#6 - Brent Beshore (Part 02)
Summary:
In a candid conversation on the Tension podcast, Brent Beshore, CEO of Permanent Equity, discusses the challenges and opportunities of modern business environments. He emphasizes the significance of approaching conversations with generosity, vulnerability, and a willingness to admit one's mistakes. Beshore highlights the importance of humility in business and offers insights based on his experiences, as well as those from other seasoned entrepreneurs. As the discussion moves towards the current challenging business climate post-COVID, he offers advice for businesses to stock up, save, and be conservative. Brent ends by sharing the plethora of resources available on Permanent Equity's website.
Links and Resources Mentioned:
Transcript:
Tim Sweetman
Tolkien who wrote Lord of the Rings right in the Hobit. He was very frustrated. It took him forever. So C s. Lewis part of the inklings, right? So this group of guys that got together actually not just guys, women, too, got together and shared philosophy and deep discussions and from my understanding, smoked a lot and drank a lot of beer, which is cool, too, and ate meat. I assume they were eating meat.
Tim Sweetman
Of course they are. Of course they were probably smoked meat.
Brent Beshore
Of course. Smoked meat. Exactly. And C. S. Lewis could just bang out out he was an unbelievable writer. He could just bang out these incredible stories. Right? So Peralandria is one of them. And I think he wrote it. It was, like, very quick how long he wrote it. And so Tolkien's watching this, and he's super frustrated, and he can't write hardly anything, and he's got writer's block, and so he writes this short story called Leaf by Niggle. If you've never read it, I'd really encourage you to. And the whole story revolves around what we do in this life is carried into the next and perfected into the next. And what we do today actually matters at a level we can't even fathom. And so this idea that because I think sometimes people hear, god works all things out for my good and his glory, he's in control. I'm not. There's, like, a lack of control that we have. And in some ways that's true, because we have a sovereign omnipotent, omnipresent Father who loves us deeply. But our choices matter. Right? Because if he didn't give us free will, then we'd just be captives. Right?
Brent Beshore
It's kind of like kidnapping somebody and saying, now you must love me. Right. Do you think that that's real love? Of course not. Right. So God can only whisper and woo to us, right? He can't force us. Free will is a real thing. Now, how light is a wave and a particle, we still understand, right? But it's true. Light is both a wave and a particle. How do free will and God's sovereignty interact? To be honest with you, no one knows. Anybody tells you they know. They don't know, but they do. They work together. Right? Right. And so that's, again, where this idea that, man, everything matters so deeply, like, the business deal is not just, yes, it helps provide for your family. Yes. Selling your chicken nuggets, which are delicious, it feeds people. That's fantastic. But we're doing a work that's much greater than that.
Tim Sweetman
Hey, folks, thanks so much for listening to the Tension podcast. This is part two of two of an interview I was able to do. If you want to hear the full interview, go back one week, listen to part one and come back here.
My guest today is Brent be sure he's the CEO 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 aholes. 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, a Mid, Missouri based nonprofit. Outside of work, Brent is raising three young daughters with his wife, Dr. Erica Beeshore, 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 humbled 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. So without further ado, my guest, Brent Beshore.
Brent Beshore
Sure. I just think it always goes back like I said earlier when we were like, it all goes back to first principles in the Bible, right? If you look at how Proverbs opens up, right. The fear of the Lord is the beginning of wisdom. What does it mean to fear the Lord? Well, fear doesn't the Hebrew word when they talk about fear is not a fear, as in I'm afraid in the like, oh, my gosh, there's a line over there. Now, it can be I mean, it can be in awe of, right? But there's a fear in terms of, like, a deep knowing. And when you think about what God wants us and the posture that he wants for us not only to be in relationship with us, but also for our good, to be in relationship with others is that deep fear of Him, that deep relational connection with Him, where we're drawing his identity is to my identity. His love is the love that I seek. He's filling the hole that I have in my heart. He's giving me everything I need. He's watching out. He's my stronghold, right? I'm below the wings of eagles.
Brent Beshore
Right? That is the imagery that we read in the Old Testament through the Psalms, through the Proverbs. And that imagery is so important that that aligns our heart posture so that we can be for others and for the good of others because we're already filled up. So that is out of that abundance. It is out of that love that transforms my heart. This is the gospel, right? This is filled in Jesus. This was what makes it I mean, Godly the Bible is the most beautiful piece of literature because it is otherworldly. That's one of the things when I was an atheist, when I kept reading the Bible, I'm like, there's no way that humans created this. It is the most beautiful, intricate, gorgeous expression of what we're called into this deep longing that we have. And man, when we dive into that, when that is at the center of our being, at the center of our hearts, it transforms everything. So it's like I'm not thinking when I'm trying to be in relationship with somebody, I'm not thinking, okay, let's see here. I don't want to have radical candor. I want to be vulnerable. How do I be vulnerable?
