[00:02:07] Patrick Donley: I’m really happy to have you on here today. I want to just jump right in and talk about your early days. I know your mom immigrated from Russia when you were a little baby, and I wanted to hear about that.

[00:02:18] Patrick Donley: I mentioned I’ve got several Russian friends here where I live in Columbus, Ohio. They’re all incredibly entrepreneurial. I wanted to just talk a little bit about your experience coming to the U. S. Obviously you’re a baby, but I wanted to hear a little bit about what your family did and just like this entrepreneurial gene that I feel like a lot of Russian immigrants have.

[00:02:38] Sieva Kozinsky: Absolutely. And I think the short of it is my engine is an outcome of my mother’s and my grandmother’s experience. They had a very hard life in communist Russia for many years. They are Jews, which you couldn’t really be there. So they suppressed their kind of religion. And they grew up in whatever way they knew how there, they went to school, they got jobs, but there was a lot of opportunities that just weren’t available to them.

[00:03:10] Sieva Kozinsky: And you couldn’t even really leave the country. You could travel to a few of the neighboring countries, but you were always under watch. They wouldn’t let you leave with more than 50 in your pocket. They wouldn’t let you take most of your family if you wanted to travel. So when the Soviet Union fell in the early nineties, my grandmother came to the U.

[00:03:30] Sieva Kozinsky: S. And at the time you had to go through either Israel or Italy, and you could go to one of those countries as a stopover point to get to the U. S. because there was a, there was like a refugee program, they’re offering asylum for Jews from the Soviet Union. My grandmother spent time in Italy, living in a little tiny studio all by herself.

[00:03:52] Sieva Kozinsky: She didn’t speak Italian, she didn’t speak English, but eventually she got selected for the lottery to come to the U. S. And she had a friend who, who lived near San Francisco, so it was the only place she knew in the U. S. She flew there, and she started building a little life for herself, and saving money so that she could bring my mother over, and myself.

[00:04:14] Sieva Kozinsky: And if you just imagine, when my mother came over, she was 21 years old, I was 1, she didn’t speak the language she’d never planned on coming to the U. S. And she left behind a career. She left behind her husband. She left behind all her friends. In order to create a better life for me, right?

[00:04:34] Sieva Kozinsky: That was really where the decision stemmed from. She had already gone through her medical school in Russia. So she was getting ready to be a doctor and she had a good life for her, she’d made it through. She didn’t really see any obstacles, but she knew that I would never have the opportunities that I would have in the Soviet union or in Russia at the time that as I would in the U S so she moved for me and.

[00:05:00] Sieva Kozinsky: I think a lot about their I think, I do think a lot about their experience and I think it just keeps me moving. It keeps me hungry, humble. It keeps me hungry for sure. In a way that some people that maybe don’t have that story and don’t have that close family experience may not.

[00:05:19] Patrick Donley: My friends have a similar story. Their parents were professionals, doctor, dentist. And once they came to the U. S. That obviously goes away. That’s really hard. What did your mom do after getting to San Francisco, you said? 

[00:05:34] Sieva Kozinsky: Yeah, she came to San Francisco. So my grandmother was working two jobs at the time.

[00:05:39] Sieva Kozinsky: She was working in a restaurant and she was working a front desk job at a hospital. So she was also in healthcare in Russia. But once you come over to the U. S., you lose all of your accreditation. So she had to start over and she was working on getting certified as a lung therapist. My mother came over and because she couldn’t be a doctor here and she didn’t want to go through the seven year medical school program, she found a dental school program that gave you one year of credit if you had medical experience in a different country.

[00:06:10] Sieva Kozinsky: So she came over with her experience and she did a two year dental school program. My grandmother watched me during the day when she went to school and then they would trade off in the afternoons. And she became a dentist and that’s actually how she met my stepdad as well, was in dental school.

[00:06:27] Patrick Donley: Fascinating. So did you have an entrepreneurial, did you have side hustles as a kid, as you were growing up? Did you do any, I don’t know, Molons or anything like that? When did the entrepreneurial gene kick in for you? 

[00:06:40] Sieva Kozinsky: I never really thought of entrepreneurship until later in life. And if I look back, I can probably trace the dots and say, yeah, I had some entrepreneurial energy I was thinking creatively.

[00:06:54] Sieva Kozinsky: I was tinkering around. I was always looking for ways to make money, but both of my parents were not entrepreneurs. They came from the Soviet Union where everybody worked for the government. So there was never this idea of, Hey, you can start a business. You can own your own business. You can grow it. The only concept that my parents really knew was be a doctor, be an engineer, be a lawyer and work for someone else.

[00:07:19] Sieva Kozinsky: And as long as you could get a good degree and a good education, things were going to work out. I really didn’t learn about this idea of entrepreneurship until college. I was actually studying pre med for a couple of years, and I thought I wanted to be a doctor or a veterinarian. I wasn’t sure, but some of the classes just really weren’t doing it for me.

[00:07:40] Sieva Kozinsky: I was doing fine, but I just wasn’t having fun. I wasn’t enjoying it. And that led me to start thinking about other careers for the first time. So I took a class in the entrepreneurship department at my school, just because a friend had recommended it to me. And it was taught by a guy named John Greathouse, who is this incredible entrepreneur.

[00:08:01] Sieva Kozinsky: He’s built a couple of different businesses. He started one of the first companies that was doing like robotic arms and health care, and then he started another company, which was doing Webex effectively. It was called, they sold a business to Citrix online called GoToMeeting and GoToMyPC. So he taught this class at my college at UC Santa Barbara.

[00:08:22] Sieva Kozinsky: And it was the first kind of practical learning class that I’d ever taken. Everything else at UC Santa Barbara is research based, research focused, and highly academic. So you don’t really learn practical skills, you learn a lot of theory. Which, as like a red blooded entrepreneur now, that used to drive me nuts.

[00:08:39] Sieva Kozinsky: So maybe that was one indicator was I just couldn’t handle the research theoretical subs. But this was the first class that was practical. It was hands on. And he really encouraged you to think of real life business solutions, gave you the skills on how to do it. And then he pushed you to start that business or participate in the business plan competition, which I did.

[00:09:00] Sieva Kozinsky: So that was the first opportunity where. I had my eyes open to business. He would invite his friends over who were also entrepreneurs, and they would talk about their kind of feats and their journeys and their stories of starting a company, raising capital, building something, hiring people that they wanted to hire.

[00:09:19] Sieva Kozinsky: And I just got super fired up about it. I remember I would sit in the front of the class, which I never did. I took a bunch of notes. I got a great grade in that class. And that kind of set me off onto this entrepreneurial journey of tinkering with businesses. And it led me to start my first education business, first software education business, which is, that must have been my sophomore year of college.

