Tiny

Incentive-caused bias: share buybacks line the CEO's own jeans

Wilkinson explains incentive-caused bias using buybacks: CEOs paid in stock options benefit when share price rises, and buybacks shrink the share count to lift price — so a 'return capital to shareholders' move can really be self-enrichment.

“a lot of CEOs are compensated based on share price because they get stock options. So their stock options become more valuable when the share price goes up. And what makes the share price go up but share buybacks? So when you buy back shares, there's fewer shares and each individual share is worth more. So it's actually a way for the CEO to put money in his or her own jeans.”

Incentive-caused bias: share buybacks line the CEO's own jeans

Wilkinson explains incentive-caused bias using buybacks: CEOs paid in stock options benefit when share price rises, and buybacks shrink the share count to lift price — so a 'return capital to shareholders' move can really be self-enrichment.

“a lot of CEOs are compensated based on share price because they get stock options. So their stock options become more valuable when the share price goes up. And what makes the share price go up but share buybacks? So when you buy back shares, there's fewer shares and each individual share is worth more. So it's actually a way for the CEO to put money in his or her own jeans.”

Buy boring: Tiny acquires simple, profitable, durable internet businesses

Andrew Wilkinson describes Tiny's thesis: a long-term holding company that buys majority stakes in profitable, simple, often boring internet businesses from bootstrapped founders. He deliberately avoids sexy categories like drones, AI, and VR in favor of predictable cash flow.

“So we go out and we find profitable, simple, often boring internet businesses, and we acquire majority stakes and we take over ownership. And we usually buy from founders. Often they're bootstrapped., and usually the businesses have been around for, you know, 5, 10 years. These are longer-term things, and we don't go for sexy stuff. We're not doing drones and AI and VR and all that kind of stuff. We look for businesses that are simple and predictable and boring.”

Steal thisHunt for simple, boring, cash-flowing internet businesses that have already survived 5-10 years instead of chasing sexy categories.

The Buffett-style 7-day term sheet that founders actually love

Wilkinson contrasts the miserable, drawn-out private equity process (months of diligence, last-minute renegotiation, earnouts) with Warren Buffett making multibillion-dollar deals in 7 days. Tiny copies Buffett: fast decisions, no renegotiation, founders get to leave and Tiny takes over management.

“And when we started reading about Warren Buffett, we were like, what the fuck? Like, Buffett makes deals in 7 days and he's doing multibillion-dollar deals. Why can't we just do the same thing? And the businesses we're buying, they're way less complex, way less complex than what Buffett's buying. He's buying factories and stuff. We're buying like these tiny little internet businesses with, you know, 10 to 20 employees. And so we started doing it and people love that. Because founders are high-paced. They want to make a quick decision and get a deal done, and they don't want to waste a bunch of time on it, and they don't want to be renegotiated and dragged through the mud.”

Steal thisWin deals against private equity by promising founders a fast, no-renegotiation close instead of months of diligence and earnouts.

Tiny's hands-off CEO playbook: a monthly P&L and a quarterly SWOT

When Tiny buys a company it installs a trusted CEO, hands them a growth playbook, and asks for only two reports: a financials-only update monthly and a SWOT analysis quarterly. No board meetings; some CEOs go six months without contact unless there's a crisis or big investment.

“All you have to do is send us two things. Once a month, you're going to send us a financial-only update. So we get no information about the operations of the business, just the, the numbers, the P&L and the balance sheet. And then on a quarterly basis, you're going to send us a SWOT analysis. So strengths, weaknesses, threats, opportunities in the business. And if there's anything that's really important, you got to call us quickly.”

Steal thisManage portfolio CEOs with just a monthly financials-only update and a quarterly SWOT, escalating only on crises or big bets.

MetaLab threw off ~$7M/year in profit before Tiny started buying

Wilkinson reveals MetaLab was generating roughly $7 million a year in profit when he began acquiring other companies, starting with Designer News in 2013. That free cash flow became the engine for Tiny's acquisitions.

“I think we were doing about $7 million a year in profit or something like that when we started buying businesses.”

Tiny Capital: buy profitable companies and live off the dividends

Sam describes Andrew Wilkinson's Tiny Capital, whose portfolio collectively does about $100M in revenue, taking dividends and using the cash flow to buy more companies—a buy-and-hold-for-cashflow model versus chasing exits.

“He owns tiny capital, and they do— they've been doing this. Uh, the companies that they own collectively, I think, do about $100 million in revenue, and he, I think, takes dividends and buys companies with the cash flow, right? And, uh, it's an awesome model.”

Steal thisBuy profitable companies, take dividends, redeploy the cash flow into more acquisitions.

Phantom equity over real equity to keep a conglomerate clean

Wilkinson avoids giving real equity in his ~40 corporate entities because it blocks him from moving assets and merging companies for tax purposes. He uses phantom equity instead, and only gives any equity at all when the plan is to eventually sell the business.

“We're moving towards doing more phantom equity if we do do it, because it's really complicated in a conglomerate like we have where you have, you know, 40 or so corporate entities to not be able to move stuff around and, you know, slam companies into one another for tax purposes and stuff. So we're moving more towards phantom equity if we do it. But if a company is at scale, you know, already doing tens of millions of dollars of revenue and profitable, I wouldn't give equity unless the plan is to sell the business.”

Steal thisUse phantom equity instead of real shares so you keep the freedom to restructure and merge entities for tax purposes.

The capital-call headache that pushed Wilkinson to phantom equity

Wilkinson illustrates why outside shareholders are painful: if a CEO owns 3% and Tiny has to inject $100K into the business, you have to ask the CEO to chip in $3K, they balk, and then you have to dilute them. Phantom equity sidesteps the complexity.

“Let's say we have a CEO and they own 3% of the business and Tiny has to inject money into the business, like loan the business money or something. There's a lot of complexity when you have outside shareholders where you go to the shareholder, like the CEO, and you say, hey, we're loaning $100,000. Can you chip in 3% or, you know, $3K? And they're like, what the fuck? And then you have to dilute them and it just gets kind of complicated. So that's why we're moving towards phantom equity.”