Brent Beshore
No, it's out of this overabundant love that I feel. It's out of this safety that I feel that I know that God's for me, that he loves me. He's working all things out for my good and his glory. It's out of that that then flows. Okay, well, now I can rest and I can even in difficult situations, and by the way, we face really difficult situations. I found out yesterday that a partner of ours has terminal cancer. Breaks my heart, right? Like, I know that future is secure, so I don't have to be worried about what does that mean for me? I can say, hey, how can I serve Him and love Him and treat Him with dignity and respect? So I don't know if that makes sense.
Tim Sweetman
It does.
Brent Beshore
Yeah. And again, this goes back to if you aim for vulnerability, you're not going to get vulnerability. If you aim for Jesus, you get Jesus and you get vulnerability.
Tim Sweetman
What's really interesting, and maybe this is something, I don't know if it's recent on your mind or it's been on your mind for a long time, but the whole idea of zooming out and having more of an internal perspective is so freeing and life giving, and that begins to fill your heart. The other piece is your identity is no longer in the things you accomplish, the things that you do. But it's I already know how God sees me. I know how when he sees me, he sees Christ. There is nothing I need to prove in my life. And for people that are driven individuals, that is incredibly difficult to accept that love and graciousness from the Father that he sees us that way.
Brent Beshore
I was really struck.
Tim Sweetman
You posted an article a few days ago about this challenge of sailing around the world and the contrast between the two sailors. The one that wasn't really a sailor and pretended he wanted to win this race and basically his ship was going to sink, so he faked it. And then the other guy, who was an incredible sailor, he loved sailing so much that he literally quit the race halfway through and basically retired and wrote books about shipmaking. I was so struck by that. I'd love to hear is that something that's recently been on your mind of thinking through what does work as meaningful really look like? Our attentions on the wrong things because we're so earthly minded and we don't have this eternal perspective of what we do does matter here, but such a longer horizon and time horizon than we really think. I'd love to hear more of your thoughts on that.
Brent Beshore
This is the deep waters, man. No pun intended, right? We're talking about sailing here, but this is really the deep waters. So that Anecdote is from a Morgan Housel article, and Morgan's become a dear friend of mine over the years. We have a fake Twitter feud. He's my Newman, my nemesis, my fake nemesis on Twitter. He's such a great dude, great guy. And he probably won't listen to this, but if he does, he knows I love him, but he's probably the best storyteller in all the finance world and just comes with these incredible stories that he weaves together with principles and really makes you think. I mean, every time I read something of his, maybe not every time, he's got some crap out there too, but most of the time he makes me think. And that Anecdote was I think it was a royalty commissioned a race around the world. It was in England, right?
Tim Sweetman
It was in England?
Brent Beshore
I believe so. The British Royal Crown, I think, commissioned this race. And yeah, there's this guy who just desperately wanted to win at all costs, and it was failing and so tried to fake a win and he ended up committing suicide. Right? He did, yeah. Trying to remember exactly all the details of the article. It's not my story, it's Morgan's. So I blame anything I got right. It's my fault. Anything that I got wrong is Morgan's fault. The other guy, he loved sailing so much, he went off and sailed into the sunset, basically, and kind of made sailing the rest of his career and rest of his life. I love that. And I think the principle that Morgan was trying to get across was maybe slightly different than the way that I think about it. I think the principle was, hey, you're really going to be excellent. The thing that you are internally motivated to do. Right? And so there's intrinsic motivation and there's extrinsic motivation. And one of the things I've been thinking a lot about is I don't think either of those are actually the right posture. So I think intrinsic is certainly better than extrinsic.
Brent Beshore
But I had a lot of intrinsic motivation when I was at my worst, at my most sort of nihilistic. I desperately wanted to make something look, we all want to matter, right? We all want to feel safe and we all want to matter. And that can be an intrinsic motivation. And that is better than sort of bobbing on the whims of everyone around you. But I don't think that either of those properly capture. I think what we should be doing, which is what I would call, like, uptrinsic motivation. Right. So when I am enjoying my life the most, when I have the most joy in my life, the most happiness in my life is when I'm trying the least to be happy. And when I'm focused least on myself and when I'm focused most on God and I'm focused most on what he's calling me into and this beautiful enchanted world that he is providing for me and beckoning me into, that's when I feel joy and it can happen. It's like, sort of c. S. Lewis has this great book called Surprised By. Like, I feel that way sometimes myself. I'll be in the middle of a conference call, and it's actually, like I don't know why, but all of a sudden I'm just overwhelmed with a joy of, like, I get to do this for a living, and this is how I this is so like it's a childlike excitement about this.