[00:09:42] Patrick Donley: So was that part of this entrepreneurial competition that you did in this class or was that totally separate? Was that study soup because I know you started a company study soup I don’t know if that is what you’re referring to But I want to hear a little bit about study soup for sure 

[00:09:56] Sieva Kozinsky: My sophomore year as I was opening my mind to this idea of starting your own business The teacher’s advice was basically work on something that you know, and you understand And at the time I’m a sophomore in college, so I didn’t understand a lot of things.

[00:10:11] Sieva Kozinsky: Maybe my world was a few very simple things, right? It was family, it was music, it was school and parties and sports as well. I started just trying to solve my own problem. And one of the problems that I noticed at the time was I was living off campus and I was biking to campus with all of my like textbooks and my laptop was so heavy because I didn’t want to leave campus because I lived so far.

[00:10:34] Sieva Kozinsky: I lived so far away from class. And I started thinking why aren’t all of my, why can’t I access all of my materials and all of my textbooks directly on my laptop? This is before there were eBooks. This is before everything was accessed online. Now we’re in a different world. But at the time, as you can imagine, I was carrying like three textbooks, notebooks, and my big old laptop.

[00:10:57] Sieva Kozinsky: This was really the first idea. And I went to a buddy of mine who was a software engineer and I said, Hey, I don’t know anything about building a software company, but will you help me build the software? And then I’ll go sell it to university professors. I’ll sell it to the school. And we’ll create this course delivery solutions for people’s eBooks, for their readings, for their class notes.

[00:11:18] Sieva Kozinsky: And at first we called it studiously. And we went about selling this software and it was incredibly hard. Most universities do not want to buy a rinky dink software from two guys working on it in the attic of their dorm, basically, which is what we were. So we worked on that for a year and a half.

[00:11:37] Sieva Kozinsky: We got a little bit of progress, but it was like pushing a boulder up hills incredibly hard. And then we decided to pivot the business. We said, Hey, let’s stay in education, but what other solutions can we provide to students? And we came up with this idea of helping students sell their class notes directly on our website.

[00:11:55] Sieva Kozinsky: We noticed that people are sharing notes. People are selling, sharing study guides. People are helping each other study in school. How can we bring that online? How can we get people paid for participating in that behavior? And that’s what StudySuit became. And. The fun thing was that as soon as we pivoted, we got to finally see what good product market fit looked because the business just took off instead of pushing a boulder uphill, students were coming to us as sales were happening pretty easily and in the first six months, I think we made more money than we had ever made in the first business.

[00:12:29] Patrick Donley: Were you just at UC Santa Barbara or were you at other campuses as well? Did you try to, did you grow? 

[00:12:35] Sieva Kozinsky: Yeah. So right out the gate, we knew we wanted to grow. So instead of testing it at UC Santa Barbara only, the first semester we tried at UC Santa Barbara, University of Oregon and University of Washington.

[00:12:48] Sieva Kozinsky: It’s funny to think back on these days, man. I remember those two schools or those three schools being very important parts of our business. So we knew we wanted to grow and we knew that if we made it work at UC Santa Barbara we may consider it a fluke. Obviously had a bunch of connections, a bunch of friends there.

[00:13:04] Sieva Kozinsky: So we wanted to see, can we launch campuses remotely? And we did, and all three of those campuses for us were very successful. And when I say very successful, it was to the tune of tens of high tens of thousands, maybe a hundred thousand dollars a year. So after that first semester, we thought to ourselves, this seems pretty simple.

[00:13:23] Sieva Kozinsky: If we just run this playbook over and over, and I still remember there’s 4, 000 colleges and universities nationwide. And there’s, I think there’s maybe two to 400 of them that are considered like large public state schools, similar to the ones that we started with. And we said to ourselves, great we’re making a few hundred thousand dollars, we’re making about, let’s say a hundred thousand dollars a piece here.

[00:13:46] Sieva Kozinsky: If we go do this at 10 campuses, we’ll be making a billion dollars a year. If we do this at a hundred campuses will make $10 million a year. And this sounds like a great business. This sounds like a great opportunity. We raised a little bit of money from angels, which was incredibly hard. This was our this was our first business.

[00:14:04] Sieva Kozinsky: We’re like 22 year olds. We’re going around San Francisco meeting with angel investors and GCs. I got a lot of people who slammed the door in my face. Some very kindly, some not so kindly. But after hundreds of conversations, and it really was hundreds of conversations, I was able to raise a little bit of money to test out this thesis of ours.

[00:14:24] Sieva Kozinsky: And we worked on growing that business from three schools to 15 schools and then to 150 schools. And between three to 15 schools, that worked fine. Like our thesis held, it grew nicely, but going from 15 schools to 150 schools, things started to fall apart. For us, the unit economics changed because we noticed that different schools behaved differently.

[00:14:48] Sieva Kozinsky: Some cared about schools, some didn’t care about school. Some schools were big, some schools were small. Some schools were easy to advertise to, and others were hard to advertise to. We got lucky and we caught lightning in the bottle for the first 15 schools, but things started to really slow down after 15 schools and eventually that business hit a plateau.

[00:15:11] Sieva Kozinsky: We got to a few, maybe three and a half million dollars of revenue. We were not profitable. We were burning a lot of money trying to grow and grow big and grow fast. We were excited about that venture growth mindset. And eventually we realized, man this business is not going to grow.

[00:15:26] Sieva Kozinsky: Maybe don’t grow to 5 million, but it’s not going to grow to 50 million. And. We should slow down, we should slow down our spending to become a profitable company because otherwise we’re just going to shoot off a cliff and not have money to pay for payroll. And that’s when we had a come to Jesus moment we realized that our original plan was not the one that we set out to, our new plan was really not the one that we set out to pursue.

[00:15:51] Sieva Kozinsky: We were no longer going to be on this venture growth strategy, and we dialed everything back. I promoted my COO and made him CEO, and I tasked him with making the company profitable. And he did that, and that business is still around today which is maybe 12 years later, which is surprising to me.

[00:16:11] Sieva Kozinsky: I haven’t been involved with it for 8 years, so I can’t take any of that credit, but they’re still running a kind of small, profitable business. 

[00:16:18] Patrick Donley: That’s awesome. So when you decided to go whole hog into it and grow where had you already graduated at that point, or were you still taking classes and still in university?

[00:16:28] Sieva Kozinsky: Yeah, I had graduated already. I was working at a restaurant at night. So I would work on my startup during the day between 7am and 6pm or so. Maybe 5 p. m. And then I would go to work at a local restaurant and I would work the night shift. I’ll work the dinner shift between 6 p. m. And like midnight.

[00:16:48] Sieva Kozinsky: And I would do the same thing over and over again. So the waiter job, the restaurant job gave me the cash that I needed to pay for rent, which wasn’t expensive. I was living with roommates at the time. And the startup was the opportunity that I was really investing in, but it was a great learning experience.

