Arcadea Group - Permanent Capital Investing in Vertical SaaS - [Art of Investing, EP.14]

Our teachers today are Daniel Eisen and Paul Yancich, co-founders of Arcadea Group. Arcadea is a private market, long-duration investor building a permanent home for high-quality, vertical market software companies. Today, we sit down with an example of next-generation talent in Daniel and Paul, who began Arcadea after having the rare opportunity to learn and sit at the feet of Mark Leonard and the remarkable core team of Constellation Software. In this session, we learn about the attractive opportunity in vertical market software and the structural advantages of pursuing this particular opportunity with permanent capital. They've built Arcadea in a way that both honors their past while successfully layering on their own unique ethos. Please enjoy our class with the impressive and inspiring Daniel Eisen and Paul Yancich. For the full show notes, transcript, and links to mentioned content, check out the episode page here. ----- This episode is brought to you by Summus. Summus is a revolutionary health benefits solution, driving superior employee engagement while dramatically lowering your company's enterprise-level healthcare spend. They're completely transforming the world of health benefits by providing employers and their employees in any location, fast access to over 5,100 of the top medical specialists from America's very best medical centers for support across all health questions. If you're looking for a benefit that drives your employee engagement, truly takes care of your people in their most scary and vulnerable times, all while improving your healthcare ROI, visit GoSummus.info/AOI. This episode is brought to you by Hunt Club. Hunt Club unlocks relationships and helps companies grow. Whether it's recruiting your next hire, landing your next big partner, or financing your business, a trusted introduction always works more effectively. Hunt Club’s tech-enabled search model leverages the largest community of its kind to refer amazing talent on your behalf. Additionally, its software program, Atlas, helps organize the entire network of a company or fund and assists in streamlining the right introductions. If you're looking for the ideal solution for all of your talent needs, visit HuntClub.com/AOI. ----- Art of Investing is a property of Pine Grove Studios in collaboration with Colossus, LLC. For more episodes of Art of Investing, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @ArtofInvest | @Buhrman_Rick | @PaulBuser | @JoinColossus Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Show Notes (00:00:00) Welcome to the Art of Investing (00:04:19) First Question - The Success of Constellation Software (00:14:58) The Role of Incentives in Business Success (00:18:37) Paul’s Personal Background and Career Path (00:21:48) The Journey to Success: Overcoming Obstacles (00:25:35) The Importance of Operating Roles in Business (00:29:41) Breaking into Finance with a Religious Studies Major (00:33:22) Working with Mark Leonard (00:40:10) The Birth of Arcadea (00:43:11) Influences On the Vision For Arcadea (00:44:19) The Concept of Renter vs Owner in Business (00:44:59) The Influence of 'The Hard Thing About Hard Things' (00:47:58) The Decision to Start Arcadea and the Importance of Partnership (00:55:52) The Structure of Arcadea as a Company, Not a Fund (01:01:29) The Importance of Long-Term Ownership and Growth Orientation (01:06:16) Reflecting on the Early Years of Arcadea (01:12:01) Positioning Against Venture-Backed Companies (01:17:22) Building a Shareholder Base (01:30:49) The Future of Vertical Software