Brent Beshore
That's way better than me being like, well, okay, if I grid out this conference call, I'm pretty sure we can maybe get a deal done. It's going to advance the ball down the court. We can probably make an extra $250,000 this year. Boy, if I have that, I could buy this thing and I could take my family on this trip and me me II. And then all of a sudden, everything's gone. All that satisfaction, all that happiness is all gone, right? Yeah. So I certainly think intrinsic motivation is better than extrinsic motivation. I think the proper posture that makes extrinsic motivation nearly irrelevant and you're playing to an audience of one, and it transforms intrinsic motivation. I mean, let's talk about this definition of freedom. And maybe this is a tangent, but it just popped into my head. Yeah. When we think of freedom, what do we think of? I can do anything I want. I have unlimited, optionality, complete freedom. No attachments. You know, people who live like that are miserable, right? Purely miserable. Purely miserable. So the better thing to do than to have no attachments is to be attached. Now, the question is, attached to what?
Brent Beshore
So the purpose of freedom is to choose your attachments. Now, the only attachment that we know that won't disappoint us is God. So if you think about it, what is real freedom? Real freedom is desiring the things that God desires. The real freedom is aligning my desires. Right. So this is Augustinian, right? So St. Augustine, who know the primary problem with humanity is a disordered, loves. And so what does it look like to reach for joy, to reach for happiness? What we're trying to say is there are things in this world that I think will make me happy, and I want to pursue them. This is where, look, read some Jim Carrey quotes, right? Watch some of his interviews, right? He does a phenomenal job of basically saying, hey, look, I hope everyone gets everything they'd ever hoped and dreamed to realize. That's not it. And I said earlier in the interview, that's kind of what God did for me in many ways, like successful career, beautiful wife from the outside looking in, everyone's great, right? But I was rotting, right? And so this idea of freedom now is, like, so closely ties with this uptrinsic motivation, is I now want the things that God wants for my life.
Brent Beshore
And the more I get those things, the more I experience unbelievable joy, unbelievable satisfaction, unbelievable happiness that I can't get anywhere else. And how do we know what God wants for our life? He tells us. I mean, this is where the idea of premarital sex, right? It's really controversial, really difficult. Bet your listeners didn't think in a business podcast we'd be going here. But look, the bottom line is, is sex fun? Sure. Yes. Anybody who tells you sex is fun, you're doing it wrong. It's like pizza, right? Pizza is always taste good. It doesn't matter how bad the pizza is. The problem is that we're not built to handle premarital sex or sex just outside of marriage in general. And so it burns us. It's like touching fire, and it harms us, but it feels good in the moment. I think this idea, again, is God's not trying to put limits. So that's like a freedom thing, right? You're like, I will do what I want to do with whoever I am, two mutually consenting adults. And it's like God's not saying, like, I don't like you. I don't love you because you had sex outside of marriage.
Tim Sweetman
Like, that's not the purpose.
Brent Beshore
That's not the point, right? If you want to go have sex outside of marriage, go have sex outside of marriage. What God's saying to you is, you're harming you, you're harming that other person. You guys are both being harmed in that act, right? And those have lasting consequences, right? And so God wants something better for us. And I think that's where if you then are married and you find out what deep love really is, and you find the sex that goes with that, it's like ten times better than a hookup. It's ten times better than porn. The problem is, unless you've experienced that porn can be fun, premarital sex can be fun. But it's this cheap imitation. It's again, I quoted CS. Lewis a few times, like, we play with mud pies when there's this incredible, unbelievable vacation at the beach waiting for us, right? And so I think that's, again, where what is freedom? What should we be pursuing? We should be pursuing what God wants for us, because that is how we were built. That's how we were made. We were made for a purpose. We have a telos, right?
Tim Sweetman
Right.
Brent Beshore
And the more that we can pursue that in business, outside of business, the more we can align with what God wants for our lives, the more we're going to live unbelievable life giving. We're going to be springs of life, we're going to be salt and light in this world. And look, every time in my life that I'm like, okay, God, yes, I hear you. You want this other thing for my life, but I really want this other and I'm just going to go my own way. It always goes bad every single time, right? And so I think that's, again, Sanctification is learning to truly trust in, as you said, some limits that God puts on our life, not because he doesn't want us to have fun, like read Song of Solomon. It's saucy, right? God wants us to have passion. God wants us to I mean, sex, he created sex, right? I'm just using as one example whether it's money. I mean, God's not an anti money. God just knows that money can cause you to think that you're God, which is basically what all the Western world does and where my heart leads. And so there's nothing bad about money.
Brent Beshore
God, in fact, wants to give more resources to those people who can steward it. Well, that's, again, not prosperity. Gospel garbage doesn't always happen. You're doing it for that purpose. But God wants to give you things that you can handle. And so going back to kind of the very beginning, like uprinsic look to God, think of freedom less about you being in charge and more about aligning to what God wants and purpose in your life, right?