[00:17:04] Sieva Kozinsky: I think the real takeaway there is there’s a lot of young people who get caught up in the excitement of venture capital, the excitement of growing a business fast tech crunch was at its peak when I was 21 years old. And people were announcing big funding rounds and people were getting celebrated for growing really fast and getting their companies sold.

[00:17:24] Sieva Kozinsky: That was the information and kind of the environment that I was in. And I thought to myself I can do that. I’m going to do that with my current business. But I never stopped to really consider and think to myself, Hey, maybe this business isn’t supposed to be a venture capital backed business.

[00:17:39] Sieva Kozinsky: Maybe this isn’t going to be the next Airbnb. Maybe I should just grow a nice profitable business. I can own the vast majority of it. I can distribute cashflow to myself and my business partner, and then I can use that cash to go start other businesses, invest in real estate. That never once crossed my mind.

[00:17:58] Sieva Kozinsky: And it was really just the lack of kind of experience, a lack of knowledge. And nowadays, when I get approached by young entrepreneurs, young people starting businesses, I really encourage them to first consider starting a profitable business. Maybe a good service business or something that will just generate cash flow for your life.

[00:18:17] Sieva Kozinsky: It gives you an opportunity to learn good business hygiene. How do I read a financial statement? How do I understand what gross profit, gross margin is? Which I really didn’t know at the time of starting my business. But pushing a profitable business, growing a profitable business really forces you to do that, right?

[00:18:34] Sieva Kozinsky: Because if you don’t have venture capital or angel money in your bank account, you have to think very carefully, where’s every single dollar going for? What’s my cash conversion cycle? How long does it take me to get money for my accounts receivables? How long does it take me to pay my bills? And once you learn those things, let’s say you build a nice cash flowing business, if you want to go pursue a fast growth, big venture capital sway, feel free to do that, but you’re now doing so with kind of better hygiene, better fundamentals than I did when I started.

[00:19:05] Patrick Donley: That’s good advice. I love that. I wanted to take a little step back. At a certain point, you ended up in San Francisco. And you were sharing an apartment or sharing something with Sam Parr. I wanted to hear about that experience of working with Sam Parr at The Hustle. I think you guys were working on separate things, but you had day to day contact, it sounded like.

[00:19:24] Patrick Donley: And at one point, Tim Ferriss showed up. And I just think all of this is fascinating. So I wanted to hear a little bit about those experiences in San Francisco. 

[00:19:34] Sieva Kozinsky: Yeah, sure. So that’s a long time ago now. And Sam is a good friend of mine. Let’s see. I was working in San Francisco at a little tiny office by myself on my startup at the time.

[00:19:45] Sieva Kozinsky: And I was subscribed to Startup Digest, which I would imagine they’re still around, but it was a weekly newsletter about startup news. And I received the weekly calendar. They used to share events. And it basically said, Hey, today, Monday night, there’s a book club meeting, business book club meeting hosted by a guy named Sam Parr.

[00:20:07] Sieva Kozinsky: And I’m a book nerd. I love business books. I love autobiographies. I’ve read hundreds of them. And I thought to myself, you know what? I don’t have a lot of friends here in San Francisco right now. I certainly don’t have a lot of friends working on startups. So I’m going to go to this event and see what it’s like.

[00:20:24] Sieva Kozinsky: Maybe I’ll make some friends. Maybe I’ll just find some peers who can encourage me to read interesting books and keep me accountable. I went, I showed up. It was, I remember it was on the border of Chinatown and Little Italy there which is North Beach. And I showed up. It was in this like dingy little tiny bar.

[00:20:42] Sieva Kozinsky: It was very dark. And there was like, like neon lights around. I couldn’t really see what was going on. So I went through the went down this hallway. And at the end of it, there was a small group of people. I want to say there’s seven people there. And I see this guy, this pretty tall guy standing there.

[00:20:59] Sieva Kozinsky: He’s wearing cowboy boots and a button down shirt. And he comes up and he shakes my hand. And he says, Hey, I’m Sam Parr. How are you? I’m Sam Parr. He’s incredibly gregarious and charismatic. I probably would have left if he hadn’t greeted me because it was like so dingy, weird, there weren’t a lot of people there.

[00:21:16] Sieva Kozinsky: And I was like, what did I get myself into? I got to get out of here. But basically what Sam did is he hosted this event once a week. There’s a book shows that everybody bought it. And he used this book club as an opportunity to meet interesting people, to bring in speakers to come and talk to us and talk about their books, and just to build out his network and stay accountable around reading.

[00:21:36] Sieva Kozinsky: And I thought it was a great idea. There, there are many people that kind of like floated in and out, but Sam and I became very close as well as a couple other people in that group. And that’s what really kicked off our relationship. So years later, maybe like a year later. I had gotten an office in the sunset, I was sharing an office with a couple other guys and it looked like a little apartment building, but it was actually the old office building of Craig Newmark Craigslist.

[00:22:03] Sieva Kozinsky: He had spent 12 years in that office building, so he really started the business there, it was just him and a friend, and then little by little they grew and they took over this whole kind of two story apartment in the sunset right off of Judah. I moved into that office, I started sharing it with a couple of friends.

[00:22:20] Sieva Kozinsky: Eventually they moved out and I reached out to Sam and I said, Hey we have space in our office. I know you’re starting the hustle, which was a media company at the time. Do you want to come share this office? And he moved in with me, another group moved in with us and they eventually moved out.

[00:22:35] Sieva Kozinsky: But Sam and I stayed and little by little, he grew the hustle and I worked on study soup. And we became closer over that time period. You asked about Tim Ferriss. So Tim Ferriss, became an investor in Hustle and he showed up in the office one day and this is pretty early in Tim’s journey as a kind of content creator as being like a media mogul.

[00:23:00] Patrick Donley: Before, would this have been before the four hour work week came out or right around that time? 

[00:23:06] Sieva Kozinsky: It was right after the four hour, it was right after the four hour work week came out. So obviously the four hour work week was a bestseller, so he was famous for that. But he didn’t really he wasn’t as big on his podcast just yet, which I think is his biggest platform now.

[00:23:19] Sieva Kozinsky: And his email newsletter as well, which I think now has millions of subscribers. So he came into the office and I was just lurking around I wanted to meet Tim. I’d read the four hour work where you guys, I was fanboying and he was talking to Sam and I was there just listening in he shared like a few interesting lessons because Sam was obviously in the early stages of building his media company.

[00:23:40] Sieva Kozinsky: And he wanted to hear from Tim. Hey, Tim what did you learn building your company? Where’s the value and where did the economics really accrue for these types of media companies? And Tim shared something interesting that I had not really considered in the past, because I assumed Tim is selling the four hour work week, he’s making a bunch of money on his books, that’s what’s really going to make him famous, so he’s going to spend his whole life making books and making money off of those books.

