Justin Ishbia - Lessons from Acquiring 586 Companies - [Invest Like the Best, EP.357]

Invest Like the Best with Patrick O'Shaughnessy

My guest today is Justin Ishbia. Justin is the Founding Partner of Shore Capital. Shore is a private equity firm that invests in microcap businesses within industry niches. With $7 billion in capital deployed but an average transaction size of just $12 million, Justin has worked to build a system to drive success for hundreds of businesses through replicable operating procedures and championing young professionals.

The firm has created a moat around volume with nearly 600 acquisitions over the last three years, some of the highest numbers in the world. We discuss identifying growth prospects, constructing a meaningful board, and the business mentality behind "main street," not wall street, as Justin puts it. Please enjoy my conversation with Justin Ishbia.

Listen to Founders Podcast

For the full show notes, transcript, and links to mentioned content, check out the episode page here.

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Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.

Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.

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Show Notes:

(00:03:10) - (first question) - “The system is the star” and how it applies to Shore Capital

(00:07:10) - Shore Capital’s origin story

(00:12:48) - What the perfect type of deal looks like for Justin

(00:16:34) - The historical rates of return for their deals

(00:18:12) - Shore Capital’s defensibility and strategic advantages

(00:22:13) - Their board system and incentive structure

(00:28:20) - Why they focus on the industrial subsector

(00:31:21) - Overview of thesis evaluation and generation

(00:37:24) - What they’re looking for during the diligence stage

(00:40:45) - The bad reputation of levered rollups

(00:43:57) - What he’s learned about negotiations

(00:46:39) - The weak points of Shore Capital’s system

(00:48:59) - The Innovation Stack; Thinking about stacking unfair advantages

(00:52:11) - Selling a business and what buyers are looking for

(00:55:08) - Heavy focus on operations and their portfolio performance group

(00:58:00) - Why nobody above an associate level has ever left Shore Capital

(00:60:46) - Lessons learned becoming the owner of a major sports franchise

(01:03:56) - What’s surprising about how the league functions

(01:05:05) - Key people and firms he’s learned the most from

(01:07:17) - Where Shore Capital’s system could improve the most

(01:11:06) - The kindest thing anyone has ever done for Justin