Tim Sweetman
And then that's what human flourishing ends up looking like and being. And it goes back to what you said earlier about the distance between head and heart. In hearing that, I'm like, yes, absolutely. And it is so hard. I think it's a battle every single day, though, because in your mind, in your head, you go, yeah, absolutely. I totally believe that that's what true freedom looks like. But man, when the opportunities arise in your life for short term, quick wins, little thinking, it's so easy to do that. And again, it goes back to even writing down your goals and thinking that those are going to be the biggest goals I'm going to do. X I remember when I first started my business and I wrote down, this is what we're going to do in sales in the next three years, or.
Brent Beshore
Whatever it was, and we blew that.
Tim Sweetman
Out of the water because, as you said before, you could have never guessed that or dreamed that. And letting go gives you so much more than you could ever imagined. It's so different and so helpful, but a hard principle to take. And so I appreciate just that. Really answers a lot of questions. I think I had around the thinking around long term bets versus short term wins and the application of that. And you're doing that practically in the business and most folks are just looking for strip it down and resell it. And you're going, no, we're actually going to apply this to the way that we do business. And we think that that's the best way to do it.
Brent Beshore
Yeah. I would just say I assume why I listen to podcasts often is I'm trying to figure out some edge, right. Something that I can learn from it that I can apply to my own life. If you're listening to this podcast, I assume that you want to be successful or you want to be more successful. And I'm just here to tell you, like, I am a trophy of grace. If you can get on your knees and give everything you are and everything you have to the true king and say, I want to be a steward, he will give you more abundance than you can ever imagine. And when I was an atheist, I was challenged. Somebody asked me, they said, have you ever prayed to Goddess if he's real? I said, yeah, sure, of course it's not real. No. Have you ever prayed to Goddess if he's real? No, probably not. And I kind of put off the side. It was three or four days later, and I was alone and bored. I had really nothing to do. I remember thinking, oh, shoot, all right, well, I'm going to do this. I'm sure it was like the prayer and meet the parents, right?
Brent Beshore
I mean, it was probably awful, but I just was like, God, I still remember this day. I was like, just, God, if you are real, please show me. I desperately want to know the truth. I want to be intellectually honest about this. And if you're not real, well, I guess I won't feel anything. I won't know anything. But if you are, I'm desperately asking. I am knocking. Come answer the door. And I got to tell you, that's something that I think it was that moment that probably changed my life, right? Wow. It didn't happen immediately, and that's when all of a sudden god started surrounding me with people. But I mean, I was in a desperate place at that point. Right. God only works through idiots, right? God only works through the broken, and he uses the broken, the childlike, to shame the intelligent.
Tim Sweetman
That's right.
Brent Beshore
The arrogant, the prideful. And if you're listening to this and you're like, I'm amazing, and I know how I'm going to be more amazing, what I would tell you is you are amazing, but just not for the reasons why you think you are. You're amazing because God loves you, and you were created for a purpose, and you have an unbelievable opportunity to participate in the grand, true story of the universe and your little tiny world that you think is everything and you have all these goals and plans and all this stuff. Look, no one's going to know your name in 100 years. No one. Yes, no one's going to care in 100 years. The only thing that matters is that you are in relationship with the God of the universe. And so from that, though, flows all this incredible adventure and all this incredible abundance. And I guarantee you, if you're listening to this and you're skeptical like I was skeptical, I hear you, I understand you. If you're listening to this and you're like, oh my gosh, I can't believe he keeps blabbering on about God. Get to the basics. I want to learn some tricks.
Brent Beshore
I want to learn some shortcuts. I want to learn some life hacks. Like I'm telling you, the ultimate life hack is to give your life to Jesus and ask him truly with an open heart to reveal Himself to you, and you will experience a flourishing that you can't even imagine. You'll experience a happiness you can't even fathom. That is the ultimate tip. That's all I got. That's all I got. It's amazing.
Tim Sweetman
It immediately is making me think about I don't know if you've read this before, but Francis Schaefer has a phenomenal little book called no Little People and in the first chapter he talks about Moses. Moses wasn't used by God until he was in his eighty s.
Tim Sweetman
And when he is used by God, he really is just delivering his rod, his staff, and that's what the plagues of Egypt come through. It's not even Moses himself. It's his little stick of wood that God ends up using for his glory to free the Israelites from bondage and slavery. Such an incredible and compelling and convicting story. And that's just who we are. And I love that. It's so encouraging for so many people just want to be known. They want to be the big person. I want to know all these makes.
Brent Beshore
Sense though, because they're made in the image of God, right?
Tim Sweetman
They should be known by the right person, right? Who needs to know us, right?