[00:24:07] Sieva Kozinsky: But what he actually shared in that office is he said, look, I make some money off of these books that are bestsellers, but I don’t make a lot of money off of it. My long term game is to build up my owned audience. His game was really to build up his podcast and his newsletter, and he said, look, the media does not want to talk about my podcast or my newsletter.

[00:24:32] Sieva Kozinsky: They don’t care, but they do want to talk about my books. So I’ll get invited to do an interview with Yahoo Finance, for example. And they want to hear about the 4 Hour Workweek, and I’ll plug my podcast, I’ll plug my newsletter, and his book process, his book writing process, was really the top of the funnel for his podcast and his newsletter.

[00:24:57] Sieva Kozinsky: And I think at the time he had maybe one employee or two employees running the podcast, selling ads, managing all of the operations. So you can imagine if you can run a media business with millions of subscribers with one or two employees, you can have a really profitable company. And for me, that really set off a few different light bulbs.

[00:25:16] Sieva Kozinsky: One is it imparted the kind of importance of owning your brand and really having an owned audience. And then two, it really opened my eyes to book writing, right? I never considered writing, writing a book, but all of a sudden I thought to myself if it’s good enough for Tim and Tim is using it to build his reputation and build his credibility, maybe I should write a book.

[00:25:40] Sieva Kozinsky: And actually I am now finally many years later, this is 10 years ago now. I am now finally in the process of writing my book with a business that we bought called Scribe Media, which is a hybrid book publisher that’s helping me publish my book. 

[00:25:55] Patrick Donley: I want to get into that. I interviewed Eric Jorgensen, who took over as CEO of Scribe.

[00:26:00] Patrick Donley: So I definitely want to get into Scribe later. But before we do that, I know that you’re a big Buffett and Munger fan. You read Snowball. And I wanted to, it’s probably a book that maybe you and Sam Parr read in the book study group, maybe. But I wanted to get into some of your lessons from Buffett, Munger, Snowball in particular.

[00:26:19] Patrick Donley: And I also wanted to touch on Rick Guerin and the idea of, and you talked about the idea of anti luck. Let’s just get into a little bit about the lessons you’ve learned from Buffett, Munger, and you now have a holding company. That’s a baby Berkshire Hathaway. 

[00:26:35] Sieva Kozinsky: Yeah. There’s so many lessons to share.

[00:26:38] Sieva Kozinsky: So I’ll think a little bit about where we can start. I read Snowball, which is a book by Alice Schroeder about Warren Buffett. I must have read that book in 2015. In 2015, I was spending a lot of time in India because we were hiring a lot of staff there for my study suit company, both engineers and academics.

[00:27:02] Sieva Kozinsky: And I had a lot of time on my, I had a lot of time on my hands. I didn’t have any friends there. So I was really just working and reading and I read snowball. And one of the things that stood out to me was that Warren had this holding company called Berkshire Hathaway. And the way it worked for him is he had a few different businesses that all generated cashflow and he could take money from all of those businesses.

[00:27:30] Sieva Kozinsky: and pull it up to the holding company and reinvest in the best growth opportunities. Sometimes that meant new businesses. Sometimes that meant these current growth businesses. And right around 2015, I was starting to think of StudySoup. I was starting to see the writing on the wall for StudySoup.

[00:27:48] Sieva Kozinsky: Maybe this was actually 2014 now that I think about it. But I was seeing that study soup had gone from doubling or tripling in size year over year. And all of a sudden we hit a ceiling and the business was still growing, but it was growing at 10 or 15 percent per year. It was no longer requiring or it was no longer requiring the type of investment that we were making into a previously.

[00:28:12] Sieva Kozinsky: So I’m looking at Warren Buffett’s situation and he has multiple businesses where he can reinvest capital however he sees fit. And then I’m looking at my situation and I think to myself, man, like this little business that I have, it can generate cashflow pretty predictably, but I don’t want to reinvest it back in this business.

[00:28:32] Sieva Kozinsky: I wish that I had multiple other businesses where I could reinvest this capital because that would be the best thing for me to do as a capital allocator. And this was the first time that my brain went from I’m an operational CEO to I’m actually a capital allocator. And my job is not only to make sure that the business is running properly, that the trains are running on time and that we’re profitable, but my job is to figure out once we have that profit, what is the best thing to do with that each incremental dollar?

[00:29:05] Sieva Kozinsky: And I think it unlocked something in my head that I was able to access many years later when I did decide to start Enduring Ventures which is largely inspired by Snowball, largely inspired by Warren Buffett, but it really started my thinking, like things didn’t change for me immediately, but I do remember going through that thought process while reading Snowball.

[00:29:28] Patrick Donley: Let’s get into Rick Guerin. First of all, I’ll let you describe who he is. And then some, I know you’ve had a lot of lessons from him as well. 

[00:29:36] Sieva Kozinsky: Yeah, that’s a really interesting story. I think one of my favorite takeaways from the Berkshire Hathaway journey has been the focus on incremental growth and patience.

[00:29:49] Sieva Kozinsky: And I’m not naturally a patient person. I can be fairly impatient. People say I have a pretty relaxed and chill demeanor, which I think is helpful of what I do, but at times I can be fairly impatient. And I think that reading about the growth of Berkshire Hathaway, reading the letters that weren’t published over the years has really taught me to take my time, not to try to accelerate the desire to make a lot of money today, because I think that’s how most humans are wired.

[00:30:17] Sieva Kozinsky: If we look at incentive plans, if we look at the public stock market and we think about, okay, there’s reporting schedules every quarter and executives are incentivized around stock price and they’re incentivized around that reporting cycle. So our entire economy downstream is incredibly short term minded.

[00:30:36] Sieva Kozinsky: People are trying to squeeze the most profits. In the short term, in order to benefit personally, so nobody’s acting maliciously, but their personal incentives are tied to these quick growth schemes, basically, and we see the same thing in private equity. So private equity makes a lot of money by purchasing a business with as much leverage as they can and flipping it 2, 3, 4 years later for profit.

[00:31:00] Sieva Kozinsky: The more leverage they can apply, the more profit they’re going to the more like proceeds they’re going to get personally because of the way promote structures work. Warren Buffett is like a light amongst the darkness. He writes about this idea of growing slowly, limiting the amount of leverage you apply to things, really trying to grow in a way that is indestructible and is defensible.

[00:31:26] Sieva Kozinsky: Because the markets are going to grow. The markets are going to crash. That is the only thing that’s predictable, right? You can’t predict the future. You can’t predict how the market’s going to go, but you can predict that there will always be recessions in the future. There will always be downturns. Similar to what we’re experiencing in the office market today, right?

[00:31:46] Sieva Kozinsky: Nobody could have expected the Fed raising interest rates so much and cities getting wiped out. Places like San Francisco where it was considered grade A style commercial real estate is now you know, 50 60 percent vacant. We can’t predict what’s going to happen but we can predict that something is going to happen and That’s probably a key learning that I took from those guys is really grow slowly.

