To Sell or Hold, that is the Question…
By: Scott Newhouse
For as long as I can remember, I have possessed a very entrepreneurial spirit. One could say that being an entrepreneur is in my DNA. Both my parents founded and ran their own businesses. My father Peter Newhouse founded a public accounting practice in 1978, and my mother June Newhouse started a corporate sales and incentive travel agency in 1976. They both ran their companies successfully for over 30 years. They built dynamic and very loyal teams around them and had very loyal customers. Both firms established strong long-lasting reputations. I am extremely fortunate and grateful to have had and continue to have the chance to observe and learn from them over the years. It truly was the best education I received.
Lifelong Guidance & Lessons Engrained by My Parents
My parents proudly ran their businesses with strong conviction and values. They demonstrated consistent integrity, hard work, honesty, treated others with respect, had gratitude for all staff and customers, and sincerely cared for those around them. They engrained in me to be humble, live modestly, spend time with family, use good judgement, and always stick to your core values. I can confidently say much of who I am and what makes me successful today, came from their early guidance and leadership.
The Instinct to Sell or The Patience to Hold
If you ask my parents if there was one lesson they tried to teach me, that likely never took hold, was practicing patience. I often joke that I am blessed with many great qualities, but patience is not one of them. Notwithstanding the lack of my patience in my early years, I was still able to enjoy an extraordinary amount of success.
From the age of 18 to 39, I was involved in founding or co-founding 5 different firms in 5 different industries ranging from student rentals, to cleaning and property management companies, to in-direct subprime automotive lending. All had the same theme: build it quickly, create value, and then sell to lock in the gain. Most of these ventures lasted 5-7 years. All of these firms had their success, but obviously once they were sold, it was a one-time gain.
I was 39 years old when I joined Massey Capital in 2017. It was not until I joined Massey Capital that I realized that my lack of patience was becoming a barrier to creating perpetual value. I began to realize that I was so focused on “locking in the gain”, that I lost sight of the upside of a continual stream of cash flow that can come from a long-focused investment strategy. It was like a “light bulb” went off! This was a very valuable lesson that I credit to Roman Kocur, Massey Capital’s Managing Partner, for sharing with me. Looking back, it was in 2017, that this new “patient, long term hold” mindset became one of the most important pillars for the next stage in my career.
Founded in 2017, Massey Capital is focused on a long-term investment strategy. When asked how to best describe Massey Capital, I often say it is a blend between a Family Office, a Private Equity Firm and an Operating Company.
- Family Office, because we are long-term holders of our businesses and utilize our own money. We also do not experience the pressure of having to return capital in 5-7 years,
- Private Equity Firm, because we use a leveraged buyout model and drive return through 4 key value creation pillars,
- Operating Company, because we are extremely hands on day-to-day in our businesses. This is the key differentiator of Massey compared to our peers.
While I have no regrets to part one of my career and I am very grateful for the successes that I have had and the special team members I shared it with, I do see Massey Capital’s long-term hold strategy as an outstanding business model. I fully embrace this patient, long-term hold strategy and am excited about the journey ahead.
Coming Full Circle to Appreciate the Value of Patience
I often reflect on my parent’s work journey and find myself comparing my current journey to theirs and look to see what I am doing the same and what I am doing differently as compared to them. One of the most obvious values that I missed, other than patience, was that they created a wonderful and successful life in playing the long game. They did not rush success, but rather fostered it over decades. Each proudly built and ran a business for 30 years. It took me 25 years to finally see this big piece of the puzzle.
Today, my answer to the question “To Sell or to Hold” is fully aligned with the way my parents June & Peter Newhouse ran their businesses for +30 years.