Brent Beshore
God, those are all cheap imitations of what we really want. We're all seeking love in the wrong places. We're all seeking to matter in the wrong places. Me too, right? Look, 50 times a day I get jealous or envious or I think about something, I get angry, right? And I'm like, what am I doing? That's one of the things I love about following Jesus is if I'm having a bad day, if I'm upset, if I'm frustrated, if I'm angry, if I feel unsatisfied, I just haven't thought about it enough. And conversely, when I was an atheist, if I was feeling joy or beauty or meaning, I just hadn't thought about it enough. So one life philosophy, one faith, and by the way, atheism is absolutely a faith. One faith takes you to hell. If you think about it enough, and the other one takes you to heaven, if you think about it enough. And I'm not talking about heaven as in Cart playing all that Left Behind garbage. I'm talking about heaven on Earth. I'm talking about the restoration of all things. I'm talking about the restoration, and the beginning of the restoration is your life today in Jesus.
Brent Beshore
That's the most beautiful thing we've got eternity to look forward to. And it starts today. Right. The people who care most about this world are those who think most about the next world.
Tim Sweetman
Yep.
Brent Beshore
By the way, I'm going to apologize. I'm being too harsh on some pastors out there, but this whole idea of like, there's only two things that matter in this world, and it's the souls of men and God's word, and it's like, no, that's not everything does not burn. Everything's restored. Heaven comes to Earth, we don't go to heaven. And that's the most beautiful philosophy, and it should inform everything around us. It should animate everything we do. There's an unbelievable Tolkien who wrote Lord of the Rings, right? And the hobbit. He was very frustrated. It took him forever. So C s. Lewis part of the inklings, right? So this group of guys that got together actually not just guys, women, too, got together and shared philosophy and deep discussions and from my understanding, smoked a lot and drank a lot of beer, which is cool, too, and ate meat. I assume they were eating meat.
Tim Sweetman
Of course they are.
Brent Beshore
Of course.
Tim Sweetman
They were probably smoked meat.
Brent Beshore
Smoked meat, exactly. And C. S. Lewis could just bang out he was an unbelievable writer. He could just bang out these incredible stories. Right. So Peralandria is one of them, and I think he wrote it. It was like, very quick how long he wrote it. And so Tolkien's watching this, and he's super frustrated, and he can't write hardly anything, and he's got writer's block, and so he writes this short story called Leaf by Niggle. If you've never read it, I'd really encourage you to, and I don't want to give away too much. The whole story revolves around what we do in this life is carried into the next and perfected into the next. And what we do today actually matters at a level we can't even fathom. And so this idea that because I think sometimes people hear, god works all things out for my good and his glory, he's in control. I'm not. There's, like, sort of a lack of control that we have. And in some ways that's true, because we have a sovereign omnipotent, omnipresent Father who loves us deeply, but our choices matter, right? Because if he didn't give us free will, then we'd just be captives.
Brent Beshore
Right? It's kind of like kidnapping somebody and saying, now you must love me. Right? Do you think that's real love? Of course not. Right? So God can only whisper and woo to us, right? He can't. Force us. So free will is a real thing. Now, how light is a wave and a particle, we still understand, right? But it's true. Light is both a wave and a particle. How do free will and God's sovereignty interact? To be honest with you, no one knows. Anybody tells you they know. They don't know, but they do. They work together. Right? Right. And so that's, again, where this idea that, man, everything matters so deeply, like the business deal is not just, yes, it helps provide for your family. Yes, selling your chicken nuggets, which are delicious, it feeds people. That's fantastic. But we're doing a work that's much greater than that.
Tim Sweetman
Are you looking for new ways to.
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Navigate the many tensions in your life?
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Embrace these tensions, to create innovative solutions you never thought possible?
Tim Sweetman
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Tim Sweetman
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Brent Beshore
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Tim Sweetman
You you this is a perfect segue into the change that you have recently made, away from talking about we buy boring businesses to this new phrase of we invest in companies that care what happens next. I feel like that's so informed by.
Brent Beshore
What we just said.
Tim Sweetman
So talk more about that new philosophy and the kind of businesses you break.
Brent Beshore
That phrase down a little bit further.
Tim Sweetman
For the kind of businesses and people.
Brent Beshore
You're trying to invest well. So the boring businesses thing, honestly, is myself and Emily Holdman, who's one of our top people here at the firm. She and I have worked together for a long time, and we were in a room gosh, this is probably 810 years ago now, and we were like, okay, we're in Columbia, Missouri. We want to be in Columbia, Missouri. We want to do deals all over the country. How do we find these people that are our people that want to sell us their business partner with us in the long term so we can be good stewards of it? And we started doing this testing online, and we would use different phrases, and most of the time, we would get, like, venture style deals. We would get people who wanted you to fund their startup and we just couldn't figure out what is a phrase which would describe like a mainline, main street, stable, cash flowing, sturdy business. And we used all these different phrases family owned companies. And eventually we settled on this term boring. We were like, let's just test it out, let's see what happens. Well, it turns out if you put the word boring in front of pretty much any other phrase, you get like two times to three times the response rate.