[00:32:10] Sieva Kozinsky: Don’t over leverage things. Don’t ever put your holding company at risk of failure, right? Even if it means you have to grow a little bit slower, even if it means you have to delay gratification or delay wealth till later on, as long as you continue making good decisions and not losing money for yourself and your investors, eventually things are going to work out for everyone.

[00:32:32] Sieva Kozinsky: And recurrence. When I talk to people, everybody of course knows Charlie Munger, who passed away this year and Warren Buffett, they are the two kind of heads in the figures that led Berkshire Hathaway for the last 60 years. Now, Rick Curran was the third partner of Berkshire Hathaway, and it’s a really interesting story.

[00:32:55] Sieva Kozinsky: Rick first started working with Charlie Munger and his partnership because Warren was over here running Berkshire Hathaway and Charlie had his own partnership early on. And Rick and Charlie would do deals together. And one day Rick discovered blue chip stamps, basically blue chip stamps. What they were doing is when you would go to the grocery store, you would receive these little like coupons or like gift cards.

[00:33:19] Sieva Kozinsky: And you could add up these tokens and eventually you could cash them out for money, for gift cards, for prizes. So Blue Chip Stamps was the purveyor. They were the one that supplied the stamps that people collected. And what Rick found was that this business had a, I think it was like a 50 or 70 percent redemption rate.

[00:33:37] Sieva Kozinsky: But they were required to keep all of this cash on their balance sheet as a liability, even though they knew a large percentage of the people would never redeem. They’ve been around for many years. So they knew what the pattern was. They knew how much of that was actually true cash as opposed to a liability.

[00:33:54] Sieva Kozinsky: They had it all listed as a liability because that’s what you’re required to do with things like gift cards and prizes and future prizes. He also noticed that they had 100 million in public securities. So they were stockpiling cash and investing in bonds and securities. But the stock was trading at something like 60 or 70, the market cap of the company at the time was like 60 million.

[00:34:17] Sieva Kozinsky: So they have all of this cash on their balance sheet that they’re holding back and they’re marking as a liability and they have all of this money in securities and he can buy this. He can now buy this business or 50 percent of this business for 30, 35 million. Little by little, him and Charlie bought into this business.

[00:34:35] Sieva Kozinsky: And once they did once they got to above a majority, they were able to control the balance sheet of the company. So they spent 30, 35 million to control something like 100 million of capital for this business. And then they, and they got Warren to invest alongside of them as well into this strategy.

[00:34:56] Sieva Kozinsky: And then they used the capital from Blue Chip Stamps to invest in a few states, few of what became pretty standout companies for them. They invested in one insurance company. Then they invested in the Buffalo newspaper, which they funded for years out of blue chip stamps, which eventually became a business that was generating somewhere between 30 to 15 million per year of free cash flow for them.

[00:35:20] Sieva Kozinsky: And then they sold it for around 500 million. And then they also invested in See’s Candies and everybody knows about See’s Candies, but at the time they, they paid, I think, 25 million. They paid 30 million for the newspaper. They paid 25 million for See’s Candies. They put in 30 million into this insurance company.

[00:35:42] Sieva Kozinsky: And See’s Candies became a juggernaut for them. That business, to date, has produced about 2 billion of cash flow for them over the years, which is just incredible. These guys paid 25 million for a business that was generated. 2 billion of cash for Berkshire. This was all Rick’s idea, right? He found this.

[00:36:03] Sieva Kozinsky: He’s an incredible investor, really smart guy. And eventually they agreed to merge the two partnerships. So Rick ends up with something like 5 percent out Berkshire Hathaway. Charlie ends up with something like 10 to 15, 10 percent maybe at the time. And Warren ends up with the vast majority of it. I don’t know if there’s a, those are not exact numbers there, but they’re within a few percentage points.

[00:36:25] Sieva Kozinsky: I’m sure now 17 1972 rolls around and Rick Gurin is highly levered on his stock portfolio and towards the end of 1972, there’s a stock crash, 1972, 1973. There’s a stock crash. And because Rick is. Levered on his portfolio. He gets margin called, which means he has to liquidate most of his portfolio in order to pay down the leverage that he’s, that he was taking.

[00:36:58] Sieva Kozinsky: So he ends up selling his shares back to Ward Buffet for something like $43 a share. All of them get liquidated and sold to Warren. Today if you fast forward the clock, I think Berkshire’s trading at over half a million dollars a share, and his piece of the portfolio would have been worth somewhere in seven billion dollars.

[00:37:22] Sieva Kozinsky: What’s the lesson there? The lesson is really and actually Warren got asked about Rick Gurin just a few years ago in an interview. They said, Hey you guys used to have a third partner named Rick early seventies. What happened to him? And Warren shared this incredible lesson.

[00:37:38] Sieva Kozinsky: He basically says, Rick Gurin was just as smart as Charlie and I. He’s an incredible ambassador. But Rick was in a hurry and he had these loans out on his portfolio. He was in a hurry to get rich. That’s why he had these loads out. He wanted to get maximum leverage to get maximum returns. So when he got margin called and he’s had to sell all of his shares back to Warren, he lost everything.

[00:38:02] Sieva Kozinsky: And that really is the lesson, right? Like you can be an incredibly smart investor, you can be incredibly hardworking, but if you have a systemic risk in your portfolio, which is usually too much debt it can take you down. So my takeaway is take your time, never apply systemic risk to your holdings.

[00:38:21] Sieva Kozinsky: You can use leverage thoughtfully for us, we have zero leverage at our holding company, but occasionally when we buy a business, we’ll use a little bit of debt at those businesses, right? Because we think to ourselves, we’re going to do whatever it takes to protect those businesses. But if a few things go wrong and it doesn’t work out, we don’t want to harm our greater portfolio of businesses.

[00:38:45] Patrick Donley: That brings me to my next question. We’re talking about Warren and Charlie. I wanted to get into your business partner and the importance of picking the right business partner. So talk about Xavier, if you would, and then whether or not if somebody is listening to this and they’re considering starting a company, whether or not they should pick a partner or go it alone.

[00:39:06] Patrick Donley: I wanted to hear your thoughts on that. 

[00:39:08] Sieva Kozinsky: Yeah, it’s a complicated question. So Xavier is an incredible entrepreneur that I met probably 10 years ago now. I was working on my little business, my little study suit business. And I got invited to a conference for entrepreneurs in Utah. It was an invite only event.

[00:39:28] Sieva Kozinsky: There was 150 people. I got lucky. My friend’s dad is a well known angel investor. He said, Hey, you’re getting started in business. Why don’t you come to this conference? I certainly didn’t belong there amongst the people that were there. I was the bottom of the totem pole. As far as entrepreneurs are concerned, that was summit series.

