We've done it and we've seen it. Right? And so we've learned a lot by unfortunately hitting our face on the pavement.
And so that business didn't do well, but it led into starting another business. It did a little bit better. And then I accidentally bought a business as close to accidentally as you can with an s b A loan. Took out an s b a loan. My girlfriend became my wife, asked her to sign a personal guarantee with me, and we bought this business Wow.
Um, in St. Louis in 2009. And that again was a transformational experience. So I had started companies mildly successfully, is what I would say before. Then now had acquired something and, and ended up doing quite well with that. And so, Had this itch to start and this itch to buy. And I was like a friend of mine, you know, I had a bunch of friends from w L that went into finance.
I didn't go into finance. I haphazardly fell backwards into finance accidentally. But I was on the phone with him and I was describing what I did, and he goes, oh, you did a private equity deal. I literally googled private equity. I didn't know that there was, you had no idea what it was called. Right? I didn't know that what we had done was a private equity deal.
Right? And so, Found out there's this whole industry that bought businesses. And I was like, wait a minute. Why did they lever 'em with a ton of debt? That doesn't make sense from an operational's perspective. I bet that's really stressful. And why do they sell 'em almost immediately? And like, that seems really stressful and like you can't build good long-term relationships.
And, um, the fee model looked all like the incentives would be all off. Like you'd want to fee, gather and just move up market. Well, it turns out all that stuff's true, right? And so, I just figured, well, I'll just keep rolling forward. The cash flow, I mean, lived in Columbia, Missouri at the time. We were able to pay off the SS b A loan early debt free, doing quite well, had income that way, exceeded our, you know, sort of lifestyle needs at the time.
And so just started banking cash and rolled that into a number of other deals. And then I started getting approached by people with money and said, Hey, will you take our money and do this with us? And I said, well, what does that look like? And they said, well, let's form a HoldCo. And I said, well, wait a minute.
Don't you have to value the current assets? They're like, yeah, we'll just throw the current assets in. They're like, well, those are mine though. That's like my family, and we're, and we're doing great and like, we have a great life. And like, I don't have a boss and kinda like, come work for me. And I was like, I don't know if I'd do well.
Like I'm functionally unemployable like at this point, right? Like right. Yeah. And so I kind of turned down a couple opportunities to start a, a holding company. Just never could get the math to work and, and didn't feel comfortable with it. And then, you know, we got approached to take money in more of a traditional private equity style.
And it was unattractive. The two and 20 typical fee models. So for your listeners, you get a sort of annual fee of 2% on the assets that you have under management, and then you get 20% of the upside after you pay back your investors typically, plus a sort of a hurdle rate or preference that's, uh, put on the capital.
Mm-hmm. Usually 8%. Um, although that fluctuates up and down. So that wasn't attractive either. 'cause I, I feel like that, you know, we'd have to use a lot of debt to make the math work. We'd have to flip the companies. There'd be a lot of incentives to treat people differently than we wanted to treat them.
And so I just kind of said no. And I kinda left from a heart posture standpoint. I kinda like, just kind of turned that off. Like I didn't think it was a possibility. And then had this crazy guy named Patrick O'Shaughnessy, who I came in contact with. And, um, Patrick at the time was helping run a firm, his father's article called, uh, Shaughnessy Asset Management, oss A and uh, he ended up running the business and then they ended up recently selling it.
But he came out of kind of nowhere on Twitter and we connected. And I dunno, you can just tell, I think there's a principle of this, like tuning fork in the heart, right? I think that that's a, something that maybe we undervalue. I mean, look, I come from a, I was an atheist in my twenties and then became, I'm a Presbyterian now and.
Tim Keller's like my Pope, right? So like That's right. Not charismatic at all. But you know, I think that's something that maybe the Presbyterians get wrong is like the charismatic side a little bit. And I think there really is, the Holy Spirit does talk to us, through us. And I remember the first time I met Patrick and I.
I mean, there's just something that went off, like the tuning fork kind of went off in my heart. Hmm. And we just had a great, we had a couple great conversations by phone, and then he said, Hey, can I come visit you in Missouri? I said, sure. We spent 12 hours talking like 12 hours, felt like maybe an hour.
