Kelsey Lehrich·August 17, 2023

Holdco Entrepreneurs: A Peek Behind the Curtain | Kelsey Lehrich Interview

Kelsey Lehrich is the co-founder and CEO of 365 Holdings, a self-funded holding company of e-commerce DTC businesses with 100+ employees and multiple eight figures in revenue. This episode is not a standard deal-walkthrough interview; instead it is primarily a discussion of the inaugural HoldCo survey (holdcosurvey.com) that Kelsey and co-founder John Wilson conducted with 100+ self-identified holdco entrepreneurs, revealing that most holdcos are smaller than commonly perceived, that meaningful structural changes tend to happen around $50M in revenue, and that decentralized models and global hiring are dominant trends. Kelsey shares that 365 Holdings is vertically integrated and has evolved toward a more decentralized structure, and he discusses the focus-vs-diversification debate, the sequencing of executive hires, and the economics of small-business holdcos. The episode also promotes HoldCo Conf (September 2023 in Cleveland). No specific acquisition deal terms are disclosed.

Deal facts

revenue: multiple eight figures
financing structure: self-funded, no outside equity capital
notes: 365 Holdings is a portfolio of e-commerce DTC businesses; 100+ employees globally; portfolio company count not specified but described as 'sizable'; no specific deal terms disclosed for any individual acquisition

Why this business

Kelsey and his business partner bought their first e-commerce business after having small companies that never achieved much scale. The e-commerce platform model allowed them to buy, operate, and build a portfolio of DTC brands, leveraging vertical integration including their own pick-pack-ship and some manufacturing.

What's working

Self-funded, bootstrapped model with no outside equity capital — full control and retained earnings compounding
Vertical integration: owning parts of the supply chain including production workers and fulfillment
Global hiring, particularly from the Philippines, to scale operations cost-effectively
Building shared infrastructure and eventually moving toward more decentralized divisional structures as the portfolio matures
Co-founding HoldCo Conf and the HoldCo survey to build community and brand awareness around the hold co phenomenon

What's hard

Cultural adaptation for US team on how to effectively leverage global remote resources
Documenting, systematizing, and building process for team members not physically co-located
Determining when to centralize vs. decentralize — 365 Holdings has shifted its model and is now moving more decentralized
Determining the right sequencing and timing for executive hires at different revenue thresholds
The focus vs. diversification tension: spreading attention across multiple businesses may limit how far any single business can go

Notable quotes

I forget who to credit it to but somebody refers to the everything tastes like chicken layer of business — meaning that Finance is finance you gotta reconcile your books hiring is hiring you gotta have a process for bringing in good people — leadership and management and accountability whether it's something like EOS or just some other system of daily operations those transcend Industries.

Many small businesses have a constrained total addressable market you can only grow it so profitably and so inevitably if you want to grow you end up diversifying.

A holds co-path or a holds covision is a way to play in small business but do something big not do something small and so it kind of scratches the ego itch I think for a lot of really ambitious entrepreneurs.

If you're listening to this as a Searcher leave the hold code thing second just like find a company first and let's talk about business number two once business number one is chugging along.