Buying your passion
My friend, an aspiring entrepreneur, recently received the following advice: Do only what you are insanely passionate about, what you think about night and day anyway, because that’s the only way you will succeed.
My response: yes and no.
The entrepreneurial path is absolutely a life choice. It’s all-consuming, it’s Self-forming, and it has the potential to be life-defining. Your business and your team will become integral members of your family… or perhaps a second family. You will wake up thinking about the business and inevitably think about it as you lay your head down at night, especially when you’ve just finished a 10pm investor call. Whenever you meet an acquaintance, whether old or new, your business will always be a topic of conversation, for better or for worse.
With such an all-consuming endeavor, of course passion is an important ingredient. Without it, you’ll burn out, get distracted, or become discouraged and raise the white flag. That said, many aspiring entrepreneurs misinterpret the importance placed on passion. They believe you stand a chance at succeeding only if you create a product or service that is directly aligned to your lifelong passions.
Likewise, search fund entrepreneurs often begin the process believing that in order to be successful and satisfied, they need to buy a business in an industry aligned with their personal passions. However, this creates a couple of challenges:
Prospective searchers often equate passion with hobby. They begin their analysis on the surfing, golf, or travel industries in the belief that only in those industries could they be happy running a company for the next decade. (While this may be true for a few, it is a misconception for most entrepreneurs for whom the search fund model is a fit.)
Limiting the search to industries that are strictly aligned with your particular passions is likely to yield too few potential targets and reduce your chances of success.
If everyone started/acquired/built only businesses that were perfectly aligned to their childhood dreams, or even their early adulthood dreams, many of today’s successful businesses wouldn’t exist. There would be no successful toilet manufacturing, coal mining, or pest control companies. And we’d have far too many fire departments and dance ensembles.
When Kevin Taweel and Jim Ellis acquired a roadside assistance company, later to become search fund megahit Asurion, they didn’t have a particular passion for roadside assistance. When Jay Davis and Jason Pananos acquired Vector Disease Control, they had no penchant for crop dusting. When Ricardo Aguirre acquired American Plant Maintenance, he had little idea what a steam trap was. Yet all of these people, and many more like them, have achieved great success in their entrepreneurial search fund journeys.
Why is that? If passion is important to entrepreneurial success, then why have these people succeeded in industries in which they had no particular interest prior to identifying the companies they would ultimately acquire? Most successful search fund entrepreneurs are both incredibly passionate and at the same time, within bounds, industry agnostic. “How is this possible?” you might ask.
The object of your affection
The solution to this paradox can be found when closely examining the searcher’s passion, uncovering the true nature of that passion, discovering what truly drives that entrepreneur. And in reality, as with many executives, the passion lies not in the end product or service at all, or even the industry in which the searcher operates. Rather, the passion lies in the business itself.
As most search fund entrepreneurs are top-tier MBA alumni, we can reasonably deduce that they have a keen interest in business. And in my experience, whatever interest in business existed prior to business school only grew during the MBA and any subsequent work experience. The allure of business continues to grow within that entrepreneur and, for some, leads her to the decision to acquire a business of her own.
For the search fund entrepreneur, the ultimate decision/goal is typically framed as “I want to acquire and run a business.” It is not typically “I want to run a makeup distribution business.” The enthusiasm is for the prospect of owning and running a business rather than for distributing makeup.
Can running a business really be a passion? Absolutely, and I would argue perhaps even more so in a small business. The daily challenge of strategically allocating resources, managing people, building relationships, assessing risks, and seizing opportunities at one’s will provides the intellectual stimulus and emotional satisfaction that these entrepreneurs crave. If the end product or service happens to align with the entrepreneur’s interests, great (though perhaps this presents additional hazards?), but that is almost irrelevant to this entrepreneur’s success and sense of fulfillment. Whether the business produces wrenches or bikinis, the daily business challenges and opportunities faced by the business owner are, surprisingly, broadly consistent across industries, and the search fund entrepreneur lives for that adventure.
Two become one
The other important point here is that, in the end, the searcher does develop a passion for the company’s product or service, whatever it may be!
Post-acquisition, the business and the searcher begin a process of fusing together. The business begins to assume the personality of the searcher, and the searcher starts to look more like the business, much like how married couples look more and more alike as time goes on. The business becomes the child of the searcher-CEO, and naturally that searcher develops a burning desire to care for that child. And in order to do so, she needs to understand that child deeply, get to know her friends and enemies, and figure out how she compares to her peers - where she excels and where she needs improvement.
Before long, the searcher-CEO is living and breathing bikinis (or wrenches). She knows every competing company out there, the ins and outs of each variation of every product, how her COGS compare to those of others in the market and how to tell the story of why her bikinis are the best choice for her customers. And she truly, deeply believes it.
She wants to provide the best for her bikini business, so she looks for opportunities for growth and development. She looks at acquiring other bikini lines, she strategizes her way into the country’s best swimwear retailers, and she surrounds her bikinis with the best people she can find.
When she comes home, she talks about the new bikini designs she’s about to produce next season, and she searches her spouse for sympathy as she tells the tale of the fast fashion companies who are undercutting her prices and undermining the integrity of the swimwear industry.
Even if she has never learned how to swim, in just a short time our searcher-CEO has become a bikini fanatic. She has fully immersed herself in the world of bikinis, because the company has become a part of her, and she has given herself to the company. One might say she is now passionate about bikinis.
Eyes wide open
If you find yourself compelled by all the potential benefits of buying and operating a business, then make that your goal without limiting yourself to surfboard repair services. By all means, have a look at all the surfboard repair service businesses you can find. If you do land one, you’ll be able to bring your passion and knowledge to work on day one.
But if you can’t find a surfboard repair business that fits your investment criteria - and you probably won’t - then don’t hesitate to open your eyes to any other industry that meets your basic criteria. Whatever you buy, regardless of industry, you are highly likely to become passionate about that business, even if you didn’t start the journey passionate about alarm monitoring services.