Right. And at the end of it, he said, I want my family to, to invest with you. And I said, I don't have a way to do that. And he goes, well, why don't you figure that out and let me know and then we'll tell you if we can do it or not. And I was like, wait a minute. You just want me to create whatever would work for me?
He's like, yeah, just do whatever would work and then we'll tell you if we can do it or not. And so I spent a couple days just whiteboarding blank page trying to figure out what to do. And the structure we have now is basically what I came up with at the time. And as family said Yes. Wow. And they, and I said, okay, great.
So you guys are investing, like how do we raise the rest of the money? And they're like, well, we, we live in green, Connecticut. Like we know a lot of rich people. We'll help you raise it. And like they helped me put together the deck and I mean, they really, he and his father were. Unbelievably generous and kind to me, and, and Patrick has become one of my best friends.
Talk to him today. And so anyway, so we raised this $50 million fund in 2017. Under crazy terms, we have a 30 year lockup on the Capital three decade lock, which is I think the longest in private equity history. We take no fees of any kind. No cash flow comes from the LPs to the GP or from the portfolio companies to the gp outside of, once we make the investment and we start returning cash back to the investors, we take a percentage of that free cash flow.
So that's how we pay our bills. But it's all entrepreneurial. Like if we don't make investments and if the companies don't perform, we don't get paid at all. In fact, we're working not only for free, but we're losing money to serve our investors. Wow. So very aligned, very entrepreneurial, and we love it.
It's worked out great. Look, God's gonna give us what he wants us to have to steward. I remember I got all stressed out about a deal that fell through at one point, and one of the pastors I know I was talking with, I was complaining to him and he said, Hey, can I just stop you there? He said, do you think you'll have more money than God wants you to have?
And I was like, oh, shoot. Dang. That's a, that's a, why did you have to ask me that? That's a brutal question. And I said, no, I don't. No, no. And he said, great. Do you think you'll have less than he wants you to have? I was like, No, probably not. No. No. And so it really is trying to hold things with open hands. I mean, it is worked out great.
It's working out well. We love our investors. You know, everyone warned us about taking outside capital. Usually you go the exact opposite direction, right. Usually most people take outside capital to start and then return the capital back and say, screw you guys, we're going home and do their own thing.
Right? Right. We did our own thing and kinda learned, and on our own dime paid a lot of tuition to learn mm-hmm. And then took outside capital. Right? So it's kinda, we're we're going the exact opposite direction and, and we have no intention not to continue to take outside capital because we love our partners.
We get to interact with some of the smartest people in the world and, and. Maybe it's because of our structure. Maybe it's because of our ethos, but we've attracted a group of people who are kind and generous and thoughtful and helpful, and. I mean, I can't imagine. I feel like I'm the luckiest guy in the world.
Yeah.
Tim Sweetman:
So that's an incredible story and it, it does, we'll certainly dive deeper into this, but it seems like there's so many moments where when everybody else is zigging, you're zagging. You kind of go in the opposite direction. I. I'm interested to hear, and you can tie this maybe a little bit into your faith story, but you have an old article, I think back from 2013 about being a bad boss, some of the things you've learned, but I'd be really interested to hear kind of along the journey what, what was happening in your heart or your mind?
That got you to the place that after that 12 hour conversation you're sitting down and you come up with something so dramatically different. Like that doesn't just happen, that you come up with this idea of, alright, we're gonna do a 30 year deal. It's, it has to have come from this heart change or a leadership change or some tough lessons you learned along the way.
So I'd love to hear. A little bit more about how that came to fruition.
Brent Beshore:
Yeah, well you're correct. And it's interesting 'cause God's always given me just enough character to handle the resources that he's given me and just enough more to handle more resources. And I think that's really, look, I think it, we're all in different trajectories and different relationships.
And the most beautiful thing is we have a, a loving, gracious. Father who wants the best for us, cares deeply about us, is able to provide in a way that is otherworldly, right? I mean, is able to give us exactly what we need, when we need it, and to help us in ways that we would never ask for help. So, In my twenties, I told my, my mom I was, I didn't believe in God when I was nine years old.
I remember exactly where we were driving. My brother, who's three and a half years younger was in the backseat and we were by the Carl Richards Bowling Alley in Joplin, Missouri. And I said, I didn't believe in God. And it'd be kind of just like on my heart, you know, we went to a P C U S A church in Joplin, Missouri, and I'm sure that they preached the gospel a lot.
