With an aging population in the U.S., Teamshares is betting this market will grow even bigger, which is why since 2018, it has snapped up 84 small businesses from retiring owners. These owners like its pitch. Though Teamshares says that it sometimes pays below market price for a company, it installs a new president that it trains and grants 10% of the business’s stock to its employees. Moreover, it promises to increase those employees’ ownership to 80% within 20 years. It sounds almost valiant, like when KKR bought out a door company in 2015 and promised every employee a payout of at least $15,000 if the company met its targets when sold. When in 2022, KKR sold the company for 10 times what it paid, its 800 employees saw a payout of $360 million.

1. Sounds ambitious and I like that philosophy of buying to make it a more sustainable business model in the future

2. My BS detector went off a few times reading this. Something feels off but I can't pinpoint my concern. Then again, I'm not a financial analyst so take it with a grain of salt.

3. If their business model is to replace POS systems, or find micro-opportunities to shave the business expense pie in their favor... this seems like a graveyard. There's many success stories of startups in the past few years that went bankrupt during the pandemic.

And so while I'm rooting for them, I'm not optimistic that they'll grow beyond their size since that industry has a lot of aggressive financial backers. Square for instance.

The boring dystopia continues.

This is the best summary I could come up with:

Teamshares is a low-flying, New York-based startup with big ambitions to capitalize on an opportunity in plain sight: that of small businesses without a succession plan.

In fact, according to co-founder and CEO Michael Brown, Teamshares doesn’t want to sell the companies it is buying — ever.

We built a neobank, we’re soon to launch credit cards, and we’re building an insurance business as well, so there’s a secondary layer of financial products that will basically replace the vendors that the companies used to use.

We only build something if a product doesn’t exist for our exact use case, which is some combination of really traditional small business or employee ownership.

When we set out, we didn’t think we’d build a neobank, but there just wasn’t something that existed to our satisfaction, in part because small businesses still unfortunately receive a lot of checks.

In terms of the Berkshire Hathaway piece, we subscribe to a lot of their philosophy about being very long-term minded and being pretty efficient in our underwriting and keeping things simple.

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Interesting model overall. I thought their end goal was going to be to just buy and modernize small businesses, but their ultimate goal is also interesting.