I'm A Wharton MBA & Y-Combinator Founder Who Failed As A Searcher

December 29, 2021

by a searcher from University of Pennsylvania - The Wharton School in 1032 N Boden Dr, Anaheim, CA 92805, USA

Here to collect my free membership, and figured I might as well make the required post worth it ;)

To all the people struggling with search right now, this is for you.

I wanted to do a search fund in 2017 after I sold out of my tech startup (we got into Y-Combinator, raised $1 million, and I had a decent exit). Considering YC and Wharton, with the "entreprenerial" background that people kept talking about in search, I figured that I'd be a strong candidate.

But wait.

Let's go one step further. I wanted to show data to prove that I can run an effective search before I even went to investors! So to collect this data, I ran an unfunded search for 4 months using a team of 13 interns (combo of undergraduate + MBA). We reached out to 7,000 businesses, collected over 20 LOIs.

Finally, we had a really strong deal for an HVAC company in the south that had a chain of locations, very low opex cost, huge innovation potential (turn that company into recurring revenue model with selling replacement ACs, upselling IoT services in those homes). Employees loved the company. I vibed very well with the CEO who gave me a nice valuation discount (because we were both Christian).

Even if that deal didn't close, I had proof of concept! So I took it to ALL of the investors in the search fund world (they're all on this website). Paid for my own travel to meet people in Silicon Valley, Boston, Chicago, etc. and presented this. Standard terms. I'm a first generation college student so I didn't wanna squabble over percentages; I just wanted to be an entrepreneur.

All rejections. 100%.

I'm still really fucking bitter about it. And I feel that investors want an ex-management consulting / PE person with a little entrepreneurial bone to itch rather than a TRUE entrepreneur. And that's fine. Now when people ask about search, I tell them what investors ACTUALLY want.

But life went on. I ended up marrying a (now Stanford professor) that wouldn't have been possible if I did search. My portfolio was basically Tesla since 2013 and I went all-in during the 2019 crash. Then went hard into Bitcoin. Then made an investment in a battery recycling stock from an ex-Tesla engineer that went 30x on me. Then invested in SpaceX. Then invested in Luna at $17, and 3x that investment when it crashed to $4 in May (it's now at $100). Plus I still have my own startup exit. So yah...I ended up doing just fine.

I'm petty, egotistical, and edgy as a first gen student who always had to scrap for everything in life. But I also would've been a great small business owner (as a first gen college student who resonates more with hourly wage employees than with fellow Whartonites) and am a fairly good leader (I basically empower my team to do what they want, empathize and support them as a mentor, and celebrate when companies poach them at 2x salaries). Yah, the audacity and awkwardness of declaring yourself a good leader, but they this is a shitpost so w/e.

A lot of searchers fail. And fade into the abyss. It's not as rewarding as running your own company and failing because all you do is cold call + email people as a searcher. But I still value the relationships with my interns (several were invited to my wedding) and the knowledge gained about small businesses.

Feel free to DM me if you wanna chat or be friends. ESPECIALLY if you're struggling. I'm here for ya. redacted

Reply by a searcher
from University of Melbourne in Perth WA, Australia

Ronald, loved this post and your authenticity. This resonated with me on so many levels - let me share why; I don't consider myself 'old' particularly as someone who recognises that the further I get, the less I know and I'm always keen to learn. I'm a YPOer and Lifelong Learning is central to that. I graduated in Australia from Melbourne Business School and spent 2 years in management consulting in Australia, Japan, Singapore, Hong Kong, Kuala Lumpur, Manila, Capetown and São Paulo. Following that I was appointed as CEO of an Australia-wide 20-year old Financial Advisory/Wealth Management/Private Equity business with offices in each of our state capitals that was valued at close to nothing on my appointment and I led to a $100m exit over the following 2 years before raising $20m in debt and equity funding to start my own Financial Advisory/Wealth Management/Private Equity rollup that I led through the GFC before exiting nearly 10 years ago. I've been a 3-time finalist as CEO in the Australian Business Review Weekly's Fast 100 growing companies. Since then, I've established a tech VC and am currently working on the exits of our first 3 investments all of whom are either ASX-listed or close to (I've been an ED, NED and now Chair of the first of those businesses listed). I first came across the concept of SearchFunding earlier in 2021 and have considered myself a 'Self-Funded' searcher for the past 10 years. After spending considerable time looking into this area including being part of this community - largely as an observer and primarily because I've learned that success is more likely and more enjoyable working in partnerships and drawing on strengths than doing in yourself, it is clear that real-world experience is considered inferior to data and analysis (interestingly the ASX company that I'm now Chair of is also a big-data/artificial intelligence play). I explored being a Searcher with a couple of established Search Funds and I certainly didn't fit the mould. It is great that a sector can be built based on loads of empirical evidence however the broader analysis will show that often being in the right place at the right time, actions that appear to be opportunistic, people who rely less on intellect and more on instinct and even those who've not had formal education (where largely you get taught to be completely risk-averse) are often the most successful - plenty of examples readily come to mind. Like you I discovered Decentralised Finance (DeFi) and the Terra-Form (Luna/UST) community in 2021 and it is hard to go past the returns being made in this space (I thought Technology was exciting coming from traditional finance - DeFi takes the risk/return equation which I used to compare in Technology versus Traditional Wealth Management as the risk/return that could be made in a year was made in a month. In DeFi, these same metrics are delivered daily! I hope that you'll look back on your experiences positively - all of what you've shared will make you a better leader, I too would love to dive back into CEO-business leadership and am still looking for the right opportunity/ies while exploring this exciting new frontier of DeFi. Bless you Ron, loved your Post!

Reply by a searcher
in San Diego, CA, USA

Thanks for the honesty!

I also ran out (failed if you want to call it that) of time as a traditional searcher with a partner.

The search fund experience made me more well rounded - the exposure to SMB financials daily, learning from Investors what they value, etc. I found the investors we spoke with to be direct and helpful.

I didn't have the accolades you do and that's an impressive track record. I don't consider my experience a failure but if I did, I would place it in my top 10 best failures list for sure.

It sounds like despite the search fund not playing out, life has delivered many fruitful opportunities. Did you consider the self-funded or even investment route? Good play on bitcoin, IMO crypto is the future, especially once the investment community and general public adopt staking over traditional interest.

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