https://open.spotify.com/episode/56IxVRJTTfXzCwWkCbOVqF
Paul Bueser
Hello, and welcome to The Art of Investing. I'm Paul Bueser.
Rick Berman
And I'm Rick Berman.
Paul Bueser
We're your hosts. Art of Investing is a series of discussions devoted to exploring the joys of compounding in all its forms. In each episode, our guests will be some of the world's most compelling people from across the vast range of human achievement.
Unknow Speaker
This show is brought to you by Pine Grove Studios in collaboration with Colossus. The hosts of the show, Rick Berman and Paul Buser, are the co-founders and co-CEOs of Seda Grove Holdings and co-CEOs of Seda Grove Management Company. All opinions expressed by any of Rick, Paul, or their podcast guests are solely their own and do not reflect the opinion of either Seda Grove Holdings or Seda Grove Management Company. This podcast is intended for informational purposes only and should not be relied upon as the basis for investment decisions. Seda Grove Holdings or clients of Seda Grove Management Company may maintain positions and securities discussed in this podcast.
Rick Berman
Our teacher today is Jan Moore, the investor-turned-operator who is currently CEO of Chapters Group, a publicly traded holding company building Europe's home for mission-critical businesses. At just 33, Jan is actually closer in age to our students than he is to our typical guest, but rest assured he has already traveled well up the compounding curve and has a great deal of wisdom and lessons to share. Perhaps what interests us the most about Jan is just how quickly he's evolving as he follows his ferocious curiosity and is fueled by what seems like a boundless energy. Consider that by 25, he had already launched a thriving investment firm, JMX Capital, that was backed by some of the best endowment and family office LPs in the world. Fast forward just another seven years and Jan was pivoting again, this time to take the CEO reins of his largest portfolio holding with a daring ambition to build a baby Berkshire in his homeland of Germany. This class is first and foremost about a young aspiring value investor who embodies a fascinating combination of German discipline and sensibility with a more American risk-taking and entrepreneurial spirit on his quest to continue re-imagining the art of what's possible in a life and career. We also discuss in detail the vertical market software industry, particularly its European landscape, and the business attributes that make it our favorite investing battlefield. Finally, we explore with Jan what it looks like to be an astute student of business history, and to successfully apply those learnings real-time as both an investor and an operator. With that, we hope you enjoy our class today with our good friend, Jan Moore.
Paul Bueser
Jan, welcome to The Art of Investing. It's great to have you here, and we're looking forward to what we know will be a really far-ranging conversation. And as a launching point, I was wondering if we could zoom in on that decision last year when you shut down JMX Capital and went all in as full-time CEO of Chapters Group. At the time, you were successfully managing hundreds of millions of dollars. And some might even say you had fulfilled the dream of every aspiring value investor. And yet you decided to give that up. So take us back to that moment and share what was going through your mind. What was so compelling to you about that opportunity to build chapters group?
Jan Mohr
Well, thank you, first of all, for your interest. Who would have thought that what started as a little experiment would be interesting a few years in? So it all comes back to when I was 11 years old, I read a Burne-Buffet biography. And I started reading really, really early. My dad would always hand me biographies and pretty random things. When you go through all the biographies I read when I was nine and 11 years old, I could well be at some sort of biology conference because I really caught a different bug. I read this Buffett biography, and that particular one I can't recommend. There are a bunch of fantastic Buffett biographies. I really got fascinated by the entrepreneur and by the person. And the more you study Berkshire Hathaway and Buffett, the more you get this insight that... I mean, he's obviously talked about as a fantastic investor, which very clearly is. But I think where Buffett is the absolute complete outlier is just in terms of the building of Berkshire Hathaway and how the entire structure came about. I think every value investor carries around that little backpack of trying to do that on their own one day. And that idea certainly has been in my mind for a while. And that's because the idea of a holding company or public holding company has so much appeal if you want to do investing for the genuine long term. So, I mean, when I ran my fund, you were trying to underwrite really long-term investment theses, right? So you were looking at change in companies and you were looking at really nice compounding cases. But if you looked at it from a real objective perspective, you were matching that with monthly liquidity. So my LP base, everybody was very long-term, very high quality, but just objectively in the public market, you're not, right? Your performance is measured quarter by quarter or year by year. And you're trying to make this point in your investing side, how like the 20 years matter. And there's just this big mismatch in duration. And that's one of the beauties of a holding company is that the capital base is there in perpetuity. I believe investing success is as much about the left side of the balance sheet. I mean, where you invest as much as how you match those investments, the right side of the balance sheet. And I think the right side of the balance sheet always gets underestimated in importance. And when people blow up or all the big tears happen in our industry, is that because people the right side of the balance sheet wrong. So that opportunity emerged for a number of years when we built Medicon into a holding company. And it's just by a mix of opportunity at the beginning of 2023, also a bit of necessity because it has become this huge focus of the fund in my time. It was the right thing to do. So I joined full-time in 23.
Rick Berman
Hey, Jan, why don't you set some of the context for us around JMX, when you got going in your fund investing career, a little context for the approach and the philosophy that you had there, and ultimately take us up to the Medicon story and the very initial days of it and that opportunity that emerged for you and some other friends to begin thinking about a second act for this company.
Jan Mohr
I think a really pivotal point was when I was at the 2011 annual meeting of Berkshire Hathaway. I was still in university and I was always the kid who invited himself to all these informal value investing meetings. You know, the value investing world in general is very friendly and of these informal meetings. And one of the organizers in the German world is a guy named Norman Rentrop. He's a publisher in Germany and has built a big investment firm around his publishing company and investing his private wealth with a team. And he's doing a conference in Omaha. I think he's traveled to the Berkshire meeting for, I don't know, the last 30 years or something Addison, always one of the first Germans who was in Omaha. And I got invited to that meeting and nice idea sharing conference and met Norman that way. And also at that conference met Matthias, Matthias Sagau, who then very shortly after joined Norman's investment firm. Then Matthias hired me at the investment office and we ended up working together for Norman, really picking stocks. And Norman's operating model, which was really pioneered by his family officer, guy by the name of Jens Goels-Allermann, is not to build an integrated investment firm where you move up the ranks and you get more stripes on your shoulder and get more responsibility, but it's quite the opposite. When you're successful and you want to build your own personality as investor, you're kicked out in a very friendly way, but by way of getting seed money with your own investment fund. So Norman and Jens have a track record of, I think nowadays it's seven or eight funds that used to be analysts with the family office who now run their own investment funds. It's guys like Matthias and I, but also Rob Vinal in Switzerland, who've done very well building their investment firms. I still don't really know why that young or what they saw, or whether they might have confused me with someone. I don't know. But they provided me with seed money very early on in April 2015. It was a nice coincidence. I was living in Sweden at the time with my then-girlfriend and a wife, and we were moving back to Hamburg. And Norman, in the end, asked whether I wanted to run my own investment fund. And I don't have any background. My parents didn't have substantial capital to invest. So I was always a capitalist without capital. And that was the opportunity I was looking for. So I got started with JMX in early 15 with one investor, really two investors. So I had 5,000 euros from my personal wealth. And then the seed money from Norman, which was a little bit larger, got started. Always done the same, right? So concentrated, long only, try to find good companies that were undergoing change that we could own for a number of years. And we're also input or helping the company might actually unlock some of the value. We've grown that into a nice little investment business. It was an interesting time when you look at the 2015 to 2023 timeframe, a lot of things happened, right? There was Brexit in there, it was COVID in there. We had very positive oil prices and we had negative oil prices. A lot of stuff happened in that timeframe. And I think we did on balance, we did a good job for the investor base.