I'm sure it was a, I didn't have ears to hear, I just didn't understand the gospel. What I saw, what I understood was a lot of people working for salvation and a lot of people doing it was like a, it was like a social club with guilt. Like a really, it was like a really bad country club, right? Mm-hmm. Um, It just never resonated.
I mean, I can remember being in like a vacation Bible school and everyone was singing these songs and I just didn't, I didn't get it. I mean, I, it wasn't my time. Like I said, I didn't have a heart to know the Lord at that point. And so I, man, I got into, I mean, obviously I was nine, so I didn't, you know, I started reading though, and you know, by the time I was in high school, College for sure got into atheism, new atheism, really kind of, I would call it like strict materialism.
And it's a dark world man, when there's nothing beyond me and everything's gonna turn to dust and nothing's gonna matter. And sort of eventually all of human history is gonna be unknown. It's really hard to not go towards nihilism and so, I would say my journey sort of separate from the businesses that definitely coincides with different moments in business was, I mean, I, in my early twenties and the mid twenties, I felt like it was all on my shoulders.
The stress was unbelievable. I would have heart palpitations. I would wake up every morning with sweaty palms. I. I had a, a sort of a river of frustration and anger underneath everything. I was arrogant and I, I look back at my heart. Then it was just, I was a hot mess. I mean, in some ways I still am. Right?
I mean, we're all work in progress, but, but I mean, I didn't know what I believed. I. But I hadn't really thought about it as much as I should. I mean, look, I took a lot of like religion and philosophy classes in college and like, I mean, read my fair share of Nietzsche and I mean all the, even Pascal, you know, and I've read a lot of 'em, but I, but it was from a very skeptical heart and it was like almost like I had decided God wasn't real, so therefore, how do I make sense of the world, right?
And so, I mean, look, if you fast forward. What would I have done? So I, I think about this a lot. God, in some ways gives us the opposite of what our heart would expect. So looking back, I am in my mid twenties. I've just, you know, started a couple companies mildly successfully. I bought this business. It's going terribly in some ways.
Great. In others. But I'm super arrogant. I'm trying to win every award. I'm, I'm trying to be as big a deal as I possibly could. I'm trying to make sure everyone else knows I'm a big deal. Gosh, I was so obnoxious. It was awful. And I was just hurting inside, right? So I have a heart for those people. Now, people that I see that, you know, you just kind of cringe at their behavior.
I have a real heart for them because I was them, and they're all hurting, right? And they're all pretending. And sort of the mask that they put on is really only lightly masking the suffering that they're feeling. And if I was, God, what would I have done for me? I would've taken everything away. Right? I didn't deserve anything and I would've punished me.
Right? That would've been the fair thing to do. I deserved to be punished. I deserved to not have anything at that point. And I deserved to be humbled. I needed to be humbled. And he did this weird thing where he did the exact opposite. He gave me a beautiful, smart, loving wife. He gave me a thriving business and he let me sit with it for a while in success and realized that wasn't it.
So 28, I told my wife I didn't love her. I was totally bored with the businesses and I was kind of, I mean, bordering on nihilism. I was just so unhappy, deeply unhappy. And then God started surrounding me with people who were Christians. And I was like, you gotta be kidding me. Christians, come on now. These people are weird, right?
I don't want anything to do with that. Yeah. They had something about them that were, that were different. Like they loved in a way that I didn't have the capacity at that time for loving. Like I don't think I knew what love was then, and I had this like brutal honesty streak in me, right? So when I told my wife I didn't love her, I mean, it was just horrible.
I treated her terribly. But it was the truth at the time. And one of the things I actually have learned is, you know, whether it's a porn addiction or whether it's, you know, whatever the darkness that you've, you're hiding, like if you drag in light, there's real healing, there's freedom in getting it out into the open, right?
Sin significantly increases in darkness, right? And right thrives in darkness. And so God did this beautiful thing, which is like, started surrounding me with Christians and they were really challenging. And I met, met people who invited me into a small group and. I started interacting with really thoughtful, very well educated, deep thinking Christians, and I didn't, they were talking about things that I didn't even know.
