Top 10 Articles of 2023 & IP Annual Review

Top 10 Articles in 2023

1. IP RESEARCH: Constellation Software: A Competitive Analysis

2. IAA, Copart, & Salvage Auctions

3. IP RESEARCH: Constellation Software: Operating KPIs

4. IP RESEARCH: HEICO: Wencor Acquisition Synergies and Analysis

5. Danaher, Sartorius, & an Overview of The Bioprocessing Environment

6. IP RESEARCH: Burford Capital & Litigation Fair Value Accounting

7. IP RESEARCH: Halma, Danaher, CSU & Serial Acquirer Org Structures

8. Evolution Gaming vs Pragmatic Play

9. Costco Buying Strategies & Supplier Relationships

10. IP RESEARCH: Credit Acceptance: Dealer Survey

In Practise 2023 Annual Review

In December 2022, we communicated our mission to help the best investors and operators understand, run, and invest in businesses to create value. We aim to build the highest-quality primary research platform you can trust to help you understand how a business works. A focus on signal over noise. A partner who can help you build conviction in an investment thesis. Last year felt like a significant step to formalize our approach to pursue such a mission.

We solidified core aspects of our offering:

1. IP Research

2. Our internal Sourcing Pod Structure

3. Scaling our Interview Library

IP Research

In 2022, 3 of our top 5 articles were non-interview, research pieces. The stats were similar in 2023. This is a reminder that investors don’t necessarily want interviews. We want to learn, understand, and handicap risk / reward. While 60-min interviews are efficient, they are often not the most effective format to drive understanding.

We’ve organized our business to focus on sourcing the best executives to produce the best primary research. We believe quality is timeless. And that the operating realities of business also have a certain timelessness about it. Although industries and companies evolve, there is a timeless quality in understanding how businesses really work. Investors and operators can use such truths to make better decisions.

IP Research is central to our offering to help you understand businesses. We have 4 core formats:

1. IP Analysis - specific pieces of research on 1 value driver for a company. For eg. TransDigm: Boeing vs OEM Supplier Bargaining Power - how and why TDG has power over airframers and how Boeing tried to combat TDG pricing power

2. IP Company Learning Journeys - an intuitive way to navigate all company research and interviews in our library. For eg. ACV Auctions - how the US Wholesale auto market is structured, physical vs digital auctions, how ACV is differentiated, and CVNA / ADESA role in value chain

3. IP Value Chains - a breakdown of an industry or market value chain. For eg - SHEIN’s Supply Chain: How it Works

4. IP Surveys: written surveys on 1-2 core drivers of an investment thesis. For eg. Burford Capital: Law Firm Survey exploring why and how law firms use litigation finance and the risk to funders

Each format aims to cover a section of an investors’ learning journey:

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Company Learning Journeys curate our research and interviews to help you find new ideas and get up to speed on a new company effectively. Value Chains deepen your understanding of a new company and industry. As you learn more through 10-K’s, earnings calls, etc, our interview library helps you build upon your base understanding. Once you own or know the business well, our research and survey formats focus on the 1-2 core questions that matter to the investment thesis.

Other providers aim to provide information at scale. We’re focused on providing knowledge. We’re building out a small team of generalists trained in the art and science of primary research to produce IP Research. This will take time, but we believe it’s differentiated and hard to replicate. We will grow IP Research carefully: our aim is to only publish research we believe is incremental to long-term shareholders. You can read more about our research philosophy and coverage here.

By maintaining our curiosity and seeking the truth, we hope to surface and share insights into the operating realities of businesses for many decades to come.

Sourcing Executives

IP Research couldn’t be possible without a quality sourcing operation. This is the core of our business: to find the best executives on the planet in each field. We’re not sector specialists, but we’re organized to find and curate the knowledge of the best operators globally. Unlike incumbent networks, we focus on quality over volume.

Incumbents are organized and incentivised to drive volume rather than truly finding the best executives to help investors. This is partly due to their legacy of serving consulting and PE firms who are typically earlier in their learning journey when conducting primary research:

An Apollo or McKinsey analyst, typically, has very different needs compared to a PM buying and owning public securities for 5+ years. This is an important nuance to how investors use ENs: PE and consulting clients prioritize speed and volume while long-term, fundamental equity funds prioritize speaking to the best executives. For example, Apollo’s LBO team has to move quickly to meet bidding deadlines. Speed is crucial. PE, typically, needs to rapidly climb the learning curve to understand the asset in the weeks before making a bid. Therefore, the volume of expert interviews and speed at which they are conducted is crucial for PE clients. The quality of experts is a secondary requirement. - IP Research Analysis, GLG: Misaligned Incentives

Because ~70% of industry call volume is driven by PE and consulting, incumbent networks are structured and incentivised to focus on volume over quality. This focus on volume also applies to other players who only care about producing more interview content.

Last year we formalized our internal sourcing pod structure between a recruiter and a research analyst to focus on quality. Analysts join calls with our hedge fund partners to interpret research questions they are exploring. They read 10-K’s, proxies, investor materials, and conduct industry research to understand how best to source the right former executive, customer, or distributor. Our analysts spend 50% of their time working on Partner projects and 50% conducting their own interviews published on our platform.

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We believe the relationship between analysts and recruiters not only sources higher quality executives but also leads to better communication and overall experience for our partners. You can read more about why we believe this structure provides a better experience for public equity investors than incumbent networks here.

Scaling our Interview Library

By mid-2024, we estimate the industry is on track to approach ~10,000 interviews published per month. Investors are drowning in information. There are multiple players fighting to become the scaled platform. We can’t compete on scale. But we do believe there is a position for a higher quality platform focused on sourcing the best executives and working with the best funds conducting the best interviews.

We’re very selective in who we allow to conduct interviews on our platform. We aim to work with the top 150 public equity investors globally. Over time, given our edge in sourcing executives, we believe we will attract the best investors to our Partner Program. Partners can conduct private or published calls. While we may not publish the best interviews every time, we believe limiting access to our Partner Program will put a floor under the interview quality on our platform.

We’re on track to double our interview library YoY and believe there is a long runway to increase volume whilst maintaining the highest-quality in the industry. Please reach out if you’re interested in a trial package to test our ability to source quality executives.

Evolution of IP

We’re excited for the next few decades to come. Our capital structure is designed so we’re in control of our destiny. There is no VC determining arbitrary goals for us to meet. We’re focused on learning and helping others learn about businesses to make better decisions.

Today, our core ingredient is executive interviews but we won’t stop here. There are many crucial parts of the learning process that we’re not covering; financials, original source documents like 10-K’s, S-1s, earning calls, etc. We’re also no stranger to how Bloomberg or Factset and the like have scaled. But we’re also conscious we’re not early to the party. Many incumbent platforms provide all of the data above and command a significant amount of attention from investment professionals. For us to survive, our offering has to be that good to attract attention. This keeps us on our toes.

If and when we do bolt on another data set or offering, it will be focused on solving a specific problem for public equity investors that others fail to address adequately. We have a few ideas but please reach out directly if you’d like to see something specific on our platform.

Thank you

Lastly, thank you all for your support. We’re deeply grateful for our subscribers that make it possible for us to build this dream. We're looking forward to 2024!