Paul Bueser
One thing we have highlighted in Art of Investing and a couple of our conversations to date is this idea of compounding. And we're going to get into that in a few different ways. But let's just talk about what was Medical Columbus and then Medicon and now is Chapters Group. It's a 25-year-old German public company that's had a few different versions of its life to date. What was that like originally as an experiment for you? I remember we were actually researching a public company with you down in Australia. We were on the ride to Bondi Beach and you mentioned this tiny little German company that had just sold its one asset and had 10 or 15 million euro on the balance sheet. And you thought, like every aspiring value investor, that you could build your own little Berkshire Hathaway. What was the size specifically in the portfolio of JMX at that point? And what were your aspirations early on? And take us through those first few years from 18 or 19 through, say, the first three years of Medicon and then Chapters Group. What structure was there? What capital was there? What people were around the table?
Jan Mohr
It's interesting that you ask about the percentage weighing in the fund because I would need to look that up. But it certainly wasn't huge. So it's all public, but I would say like high single digits type of weighing. So like a 7, 8, 9% weighing of the fund at that point. Now, it was an interesting situation. I think who doesn't get enough credit for where we are today is the original founder of the business who built the original business, which was a business process outsourcing and turned out to be a profitable business. It was one of those companies that started during the new economy bubble. So not the last bubble, but the bubble before that. And the cap table was pretty destroyed, right? So there were some old venture capitalists and some private investors. And it didn't really make a whole lot of sense to keep the company public. And he hadn't had an investor relations meeting for quite some time. Now, the block became available and Matthias and I decided to acquire that block and get involved more with the business. And I was trading at the original time, I was trading at a very low valuation. I can't remember exactly, but it was like below cash type of valuation. And we bought that stake and then just learned that the business is actually just worth more than anyone thought. That's due to the market was consolidating at the time. And what looked like a pretty poor situation turned out to be a valuable strategic asset. And that actually resulted in the sale of the operating business then in 2018. Now, what was interesting is that the founder, Dirk, unlike how a lot of people would play the situation, was very, very receptive to both Matthias and I, to our influence of trying to do something with the capital as opposed to just liquidating the business. And he was really helping us get things started. At the time, there were two teams that we ended up then partnering with. The first is UCAM Software, a young team tried to replicate Constellation Software in Germany. And the other one, our NGC with Alexander, trying to buy companies in succession situations in Germany. And they were both fundraising at the time. We talk about the 2018 timeframe here. And they were looking for a capital investment of 5 to 15 million equity. And that's a hard spot to raise capital, right? Because you're a little bit, that's too much money for friends and family in most cases, but it's also really sub-institutional where the big family offices or endowments would consider an investment. And we knew both teams well. And at the time, It all looks like a thought out plan after the fact. But at that point, it was really just a decision between Matthias, Dirk and I to just say, listen, let's just try this. Let's just use the capital from the sale and let's see if we can get a start to these two platforms. And they did start. What used to be one company here and one company there turned out to be two companies here, two companies there. And things grew. And we were quite happy with the traction of both platforms. And I remember dinner I had with Dirk, and he was managing that as an executive, sold the original business, helped. Matthias was on the board, and I was helping as a shareholder, and he was playing along. And sometimes he said, listen, this all makes perfect sense. I really enjoy working with you, and this makes obvious financial sense. And platforms we found, they are obviously doing a good job, but I need help. I'm alone here. I need support. And that's when I originally, in early 2020, joined the executive board, teamed up with Dirk to help scale the group. I think we had about six operating companies at that point, and we're just getting started.
Rick Berman
Jan, curious why you think Dirk was interested in this next phase? I mean, it would seem to me that most operators sell the business, take the cash, start something else maybe themselves, but it seems like a very odd thing that he would maintain his capital and put it into the hands of a handful of young Germans with this idea, and maybe just set some of the context around what the opportunities were that you thought were present in terms of what UCOM and NGC were looking to buy.
Jan Mohr
So on Dirk specifically, I think he's just an incredibly street smart person and a good judge of people. So I think he understands dynamics and interests and where things go well. And I think he was de facto betting on Matthias and I. And he's a very low ego person. So he wouldn't be the type of individual who says, well, this is my success. And I think he would value outcome and meaningful relations over making it his victory. And he's a shareholder to this day. So he actually, I think, continued to participate in most of the placings that we've did. So just financially, it worked out incredibly well for him. I think it was really just betting on people. Now, what did he see at that point? And what was the opportunity that we saw? I think when you look at the German market for small and mid-cap companies, and that counts for regardless of the industry, I think you are in this huge wave of succession. And in particular, in the software space where the foundation of a lot of these companies or the formation of these companies happen at a certain point in time, right? So when you look at a lot of the vertical market software companies that we're looking at. They were formed from people from an industry at a time when software tools became available. And that is a late 90s, early 2000s timeframe. And people who build companies at around that time, they were usually not 18 when they started the company. They were usually not 60, but they were somewhere in between. And they now reach an age where retirement is an option for many, or sometimes a necessity because of health or age. And these businesses just happen to be there and they happen to need a home. When you talk about chapters today, we talk about we're building the home for mission-critical businesses. We just try to be the responsible long-term home for these companies. And I think what we saw at the point was just deal flow and opportunities, but also a young group of people who just had time. So none of the people involved have or will in the immediate future see some sort of, oh, we need to make a quick exit. And everybody got started way younger in doing this than they usually would, both CEO, CFO, but also the platform heads. They got started when you usually don't run a fund. That's not what you do when you're in your late 20s. So time perspective was there. A lot of energy was there. And I think we've just shown over time that the group is able to run these companies responsibly. Dirk is always joking that we have the biggest retirement problem ahead in 25 years because there's this huge homogeneity in age in our group, right? We're not late 20s anymore, but we're mid 30s now. And there's a huge homogeneity in leadership, apart from Paul, who just joined our board recently, this early 40s age. But other than that, I'm joking. Other than that, it's pretty homogeneous in terms of age. And I think that has value.