Existed. Right? I mean, that was the beginning. And then I remember I heard the gospel for the first time. I was saying something in this like small men's group that I, I'm still a part of it today. And, uh, it's been, gosh, I don't know, 10 plus years now, I was saying something about I need to work and do this.
And they said, you, you understand? That's not the gospel, right? I was like, what do you mean that's not the gospel? And they're like, no, no, no. We don't work hard. We don't act well or we're not good, quote unquote good Christians because we're trying to earn God's love. Like we are loved first and that love transforms us.
It doesn't matter you, there's nothing you can do once you bend the knee to King Jesus. There's nothing you can do to get outside of his love. There's nothing you can do to earn his love. So it doesn't matter how much money you give to charity or how nicely you treat people or do this or don't do that, the gospel is that you're loved.
Hmm. And that's it. And I remember just like being blown away and I was like, that is not fair. How? How is that fair? What about the, what about the murderer? What about the person who's done terrible things? And they said, well, have you done terrible things? Well, not like that. I'm not like the bad people.
I'm a good person. Right, right. Are you, are you a good person? So they had the patience to walk with me and really hold a mirror up and show me who I really was. Was I a liar? Absolutely. I was a liar. Did I cheat people? Absolutely. Did I cheat people? Did I harm people? Did I hurt people? Absolutely. I harmed to hurt people, but I didn't think of myself.
And I think that's one of the dangers is. Pastor, our church says it's not the bad things that keep you away from Jesus. It's probably your good things, right? Mm-hmm. It's the holding on to what you think you, you are and what you deserve. And so, man, my heart just started changing once I went from skepticism to plausibility to probability to faith.
Um, and it was a slow journey. It was a lot of books. It was a lot of, but what about this? What about that? A lot of, I just had such ingrained, wrong thinking, but once I. Put my faith in reliance upon trust in the saving work of Jesus. Man, everything started to transform now, not overnight, and it was definitely two steps forward, one step back.
I mean like, look, sanctification, iss brutal. But immediately my marriage started transforming, like immediately I got power over. Things I'd never, I, I never had power over before. And again, not perfect, but moving trajectory in the right direction. And, uh, my work relationship started changing before I thought, well, look, I mean, I own the business, the job of everyone's to serve me.
And by the way, when you have that attitude, you're never served the way you wanna be served, ever. No one's gonna ever serve you the way you wanna be served. And that's the upside down kingdom. Right? Right. I mean, this is the beautiful thing about the model of leadership and relationship that Jesus shows us is we gain most from relationship when we give, not receive.
Right. Well, to that date. I mean, I didn't have that model, so it's like I wanted to receive, I'm paying you, I want you to work hard for me. I want you to be smart. Don't make mistakes. Right. Say good things about me. I deserve your loyalty and you're honor, like all that, totally started reversing and I started thinking to myself, okay, how do I serve the people around me?
How do I help their lives? Right? Turns out, when you start serving everyone around you, they enjoy you a lot more. They wanna be with you a lot more. They wanna work with you and for you a lot more. So CLU has this great quote. It's like if you aim for the things Jesus gives you, you get nothing. Right. If you aim for Jesus, you get Jesus and all the things that you want thrown in.
Now, that's not prosperity, gospel garbage. I'm not saying that I'm not. Don't sow your seed and you know, whatever, reap the harvest, all that garbage. What I'm saying is that God promises abundance, right? God grows good things and so. You asked in the beginning, I dunno, it was probably 15 minutes ago at this point, you asked me, so how did that intersect with the business?
And you know, I meet Patrick O'Shaughnessy and we raise this fund and it was just around that time that I had really started to feel and experience this big hard shift. Wow. And that's when everything took off. And it's amazing, you know. I said this to a friend the other day, I said, I think we all need to remember our Old Testament.
So if you go back and read the Old Testament, right, it is disaster. God only works through idiots. Right? It's rough. It is rough. It's, it can be encouraging. It is. It is incredibly encouraging, right? Because they're all flawed, broken people doing broken things and God rescues them and shows 'em a better way and transforms their hearts, right?
And so, you know, I feel like that's what happened with me is like pre 28, 29, Maybe even 30 into my early thirties. That was my Old Testament. That was me being distant from God. It was horrible. In many ways, it was very rough. And then God rescued me. Mm-hmm. And so when he rescued me, then God grows good things.