[00:39:47] Sieva Kozinsky: Yeah, exactly. So I went there and I showed up and I’m sitting in the house where I’m spending the weekend talking to some of the people who I’m sharing with. And this guy comes in with long hair, he’s wearing a suit he just flew in from Africa, his name is Xavier, and over the course of the weekend, we become friendly, we get dinner together, we ski together, we have a really, we had a really nice time we always joke that we met in a hot tub, cause, cause we went hot tubbing that day, but yeah, so he, what I learned about him is that he’s an entrepreneur, he’s built a couple of businesses, he built one of the largest book retailers on the internet, called Better World Books, which he sold.

[00:40:30] Sieva Kozinsky: They were processing millions of books per year. And then he started this company in Africa called Zola Electric or Off Grid Electric at the time. And basically what they were doing is they were lighting the homes of millions of people that were off the grid using solar. Really cool stuff.

[00:40:46] Sieva Kozinsky: And they had built this like off grid, decentralized grid technology. Just really impressive guy, really impressive company. And we became friends. I used to host this founders dinner in San Francisco with a guy named Sean Puri, who’s Sam Parr’s co host now on My First Million. And we used to host this thing called Junto where once a month or once every two weeks, we would get together with interesting CEOs, people that were building cool companies.

[00:41:16] Sieva Kozinsky: And it was really our way to get close with people that were further than us in their career who have built cool things and wanted to meet other interesting entrepreneurs. So we would meet once a month. And Xavier, I invited Xavier after that weekend I thought to myself, wow, this guy’s great.

[00:41:31] Sieva Kozinsky: He’s super kind. He’s an incredible entrepreneur. I love the way he thinks. I want to be closer with him. So I invited him to this event that we had in San Francisco. And he started attending, he became a regular with a few other guys that I’m close friends with today. And then many years later, when he had hired a CEO at his company and decided he was going to go pursue a new project, he reached out to me and we started talking and he said, yeah let’s definitely work on something together.

[00:42:00] Sieva Kozinsky: And this idea for doing a holding company came about, which frankly he came up with, and that’s how we got started. Your question was. Should everybody have a business partner and do I recommend having a business partner? Xavier is an incredible business partner. I could have not accomplished everything that we have accomplished to date without him.

[00:42:22] Sieva Kozinsky: There’s no way. He’s really special, but I don’t recommend business partners for everyone. Xavier and I knew each other for many years, right? I knew how he thought I knew what made him tick. I knew what got him frustrated. I knew how he behaved in difficult situations because. We were meeting and talking about this very intimate elements of each other’s businesses.

[00:42:46] Sieva Kozinsky: So by the time we worked together, I knew that he was someone that was incredibly fair, that he was kind, he was very hardworking. He thought in very unique ways. And that was a good basis for our relationship. That was a good basis for my partnership. The challenge with most founders is that I see is that somebody meets somebody in college or business school, or there may be coworkers for a few months together and they decide to start a business together.

[00:43:13] Sieva Kozinsky: And they said I need a co founder because they’re scared and they need someone’s help. Which is reasonable. And they picked this kind of semi random person that they’re friendly with. The challenge is you are basically married to your co founder. You were spending, you were oftentimes spending more time together than you are with your own spouse.

[00:43:32] Sieva Kozinsky: You should really approach it in the same way that you would in selecting your spouse. And you would never spend a few hours most people, I can’t say never, because some people do, but most people will not spend a few days together and immediately propose and decide to have children together immediately.

[00:43:51] Sieva Kozinsky: And that’s what you’re doing when you’re picking a founder that you maybe had a couple of classes with, or you’ve known for a few months in those scenarios. What I recommend people do is they play it slow. Don’t make any commitments to be co founders with this person. Maybe they’re great.

[00:44:06] Sieva Kozinsky: Maybe they’re not great, but you need more information. So the best thing for you to do, if you can, is to start the business yourself, get things going, get the momentum moving, talk to this person that you’re considering working with, suggest that you guys work together in an unofficial capacity for the first six months to get to know each other.

[00:44:27] Sieva Kozinsky: If they need a bit of pay, maybe you can pay them as a consultant. And then only after you’ve known each other for six months and you’ve worked together on projects, then you can talk about being co founders.

[00:44:41] Patrick Donley: I love the idea of the Junto too that you mentioned earlier. That’s a page out of Ben Franklin’s playbook, I think, right? Didn’t he have something similar to that? 

[00:44:51] Sieva Kozinsky: Yeah, that’s exactly right. Yeah. His version of Junto was. Not just focused on entrepreneurs, he was bringing in entrepreneurs like industrialists and also local politicians to talk about what was going on with the kind of, with society and their town.

[00:45:08] Sieva Kozinsky: But yeah, that’s the idea. It’s a similar idea. You 

[00:45:12] Patrick Donley: and Xavier connect, you create enduring ventures. Talk to me a little bit about the portfolio. I want to get into scribe. I think that was a pretty recent acquisition last three months or so, four months, I think. Talk to me a little bit, what the portfolio looks like today, and then I’ll go from there.

[00:45:29] Sieva Kozinsky: So today we own a portfolio of about 20 businesses. We’ve started a few small companies, but the majority of what we do is we acquire cash flowing businesses from owners, from the people who started them. So I guess our world is really split into two. On one side, we’re buying good, stable cash flowing businesses at three to six times earnings.

[00:45:54] Sieva Kozinsky: And on the other side, we have distressed or distressed technology businesses that are, they could be profitable, but they have a bad balance sheet or they’re not profitable and they, but they have good revenues and they have good products. They just need to be made profitable. On the value side of the business, on the cashflow side of the business, we own companies in swimming pool construction, plumbing, HVAC we have auditing and accounting products for retailers and a few other businesses as well.

[00:46:27] Sieva Kozinsky: On the distress side of the business, we have acquired a couple of businesses that were venture backed that had raised anywhere between 30 to 60 million. They’ve gotten to 10 plus million dollars of revenue, but they were not profitable. They were both not profitable and they were not growing fast enough to be considered the next Uber or Airbnb.

[00:46:53] Sieva Kozinsky: So they’re in this in between space where it’s hard for them to raise venture capital, further venture capital, but it also doesn’t make sense for them to shut down. And in those cases, we’ll come in, we’ll buy a business. We’ll take it over. Our team will parachute in and turn that business profitable.

[00:47:11] Sieva Kozinsky: For example, we bought one of our first acquisitions is a company called upcouncil. com which we turned profitable and another company called abstract. com, which we run profitably today. And you asked about Scribe, so Scribe kind of straddles both of those categories. Scribe was once a very profitable business that hit some hard times.

[00:47:33] Sieva Kozinsky: And for context, Scribe is a hybrid modern book publishing company. So what that means is If you want to publish a book, Patrick, and you don’t want to self publish, you want a really high quality, good looking book that’s been edited by top editors, you want to get it out into the world and really be proud of it, you could use Scribe to do and they could even, they’ll even provide a ghostwriter that’ll write in your voice. So they’ll do everything for you end to end, everything from helping you figure out what is the exact idea that’s going to be compelling for your audience. helping you actually write the book, edit the book, create the design for the product, and then produce it into the world.