Brent Beshore
It's a very polarizing term because people are like, oh, am I boring? What do they mean by boring? That's a very interesting term, right? Especially in the context of we buy boring businesses, which is what we said for a long time. And look, at the end of the day we've matured enough and the businesses we own, they were never boring in the traditional sense. But there's no way you call some of them boring now. And these are fast growth, some of them are technology based and we just really felt like it didn't capture who we were always just, again this tuning fork in your heart, right, started feeling a dissonance around this term boring. It's like it just doesn't resonate as much anymore. And we're like, okay, what is the thing that we actually are doing these days and really want is businesses that care what happens next. When we say care what happens next, it means do you care what happens to your employees? Do you care what happens to your vendors? Do you care what happens to your customers? Do you care what happens to your community beyond just, hey, I got a big check at closing and now I can go to Tahiti or whatever, right?
Brent Beshore
And the honest to God truth is most people don't care. That's what's really know. We've joked in the know. We've had sellers who say money's not the most important thing unless you're not the highest bidder, right? Right. Basically money for most people is going to be the dominant way they make the decision. And look, we're not trying to get a quote unquote great deal, but we're never going to probably be the highest bidder either. If you think about it as a business model, if you're acquiring companies like we are and your only advantage is you pay more. Which by the way is a very effective way to do deals. Like if you just pay more, most of the time you're going to win, then you can do whatever you want. You can rape and pillage because no one cares, right? All that matters, it doesn't matter. As long as they give you that check, nothing else matters. Well, that's not how we want to live. We want to care deeply. Again, our philosophy of having high humility in terms of what we pay and not using debt has served us incredibly well. We want these companies to be oak trees for their community.
Brent Beshore
We want them to grow big and strong. We want them to be enduring very durable, sturdy businesses. And you don't do that through levering them up with a bunch of debt and completely changing them and trying to sell them to somebody else. Right. And so the phrase that we settled on was we want to work with companies that care what happens next. We want to steward those companies. And so, yeah, so we kind of said, hey, we're going to put boring down. We're going to lay it down. And there's plenty of people, if you look online, who use the term boring. Now cottage, it's gotten, it's gotten it's kind of funny. Look, it's not like I invented the term boring businesses, but I think we popularized it in the lower middle market for sure. It's just hilarious. There's like, people who sell courses now on buying boring businesses. Like literally that phrase, buying boring businesses. So, yeah, so we're laying it down and we want to steward companies that care what happens next.
Tim Sweetman
Yeah, it's incredible. Well, I'd be remiss if I didn't ask a question related to the challenge we have between I think this is a good question that feeds into the type of businesses you're selecting. You're not going out and finding businesses that are struggling and you feel really bad for them and you're going in and saving the day. This is a business at the end of the day, you're trying to find strong, healthy businesses. And so one of the big questions that I often talk about on the podcast is the challenge of balancing profit versus people and taking care of people. And I think that there's a unique way that you're doing that. And so in all that we've said, where does profit and money and good financials fit into the scheme of what you're evaluating? Because you're thinking intelligently and smart and carefully about the type of businesses that you select. And so why do you select a good business? And I know a lot of that comes back to stewardship and then maybe you can tie that into because we're good stewards. These are the type of businesses and these are the type of people that we're looking for.
Brent Beshore
Well, let's go back to maybe first principles. There is no conflict between people and profit. I think anybody who thinks there's a conflict between people and profit are thinking about it incorrectly. Now, I will caveat this and say I thought for a very long time and even my fallen part of my nature still has these conflicts from time to time. But let's just be honest that the way God's economy works, the way the King's economy works is just different by treating people generously, not just fairly. I think fairness is sort of the upper bounds of what most people would say, right, I treated them fairly. Did I do what I say I do? I think there's a level, a lot of levels above that with the moniker of being generous. Generosity is what the kingdom of God runs on. And so what does it look like in situations to be generous? This is where wisdom this is where judgment and discernment come in. Right, right. But what I found is the more generous I am, the more abundance there is and the more margin there is for everyone. Now, I don't know what fairness looks like, and this is maybe one of the things that's challenging sometimes.
Brent Beshore
And as much as you can operate in sort of high level philosophy and theology and all this stuff like where the rubber meets the road is, are there people who have come to me and said, I think I should be paid more? Of course. Right. And then it's a conversation, but I think that a lot of people shy away from that conversation. Right. And I'm using a micro situation here to talk about a macro issue. But a lot of people are like, oh, how dare you? You don't feel like you're fairly whatever. It's like no, our philosophy is, of course, we're happy to talk about compensation anytime. I don't know what is fair. Our expectations are the most elastic thing in the universe. So I don't know if you've ever experienced this. I certainly have, where I'm like, somebody comes along and offers me something, and all of a sudden I'm like, oh, wow. Well, now my expectations are reset over here. Whereas three months ago, if that same person had offered half that, I would have been like, oh, my gosh, that would be amazing. That's great. And so this elasticity in our expectations offers up an opportunity to try to figure out what's underneath it.