Rick Berman
One of the things that's so clear is the energy and the vitality that comes from this group of young entrepreneurial spirits. We just had Todd Combs in class. And one of the points that he made was just how important it is to try to take risk early in life. And it does seem like that's been a big part of your journey. When I think of Germans, I don't necessarily think of risk takers. I think of people that are typically very measured, very rational, calculated. But curious if you just had any reflections on your own path and some of these decisions, it seems like you have pulled forward much more quickly than most others would in terms of the age you were when you started your investment firm, the age you were when you first joined the board, when you first became CEO now of Chapters, then Medicon. Maybe just talk a little bit about how you perceived some of those decisions in the context of risk.
Jan Mohr
I had nothing to lose. I think when people talk about risk or risk career choices, what I would always mentor a young person is to really think hard about the actual downside. And there is career risk if you have five children in private school and losing your stream of income will cause meaningful distress to people around you. That's risk. When you are out of business school or even out of undergrad, what's your actual risk? You might have peer perception that it's super important to build, I don't know, two years at a consulting firm or something like that. But if you don't have that, is that really downside? And I would give that question a lot of thought. Most people would arrive at is that that's the time where you should go unconventional. I don't want to use the firm risk-taking because I actually don't think it is risk that you take. It's where you venture out and try finding your true self and who you are as a person, and more particular in our world, who you are as an investor. And I think the more exposure you can get to different styles and trying to puzzle around what you like and what you don't like, I think it's extremely important. I would always encourage joining an organization that fosters curiosity and your own style. I think if Norman and Jens in particular get something right, then it's the creating safe space so that you can develop on your own as an investor in terms of style. I think that's quite unusual. Most investment firms, there's some sort of, this is what we do here. Let's mold you into that process animal. And I think if I came up with some random investment strategy in biotech, which they wouldn't understand a thing about, they would still love that because it makes sense kind of who you are as a person. That's important. So part of my discovery over time is I'm a fairly high intensity person, and I'm not great at some aspects of passive stock selection, but I'm better at driving change. And I think that has naturally drawn me towards situations, both in actual investing, but also in now company building, where being able to mold a situation or be actively involved, I think just fits my character profile well. That's an outcome, right? You're not 20 and you have perfect clarity on that. I would always encourage the seeking an answer to that question over some sort of perceived branding. If you can swap two years of learning and at the end, you actually know who you not are, I think that's drastically more important than two years that look great on your CV. There's one more angle that I want to offer, and that is on importance of mentors and two points of advice here. So I've been tremendously lucky getting access to mentors just by cold calling or cold emailing. And that's another example where you don't really have a lot of downside risk, so to speak because the worst thing that can happen to you is that somebody doesn't answer. So I would just go for that. And some of the relations that we have today at Chapters are really deriving from conversations I started or tried to start years ago. And that's a good advice for students, right? So if there's a person that you find interesting, worthwhile mentor and somebody you want to learn from, there's really no reason not to reach out and do it. It's surprising who you can access. And if you do it in a friendly and kind of value add way, I think the likelihood of somebody getting back to you is actually pretty high. Another aspect around mentorship, you can't obviously talk to anyone. And what I found super helpful is to look at your big idols, but don't look at them when they're 80 or 70 or kind of at the end of the career, but try to find sources of how they behaved and decisions they've made when they were at your age or at a similar point in time of your development. And that is really, really interesting. I mean, Buffett is another example. The picture you have of him today and how it is portrayed and how he kind of portrays himself is just so genuinely different to who he was when he was 20 or 30 or 40. And there's a lot to learn from that. So I always found that interesting to kind of borrow experiences from your mentors of your great idols, but just looking at that. It's very timeless as well. It just travels well. And then you get the luxury of seeing how people develop. Again, Buffett as an example, like look at Buffett in the 30s, look at Buffett in the 40s, in the 50s, in the 60s, just see the learning curve and you see how he grows as an investor. And that's just fantastic to study. And I would do that because it helps you kind of form who you are and helps you in your decisions today.
Paul Bueser
We've been there along the way on this whole journey with your merry band of much younger people than we are. And it's interesting, you referred to this idea of in hindsight, things make sense. And I just want to pull on that golden thread for a minute now, where we are in the fall of 23, it's interesting for others to know how some of this came together. And I recall several years ago, you're teaching at London Business School. There's a really famous course there on search funds and entrepreneurship through acquisition. Our mutual friend, Will Thorndike, was very involved in that, as was Matthias Reichert and a lot of other Germans that are involved in some of those secret German enclaves at Berkshire Hathaway. What's interesting to me is you pulling those threads of search funds in Europe not being ideal, mid-market private equity missing out on a lot of these smaller companies that are going through generational transition. You learning about incentive structures, for instance, and Norman Rentrop was wise in the way that he structured with RV and Rob Vinal and you and others, this very simple fee structure with a small management fee and a hurdle rate. And so that influenced you a lot. You then thought about some of your favorite businesses. And I remember talking about those over time would generally have a decentralized structure. And so you meld all those together and you find Stefan and Niels building Ucom in Berlin. You find Alex in Munich and NGC. Some of that is serendipity and timing. Talk about how all those pieces came together and maybe put it in context of just the very specific what is chapters group today. Give us the number of platforms, number of companies, what the team looks like, and connect those dots from this mosaic of experiments and influences in the background leading to what is quite a large public company today.