I mean, I firmly believe that. And the more that I was able to be in relationship. And to trust him, rely upon him and truly say, Hey, all I am and all I have is yours. What do you want to do with this? Right. To look at it from being mine, to being a steward of it, you know, was a massive change. And look, when I see the massive change, like the idea of that, yes, it's easy to understand the actual heart posture.
Like I've learned that the distance between my head and my heart is a really long ways. Hmm. A really long ways. And so there's a lot of things even today that I know intellectually. Like I could tell you what the correct theology of an idea is, but in my heart, do I really trust it? Right? Gosh, that's a whole separate question.
So I think that's where over time it's, you know, I think sanctification is, I. Heart transformation. Right? Right. Yes. The head definitely is a part of it. And look, our faith is well reasoned. Our faith is very logical. It's not blind faith or, you know, when I was a atheist and, uh, polemical, atheist at that, you know, I would, it's just, oh, it's.
Ridiculous. You're gonna, you're gonna worship the sky ferry to give you good stuff. It's like that's not an all with the cases, right? But it mostly is about our heart. It's about a tenderness towards God and towards others. It's about a true trust that the battle's already been won. We stand victorious.
We are sons and daughters of the king, like we have been brought out from enemies into the king's quarters. Like we get to dine and we get to live with the king and, and that's the most beautiful thing and. Let's continue to transform my heart.
Tim Sweetman:
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What's amazing is it's transforming the business, and I think what's so striking. I appreciate you just really giving the background on that too, because it's so encouraging to hear that story. And to understand a couple of layers deep because there's so many business owners that are Christians, I think that struggle with, how do I work this out?
You know, like how does my faith actually affect the structure of my business? And oftentimes I think there's that temptation to sort of buy into the old model of I must be served. That's just how it is. And that's the way that you get results and. That's just how it works. So what's fascinating to me is that here at permanent equity, you have continued to make some very intentional decisions, phrases, boundaries, guardrails.
I don't know, uh, what the phrases that you guys use in particular, but the foundations really of the business. One of the things I think you said in in a recent letter was success starts with good posture. And I, I'm sure I have the notes somewhere else, but in terms of that posture is a different thing.
Like you guys aren't about goals, it's about this posture and so I'm really interested to hear why you believe posture is more important than say a goal. In fact, I think you guys, you've talked about, man, we don't have 90 day plans. We that, that's just like not part of it because I asked that with the context of most of us are very driven to get the quick wins.
And not be focused on culture. But this is, you've talked about with private equity, it's about short term wins. It's about turning this thing over and that's the temptation in my heart as a young business owner, I look out and go, how can I get this done in two years? So what is, why do you believe in posture being more important than a goal?
Brent Beshore:
Well, I think this has come through experience and, and a lot through. Now I don't read a tremendous amount of business books because it really is all in the Bible when I look the wisdom's there. And so there are these bible verses that say, you know, you don't know where you're gonna, you know, people say, I'm gonna go here and trade here and do this and do that.
No, it's, if the Lord wills it, right, I go and do this. Now I think you can, you can take any Bible verse, lift it out and twist it. And obviously every. Verse in the Bible needs to be interpreted and read through the rest of the Bible. Right. But I think in particular, what God wants us to do is to go and be checked and try to figure out.
Our will. We have the Holy Spirit in us. Our will is God's will unless he checks us and tells us to do otherwise right. But with that said, his plan and the work that he's doing is always so much grander and there's so much more complexity to it than we can even imagine. And so if you'd gone back and asked me five years ago, what are your goals for permanent equity, I would've told you a way, way smaller crappier version of permanent equity than it's today.
Like, I couldn't even dream where we'd be now. Wow. So when you ask me today, the humility, true humility that I have, and this is, you know, it's easy to sort of fake humility, but the true humility I have is I have no idea where God's taking us. But I know two things. I know that wherever he is gonna take us is for my good and his glory, for our good and his glory.
And I know that if I tried to plan it out, I'm not gonna hit that mark. So when we think about how we treat companies that we work with, We acquire, we invest in, you know, we try to take a high humility posture towards them, and that's why I say posture matters, right? Right. It's less about goals, more about posture is we want to treat them with love and care and respect.