Brent Beshore
And so oftentimes what I've found is when somebody says, I need to make more money, what they're really saying to you is, I don't feel recognized. I don't feel like my work matters very rarely now, you operate in a little bit different segment of the world than I do in terms of how much people are compensated. No one's coming to me based on the way we pay and saying, hey, I can't feed my family. Hey, I'm desperate. Right. Most of the time, what people are saying when they come to me is, I think I'm being undervalued compared to my contribution. Right, right. I think it's a very different and we can talk about how you'd handle that with obviously, inflation is raging. It's a real thing. It's hurting the poorest among us the most, and it's a real problem. And that's a separate issue. What I'm trying to talk about is, like, when somebody comes to you and says, I'm dissatisfied, that should tip off in your mind. They don't feel safe, they don't feel appreciated. They don't feel like their work matters. There's a lot of these things that are kind of all tangled up because at the end of the day, all I can say is what's fair is what two mutually consenting adults agree to in terms of compensation.
Brent Beshore
In terms of terms and then I always say that's the baseline. I always, as a person who's employing people, that's the minimum that I will ever do for somebody, and very rarely is that what they actually get paid. I always want to go above and beyond and be generous beyond fairness. Right. But if somebody comes to me and says, wait a minute, yeah, sure, you've given me more than what we agreed to, but I still think I'm wildly undercompensated, then I say, okay, what's changed? Now, circumstances may change. Right. There are very good reasons. Hey, you're adding a value that I didn't realize you were adding. Or maybe I'm and look, I'm messy, I'm broken. Like, I don't have the perfect view on things. But I think there's a way to approach conversations like that from a heart of generosity for the good of the other and with a true vulnerability for the good of the other. You're not scared to have the conversation. You're not worried. They're like, oh, crap. Well, now I'm backed into a corner, right? That's not at all the case. It's about trying to understand their perspective and then trying to figure out maybe you're wrong or maybe I'm wrong.
Brent Beshore
And a lot of those conversations, that's the way I kind of talk about it. I'm like, hey, I appreciate you bringing it up. It sounds like this has been a challenge. Like, I wish you would brought up sooner, honestly, and I really wish I would have come to you first if I'd felt but I just don't feel that way, and so help me understand. And sometimes, look, I would say sometimes I say, hey, I was wrong, and then other times I say, I really don't think that you have the proper perspective, and let's talk about that. Yeah, but almost all those end in good places. Very rarely, I think this is where, whether it comes to employment, which is a deal, right. How much somebody's compensated in what form, what way, under what circumstances, or in terms of a transaction to purchase a company or to fund a company or whatever partner with a company. Great conversations. It's usually obvious where you should get to when two people can kind of let down their masks, let down their guard, and just say, hey, this is what I'm thinking, this is the way I'm feeling. Great.
Brent Beshore
This is the way I'm thinking, this is the way I'm feeling, and just try to come together on it. I think that are we getting to challenges again where egos flare, where pride gets damaged, where we feel slighted? And look, I still feel in my heart sometimes this as well. Like, when somebody comes to me and has a problem, I'm like, how dare you? That's my first heart reaction. How dare you? Do you know how busy I am? And I'm like, wait a minute. Wait, hold on. Back up, back up again. This goes back to first principles. Yeah. Where am I putting my identity? Where's my salvation? Where's my security? Why do I matter?
Tim Sweetman
Yeah, just keep coming back. That's so good. So, last question, because we are running up against time and got to let you go. But recently you guys did a mid year update. Love how you phrase it, man. It's been a year, and it's only June, or it's only July. It has been a year. I always hate to date a podcast because I want to be able to talk about principles that last longer. But I would love to end with.
Brent Beshore
Hearing your you just have a lot.
Tim Sweetman
Of encouragement, I think, for business owners and leaders. We're coming out of COVID post pandemic. I think people are beat down a lot of mental health issues, a lot of challenges. And there is a need, I think, for encouragement because there's a lot of good things that are happening. But as best as you possibly can, again, with much humility and with lack of ego, as you look out over the next couple of months, or maybe the next couple of quarters, four to five quarters, what are you seeing forthcoming, and how can that be an encouragement for those that are listening?
Brent Beshore
Yeah, you're all screwed.
Tim Sweetman
It's going to get worse.