[00:48:19] Sieva Kozinsky: So they’ve actually done the book, they’ve actually published the books of over 2, 000 people now. These people are CEOs of Fortune 500 companies, they’re coaches, they’re lawyers, they’re accountants. Anybody who’s looking to build their credibility and put out a high quality product.

[00:48:42] Sieva Kozinsky: Because a book is like one of these things that it lives on forever, first of all, but also it’s a constant sales tool so for example, like I went to a conference two weeks ago, one of the gentlemen there handed me a book and now that book is on my living room table. So I’ve forgotten most people that I met at that conference, but I know who he is.

[00:49:03] Sieva Kozinsky: I know what he does and I know what his business is. So it’s this incredible like perpetual sales tool for business professionals on the other side. There’s customers. There’s like famous influencers, famous writers like David Goggins, who wrote can’t hurt me and sold over 5 million copies using scribe, Nicholas, Nassim Nicholas Taleb, Chris Voss, and many others.

[00:49:29] Sieva Kozinsky: And the reason they use Scribe is because if you work with a traditional publisher, that publisher will keep 80 percent of your winnings, 70 percent of your winnings, but these guys already have an audience and a reputation. By using Scribe, they get to control their full IP and they get 100 percent of the upside.

[00:49:46] Sieva Kozinsky: David Goggins, for example, made many millions of dollars more by using Scribe and putting his book out into the world. So that’s the story of what Scribe is. I’m happy to talk a little bit about the acquisition if you’d like as well. 

[00:50:01] Patrick Donley: I just interviewed Eric Jorgensen and he’s the CEO now of the company.

[00:50:07] Patrick Donley: He wrote one of my favorite books, actually, which is the Almanac of Naval Ravikant. I love that book. You guys produced it. Just came out with one on Balaji and then it sounds like you also have plans to write a book and I’m sure you’ll use scribe So I actually wanted to get into your idea for your book and some of the thoughts that you have on it Have you started writing it?

[00:50:30] Sieva Kozinsky: Yeah, definitely I don’t want to give all the juicy details away just yet But I can share what I’m thinking about and what gets me interested in the world and that will guide What the book is going to be about I read a weekly newsletter called the Business Academy which you can find at sievakozinsky.

[00:50:50] Sieva Kozinsky: com, just my first last name. com. And the things that I write about are really investing topics, lessons learned in business. And then I do profiles of what I think are interesting holding companies or interesting businesses. So my day to day is learning as much as I can from other investors, from other company owners, talking to private company founders, public company founders, and really understanding what has led to the success of the business, what makes their business tick.

[00:51:19] Sieva Kozinsky: And building up my internal repository, really sharpening my tool set as an investor so that I can become better and sharper identifying what is the difference between a good business, a bad business, an outstanding business. And everything we’ve done so far with Enduring Ventures, everything that I’ve done so far building my businesses has compounded and led to this.

[00:51:43] Sieva Kozinsky: The intent of the book is to be a synthesis of some of those lessons through the eyes of some of the businesses that I also have explored, right? Can I teach, can I use this as a way to teach as many people as possible to become better at identifying great businesses? to become better at running good businesses, just to become better investors, et cetera.

[00:52:05] Patrick Donley: You’re a great writer. I’ve connected with you on Twitter. I love your Twitter tweets, X, whatever it is now. Talk to me a little bit about the actual, what Twitter has done for your career and a little bit about just like your creative process in terms of writing and just creating really great content on a consistent basis.

[00:52:26] Patrick Donley: It’s not easy to do. 

[00:52:28] Sieva Kozinsky: Yeah, Twitter has completely changed my career and the trajectory of our company. It’s been incredible. And it’s for people that don’t understand or don’t participate, I think it’s hard to grasp, right? Twitter seems like a silly tool and Elon gets a bunch of bad press around it.

[00:52:46] Sieva Kozinsky: People are like, what are you doing there? Why are you wasting your time posting and sharing information? And I can share some of the success that I’ve had and I will here in a moment, but for me, it really started to be to share content and share my learnings with through Twitter, through LinkedIn, through my newsletter was really inspired by other great investors.

[00:53:09] Sieva Kozinsky: The way I live my life is I think to myself, where do I want to go? Who do I want to become? And I try to learn as much as possible about them and then pattern my life around them. Because these are people that have been doing it for 50 years, right? They’ve tried and tested different methods that work, that didn’t work.

[00:53:26] Sieva Kozinsky: And there’s a reason that 50 years later, they’re doing certain things. For the last 50 years, Warren Buffett has written an incredibly detailed, thoughtful, and thorough newsletter to the public. He doesn’t write it in financial terms he’s not writing it for analysts, he’s writing it for people like me, people like my sister, people like my friends, who can read his writing and learn as much as they can.

[00:53:53] Sieva Kozinsky: And if you think to yourself, why is he doing that? Why is Howard Marks producing a podcast? Why is Bill Ackman all over Twitter? These guys are world class investors and they are world class content creators. So at some point in their journey, they determined that being a content creator, building an audience is beneficial and gives them an edge in what they’re doing.

[00:54:19] Sieva Kozinsky: And it’s absolutely true. If you think about, if you’ve got a big business that does a hundred million, you put down a family business and you want to sell it to someone, who’s the first person you’re going to call? You’re going to call Warren Buffett, right? And that is an incredible advantage. That’s an incredible price advantage.

[00:54:37] Sieva Kozinsky: Because you could call any private equity firm, you could call it, could call any strategic, but he’s always going to get the first call because he has spent the time and the energy building his reputation through content. So that’s what really inspired me to get started. And that’s what really what’s encouraged me to keep going, even though at times it feels like what am I doing?

[00:54:57] Sieva Kozinsky: Why am I posting on Twitter? Why am I posting on LinkedIn? Aside from that, I get a huge kick out of people reaching out to me and saying, Hey, you really inspired me to take the jump and start a company. Or you really inspired me to go out and buy my business. I learned so much by following your journey and I love that.

[00:55:14] Sieva Kozinsky: I get a lot of joy from that. For me, creating content has led to a lot of unique opportunities. It has brought businesses our way for investment. For example, like Scribe came through Twitter from Eric actually. And if I hadn’t been posting on Twitter, there’s no way he would have known who I was. We’ve raised a lot of capital through those channels.

[00:55:35] Sieva Kozinsky: We’ve never posted to say, Hey you should send us your money and you should invest with us. But people see what we’re talking about and they reach out proactively and say, Hey, I like what you’re talking about. I want to invest with you. It’s been, it’s really been an incredible tool.

[00:55:50] Sieva Kozinsky: And as we grow, and as our audience grows, and as our experience set gets better, all of this compounds, I have more people who know what we’re doing that I did when I had 10, 000 followers. And we have more experience as investors, we have more capital to deploy. And if we just keep going and we keep growing along those different vectors, I think good things will continue to happen.