We want to treat them as if we're gonna work together forever, we want to invest in them. And when I say invest in them, we're not just talking about investing in equipment. Yes, sure. Gotta do the normal stuff like that, but also invest 'em as people. And what would it look like? I mean, this is a question I've been thinking about a ton recently.
Like what would it look like if work was a gateway to flourishing in every other area of life? So we, right now, we look at work as being sort of a necessary evil. And I, I really don't think that's biblical. Right. Work was given to us pre-fall. We are called to work and we're called to co-create, which is what makes the most miserable people in the world that I know are trust fund kids.
Right. Like if everyone thinks they're, they have this great life, they can buy bottles of champagne and Ibiza and all this stuff. If you actually get to know them, they are hollowed out empty shells of humans because they don't have the ability to work, right? They're zoo animals. And I think that's where we oftentimes, it's like being a visitor of the zoo.
Look at zoo animals. People who, for whatever reason have been given a lot of resources and don't quote unquote, have to work and we idolize their lives. And that's the exact opposite. Like, I don't know if God calls us to quote unquote writ. Tire ever, right? Like we're called to co-create with him, to build the garden, build the city, grow the good things of this world to be salt and light, whatever days we have left, right?
That's right. And so I think that's the posture that we want to take, is what does it look like to be good stewards? What does it look like to treat people made in the image of God as made in the image of God? What does it look like to invest in them and to help? Build the garden. Grow the garden. How?
What does it look like to help encourage the flourishing of them, their families, their relationships, their relationship with their kids? Private equity has this mentality of like, you buy it, you lever it, you strip it down, you cram as much in you can into a short period of time than you try to flip it to somebody else for profit, right?
That mentality just doesn't lead to human flourishing. I don't know how else to say it. By the way. It can lead to great financial returns. It just does not, it can. Lead to human flourishing. It doesn't likely lead to human flourishing. It doesn't. The probability of it leading to human flourishing is not high, and so we're just trying to do it a different way.
We're trying to do a more redemptive. Form of private equity that helps families who need liquidity, want diversification, want assistance in what they're doing, and want a good long-term home for their employees, for their communities, for their suppliers. Certainly their customers. We're trying to offer that.
We're trying to offer a place where you can flourish over a long period of time. And we're learning. I mean, honestly, like I I, this is something that, that, that we talk about quite frequently is like relatively to other people. I think we're doing fine. We're doing well, right? Like I think we're treating people better than I think most private equity firms.
I'm not gonna say every private equity firm. I'm sure there's some out there that are doing a better job than we are, but I think we're doing pretty well relatively in absolute terms. I think we're like a three outta 10. And that's one of the things, like what drives me? I mean, thankfully I've not been working for money for a long time, and we have more than enough live, very comfortable, nice life, but like we're doing it to see what, what's possible, what does a nine or a 10 outta 10 look like?
How do you treat people and treat the families and, and grow businesses and spread flourishing?
Tim Sweetman:
It's so different. You're not taking fees, which is so different. You're covering. Your costs. You're not nickel and dimming these companies and the approach is just so different. Why do you think that so few people are?
Brent Beshore:
Doing it the way that you're doing it? Well, to be fair, nobody who works at permanent equity comes from a traditional finance background. We don't have anybody on staff who's worked for another private equity firm, so we didn't have to unlearn a lot of the norms, right? Mm-hmm. We just came at it from kind of a first principles thinking of it.
So I'd say one is that's been a big advantage, a huge disadvantage in some ways too. I mean, like we've done stuff where we're like, Trying to reinvent the wheel, and people are like, Hey, there's this thing called the wheel, like you should probably use that instead. And we're like, oh. Oh, this could've been so much easier.
Tim Sweetman:
No kidding. That'd be amazing. Yeah. It turns out there's a wheel out there, but that mentality is so different when you haven't come from that background and you're not ingrained into the old way of thinking.
Brent Beshore:
It's brand new. Yeah. Yeah. And I think just, again, like the posture and the first principles lead us to do what we're doing and we're just trying to do it the best we can and we're trying to learn and grow as we go.
Yeah, and like I said, not having a plan is actually very freeing. Yeah. Which, it's such a paradox,
Tim Sweetman:
I feel like, so many pieces of what you're talking about, it's, you know, you give to receive. It's such a paradox. Like not having a 90 day plan actually can be very freeing and that there's a level of humility and, and I don't think most people will interpret that as we just have no idea what we're doing.
