Holding Companies: The MFM Guide to Owning Everything While Running Nothing
In 2013, Andrew Wilkinson and his partner Chris Sparling took 850 million Canadian dollar valuation, and Wilkinson owned 71 percent of the shares. He describes himself as “incredibly lazy.” He has not spoken to some of his CEOs in two or three years.
The holding company model inverts the standard entrepreneur’s playbook. Instead of building one company and grinding through every operational problem personally, you buy multiple businesses, install professional managers, and step back into a role that looks more like a private investor than a founder. Warren Buffett made this approach famous through Berkshire Hathaway. A generation of operators who grew up reading Buffett’s annual letters are now adapting the model for smaller scale.
The appeal is obvious. The execution is harder than it appears.
What Is a Holding Company?
A holding company—often shortened to “HoldCo”—is a corporate structure that owns stakes in multiple operating businesses without directly managing day-to-day operations. The holding company itself generates no revenue from products or services. It exists to allocate capital, hire leadership, and compound returns across its portfolio.
The distinction from private equity matters. Traditional PE funds buy companies, optimize them over five to ten years, and sell them to return capital to investors. The holding company model, at least as practiced by guests on My First Million, emphasizes buying and holding permanently. The term Brent Beshore uses for his firm—Permanent Equity—captures the philosophy precisely.
The key figures who have appeared on MFM to discuss this approach include Andrew Wilkinson (Tiny), Brent Beshore (Permanent Equity), Alex Hormozi (Acquisition.com), and Nick Huber (Bolt Storage and various service businesses). Each operates with different capital structures, industries, and temperaments. All share the conviction that owning multiple businesses is preferable to running one.
Key Examples from MFM
Andrew Wilkinson and Tiny: The Lazy Millionaire
Wilkinson’s origin story involves failure. He started Metalab, a design agency, and it succeeded. He then attempted to start ten new businesses using Metalab’s profits. Almost all failed. He estimates he put $15 million into bad ideas before arriving at a realization: he should just buy businesses that already worked.
The portfolio now includes over 40 companies—Dribbble, Aeropress, DJ software, and various internet businesses. The combined numbers as of their public listing: roughly 65 million in recurring revenue, and $40 million in EBITDA.
The operational philosophy is radical non-involvement. Wilkinson explained on the podcast that there are CEOs he has not spoken to in years. His self-described approach: “I’m Teflon for tasks.” He uses the word lazy not as self-criticism but as explanation. He built a system that does not require his presence.
Brent Beshore and Permanent Equity: The Patient Capital Model
Where Wilkinson started with tech and design businesses, Beshore built his portfolio in what he calls the “Island of Misfit Toys”—a children’s clothing brand, a military recruitment firm, manufacturing, construction, aerospace, and a fencing company in Dallas.
The numbers are substantial: 16 companies generating 50 million in free cash flow. But the structure is what distinguishes Permanent Equity. The firm takes no management fees, no reimbursements, and uses no debt. The fund has a 30-year initial term. Investors cannot withdraw capital; they can only trade their positions to others.
The compensation model is simple: Beshore takes 40 percent of free cash flow as it is distributed to investors. No fees for managing money that is not making money.
Alex Hormozi and Acquisition.com: The Operator’s Holdco
Hormozi’s approach differs from both Wilkinson and Beshore. He built a portfolio of gym-related businesses, exited in 2021 for 40 million in distributions, and started Acquisition.com the next day using his own capital.
The current portfolio includes 11 companies. The model involves taking equity stakes—minority to majority—in service businesses and providing growth assistance. Hormozi invests roughly $500,000 annually in labor costs from his holding company to install systems and find talent in portfolio companies.
His stated ambition: build something like Berkshire Hathaway, but with his own approach to culture. The cultural emphasis distinguishes him from the more hands-off Wilkinson model.
The Frameworks and Lessons
Door 3: The Option Most Founders Miss
Wilkinson offers a framework that reframes the exit question entirely. Most founders, he argues, think in binary terms: keep running the business forever (Door 1) or sell it (Door 2). But there is a third option: hire a CEO to run the business while retaining ownership.
The threshold for this option is profit, not revenue. Wilkinson recommends against hiring a CEO until a business generates at least $300,000 in annual profit. Below that number, CEO compensation consumes too much margin. Above it, the math starts to work.
The Hammer Framework
When evaluating potential CEOs, Wilkinson looks for what he calls their “hammer”—the default lever they reach for when trying to grow a business. Some CEOs naturally gravitate toward marketing, others toward sales, others toward operations or finance. The framework: “To a man with a hammer, everything looks like a nail.”
The interview process reveals the hammer. The job is matching the right hammer to the right business. A CEO whose instinct is marketing will struggle in a business that needs operational discipline. The reverse is equally true.
Permanent Capital: The Ultimate Structural Advantage
Both Wilkinson and Beshore emphasize the advantages of capital that cannot be withdrawn. Traditional private equity funds must return capital within a set period—typically ten years—which forces exits regardless of market conditions. Permanent capital allows the manager to invest through downturns rather than sell into them.
Wilkinson rates permanent capital as the highest tier of business model. He points to Bill Ackman’s Pershing Square as an example: *50 employees managing 200 million in cash flow at a 1.5 percent fee.
All Businesses Are Loosely Functioning Disasters
Beshore’s most quoted observation functions as both warning and comfort. Every business, he argues, is dysfunctional because every business is full of people. The expectation of smooth operations is a fantasy. The question is not whether a business has problems but whether it makes money despite them.
The phrase he uses elsewhere—“every business is a slow motion knife fight”—captures the same reality. Ownership means waking up sweating, fighting, and trying to survive. The advantage of holding multiple businesses is not escaping this dynamic but diversifying across it.
