Building a Berkshire for the Middle Market – Tracy Britt Cool

Tracy Britt Cool (0:00)

I told Warren it would take me a year, maybe two years, to get this thing coming. It would have been in decline for about a decade. It was a big turnaround that I needed to go do. It ended up taking nearly four years to do it. Everything is harder and operating than it seems. Even though I knew what needed to be done, I had the strategy in my mind, I knew I needed to go get the people on board, build the culture. It's a lot harder than you expect, because it all involves people, and people are tough. You hire the wrong people, you've got to change them out. Or you've got to work on culture and retention, which doesn't get changed overnight if you've had challenges in the past. You've got to go invest in people getting up to speed, learning new tools, new practices, new spaces. You've got to build all of this together. That was a huge surprise, humbling. Probably not dissimilar from how most investors think. Let's take margins from 10% to 14%.

That's one click in my spreadsheet. In reality in a business, that takes a lot more work to do. There's a lot of missteps or mistakes and learnings along the way to get there.

Ted Seides (1:03)

I'm Ted Seides and this is Capital Allocators.

My guest on today's show is Tracy Britt Cool, co-founder of Kanbrick, a long-term investment partnership that provides owners of family-owned mid-sized businesses with a differentiated option from traditional private equity. Tracy launched the business after spending 10 years at Berkshire Hathaway as one of Warren Buffett's few deputies. She started out of business school as a financial assistant to Buffett, served as chair of several Berkshire portfolio companies, and became CEO of one of them, Pampered Chef. Our conversation covers Tracy's journey, including lessons from Buffett and the value of operating experience. We turn to the application of those lessons at Kanbrick across its strategy, sourcing, deal dynamics, operational improvements, and long-term holding periods, all supported by the firm's creation of a community of 4,000 executives who share best practices in hiring, operations, excellence, and growth.

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