We wake up every day because you have some very clear principles that guide you, which I really wanna talk about two of those. So yeah, the first one being, This idea of the no. A-hole rule, uh, or no asshole rule. Which is, which is absolutely incredible. And then we will get to the second one, which is do no harm.
Brent Beshore:
Yeah. Obviously, I'm sure there's gotta be a million stories of where this came from. When did you institute this idea of the no asshole rule? I. How has it played itself out in the business and decisions, and maybe even, I guess, Steve with Steve is the president and Chief executive officer of I C L Management.
Unfortunately, in his capacity at I C L has instrumental in development I ventures, including about Aton episode as well as technology self-centered. You founded Spring free Tram in yourself. As first chief and foremost bouncing officer, where he oversees it growth and development's not sold over 30 countries globally.
Tim Sweetman:
I think you very intentionally said that's not, which is a world leader and security surveillance for the mobile workplace in, but, but we felt like it was ands, like there's a certain. Ly He Matters. There's a certain competition around's largest golf operator and AdvantX marketing International Point raised in Victoria, British Columbia currently lives in Toronto. Which University College Seminary.
Brent Beshore:
There's only really two types of people. There's either assholes or assholes in recovery, and everyone's just to one of those two buckets, right? I mean, look, if this world is all you know, and all you have is job to get the most out of it, like that is the definition of being an asshole.
Now you can sugarcoat it and you can try to mask it. But ultimately when push comes to shove, whatever that shove really is, is gonna cause you to harm others through your actions. And some people can ask it better than others, but I would just say is the people we look for. So I don't want to come across, and we are very careful in the article to say this right, is it's not about there, are they bad people?
Us good people? Right. We're not trying to other them. Yes, we're not trying to create tribalism. That's not helpful. That's not what we're trying to do, and that's not really a thoughtful way to look at it. What we're trying to say is we wanna work with people who realize that gaining together and going together is a really important part of life, and that we wanna work with people who are excited about delaying gratification for the good of the group, as well as them being a part of that group.
You've worked long enough. We, we talked at dinner last night about this, and you've had some challenges on this front too. A lot of people have a tough time when they have the opportunity to take a little bit more, to not take a little bit more Look, I'm not always talking about stealing. I mean, sure, obviously fraud is a clear version of this, but even just like there are times in every relationship where the power dynamics shift and sometimes they shift permanently, but oftentimes they just shift temporarily and.
You know, if you work closely with somebody over a long enough period of time, there will be an opportunity for them to shift the power dynamics against you and you against them. Hmm. What we want is to work with people who, when those power dynamics shift, they're gracious towards us, and when we have the power dynamics in our favor, we're gracious towards them.
That's being an asshole in recovery because most of the time with the way the world operates and what the world tells you to do is to take advantage of every advantage you have. Mm-hmm. And look, in our world, we hold a tremendous amount of power over a lot of people's lives, and the children and the spouses, and the extended family and the suppliers and the Oh yeah.
And the customers and the communities that we operate in. And we take that very seriously. Now, I gotta tell you, 10, 12 years ago, I didn't take it as seriously. Hmm. It was about me. It was about what I wanted. It was about serving me, making me money, giving me optionality, giving me freedom. So, It's a principle.
How has it played out haphazardly at best? I don't know. I mean, we, it's really hard. I mean, in the transactional process that we go through, it's so difficult for people to let their masks down. Like all their advisors are telling 'em to keep their masks up the process. And some of these are designed to keep masks up, so you don't really know who you're getting involved with and what you're getting involved in.
Until you, after you buy the company and then you find out. And look, sometimes we're positively surprised. We've had a couple where we are just, I'm like, oh man, this is gonna be tough. We're gonna have to love on this guy a lot and turns out to be great. And we're like, well, that was a shocker. You know? Um, fantastic.
Um, yeah, he just had some rough edges, but like, don't we all like, you know, amazing. Um, and he didn't do a very good job of hiding those rough edges. Right. And then we've got other people who are like, you know, smooth as butter. Going into transaction, you get post-close. It is like you got in bed with a pit viper.