Brent Beshore
Yeah, we're all doomed. No, I was recently having lunch. One of the things I love to do is to go and get lunch, share a meal, buy a beer for what I call sages. Right. People who have been there, they've done that. And this guy had been operating his business for 40 years, started it in his mid 20s. He's now in his mid sixty s. And he's built this business, and it's a big business now, cash, my guess would probably be doing 15, $20 million of free cash flow. He owns 100% of it at this point. He's doing great. Right. But it's been hard. And I asked him. He was kind of complaining about some of the stuff. And I said, hey, compare this operating environment. Like, you've lived through the 80s. You've gone through some of the weird stuff that happened in the 90s, early 2000s, like all this, 2008, obviously. And I said, what does this environment compare? What is the analogous environment from the past? And he goes, this is completely new, and this is the toughest operating environment I've ever had in my entire career. Wow. So as an encouragement, again, this is not me saying, I mean, I've only been at it since 2007, right?
Brent Beshore
So I haven't been at that long, but it's certainly the most difficult operating environment I've experienced. Everyone I talk to, unless you're in some weird niche that's like, oh, yeah, we were in hypodermic needles, and we happened to go through the roof. We were the sole face mask provider to China or something like that. Right. Other than those weird anomalies. Like everyone's saying, hey, this is level ten difficulty. We got inflation, we've got material scarcity, we've got labor scarcity. You've got weird, inconsistent government policy. You've got political turmoil that's obviously informing that there's all these things that are just swirling around. I have no idea what the future holds, and I hate to I don't have a crystal ball. This really comes back to the principles of why we try to be so humble in how we set up relationships, why we think that margin in relationships is really important. Right. So if you're on an edge with somebody, probably the next two years might break that relationship. So I would encourage you if you have a tenuous relationship, whether it's at work or at home, invest heavily in getting margin in that relationship. If you've got a business that is vulnerable.
Brent Beshore
I'd try to do everything I could to stock up, save up delever, be conservative. Like, now is not the time to score points. Now's the time to play good defense. And I don't know what's going to come next, but I know it's going to be challenging. And look, things may reverse. Like, no one knows the future or anybody tells you knows the future is lying to you, especially experts. Don't listen to experts. So I would just say it comes back again to posture of humility. Do what you think you need to do to be durable, to survive. I mean, just be humble in your approach. Yeah.
Tim Sweetman
That's all you can do.
Brent Beshore
That's super self grace. Everybody's going to make mistakes. You're going to screw up. That's okay. Just roll with it and learn from it. Right. Don't hide from it.
Tim Sweetman
That's right.
Brent Beshore
Yeah.
Tim Sweetman
It's encouraging to me as a young business person to hear you say that somebody's been doing it for 40 years, going, this is the hardest. And I've heard that so many times. Now I'm going, okay, I guess I'm not doing it quite as bad as I thought it was. These challenges are real, and so that in a lot of ways, it's like, okay, releasing that pressure on yourself, and it's so encouraging. So where can people find you and the floor is yours? Where would you like people to reach out to find out more about permanent equity and maybe follow you on Twitter? Because that's a fun follow. Or any other calls to action.
Brent Beshore
Yeah, I mean, look, happy to try to help. If I can be helpful, I try to respond. Unless you're hard selling me on something. It looks like you've written something custom. I try to be responsive and whether it's my DMs are open on Twitter, send me a LinkedIn message, go through the website, whatever you might want to do. If I can be helpful, I'm happy to help. Personally or professionally. I mean, look, I get a lot of people who reach out to me and ask me about my faith journey and something I've written a little bit about. I haven't published it publicly, but happy to share that confidentially with you if that's something that's interesting. If I can give you some insight or I'd say also comb the Permanent Equity website, we try to be very generous in terms of how we open kimono, our learnings, and certainly it helps us, obviously, but we really try to do it too out of a heart to help others. And so if you're thinking about buying a business, there's a piece of content on there that spent a lot of time on called how to Buy Your First Business.
Brent Beshore
Encourage you to check it out. Right. If you're curious about how we think about debt and the use of debt, we've got a piece on there called The High Wire Act that would encourage you to read. We've got a business calculator on there. We've got the book that we did called The Messy Marketplace. We actually have a podcast version of that that's completely free. You can listen to it. Obviously, you can buy the book on Amazon. So anyway, there's a lot of different ways we try to be generous, but if I can be helpful in any way, let me know. Grateful for you listening today and grateful for you. Thank you for coming in and hanging out. And I think it's not many people want a vacation in Missouri in July, but Tim's not the sharpest knife in the that's right. Yeah.
Tim Sweetman
I appreciate that. Thanks so much for doing this.
Brent Beshore
God only works through idiots.
Tim Sweetman
That's right. Amen to that. Yeah, the small people. Thanks so much.
Brent Beshore
Appreciate it.
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.
Tim Sweetman
I hope you tune in next week.
Tim Sweetman
For part two of this conversation. It would be fantastic if you would take just a couple of moments to.
Tim Sweetman
Leave a review or rate us on.
Tim Sweetman
Apple podcasts or wherever you get your podcast ass. It really does help the show. Thanks so much for listening. To find out more about the Tension podcast, visit WW tensionpod.com or you can find me on Twitter at timsweetman.