[00:56:12] Sieva Kozinsky: So I highly recommend it to anyone who’s thinking about building monuments. 

[00:56:17] Patrick Donley: You mentioned a little bit about the idea of cloning and just basically copying the playbooks of people that have already been doing this for 30, 40, 50 years in the case of Buffett and Munger. I know you’re a big fan of Manish Prabhrai.

[00:56:32] Patrick Donley: And did a thread recently on the Patels who own a, I think over 50 percent of the hotels, motels in the U. S. He’s got this idea of heads I win, tails I don’t lose too much. Is that a concept that you guys do when you’re buying and acquiring businesses? And I’m curious how Monish has affected your thought process and investing.

[00:56:57] Sieva Kozinsky: Yeah. The Dando Investor which is the book you’re referencing is an incredible book. In it, it talks about the Patels, which is, they’re not family members. It’s a group of people who all come from, I think it’s called the Gujarat or I don’t know how to say a region of India. And many of the people, let’s say most of them are named the Patels and are named Patels.

[00:57:21] Sieva Kozinsky: I think the last name is used as a signifier for each of your functions. Basically what happened is I think 16 years ago, the first Patel gentleman came to the U S and bought a motel and he used a combination of personal equity and debt to buy his first motel. And he lived in that motel with his family.

[00:57:44] Sieva Kozinsky: His wife did the cleaning. He handled the business operations at the front desk. His kids would handle the front desk when he couldn’t. And by, he was, because his family was running it, he was able to operate the lowest cost motel with the highest profit margin relative to their peers, which meant that more often than not his motel was filled.

[00:58:07] Sieva Kozinsky: Eventually he paid off his debt and he went and he bought another motel and he bought another motel and when he bought the other motel. He realized, okay, now his family can’t run it, so he needed his cousins or his friends from his hometown to come run it. So he invited his buddies from India, and he said, hey, I’m gonna buy this motel, I need you to run it.

[00:58:27] Sieva Kozinsky: If you run it for a while, and you help me pay off some of the debts, I will fund you to go buy another motel yourself. So it became this daisy chain reaction of this group of people are this group from this one region in the world that built incredible wealth in the U. S. through motels and hotels.

[00:58:50] Sieva Kozinsky: They own something like a trillion dollars worth of real estate in the US. And I went to a hotel conference called the Asian American Hotel Association recently. And 99 percent of the people in that room were Indian Americans. I was one of the few tall white guys in there. And I met a lot of people, link Patels.

[00:59:08] Sieva Kozinsky: It’s a thing it’s a real thing. So anyways, in the book, he taught the down to investor, he talks about this storyline, how this group of people came to this country with very little to no money. And through sweat, effort, a bit of smartly placed debt, we’re able to build lasting personal wealth.

[00:59:27] Sieva Kozinsky: And very specifically he said, look, to buy a hotel. You could invest 80, 000. You could take an SBA loan for the other, let’s say 920, 000. So now you own a million dollar hotel. That million dollar hotel, if you bought it at a 10 cap, let’s say was producing 100, 000 a year of profit.

[00:59:49] Sieva Kozinsky: Now you’re running it with your family. So maybe you’re making 150 or 200, 000, let’s say 200, 000 a year of profit. So you’re quickly paying so maybe in five years. You can pay off a hundred percent of the debt or a little bit slower. If you want, now you outright owed a hotel. That’s creating 200, 000 of cashflow for you.

[01:00:10] Sieva Kozinsky: That’s a lot of money for somebody that has no American degree, probably very little English, and is now cash flowing the sum of money and owns a property that’s worth a million dollars. So the real focus there is small, where can you make thoughtful investments where the downside is limited, but if you are successful the upside is transformative to your life.

[01:00:34] Sieva Kozinsky: And it’s very much how we think about our business, right? We don’t want to risk our full capital based on any individual investment. And when we’re looking at any individual investment, we’re really thinking to ourselves, okay, our downside is of course, the cash that we put in, but our upside is. X, Y, Z, right?

[01:00:53] Sieva Kozinsky: Where can this business grow? What is the brand value of this business? What are the cashflow distributions? And we’re really looking for cash on cash for terms of 20 plus percents. So yes, very very much modish has inspired how we think about our business. 

[01:01:10] Patrick Donley: Yeah, I love it. I love that guy. He’s got some great talks that he’s done on YouTube that I highly recommend along with the Dondo investor.

[01:01:18] Patrick Donley: Definitely worth checking out. There’s so much more I’d like to ask you, but we are out of time. Unfortunately, is there anything that we didn’t discuss that you wanted to touch on at all? 

[01:01:27] Sieva Kozinsky: I think this has been a great interview. You asked a lot of thoughtful, interesting questions. So we’ve covered a lot of ground.

[01:01:35] Sieva Kozinsky: I would just say this for people listening, the lower middle market of acquisitions has unlimited opportunities. There’s so many small to medium sized businesses out there and because of the large volume of opportunities out there, you’re going to find what I call mispriced gems, right? It’s much harder to find a mispriced gem in the public markets because you have tens of thousands of investors looking every day for opportunities.

[01:02:03] Sieva Kozinsky: Everybody has all of the information. You also have bonds and you have mutual funds. You have all of these things that are fighting for good prices in the public markets. But at this scale, there’s not a lot of buyers, there’s a lot of sellers, and people are starting to retire at a higher rate as the baby boomer generation retires.

[01:02:24] Sieva Kozinsky: Building a skill set and building experience in the lower middle market is not, certainly not easy. It’s going to be full of challenges ahead, but if you can figure it out, it’s an incredible way to invest and to get good returns as an investor. 

[01:02:44] Patrick Donley: Yeah, it’s such a good point. We’ll have to wait until your book comes out to learn more about it, but I’m looking forward to that.

[01:02:49] Patrick Donley: What’s the best way for our listeners to find out about you and get in touch? 

[01:02:53] Sieva Kozinsky: Just my first and last name. It’s unique enough that it’s easy to find anywhere you go. I’m always the first Google search for Twitter and LinkedIn, and you can sign up to my newsletter. Thank you so much, Patrick. Yeah. Thanks.

[01:03:07] Patrick Donley: Really appreciate your time today. Thank you. 

[01:03:09] Sieva Kozinsky: This has been great. 

[01:03:11] Patrick Donley: Okay, folks, that’s all I had for today’s episode. I hope you enjoyed the show, and I’ll see you back here real soon. 

[01:03:17] Outro: Thank you for listening to T. I. P. Make sure to subscribe to We Study Billionaires byThe Investor’s Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday, we study billionaires and the financial markets.

[01:03:32] Outro: To access our show notes, transcripts, or courses, go to theinvestorspodcast. com. This show is for entertainment purposes only. Before making any decision consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.