Hmm. And, uh, those are tough. And so, you know, our tolerance I would say is we probably err on the side of giving people too much leeway, too many second chances. We really try to pour into people that we have conflict with. That's a really important principle that we work through. But at the end of the day, if you don't.
Do what you need to do. It harms everyone around them and, and I would say it's oftentimes when we make changes, People are like, ha Lee, what took you guys so long? I've been suffering for so long. And we're like, Hey, I'm really sorry. Like I've had to apologize a lot on that front. Yeah. But I feel like that if anything, we wanna try to show people that we don't give up easily.
And even when we part ways with people, it's never giving up. We always try to put them in a position of strength and in a good position for the future. But it's hard. Life's messy man.
Tim Sweetman:
Life's messy and people are messy. And I think that's a massive principle. That plays itself out in everything that you do and the interactions that you have with people.
I know we were talking last night a little bit too about, again, it keeps coming back to the posture that you have, but even a lot of people think that feedback and the way that we are candid with others is just an opportunity to be an A-hole, essentially. It's just hiding it behind a business book or a business idea.
But maybe you could talk a little bit about that principle as well of. You have it in your mind like you're serving the other person versus being served by that person. When you're giving that feedback and you're dealing with that individual person, because I think that's a helpful lens, even to evaluate myself when I'm dealing with or saying something.
You talked about it last night as well. So often I was saying the right words. I can say the right thing and this is actually a disaster. Yeah. It's how I'm saying is so
important. It took me a long time. I mean, I think this idea of how you say it and the heart behind it matters more than. What you actually say, you can say the exact same thing with two different hearts and people can tell this is what makes Zoom so hard.
Brent Beshore:
This is what makes honestly audio so hard, is it's really difficult to hear the heart behind things unless you're with somebody in person. Right? That's right. That's right. Um, so much more information transferred in person than through any other medium. Yeah. So, so this idea of. Early in my career, I think there was a book that came out called like Radical Candor or something.
Mm-hmm. And you know, it was like, oh, we're just gonna be brutally transparent. Like transparency is the key. Transparency, you know, in all things. Just be transparent and, and really what, I dunno about you, but like, I don't wanna be totally transparent with what I'm thinking. 'cause oftentimes I'm thinking conflicting thoughts and I have.
Things that buzz through my head, then I'm like, woo, where did that come from? That's not fully formed. I, that's not, I need to think through that more. I need to pray about that. Right, right. Um, and so this idea of radical candor or complete transparency really is for the good of the person saying it not for the good of the other.
A principle that I've just had to learn, honestly, the hard way over time is anytime I'm in conversation with somebody, I have in the back of my head, sometimes in the forefront of my head, depending on, uh, how difficult the conversation is. Like what am I saying to them for the good of the person I'm saying it to.
So if I'm having a highly technical conversation with an industry expert, I'm gonna use different language for their good. Then I would use, if somebody's not a technical expert, and I'm not gonna use jargon with them. Right, right. The tone of my conversation. If I know somebody has. A tough time, or you know, is emotional.
I'm gonna speak to them in different way than if they're unemotional, right? And the candor that I wanna have with them, like I want to be vulnerable with them. But vulnerability is for the good of the other, not for your good, right? It's actually self-sacrificial. If you think about what vulnerability really is, it's you're opening yourself up, you're opening your heart up.
And you're gonna offering yourself up to the other person for them to do surgery on you, right? Yes. You're saying, Hey, this is how I feel. I, I'm, I'm maybe ashamed of how I feel, or I feel some, some guilt around it. I don't like how I feel I'm struggling with this. Will you help me? Right? Like, that's what you're doing.
When you give vulnerability, when you radical transparency or candor, what you're saying is like, Hey, this is who I am. Take it or leave it, right? Mm-hmm. That's not loving, that's not kind. So those are again, but these are like hard earned, like I paid, like I said, a lot of tuition by doing the wrong things.
Tim Sweetman: Hey folks, thanks so much for listening to this episode of the Tension Podcast. This was part one of a two part interview I was able to do. I hope you tune in next week for part two of this conversation. It would be fantastic if you would take just a couple of moments to leave a review or rate us on Apple Podcasts or wherever you get your podcasts.
It really does help the show. Thanks so much for listening. To find out more about the Tension podcast, visit www.tensionpod.com, or you can find me on Twitter at Tim Sweetman.
