Joys of Compounding
Episode 14 Permanent Capital Investing in Vertical SaaS
Joys of Compounding

Episode 14: Permanent Capital Investing in Vertical SaaS

Joys of Compounding

Episode 14

Permanent Capital Investing in Vertical SaaS

Daniel Eisen and Paul Yancich are the co-founders of Arcadea Group. We cover their time at Constellation Software and other formative experiences, how they define and look for high-quality growth companies, and the value of a stable, long-term oriented capital base.

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(00:00:00) - Welcome to the Art of Investing

(00:04:19) - First Question - The Success of Constellation Software

(00:14:58) - The Role of Incentives in Business Success

(00:18:37) - Paul’s Personal Background and Career Path

(00:21:48) - The Journey to Success: Overcoming Obstacles

(00:25:35) - The Importance of Operating Roles in Business

(00:29:41) - Breaking into Finance with a Religious Studies Major

(00:33:22) - Working with Mark Leonard

(00:40:10) - The Birth of Arcadea

(00:43:11) - Influences On the Vision For Arcadea

(00:44:19) - The Concept of Renter vs Owner in Business

(00:44:59) - The Influence of 'The Hard Thing About Hard Things'

(00:47:58) - The Decision to Start Arcadea and the Importance of Partnership

(00:55:52) - The Structure of Arcadea as a Company, Not a Fund

(01:01:29) - The Importance of Long-Term Ownership and Growth Orientation

(01:06:16) - Reflecting on the Early Years of Arcadea

(01:12:01) - Positioning Against Venture-Backed Companies

(01:17:22) - Building a Shareholder Base

(01:30:49) - The Future of Vertical Software

Permanent Capital Investing in Vertical SaaS

Introduction

Rick
Our teachers today are Daniel Eisen and Paul Yancich, co-founders of Arcadea Group, a private market long-duration investor building a permanent home for high-quality vertical market software companies. Many years ago, Paul and I were meeting with Steve Mandel, Founder of Lone Pine Capital and someone who the legendary Julian Robertson once called perhaps the greatest analyst of all time.

At any rate, as we were accustomed to doing, we asked Steve for his advice on how we could be better at our work, which back then primarily related to fund investing. He said without flinching that our job as he saw it was not to find the Lone Pines of the world, but rather to find the next generation of Lone Pines, who today would go unnoticed by most investors who are more drawn to establish blue-chip firms and long proven track records.

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