Jan Mohr
I tell you what the downside is when we talk about chapters, is that a lot of the things you see today don't look perfectly clean, because things evolved over time, and things need time to focus and conviction builds over time. So one of the investor questions I'm always getting is, okay, well, you arrived at that vertical market software scales the most in terms of where you can deploy capital. Well, why didn't you only start doing vertical market software three years ago? It's so obvious, right? Well, if it was obvious, that's what we would have done. You learn by osmosis and conviction grows. And conviction doesn't jump from 0% to 100% overnight, but things happen. And while your conviction in one thing grows, other parts of your portfolio are developing nicely. There's nothing wrong with it. So you end up with a situation that doesn't look perfectly clean. Now, the average public market investor hates that because there's this thing about simplicity, cleanliness, pure play is a thing. I think when you talk to investors who appreciate life and how things come about, I think there's a lot more appreciation for, and you look at some of the large holding companies in the world, the Danaher's, the Berkshire Hathaway's, Ropers of the world. Sometimes the uniting force between some sort of businesses might not be best segmented in segment A, segment B, segment C, but sometimes things belong or also not belong because of other underlying reasons. And we want to build that and we'll come to that today. But who we are today is really a result of the last five years, which is a number of experiments. Two of them we already covered, Ucom Software and NGC. We've had other experiments. So we're now trying to replicate the insights that we have in vertical market software, both in the UK and in France. That's ongoing, and that's a big shift of where capital is slowing towards. We've also started an experiment with fiber-specific software. So we have one group that is one vertical where they have managed services and software. And we've also made an investment into a platform two years ago, a business called Fintiba, which in and itself is kind of an interesting story because they got started in a really scrappy way, only ever used 200,000 euros of venture capital and built a super capital efficient growth engine. So this is how the last five years looked like, right? So really driven by individuals who, we would always say we combine market opportunity and talents. So whenever we have a talent, someone we trust and we like, and there's a market opportunity that we would back that. Now, that's the past five years. I think when you look out in the next five years, I think we need to retain the scrappiness and speed of what we're doing. So bear in mind, we went from zero to 33 operating companies in three years. So you want to keep that speed and you want to keep that aggressiveness and that lean way of scaling. But I also think that we need to be more thoughtful about, in particular, what we don't do. And what we won't do over the next five years is to open eight new platforms and try to expand horizontally. I think the answer will be more to strengthen what we already own, because we really like the people involved, and we like to empower them and grow more here. And we have built conviction. And as I said before, in particular in the software space, I think that's just a big focus area. And it's a bit like finding your wife. You know, it's the one you stop walking around and looking to improve. It's just know that feeling when you see her and found that in many ways. And now the next five years is all about focus and doubling down on that.
Rick Berman
Yeah. And I love how you describe these early chapters of the company as being only able to connect the dots in hindsight. And this idea that early on, some things just take time to set a number of experimentations and see what works, see what doesn't work. It does strike me that time horizon is so important here. And the concept that if you were trying to set then-Medicon now chapters up on some kind of a three to five-year path, it would be much more important for there to be complete order day one or as quickly as possible. And yet, all of the potential for this company is wrapped up in the open-endedness of the art of what's possible over the course of decades and not years. Hearing you describe it, it sounds a little bit like chaos theory, this concept of moving between order and disorder and being okay with that because of all the dynamism that's required in order to grow something meaningful. But I think it also really resonates with the team that you have in place and the youth and the vitality. There's a long time horizon that is shared by these folks because even just by the definition of your age, you've got a really long path in front of you. But curious if you would just maybe share with us a little bit about how you think your early years as an investor, as a fund investor, have shaped your now early years as a CEO and an operator.
Jan Mohr
Before we go into that question, I want to set one thing straight. I think certain aspects of the business do need order and we need systems, right? When you look at a personality type like myself, I think there is a risk of trying too many things, having too many small bets. That's not what I meant to say. I think what we do need is way more systematic thinking about the portfolio and how we run things. And that's going to be the theme of the next five years. I think just from time to time to embrace what you call chaos or kind of accept that there is no clear outcome, I think there are those moments in time where that's just super, super valuable from an optionality perspective. And I think when we got started, we could have drafted a concise plan and knew exactly where we want to go and end up being precisely wrong. I think that's a point in time where embracing chaos is great. I wouldn't say embracing chaos is the theme of the next five years. I think it's more getting things way more structured than they were before. There will be a time again, maybe if we talk again in five years and there are other opportunities, who knows what they will be. But I think there will be a time again where you say, listen, we need to adapt again and we need to reinvent the business again. But we know where we are going now. I think it's just this openness around being open for opportunities at the right moment in time. I think that's just the mindset you want to develop. And then also having an organization that understands that because there is a huge institutional imperative around... I mean, the original business wasn't a medical business process outsourcing space. Most boardrooms would say, listen, we need to reallocate the capital from the sale in that industry into the same industry. You would have the Berkshire Hathaway, let's sell the garment business and go into garment machinery type of logic. And every observer would theoretically embrace, oh, it's so simple, right? You just sell the Berkshire Hathaway textile mill and you just buy whatever, an insurance company. But in practice, if you've ever been in a board meeting, getting that done is like moving a mountain because people's minds are just rightly so, right? I mean, focus on what the existing business is heading towards. So I think creating an environment where such discussions can be had is super important. And Paul, I mean, you're writing in The Outsiders. There are these stories where some of the CEOs were open to change course if opportunity emerges. I think having that in mind as a tool, I think that's incredibly important. But I just want to make a point, embracing chaos. If anyone who listens to this gets away with embracing chaos is the topic of next five years. That's not what I want people to, quite the opposite. Created a lot of chaos over the last five years. To your question, I almost want to call all the CEOs I dealt with over the time of running my fund and say sorry to them because as an outside investor, you come with suggestions and it's almost never in the theory. It's always never in the theoretical inside. And I can't believe how some of like Elliot of Two Cows or Rowan of Naked wines, they were always really polite to me. They were really caring and they are great individuals anyways. But sometimes it's good to change perspectives and sit on the other side of the table and just becomes clear. It's not so much about the theoretical insights, but finding an effective way to make it work in practice is like 90% of what really drives change. Very few CEOs of large companies have a problem understanding capital allocation. It's just that things are set in a certain way, that the actual true options that are public company CEOs are so limited. And it's not that you can just change course. I think for us creating a setup where rationality wins, we can do that because we build things from scratch. But that's very, very powerful. And I think that's one of the cultural aspects that we always want to maintain.
Paul Bueser
We're lucky to have one of the great business leaders who has booked some of these trends, who is able to change his mind, is a great operator and capital allocator. Mitch Rails is a large shareholder of chapters. And can you share a bit about what we often call sliding door moments? I remember when we all went to Mitch's office and home at Glenstone early this year, and you brought your team over, Marlena and Matias. One of Mitch's former executives, Alex Joseph, was there as well. And we spent a couple of days sitting at the feet of Mitch, learning not only the wonderful, rich history of Danaher, but in a beautiful way, we learned a lot of insights for how to apply this to Chapters Group, to a new decentralized business, to thinking about these tensions like Rick mentioned of chaos and order, and to thinking about broad themes that you could actually compound with for years and decades, just like Mitch and his brother Steve have. Share with us your insights from that time, and then more broadly, the myriad set of meetings we've have with Mitch as it relates to chapters group.
