The Entrepreneur’s Epilogue: Search Funds And Selling Your Startup

A.J Wasserstein
1hr 35min
April 6, 2023
About the Show

"I aspire to have this mosaic of a really rich personal life and a rich and fulfilling professional life."

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A.J Wasserstein is Lecturer in the Practice of Management at the Yale School of Management, and was previously the Founder and CEO of ArchivesOne, a document storage company that sold to Iron Mountain after 17 years of operation and growth. School is in session with A.J as he recounts his experiences with choosing an industry for its ideal economic characteristics, using “programmatic acquisitions” to steadily grow into a national brand, and experiencing a sense of loss when he sold his company after 17 years. Learn about the unique world of Search Fund Entrepreneurship, why passion for the product is not necessary when starting a business, and why being a “10x10+” entrepreneur is the best road to achieving happiness in your career. 


Key Moments

Become A CEO Out Of Business School Using Search Funds

A.J. Wasserstein stands out not only as a beacon of entrepreneurship but also as an educator imparting the treasures of his experience to the next generation. An accomplished entrepreneur with a history of building profitable businesses, A.J. now imparts his knowledge at the Yale School of Management. For him, teaching is not just about the theory; it's about sharing the real-world applications of these concepts.

Finding the riches in the niches

A.J embarked on this path by founding ArchivesOne, a company that tapped into the document storage industry. While it may not have been the most glamorous or "sexy" domain, Wasserstein recognized its potential for significant margins and high returns. His vision and leadership soon transformed ArchivesOne into a dominant player in the sector. Iron Mountain, a storage and information management services giant, identified the value and potential of ArchivesOne, leading to its acquisition. Throughout our interview, Wasserstein emphasized the importance of such strategic choices - and why going after the sexiest industry may not be the wisest choice for an entrepreneur. This philosophy not only contributed to his success but also serves as a guiding principle for aspiring entrepreneurs.

Decoding the 'Search Fund'

"Imagine not having to come up with a groundbreaking business idea but still making it big," A.J. begins. That's where search funds come into play. Rather than starting a business from scratch, budding entrepreneurs raise capital to search for an existing company to acquire and manage. This method, he believes, can be the launchpad for many post-grads, unsure of their next steps.

So what is a Search Fund? A search fund is a unique investment vehicle, primarily conceived to help budding entrepreneurs acquire and operate a single existing business. Rather than starting a business from scratch, the entrepreneur raises funds from investors to search for, acquire, and subsequently operate an existing company. This acquisition-centered model allows the entrepreneur to leapfrog challenges associated with early-stage startups, positioning them directly into a leadership role in an established business. Search funds can be especially beneficial for first-time entrepreneurs who might lack the initial business idea or the experience required to start a business from the ground up. By using a search fund, they can leverage the resources and mentorship of experienced investors, while also learning the ropes of managing and growing a business in real-time. 

The ultimate guide to Search Funds and Data on Search Funds By Stanford University

We loved digging into the Stanford Search Funds report. You will love reading about it.

Stanford Search Fund Study: https://www.gsb.stanford.edu/faculty-research/case-studies/2022-search-fund-study-selected-observations

The Step-By-Step Guide to Being a CEO Through Search Funds

  1. Raise the Fund: The first step is to gather investors who believe in your capability to run a business. "It's not about the business idea; it's about you," A.J. emphasizes. In the search funds world, the potential CEO does not need as much experience as in other funding circles like Venture Capital. 
  2. Search and Acquire: Once you have the funds, the hunt begins. Look for companies that are up for sale, evaluate their potential, and make an offer. Remember - often the more boring and un-sexy industries have excellent margins, and are a perfect place for a new CEO to start out. A.J. insists on the importance of choosing the right industry. "Dive into industries that may not seem glamorous but have consistent high returns. Think waste management or specialized manufacturing," he suggests.
  3. Transition and Manage: After acquiring, step into the leadership role. Here, you will apply all that you've learned during your business school days. Take every day as a challenge to learn, improve, and invest in the future. 

The Entrepreneur's Epilogue

A.J’s journey with ArchivesOne provides a vivid illustration of a concept that is central to his philosophy and teachings - the “entrepreneur's epilogue.” Having founded and nurtured ArchivesOne, a company in the seemingly unglamorous domain of document storage, he managed to create significant value in an industry with impressive margins and high returns. But the story of its sale to Iron Mountain brought forward the true nature of the entrepreneur's epilogue.

Wasserstein often reflected on the tension between the pursuit of wealth and personal happiness. For him, selling ArchivesOne was not just about the financial windfall; it was about letting go of something he had built from the ground up, a venture he was deeply passionate about and attached to.

This “epilogue” is at the heart of many entrepreneurial journeys: the balance between personal aspirations, the commitment to one's venture, and the lure of financial success. Wasserstein's story underscores that while entrepreneurship can lead to substantial financial rewards, it also comes with emotional and philosophical challenges. As he aptly summarized, "The pursuit of wealth at all costs is not a pathway for a happy life." Entrepreneurs must grapple with these complexities as they navigate their unique paths, making decisions that align with both their professional ambitions and personal values.

Drawing from his own experiences, A.J. Wasserstein advises young entrepreneurs to strike a balance. "Wealth is a means, not an end. Prioritize life's intangible riches," he concludes.

For those standing at the crossroads of entrepreneurship post their business school days, A.J.'s insights serve as a guiding light, illuminating a path that promises both success and fulfillment. A.J shows us that there are paths to build a lower-risk, higher reward life as an entrepreneur, all while maintaining your dignity, your balance, and your purpose. 

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