Episode Summary
Executive Summary: Patrick O’Shaughnessy interviews Jeremy Jaffan about Tiny, special situations in private markets, and how incentives, coordination failures, and personal fit drive great deals and careers. The conversation blends investing tactics with philosophy: buy messy situations, solve log jams, and avoid work, partners, or paths that drain energy.
Main Topics: Perfect business and perfect investment: Jaffan defines ideal businesses as low-capital, high-leverage advisory-like models and ideal investments as explainable dislocations. Special situations in private markets: He sees value in unresolved founder-VC, buyer-seller, and carve-out situations where incentives are misaligned. Tiny’s sourcing and execution model: Tiny built an edge by outreach, reputation, fast execution, and doing weird deals others avoided. Underwriting simplicity over analysis: He favors simple questions, gut checks, and pattern recognition over complex diligence and jargon. Human binaries and career fit: The discussion explores pre/post-fall, hard-to-kill, brute force vs cleverness, and boy vs guy frameworks. Advice, status, and sabbaticals: Jaffan argues people waste time on generic advice and status games instead of discovering what energizes them. Audience, money, and underpriced assets: He claims social presence, money, and certain neglected assets remain undervalued, while VC and holding companies may be overpriced.
Key Arguments: Great businesses pay for judgment; merchant banks are close to the ideal leverage model. Best investments come from understanding stakeholders and incentives, not just the asset. Most private-market opportunities are coordination problems that can be solved by brokering parties. Messy situations are attractive because they have clear, explainable reasons others passed. A good deal should be obvious fast; if it takes weeks, it may be too hard. The key diligence question is often simple: why is this business being sold now? Good VCs can create better carve-out or recap deals because they only care about fund power laws. At Tiny, outreach plus reputation created inbound flow for weird assets and off-market deals. The best underwrite is whether a seller makes you sleep easy at night. Generic advice is mostly useless; specific, tactical questions are the only valuable kind. The right career path is where you feel energized, not drained, and can sustain long effort. Social audience is underpriced because it can unlock commerce, access, and deal flow.
Data Points: Revenue example for a ghost ship company: $10 million a year - Used to describe a SaaS business that may still be excellent despite bad financing. Revenue example for a carve-out opportunity: $15 million a year - Example where a VC said the fund barely cared because it was from an older fund. Possible personal payout in a recap: $500 grand - Illustrative founder payoff in a recap of a business with compressed equity. Equity cram-down in recap: 10 or 20 percent - Example of how remaining equity might be reset in a recap transaction. Startup growth example: $10 million a year of revenue, growing 60% - Used to show how over-raising can make healthy growth feel like failure. Initial business sale timeline: 6 to 9 months - Contrast between traditional sale processes and Tiny’s faster execution ethos. Long no-deployment stretch: 6 years - Cited as the longest period one manager reportedly went without deploying capital. Tiny’s no-deal stretch: 2 years - Presented as unusually hard but still far shorter than the longest cited example. Founder’s first check example: $25 grand - Used to illustrate how an early investor can make more than the operator on a startup. Beat-album run: 5-year run, two albums a year - Beatles example for doing something extraordinary briefly and then stopping.
Pivotal Quotes: "I want every business to be the last business I ever buy." — Jeremy Jaffan: Describing his preference for durable, obvious, long-term assets. "The reward for good work is more work." — Kevin Kelly (quoted by Patrick): Referenced as a guiding maxim for people who love their craft. "Posting is the last great American meritocracy." — Jeremy Jaffan: Arguing that social platforms can still create real opportunity and mobility.
Implications: Listeners should look for situations where incentives misalign, be brutally honest about fit, and build careers around work that compounds energy rather than draining it.
From the Episode
Is the special situation just a unique opportunity to get an especially good deal on an enduring business? It just comes back to being lazy and not doing hard things, which is I want every business to be the last business I ever buy. So if it's not going to be, it has to be so smack you in the face good that I feel compelled to get off my ass and do it. We bought lots of cigar butts. I would continue to do those, but they have to be so good that it's, do you want to make millions and millions of dollars for very little work? Okay, sure. Another favorite question from managers is: How long have you gone without deploying money? The best I've ever heard is six years. Yeah, you and I heard that once together. Tiny did two years, which was incredibly hard. I can't fathom six years. I mean, six years are doing nothing. You literally just do nothing. I think Buffett went that long once, too. Yeah, Buffett and some other folks, I think, have done that, but it's so difficult. I find you don't really need to think about all this stuff if your default frame is just not to do anything. You have to be compelled out of your seat. Because if you are.
Try and push them away. I just had Kevin Kelly, the founder of Wired, and just an amazing guy in a lot of respects. Speaking of lines seared onto one's brain, his line that the reward for good work is more work is my favorite shibboleth of all time. If you say that to somebody and they start nodding, that's the kind of person I want to hang out with because they've solved the problem you just described. What would you do if the only reward was getting to do more of that thing? What is that for you? And almost no one has a professional answer to that. And I'm curious if you think there's. Ways of nudging oneself in the right direction, other than taking a sabbatical and just not putting pressure on yourself to find it. Another cut at that same thing is as you get closer to doing the work that you're called to, you get less envious of people, or rather, the things that make you envious are fewer. It's a very common thing that I see of top school, super ambitious kids to have to put down everything around them as bad to justify what they're doing. And I think that's really.
And my friend David Prell has been beating me over the head on this for years, and I should have listened to him earlier. I think the thing that I didn't really understand is you don't need to have a very big audience. So, quality and quantity really apply for audiences. And I cannot believe the people that you meet. I have this line: posting is the last great American meritocracy. The American dream lives in posting. And I think that's true. I really do. I think the last true and total meritocracy, you can post your way into any room in the world. Takes are interesting, and people think what you have to say is compelling. You can be an anonymous account. I mean, you've had anonymous accounts on the show before, and you can just go anywhere, and you really don't need anything other than a smartphone. And so, I think it's underrated from a social mobility point of view. I think it's underrated from a commerce point of view. Social presence was a huge factor in building Tiny, and that became quite a big business. I think we're going to see this interesting trend where, like, right now, maybe the way you
About Invest Like the Best with Patrick O'Shaughnessy
Conversations with the best investors and business builders in the world.
View all episodes from Invest Like the Best with Patrick O'Shaughnessy