Jan Mohr
I'm just grateful of that opportunity because it's just such a perfect fit for what's relevant for us, right? And the similarities are interesting, right? I mean, doing it in a public company and doing it in some sort of transformation angle. Danaher is not a company that was founded by them, but there was some sort of transformation at the very beginning. And then that idea of every three to five years to reconsider, listen, what's the focus of the business and what do the next five years look like? and reinventing the business, keep on reinventing and keep on increasing business quality and keep up increasing the organic growth profile of the business and doing that in a way that it's not hyper-invasive. I mean, companies have done that, right? By being very hard on selling parts and then splitting up. And I think at least on the outside and getting a little glimpse from the inside, I think the way Mitch and Dana have done it in a very consistent and thoughtful manner. And then over time, and quite recently, another skinning of the snake, so to speak, condensed what really has the most leverage. And then freeing up oxygen for the organizations that are spun out, which also helps, right? If you put somebody on their own, push out the little eagle out of the nest so that they can fly on their own. I think that's important as well, organizationally. I think that ethos and the ethos of it's more important what you don't do than what you do. And thirdly, the entire idea around management systems is just incredibly applicable to what we are facing. Super simple to run six businesses. And it's simple to run two operating groups with six businesses. I think where it gets really interesting, if you go to 30, 40, 50, 100. And I talked to peers who are CEOs of other holding companies. After having the experience with Mitch, I've grown very skeptical when people tell me, listen, we have a billion revenue and we're in like 40 operating companies. And I ask them, how do you run your operating companies? And then I'd be like, oh, we got one person and they are ears in the boardroom. And whenever something pops up, they know about it. And we're just the best owner for this. And I'm not so sure. I think if you build something by way of acquisition, by definition, you create a level of heterogeneity in the organization that you don't have if you build organically. It's just different. But if you build something by way of acquisition, it's a must to have a management system. And that insight, full credits to Mitch on that insight. We still today, we are small enough and we are young enough and we can change enough so that probably nobody would notice for another three to five years if we wouldn't make that change. Still do fine. I mean, these companies are growing, they're nigh, they're stable. Nothing is wrong. But I think if we don't embrace that change and push for an actual management system across the entire group, what our small bottlenecks today will become huge bottlenecks tomorrow. And the likelihood of us going back into mediocre business results is huge. And when you see acquisition-driven companies both go to mediocrity or blow up, which also happens, I think it's mainly because they didn't de-bottleneck quickly enough. It would be so simple to just relax, right? Things are going well. We're profitable. Things are growing. And why the need for change? Well, again, it's sometimes more important what you don't do than what you do. And if you want to continue the growth pace, I think you need to adopt the operating model after five years. That's just natural. And in five years, again, we'll have five years of smooth sailing and we know what to do and we know what to execute. I don't know if it's in four years or in six years, but we will sit here again and there will be a change that we need to the operating model to unlock bottlenecks for the next five years. I think that thinking is what Mitch really gave us.
Rick Berman
It seems like one of those critical tightropes you're trying to walk relates to embracing an operating system, a management system alongside certain attributes of decentralization. Is that fair?
Jan Mohr
Long live decentralization. We will not lose that ethos and we will not lose the scrappiness ethos. My daughter is in a Montessori school and Montessori has this concept around freedom within limits. So you would be very strict around setting limits for the child, but within the limits, you can be incredibly creative and free and empowered. I think that's a good mental model for what we want. think the guardrails, direction of travel, KPI sets, how do we want the business to look like in five years, I think needs to be strict. And arguably, that's something our leadership team, meaning Malene and I really have under communicated. But within those limits, I want full empowerment of entrepreneurship and decentralization and empowerment, because that's who we are. We will not centralize. Just to give you data points for people who don't know us, we're a public company, we've got three and a half FTE at headquarters. That includes myself and Malene. We certainly don't have an overhead drag problem here. It's more the opposite. And kind of striking a balance between setting direction and still embracing decentralization will be the theme over the next five years.
Rick Berman
What else are you learning about building culture in addition to this payroll block between decentralization and systemization?
Jan Mohr
I think culture is really what happens when you're not in the room. And it's the feeling that without your involvement throughout every level of the organization, people make decisions, in particular hard decisions, the same way you would do that as a leader. And that relates to the entire organization. Now, probably the biggest cultural driver that we have is both to be a reliable partner, and that's a European value that is just very, very important and a differentiator. And then the ethos of decentralization, I think those are two values that are core. One of the downsides of a hyper-decentralized organization like we have been is that the real only time as a CEO you can make visible change or where you need to make visible change is when something cultural goes wrong. And over the last years, that's what I have done as a leader of the organization. So when you notice a situation where things really go off the rails in terms of ethics, you need to act quickly. And that's obviously invasive on the organization. because in a very decentralized culture, you would come in from the top and say, listen, this is not something we accept. Both Marlene and I have been very straight here. I think the next five years will be all about being more explicit about values as opposed to having implicit understanding because this is just how things came to be. Making that explicit and possibly over-communicate what these values are, that's going to be the topic over the next five years. But an important driver has been the price you pay for decentralization is that there's very little control over what people do. And that has huge advantages and has some downsides.
Paul Bueser
Jan, let's shift gears to what has become the biggest theme for investment at Chapters Group. That's vertical market software. Now, this is a buzzword out there, I think, especially since the venture bubble has been popped since late 21, early 22. there's a lot more talk about vertical market software. It's not a new concept. Mark Leonard at Constellation and several other holding companies have been acquiring and running lots of vertical market software companies for a few decades now. For you, describe what the chapter's version of vertical market software is. Maybe give a specific example of the metrics of the type of company you'd like to acquire. What's the nuts and bolts of one of these companies, number of employees, the types of margins you typically see, and why they're such attractive businesses.
