Matt Perelman & Alex Sloane - The Art of Franchise Investing

**Patrick O'Shaughnessy** (0:00)
Two fun facts about our newest sponsorship partner, Ramp. First, they are the fastest growing fintech company in history, reaching a level of revenue in five years that I can't quote exactly, but is eyebrow raising. Second, they are backed by more of my favorite past guests, at least 16 of them when I counted, than probably any other company that I'm aware of. A list that includes Ravi Gupta at Sequoia, Josh Kushner at Thrive, Keith Raboi at Founders Fund, and Coastal Ventures, Patrick and John Collison, Michael Ovitz, Brad Gerstner. The list goes on and on. These facts demand the question, why? Having been personally obsessed with the great businesses through history, one clear lesson is that the best of them are run by disciplined operators. These operators manage costs with incredible detail and they are constantly thinking about how they can reinvest every dollar and every hour back into their business. This is Ram's mission to help companies manage their spend in a way that reduces expenses and frees up time for teams to work on more valuable projects. First on expenses, the average American business has a profit margin of 7.7%. This means saving 1% on costs is the equivalent of making 13% more revenue. The average RAMP customer is able to save 5% on their expenses each year. Of course, every entrepreneur is looking for ways to grow revenue by 50%. They should just as seriously seek to save 5% on their expenses. Second on time, unnecessary complexity is why most finance teams spend 80% of their time doing operational work and only about 20% of their time on strategic work. RAMP makes spend management very simple by handling your company's expenses, travel, bill payments, vendor relationships, and even accounting. It's notable that some of the best in class businesses today, companies like Airbnb, Anduril, and Shopify, and investors like Sequoia Capital and Vista Equity are all using RAMP to manage their spend. They use it to spend less, they use it to automate tedious financial processes, and they use it to reinvest, save dollars and hours into growth. At both Colossus and Positive Sum, my businesses, we've used RAMP for years now for these exact reasons. Go to ramp.com/invest to sign up for free and get a $250 welcome bonus. That's ramp.com/invest.
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts, and you can access all our podcasts including edited transcripts, show notes, and other resources to keep learning at joincolossus.com.

**SPEAKER_2** (3:55)
Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit PSUMVC.

**Patrick O'Shaughnessy** (4:24)
My guests today are Matt Perelman and Alex Sloane, co-founders and managing partners of Garnett Station Partners. GSP invests in the trillion-dollar franchise and consumer services industries. Matt and Alex started the firm in 2014 as MBA students when they bought 23 Burger King restaurants. Since then, they've invested in 26 other multi-unit businesses, from gyms to car washes to funeral homes. GSP is now a leader in its field. In our conversation earlier this year, Mark Lazry dubbed Matt and Alex the next generation of great private equity investors. You'll soon hear why. This discussion is a masterclass on franchise investing. We explore GSP's playbook for creating value, the power of Matt and Alex's partnership, and their approach to scaling businesses for successful exits. This conversation is special for another reason. For the last year, we've been working on a print publication that will share the very best of what we've encountered and learned every quarter. As the world goes bite-sized, short form, and full of platitudes, we are drawn to harder searching, more detailed exploration and understanding, and more emphasis on the very best people we can find, who are doing unique things in both business and investing. GSP is one such firm, and along with many others, they are profiled in our first issue of an upcoming print publication to be revealed next month. We're going to print a limited edition of them to start. So if you're interested in hearing first when pre-orders go on sale, go to joincolossus.com/print. I really couldn't be more excited to share with you what we've been working on, including an in-depth profile of one of the great investors of the last 20 years, who is a cult figure in investing circles, but has never been profiled or interviewed like this. So now, please enjoy the excellent and incredibly fun discussion with Matt Perelman and Alex Sloane. I can't wait for you to learn even more about them and their strategy soon. Stay tuned next month and for now, go to joincolossus.com/print.