Thoughts on starting ETA as a GM first?
November 19, 2024
by a searcher from University of California, Berkeley in Bellevue, WA, USA
I’m just starting my search—reading the usual books, exploring listings, and connecting with people in the space. Coming from a high-frequency trading/crypto/startup background rather than IB/PE/MBA, I find it challenging to answer, “What kind of company are you looking for?” I plan to run whichever business I buy for the long term(decades), but my current short list still feels too broad and incomplete.
A few questions I’m wrestling with:
Is it worth spending a year or two as a GM first? Would getting hands-on experience help me learn the ropes, build connections, and better define what I want? Or should I just jump straight into the search and acquisition process (as most people and books seem to recommend)?
Do people actually use GM job boards like Smithlist(Acquiring Minds podcast)? Are there other similar platforms worth checking out?
Has anyone here made the leap from GM to acquisition? What did you learn, and would you recommend that path?
Am I overthinking this? Is it reasonable to expect that I’ll figure all this out “on the fly” as I go through the process—from search to LOI to running the business?
I’d love to hear thoughts from anyone who’s grappled with these questions or taken a similar path.
from Boston University in Iowa City, IA, USA
I'm also starting on my own search fund path. And done stuff in tech domains (Domains, then AI, then Crypto, then Crypto and AI).
I believe you are overthinking. GM isn’t necessarily an issue if you can go “larger” and get a GM with the business you buy. That GM can help you ease into being a better at being GM. One of the mantras I'm sure you have heard is to work “on the business” and not “in the business.” But, if you are working “on the business” then figuring out your skills to build growth / streamline ops is critical as you will move from implementation of project to another project. It's easier to improve what you are already good at. What I’ve noticed mentioned over and over is that the *people* are very different (in Home Services[1]) and that would be the thing to get more experience (why not through the existing GM?)
A gem I have learned so far is that growth can help fix a lot of issues (city population growth, domain industry growth due to prefs, etc…) So, while I am working on different initial areas, that’s a key criteria item I’m trying to find. Growth means you’ll have a job working “on the business" and can improve GM skills while you work with an existing GM. I've found in my own experience managing start-up work, synthesizing information and arriving at conclusions to execute and dealing consultant personalities … all things you need to go from "0 to 1" is quite transferable to managing a going concern. Granted my experience is mostly in tech not home/commercial services (so I plan on easing into that rather than diving in). Criteria wise though, I’m looking at where I can add value with my existing unique skills [2].
[1] The domains I tend to see talked about on Home / Commercial Services (HVAC, Plumbing, Electrical, Roofing, Pest Control, Cleaning, etc… the commercial/construction side of these areas is different and needs much more working capital). From what I understand, it is that there are plenty of independent shops in EBITDA range of self-funded acquisitions. However, at a certain size, the acquisitions come with an installed GM. Add having a good GM to your criteria. You’d probably learn much faster from a good GM than trying to do it all alone.
[2] In addition, in my criteria I want a clear upgrade path to work “on the business” not “in the business” e.g. establishing digital marketing (from no/basic website to much better website, SEO, PPC, etc.).
from University of Edinburgh in Sammamish, WA, USA
^redacted In my opinion, you are approaching this journey correctly. The most challenging part may not be finding a great business—there are plenty out there, and with sufficient time and perseverance, you will discover one. The real challenge lies in building and motivating a team and developing processes to scale your operations, enabling you to step back from daily management and replicate the acquisition process. Here are a few paths to achieve this: 1. Corporate Experience: Spend decades in a corporate environment and build your skillset there. The downside is that you might not acquire some of the essential skills needed for success in a small business. This has been my path, and I've experienced my share of failures. 2. Jump Right In: Dive in as the CEO and learn in the deep end. Some individuals are natural leaders who can inspire and scale a business from their very first role. This approach isn’t for everyone, but for some, it works remarkably well. 3. Hybrid Approach: This is where your GM (General Manager) approach fits perfectly. It provides an opportunity to learn the necessary skills while still benefiting from the security of working under another owner's payroll. Each of these paths offers a different route to mastering the management of people and processes that are crucial for running and scaling a business.