The Tradeoffs
What Works
Lifestyle design through delegation. The holding company model, executed well, creates time freedom. Wilkinson has structured a life around not being operationally involved in the businesses he owns. The CEOs run operations. He allocates capital.
Compounding without additional investment. Tiny started with $5 million and grew without adding more capital. The profits from existing businesses funded new acquisitions. The compounding happens at the portfolio level, not the business level.
Diversification across multiple bets. A single business can fail for reasons outside the owner’s control. A portfolio of businesses reduces concentration risk. If one fails, others can compensate.
Deal flow from reputation. Building a public presence attracts better opportunities. Nick Huber praises Wilkinson’s ability to spot and delegate to operators. Hormozi generates proprietary deal flow through his content. The brand becomes an asset beyond the portfolio itself.
What Is Harder Than It Looks
You need a cash engine first. Wilkinson had Metalab generating $3-4 million annually before he started buying businesses. Beshore raised outside capital. Hormozi used proceeds from his gym exit. The model does not work starting from zero.
CEO hiring determines outcomes. Bad hires can destroy businesses. Wilkinson recommends CIA-style background checks costing $10-20K. His interview tactic: watch how candidates treat waitstaff and handle airport delays. He prefers people whose “armpits get really sweaty” in interviews over polished presenters.
The minority stake trap. Hormozi has learned that minority stakes create friction. When you only advise rather than control, people listen to half your advice and execute poorly. The result is worse than either full control or no involvement.
Constant crisis management. Beshore’s warning about businesses being “loosely functioning disasters” is not theoretical. Expect employees in jail, in rehab, in crisis. The work never stabilizes, even when the returns are excellent.
Illiquidity. Capital locked in private businesses cannot be easily accessed. Nick Huber *personally guarantees over 3.6 million in liquid assets. The net worth is high. The flexibility is low.
Tactics from the Podcast
Find the number two. Rather than recruiting active CEOs, look for the COO or president at a competitor company who wants to step into the top role. They have the skills and the ambition. You have the opportunity.
The reference check hack. Email former colleagues with a specific message: “If you do not respond, I will assume you had a bad experience.” People with positive things to say will respond. Silence is informative.
Avoid the swoop and poop. Once you hire a CEO, stop undermining them by texting their direct reports. Leave the company Slack. Stop responding to executives. Your involvement confuses the chain of command.
No debt, hold forever. Permanent Equity uses no leverage so they can invest cash flow during downturns instead of servicing bank debt. The constraint creates optionality.
Equity over revenue share. Nick Huber regrets negotiating profit share instead of equity in early deals. Revenue share provides income. Equity compounds.
FAQ
How much money do you need to start a holding company?
The practitioners who have appeared on MFM all started with meaningful capital. Wilkinson had millions in agency profits. Beshore raised investor funds. Hormozi used proceeds from a $46 million exit. The model requires either accumulated profits from an existing business, outside investment, or access to debt financing through vehicles like SBA loans.
What kinds of businesses work best in a holding company structure?
The common thread is businesses that can run without the owner’s constant involvement. Service businesses with professional managers, internet businesses with recurring revenue, and companies with established processes and customer bases. Beshore’s portfolio of “boring” businesses—manufacturing, construction, military recruitment—generates cash flow without requiring his daily presence.
How is a holding company different from private equity?
Traditional PE funds have finite lifespans and must exit investments within a set period. Holding companies with permanent capital structures can hold businesses indefinitely. PE firms charge management fees regardless of performance. Some holding companies, like Permanent Equity, take no fees and only earn from distributions. PE optimizes for exit. Holding companies optimize for long-term compounding.
Can you run a holding company while working a full-time job?
The model is not designed for side projects. Effective capital allocation requires time and attention. The lifestyle benefits come after the portfolio is built and CEOs are installed, not at the beginning. Most holding company founders worked full-time on their first business before expanding into multiple companies.
What is the biggest risk in the holding company model?
Bad CEO hires can destroy individual businesses. Poor capital allocation can destroy the entire portfolio. The diversification that protects against single-company failure does not protect against systematic errors in judgment. Focus may also be underrated: Nick Huber has publicly stated that most wealthy people he knows focused on one thing for a long time, and that running a HoldCo is “overrated.”
Sources & Episodes
- [[episodes/how_to_grow_a_small_agency_int|How To Grow A Small Agency Into A Billion Dollar Company (#414)]] — Tiny IPO story, Wilkinson’s journey from barista to billionaire
- The Lazy Millionaire: I Own 40 Companies, But Don’t Run Any Of Them — Door 3 framework, CEO hiring tactics, the $300K threshold
- I Own 38 Businesses. Here’s What Actually Makes Money. — Business model tier list, permanent capital as S-tier, Tiny origin
- $50M Founder Explains How He Finds “Golden” Businesses — Brent Beshore’s Permanent Equity model, no fees, no debt, 30-year hold
- [[episodes/alex_hormozis_plan_to_grow_acq|Alex Hormozi’s Plan To Grow Acquisition.com To $1 Billion (#462)]] — Portfolio company approach, culture emphasis, minority stake lessons
- [[episodes/how_nick_huber_built_a_100m_se|How Nick Huber Built A $100M Self Storage Empire (#420)]] — Audience leverage for deal flow, delegation as skill
- My First Million Live Event With Andrew Wilkinson (Austin Texas) — Near-failures at Tiny, Chris Sparling’s role, “slow motion knife fight” quote
Related: Andrew Wilkinson | Brent Beshore | Alex Hormozi | Nick Huber | Tiny | Permanent Equity | Acquisition.com | Warren Buffett | Berkshire Hathaway | CEO Hiring | Boring Businesses | Private Equity | SBA Loans