Jan Mohr
One of the things to embrace is just the sheer number of these software applications anywhere in the world. When you think about what is software, it's a database, and it's a way to organize process flow to really take manual labor away and automate that. We are probably still at the very, very early stages of that. And we don't even have to go into all these crazy AI possible applications. But if you look today at the type of work that is still analog, probably within Europe in particular, in Germany or France, it's mind-boggling how many processes are still pen and paper or some sort of hybrid Excel pen and paper software solution. And there's just a shift. And I think the scarcity of labor and just labor costs going up is just a propellant of that. But having a database and a unique solution to become more effective in your work is probably one of the strongest themes over the last 20 years and will be over the next 20 years. Now, that has created an ecosystem of applications, if you will, who solve super specific needs. Some of them are what we would call horizontal. For example, we are speaking on a Zoom call right now. So that's an application you could use for all sorts of content. It's horizontal, And then you have vertical applications where somebody who is spending their time on, let's say, running an orchestra needs an ERP system to run their orchestra. Or you are a supermarket chain, and that's the accounting and tax filing software that you use. or you are a building operator and you have different key access control systems from different operators and you need one software that manages the different access software. Those are small markets, very specific markets. And usually the companies who have thrived in those markets tend to be monopolists or duopolists. And they've gotten there in a very capital efficient manner because normally they have discovered and then served a customer need where you didn't really actively have to sell to customers in the classic sense, but there was just uptake for that solution. So when you look at the companies that our platforms, for example, who come in Germany or Amlock in France or Graphinia guys in the UK and Ireland are interested in, they would be normally founder-operated, founder-owned. There are exceptions right here and there, but mainly founder-owned and the founders would own 100% of the business. And if it's two people, they would own 50-50. And they would be highly cash generative. So most of these businesses would be very profitable, talking margins, 20%, 30%, 40%. However, they would usually also be pretty small. Some of these verticals are tiny markets. And even if you own 60% of that market, it would be like a 1 million, 2 million, 3 million revenue business. And we've gathered different data points, really motivated by the success of our German team, who've done tremendously well getting it off the ground in Germany, also in all sorts of other markets, just the general competition to acquire these companies is on the margin lower than you would see in the large stock. If you have a large 100 million revenue software company, every private equity would like to own that asset. That's not so much the case for the smaller ones. And if you have the right management systems, you can run dozens of those software companies who in aggregate have the same business quality that one large homogeneous software company would have. And we want to go as hard as we can at that opportunity. And I think this succession and when these companies were founded timeframe, there is a bit of an urgency and to build this now. You could argue we've already done quite a bit of building here, but I don't think it's wise to wait for another five to 10 years. I think time is now and provide a good solution for the owners of these companies that we are the permanent home for them. And I think we want to live up to that reputation.
Paul Bueser
Jan, can we dive into one example? One of my favorites is your Symfony software platform, just to make this come to life for everybody else. I know that you have many different examples across a lot of different verticals and across different countries, but let's dive in there just to show how niche these can be and how strong of a balance sheet income statement a company like your Symfony operator can have.
Jan Mohr
As a public company, we can't share super specific data on each of the individual companies, right? But I can give you a high level understanding. So that's an industry where you have less than a handful of players globally. It's a super specific application because it's actually Symfony orchestras around the world. It's a pretty complex operation, pretty large operation with very unique, specific needs that you don't have anywhere else. And each individual organizational unit is large enough so that it requires ERP. Now, when you look at the large horizontal ERP players like SAP or Sage or any of the large guys, Microsoft Dynamics, they would usually have a general system and they would specify that to a specific market. Now, that market, even if you capture 100% of it, probably the global TAM of ERP spending on that vertical. It's hard to measure these things, but it's probably 10 million or something globally, because there's just not so many symphonies out there and you can sell so many things to them. So it's all about the ethos of survival of the fittest, meaning being best fit to the specific needs of the customer. And that's a good example where an entrepreneur really built such a solution. There are a few others around the world, similar solutions, but you don't have 20, you have maybe less than five. That is way too small for the big ones, with the application way too complex for a no-code, low-code, or Excel-based solution doesn't really cut it either. That's probably a sweet spot. And then you talk about low single digit, million revenue, nice margins like you would imagine from software. And it's really all about finding a sustainable way to run these companies and motivate employees, make sure that you recruit the right people to run these businesses and pay them properly and provide perspective. And because these are small companies, it might be hard to compete in recruiting, but you need fantastic talent in the end. And managing that on a day-to-day basis, I think it's going to be critical. It's really important to call out what our UCAM team in Germany has done here. When you look at the last few years, just the talent they brought into their organization and how they've been able to create increasingly larger and larger roles for those people has been very, very pleasing to watch and just a true success story. And that's hard, right? Recruiting into small companies and finding the right people that see that as a growth potential. And I think they've just done that tremendously well. And when you look at some of the organizations where people are coming from, it's kind of the big names in the industry, Constellation amongst others. And it's a true success story and obviously something to admire. And we're really proud of the team.
Rick Berman
I think we'll want to come back to that idea of how you attract talent to an organization, which I know you're spending a lot of time on right now. But curious if you would just share more about VMS and mission-critical businesses in general across Europe specifically. What's important to understand about the European landscape when it comes to the business you're building?
Jan Mohr
In the markets we're in, which right now is seven markets where we're actively looking for transactions, if you know what you're doing, you can build a database of these companies. And then it's all about creating a B2B sales funnel, essentially, to reach out to those businesses and see if it makes sense to acquire the business. And that really comes down to whether the vendor of the business feels comfortable selling to you. Most of these people don't need the money. And it's all about, are you a serious, reliable, and credible partner? For example, our UCAM team in Germany, I mean, they've been in business for five years. They've bought a double-digit number of companies. They're objectively a credible partner for these companies. And I think we can tell that story with Chapters Group in Europe in our next chapter of development. Just think about Europe for a second, because it might not be obvious for some of the American listeners. Europe is a strange place. There are a lot of similarities between the countries. People would always speak English to you, and things look very, very similar. But when you boil down, the country-to-country differences are tremendous. So what doesn't work, and there are exceptions, right? And there are cases where this might work, and there are cases where we actually might go that way. But what usually doesn't work, if you have a super specific application and a super specific vertical in, let's say, France, taking that software and easily rolling that out to Spain, Finland, and Germany, in most cases, doesn't work for two reasons. A, because at about the same time when your business was founded, somebody in Finland or France might have started the same business and now got to 100% market share. And software is very sticky. People hate to change it. So winning that customer over will be tough. And B, in most verticals, the country by country applications are still so, so super specific that it doesn't make a whole lot of sense to roll out software across Europe. So I think that makes it a bit of a, I don't want to call it tedious, but you got to go into every country and you got to talk to all these companies and they might not become billion euro companies. They might stay the size they are or grow organically at 10% per year, but they might not be this winner takes it all dynamic that you see maybe in the US in some companies or in the English speaking countries where you have a solution that can then be used worldwide. I think that's something that is different in Europe. So I think you need to adopt certainly your deal funnel, but possibly also the operational running. There is a case to be country specific and embrace what Europe is. I think that's something to bear in mind. When you look at the competition landscape, I mean, clearly there's all sorts of competition for the companies that we are looking for. Just the degree of development seems to be all I'm hearing, all I'm seeing in the US, It just seems to be five to 10 years ahead, in particular, the search fund movement. It would be wrong to say we don't have it in, for example, Germany or France, but it's clearly not the competitive dynamic we would face in the US. So I think there is a unique window of opportunity to go out now. And this might change, right? Maybe in three to five years, the opportunity is either gone because all the owner-operated businesses have professional ownership, or there's way more competition. That's perfectly credible scenarios. So I think we got to be quick.
