🔑 Selling junk earned his investors 40,000%
Welcome to The Business Buying Academy with Sieva Kozinsky. Here's what we have in store for you today:
- This boring business nets $330 million a quarter
- What if your Registered Agent was actually helpful?
- I talked to some business buying experts - here's what I learned
We have over 50 bank accounts across our portfolio companies.
Nick, our Director of Finance, used to spend hours every week just logging in and checking balances.
Then we found Vesto. It pulls in every account—across every bank—into one dashboard. Real-time balances, cash flow, transactions. No more jumping between logins.
Now Nick handles it all in under 5 minutes. That means more time spent on cash strategy, less on admin.
(Thanks to Vesto for sponsoring this newsletter.)
Salvage yards are great boring businesses.
Buy broken down cars for pennies on the dollar, strip the parts, and sell them for a profit.
It's almost the definition of deep value investing and reminds my of this Warren Buffett quote:
A cigar butt found on the street that has only one puff left in it may not offer much of a smoke, but the “bargain purchase” will make that puff all profit.
-1989 Berkshire Hathaway Shareholder Letter.
Buy up the absolute cheapest, non-working cars, then sell the parts and scrap metal off for more than you paid for the car.
I'd love to own a salvage yard someday.
You might think of a salvage yard as a small, mom-and-pop business located on some large piece of land in the middle of nowhere (that's what I thought of, at least).
But did you know there's a $57 billion public company that started as a single salvage yard in Vallejo, California?
Copart was founded in 1982 by a 34-year-old named Willis J. Johnson.
But Willis didn't want just one location.
He expanded across California, then to nearby Oregon and Washington.
By the mid 1990s, he acquired the largest volume seller of salvage in the entire country, the North Texas Salvage Pool in Dallas.
A popular strategy doing is taking an old school business and transitioning its fax machine and paper-dependent operations to software.
Copart was way ahead of its time.
In 1997, they developed the Copart Auction System - an electronic inventory system that connected all of Copart's locations.
Then in 1998, Copart introduced online auctions for car parts. eBay was less than three years old when Copart got into the online auction game.
Copart has since become one of the leaders in online auctions for cars & car parts. And Willis himself is worth $3.5 billion.
In its most recent quarter, Copart reported revenue of $1.16 billion and net income of $337 million (love those margins).
Here are some of the keys to Copart's "boring" success:
- Consistency: Demand for vehicle auctions is stable, driven by accidents, fleet turnover, and insurance write-offs, making it recession- and pandemic-proof.
- Moat: Network effects, scale, and proprietary technology create high barriers to entry, with Copart and rival IAA dominating 90% of the market. Also, their real estate is gold. Most towns are not excited to permit new scrap yards, so by default there is a limited supply.
- Capital Efficiency: A capital-light model with high returns on invested capital (20-30% RoIC) supports reinvestment and share repurchasing.
- Long-Term Growth: International expansion (Germany, Brazil) and technological innovation (AI, data analytics) provide a long runway for growth.
Since 1994, Copart has delivered a 40,000% return to shareholders, turning $10,000 into $3.2 million by 2024!
🔑 What if your Registered Agent was actually helpful?
The more companies I've bought, the more annoying legal entity compliance has gotten.
Just tracking the legal entities, plus all the state filings - without software I've been relying (poorly) on a calendar and excel to make sure I stay in compliance. I expected my Registered Agent to help, but they only seem to be good at sending me invoices.
Then I found Discern. It's a software company that replaces your Registered Agent and automates your state filings, like annual reports and franchise taxes. I see all my legal entities in one portal, and can file things directly from the product.
I never miss a filing and spend minutes on it a year.
Check out Discern here.
Thanks to Discern for sponsoring today's newsletter.
🔑 Watch this if you want to buy businesses
Over the last couple of months, I've narrowed the focus of my podcast.
I spoke to some of the most skilled business buyers I know and dove deep into their strategies for finding and closing deals.
The advice they share is worth millions.
A few of the recent lessons shared on the show:
- How Rafael bought 9 companies
- How Brian bought a 7-figure business with 100% seller financing
- How Chris doubled his flooring company's EBITDA after buying it
If you want to buy a business (or nine), you need to watch my most recent interviews.
And if you haven't already, please subscribe to the YouTube channel.
Have a great day,
Sieva
P.S. - Are you hiring? Get started with top global talent from Somewhere (I'm a customer and investor)
Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.
