What business are you really in?

I spoke with an entrepreneur recently who, after 5 years of running a successful and growing business, said "After 5 years I finally know the real business we're in.".

It means they outwardly do X but on the inside the hard part is Y.

As an example: Let's say you run a shoe repair shop and have plenty of customers (just play along with me). You might say you're in the shoe repair business (which is true!), but actually for you as the operator the hardest part is finding great shoe repair people to do the service. So you're actually in the business of hiring and retaining great shoe repair people (cobblers?).

This really can take years to play out until you know the real business you are in.

In PE there's really only 2 models:

• Raise money (from yourselves or outside investors) before you buy something
• Raise money while you're buying something (more common in real estate, called a fundless sponsor model). Sign LOI -> diligence + raise at the same time -> close.

A third that's possible but weird would be raise money after you buy something.

Because we have no regard for prior art, we have a ton more options to consider. Here are a few possible things shaping up that I think could be very interesting.

We have a community now. It's small but growing. We also have an off market deal at ~1x profit purchase price available. Here are some different options that could be repeatable for us and cool for the community:

• XO could source deals (bc we get some off market stuff inbound now) and package them for our community members. Help with negotiations, legal, handoff etc.
• XO could put some money in and find operators from the community. "Operated by you, guided by XO"
• XO could raise $ from the community and operate them ourselves.
• XO could be the bank for the community and invest in / finance deals from the community.
• Be opportunistic / try all of these

So we thought we were in the micro PE business of owning / operating small saas companies. Then we thought perhaps we could just be a hold co and hire operators (still going to try this). But there are a ton more options with the community. They're more fun options, and also potentially more synergistic options.

So the real business we're in (if we lean in to this community route) might actually be media. Odd!