Rick Berman
Yeah, it reminds me just of the mongerism that investing is simple but not easy. And here, Paul mentioned, there's just so much talk around vertical market software. And there are some glaringly obvious attributes about the business model that are extremely attractive. And so I think there is a sense that all you need to do is just go out and buy a bunch of these and hold on to them for a long time. And that the returns will follow. But clearly, what I'm hearing is there's nuances to every market. There's reasons why you can't just take the UCOM team and send them all through Europe to replicate what they're doing within, say, Germany and nearby countries. And it takes a lot of talent. So maybe that's a good point to come back to the people side of it. One thing that's interesting to me is just hearing the full arc of the Medicon story. It's fascinating that it really sounds like the first thing that drew you to the company before the original business was sold was more of an asset business play. It was just extremely cheap, trading under cash, et cetera. And fast forward to today, and I know in our discussions offline as shareholders with you, I mean, there's almost virtually everything comes back to the talent equation and how we identify, attract, retain great people. Maybe just talk a little bit about that because you were running a one-man band at JMX. You weren't thinking a lot about attracting talent And yet, as CEO now of Chapters, it's a really important part of your role.
Jan Mohr
I would say that to that end, it hasn't changed all that much because it's all about empowering the platforms. I wouldn't define the Chapters HQ role as the HR for the organization. I think that would be a form of centralization that I don't think has a lot of utility. I think it's all about empowering our decentralization. May that be MLOC in France that would come in Germany, Fintiba in Germany, so that they're call it the federation of businesses, if you will, and somebody who is recruiting into their organization because they are part of the chapter's ecosystem, that just increases conversion. So we've had that in leadership positions at UCAM and at FinTuber, for example, where people joined and they wanted obviously to understand what the larger thing and vision is, and rightly so. And I think that will grow in importance over time. But if you define my responsibility in creating a culture that attracts talent. And I agree, by the way, I think that is critical. In terms of the horizontal building of new markets, sure, that's something where Chapter's headquarter has an actual recruiting and HR development angle. Same for the platform heads, right? I think where the real leverage is, though, is to create leverage, which is that, let's say, our team in France has improves because they are part of the larger thing. I think that's where we have the leverage, And that's where we can really win and excel. And I think being with your ear close to who you want to recruit and then to be transparent to that audience, to what can be achieved if you join the group, and then to deliver on those promises, I think is vital. And that is changing over time. That's not necessarily a bottleneck that we faced two years ago, but it's one of those bottlenecks that we discussed earlier around management system that we are now facing and that we will increasingly face is where if you stick to the old way of running things, certain talents bottleneck and they can't develop anymore. And you need to have a change in thinking around, can we do more? How do we create oxygen for growth in the organization? That's our role in talent recruiting.
Rick Berman
Several times I can just hear in several of your comments, just the influence already that say someone like Mitch and Danaher Business Systems is bringing to how you're thinking. There's probably some really important nuances and differences as well. But it reminds me that as CEO, you're not only focused on attracting talented colleagues, but you're focused on building a shareholder base too. And I think Danaher has one of its core values as we compete for shareholders. But this is a very unique setup because despite this being a fairly small German-based company that's also public, you have this very concentrated shareholder base comprised of a lot of just world-class investors, present company excluded, of course, folks that bring tremendous operating know-how, also folks who are some of the leading investors in software. And you've had experience too, just building a limited partner base with your fund. This isn't necessarily new to you, but just curious if you have any points of view. What's your posture towards shareholders? How do you currently interact with them? And what kind of value are you getting by having this more concentrated, unique to the public markets set of shareholders that my guess is you're getting some great mentorship from?
Jan Mohr
I want to ask you the comment you made around we compete for shareholders before I go into that great question. The best team wins value of Danahoe. I think that's clearly understood what the utility is. I think few European companies would, in their vision statement, put we compete for shareholders. That would be a very unusual thing to do. Now, I think that's wrong. I believe that when you are competing for capital, and you should make that explicit, it doesn't have that cozy feeling. It if you really boil down to what you do as a business is that you are a steward of capital. And what you don't want is drastic over or under valuation in your stock. You want a fair proxy for what the business is worth, and you want to create money for everyone involved. And you want to attract a stable, aligned shareholder base, because that reduces the effective cost of equity that you have to run your operation. And effective cost of equity means not crazy high stock price so that that is a low cost of equity, but it creates a huge tension when things blow up. But you want the effective long-term cost of equity to be as low as possible. And I find it perfectly appropriate to, as part of your vision, to make sure that you are also competing for shareholders. So that's a good impulse from what we're getting from Dana here. Where we are today, I think it's a unique mix, right? So we get a lot of feedback. As of today, this will change, by the way, within days, but we don't have an investor relations presentation. Investment banks would call me and say, listen, you don't understand how it works. You need a presentation. You need to be a lot of conferences and you need to give guidance and all the... And because otherwise, you don't find investors. And our response is, what do you mean? Don't find investors. We don't have a scarcity of people to talk to, to make an investment in our company and just look at the track record. And you would have this iteration of arguments, but they all center around mediocrity, right? So people would try to talk you into doing something that is just average, like the average public company. Now, I don't want to build the average public company. I want to build an excellent public company. And that also means that we do certain things differently. Actually, having an investor relations presentation is not a bad thing. So you that. But again, you want to look at effectiveness. And Buffett, for example, has been hugely effective, right? So he's primed everyone on, listen, I don't do one-on-one meetings. Come to my AGM. We do a big party and you can ask questions. So that has worked for that audience. Constellation is somewhat similar. Dana hair, extremely consistent, great shareholder base over the years. We want to really embrace that. And we think very actively around not only what the right level of equity capitalization for the businesses. By the way, that's a much harder thing to solve for in practice than it is in theory, Because you got to trade off, obviously, super attractive deal funnel within dilution. And you want to strike that balance between incoming shareholders and diluting shareholders. And you want to be thoughtful around that. It's not simple. So that's one aspect where we are spending a lot of thought on. But also, who do I want at our annual meeting in 20 years and celebrate, hopefully, 20 years of fantastic compounding? I can tell you who I don't want at that annual meeting. And that's probably a good way to start. I think you already did by choosing Paul over me to be on the board. I would see the world very, very differently if it wasn't for your involvement in 21. That's a perfect model case of how I wish our shareholder base looks like. And I think today, if you go down the list, you guys and Mitch and Thorndike, MIT, and still Norman's family office between those parties, probably owning most of the capitalization. Then when I look at who comes after that, those are super high quality, maybe not as high international brand perception, but still incredibly high profile, high integrity, well-aligned people. That's just unusual for a public company, but we want to embrace that unusualness. We always get the question, why don't you take the business private and run this as a private company? And people will always get a super strong no from me because that would force us into a situation where we would have incredibly tough discussions with our shareholders and say, listen, you've been a good friend up until now, but I have found better friends. Goodbye. we need to review everything that's put on our table for legal reasons, right? But really from a spirits perspective, we want to build a crew both with talent as with the shareholder base, who we can look back in 20 years and just be proud that we've achieved something together. And I think so far we've done really well on that. And I think we got the coolest cap table in the world.
