Matt Perelman & Alex Sloane - The Art of Franchise Investing - [Invest Like the Best, EP.393]
Episode publishedPodcast: Invest Like the Best with Patr...Invest Like the Best with Patrick O'Shaughnessy
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2 fun facts about our newest sponsorship partner, Ramp. 1st, they are the fastest growing Fintech company in history, reaching a level of revenue in 5 years that I can't quote exactly, but is eyebrow raising. 2nd, 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 Raboy at Founders Fund and Khosla Ventures, Patrick and John Collison, Michael Ovitz, Brad Gershner. The list goes on and on. These facts demand the question, why? Having be
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 psum.vc.
My guests today are Matt Pearlman and Alex Sloan, cofounders and managing partners of Garnet Station Partners. GSP invests in the $1,000,000,000,000 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 multiunit businesses from gyms to car washes to funeral homes. GSP is now a leader in its field. In our conversation earlier this year, Mark Lasry dubbed Matt and Alex the next generation of great private equity investors. You'll soon hear why. This discussion is a
story is Matt and I grew up together. So we've known each other all our lives. I was at Apollo, and Matt was at Catterson. We went to business school. The plan was to go back to Apollon Caterton after we graduated. While we were there, we developed a thesis around franchise consolidation, and we found a deal to buy 5 KFC restaurants in Vermont, and we thought we could sell the real estate for more money than they were asking for the whole business. So we hired fancy lawyers and accountants that we had no business hiring for a deal that small. We didn't know any better. We spent all of our savi
Other than that, they loved us.
That was how we started. And look, obviously, we were really disappointed, and we were upset, but we also thought we were onto something. There were a 150,000 tier 1 fast food franchisees in the country at the time, and our hypothesis was how many millionaire restaurant operators are there. It just felt like a supply demand mismatch. Rather than looking for a deal and then seeking approval, we said, let's go to the brands themselves. Let's tell them our stories. Let's see if any of them will approve us as franchisees, maybe even introduce us to a deal, to an operator, and all of the brands rej
What was it like living with them? That sounds like a very unique experience.
We have so many stories, Patrick. Yeah.
We used to say the media rights are worth way more than the company. Hopefully, 10 years later, that's not still true, but they were terrific people, and it probably still are.
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