Paul Bueser
Jan, I'd like us to do a little lightning round and thinking back to, you mentioned reading one of the Buffett biographies at a young age. I know you spent time in Michigan in high school. You've spent time living in a number of countries and you've learned from a lot of different investors and operators over time. I'd love to do a lightning round of some of these folks and just hear what you've learned from them or how they've impacted you. Let's start with Will Thorndyke. He's been involved in a number of ways, both in terms of you reading his book, but directly involved in chapters and then influencing you in other ways.
Jan Mohr
I think Will's style is to combine 100% rationality in a really friendly and constructive method of delivery. I always feel that when you get down to the core gist of the outsiders and spending time with Will around how things should be done, you get to this concept of just apply rationality in a very strict way. In reality, that creates tension in organizations and it's not always great news for everyone involved. I think Will has a style of framing and communicating that in a non-emotional and friendly and constructive way. And I think that's a terribly important skill to learn from him. I clearly learned that from him. I think the second aspect is the entire idea around equity efficiency and the detail of getting it done. is not all about, oh, just apply as much leverage as we possibly can, but it's to be thoughtful and methodical about it. I think there's a lot to learn. And boy, is he a great interviewer. I don't know how you learn that. If you look long enough, there are all sorts of ways where Will is actually interviewing other investors or operators. And he's just fantastic. He gets a lot out of people. And again, in a very friendly and constructive manner, I really enjoy that. How about Seth Alexander, CIO of MIT? I think MIT is very different from other endowments in terms of how they approach investing. And at least my experience has been that they're incredibly consistent around the values that they communicate. So I think being open for solutions that are rational and trying to optimize long-term returns for the Institute while going away that might look unusual stands out. The fact that they are now shareholders in chapters and hopefully long-term shareholders want to. I think it's just an unusual approach to investing for endowments. And all I've learned over the years from how Seth is building the team, that's a hard challenge from an organizational perspective. And all I'm hearing, all I'm getting, what arrives, what was my interface is that he does that in an incredibly thoughtful and great way. And I just love the people involved and they've been fantastic partners over a long time period. And I think that just speaks to the leadership.
Paul Bueser
Jan, you referred to Norman Rentrop earlier, the elusive publishing magnet in Bonn, Germany. What have you learned from Norman?
Jan Mohr
Norman is one of a kind. He's one of these people that is just extremely hard to describe. He has his own style. Norman has his own category of individual in a positive manner. I think he's a rarely person who cares less about hierarchies and titles and really cares more about the individual. And he has a superpower of taking risk in young people where you don't have a lot of business risk. So he would be incredibly approachable, can engage with him, very low barrier for interaction. And he would take you as who you are and not worry too much about where you come from or what your title is, but he would care about what you deliver. And I think that's a superpower. And I think a lot of the success of his investing firm is built on that principle. And I really hope that they can maintain that and scale that in the future, because that's a hard thing to scale over time, right? I truly wish that. Norman gives a lot of young people the opportunity that he gave me.
Paul Bueser
All right, Jan, last one, and perhaps most important, Marlene Karl, your CFO.
Jan Mohr
When I got appointed to the executive team in 2020, almost a panic reaction, I reached out to Marlene, who I've known for about 15 years at the time, and asked if she wanted to join. And I thought her profile, she ran kind of a credit portfolio at the time. And she was, I think, quite well suited for that model, which we had at the time, as kind of decentralized holding, all sorts of different companies, and felt she could be the right person that helps us control the portfolio. And man, did she deliver. I mean, a lot of what you see today would absolutely not be possible without her involved. I mean, you got to imagine that most of the companies we acquire, our small business is not really used to public company reporting, but we are public companies, so we need proper and very timely reporting. And actually getting us there the way she does it and with the organizational buy-in is just absolutely wonderful to watch. And what started as kind of a portfolio controlling role became CFO, and she's a true partner to what I do and just absolutely huge impact organization. And she gives a sense of civility and order to a group of boys here, which is extremely helpful. And she's been excelling at that role. And we would be half as where we are if we hadn't heard her.
Paul Bueser
Jan, this has been a fantastic, wide-ranging conversation. We covered a lot of your history. We've covered the present opportunities and challenges you're working on, let us finish up with your vision. What's the big, hairy, audacious goal, if you will, for Chapters Group when you look out over the next five or 10 years?
Jan Mohr
I think it's pretty clear that what we have today are two big segments that we're active in. And obviously, vertical market software, we spend most time on huge and dominating who we are. And then we have the financial services part of the group, digital financial services. And if we look back in five years, and we run 100 vertical market software companies, and at the same time build one large financial institutions in our market, and done that in a way that the next five years open up opportunity for even bigger goals, that's where we want to get to. So if I'm under stress in five years, when we own 100 VMS companies, I say, listen, we should actually unlock potential to get to 1,000. I think that's the mindset. So I don't think about a deterministic, this is my goal, this is my BHAG, when we achieve that, everybody's happy. But to me, the goal is more like a state of mind that we've continued the growth and feel like we can continue or increase that growth in five years. I think to that end, we need to excel at management systems. And we need to really prove that we are the best home for mission critical companies. And my B-hack is that I'm more excited about the growth of the coming five years in five years than I am today.
Paul Bueser
Jan, this has been a really wonderful conversation and we're excited to see how Chapters Group continues to evolve in the years ahead. Thanks for all your time today in the art of investing. Thank you very much for having me.
Rick Berman
Thanks so much for showing up to class today. For more Art of Investing episodes and to explore all of the resources we mentioned today and more, check out staygrovey .com. That's staygrovey .com. That's it for now, and we'll see you next week.