Michael Stenclik

@lukesophinos Yeah there’s also no way the ceo can just leave without making their investors while. Breach of fiduciary duty.

What I think is happening with the Windsurf deal that people are missing: Them “licensing” the technology for multiple billions is the exit for investors and employees. It’s an exit disguised as something else to avoid M&A approvals, waiting months for the team to be able to join, etc Gov is going to stop these at some point but big tech doesn’t see it happening during current admin and are taking advantage of it while they can.

@EricFriedman Open to chatting about this? Looking into building AI tooling for consultants and have some ideas about a product that we can build using Agents.

I keep referencing this tweet to explain what we do and who we want to help

@JasonrShuman I know both the pluses and minuses on this strategy pretty well :). Broadly agree but comes with important to understand risks!

For vertical AI companies, focus on markets where atoms meet bits for higher switching costs and unique context capture. The most defensible companies will be those that own both the digital and physical components of their industry's value chain.

@carrynointerest We've been looking into building something like this. Open to talking more?

WHAT DOES AN AI-FIRST PE FIRM LOOK LIKE? I see a lot of people yapping about AI's impact on private equity. I'm probably going to post a few more of these, but this one is going to focus on the unsexiest part of private equity: Deal Management. How will AI impact this?

@patrick_oshag @healeycypher any suggestions?

Does anyone have a team offsite format / method that’s different than the normal stuff but really effective?

@theDSOguy @RealJohnMaher77 @carkerpox I’m glad we’re working together! Will only get better this year :).

Celebrating a great year of connections on X. It's easy to get in a bubble where most of your connections are in your industry. Twitter has really diversified my contacts. -@RealJohnMaher77 suggested I hire an in house marketing team. Over the next few months, @carkerpox helped me hire an internal team in Pakistan with Pavago. They've been crushing it! -Dipped my toe in the RV park game with @mhp_guy -@MichaelStenclik and the guys at Pulse Equity built us a sweet dashboard where we can see all of our equity from the different practices in the group all in one place. Met up in person with fellow Austinites @ChaiAndCabin @TennisonEddie @PCampK and @_athenasimpson @RetailCRE_ATX and some other friends from nearby @SMBTelecomGuy and @ryanraysr Got rolling with @cody_baird on a new website Recorded podcasts with the one and only @CoFoundersNik and dental legends @peterboulden and @CraigSpodak Eventually gave in to the power of the mustache and signed up for Sagan Passport with @MatznerJon Upgraded my toothpaste with some NOBS from @BowTiedGatorDDS @BrandonCPierron built us a sweet KPI dashboard Planning some real estate adventures with @bethanyjbabcock Big thanks to all these people and even more that I didn't have time to list. Here's to more friendships and fun in 2025!

@theDSOguy @RetailCRE_ATX I’m digging into some AI applications in commercial real estate - mind connecting us? :)

If you’re not following @RetailCRE_ATX give him a follow! Just had some coffee with him and he knows his stuff! Always great taking X connections to real life!

@rebeccakaden @usv Murray’s is pretty solid!

We’re having a New York bagel taste test next week @usv (as part of an important meeting, obviously.) New Yorkers: which bagels need to be included? (Current contenders: Apollo, Bobs, Ess a Bagel, Bagel Shop…)

@EyeforRetail_ Any you can point me to? :)

@MichaelStenclik For sure, there are some smaller operators who do this

As a CPG brand, some of the best sales can come from the weirdest places. Hotel mini bars, a tech company office, a school, even a nursing home. Customers that order big, pay full price and are low maintenance. These are such a gift because most customers are quite the opposite.

At the time of this, I joked that Satish @Redpoint had been on the Midas List 6 more times than me (6 vs 0). Now 7. A rare interview with the rare VC who never VC brags, tweets, blogs, pods. Hear how he invested in Snowflake @ $50m, what makes a great leader vs. manager, and more

@lukesophinos @ClintonKonect @tenddental Also thanks for doing this. It was fun!

@ClintonKonect @MichaelStenclik @tenddental Haven’t seen grocery stores or hotels. An awesome playbook for industries where GTM has proven not to work.

Full stack companies have been interesting for some time (ie. One Medical). But a new crop of full stack is popping up with M&A as a key strategy (ie. Metropolis, Splash). I asked @MichaelStenclik, who co-founded & scaled @TendDental w/ this approach, to break it down for us:

@lukesophinos @ClintonKonect @tenddental Foxtrot tried grocery. Maybe Oyo Hotels?

Excited to announce @exowatt305 today, our newest company from @joinatomic co-founded by @jackabraham and @HaPi31415 with $20M from @sama and @KTmBoyle @a16z wsj.com/tech/ai/sam-al…

@lukesophinos @metropolisio You know how I feel about it :).

Is this Vertical SaaS 2.0? Buy an SMB Build & integrate AI-Powered vSaaS Buy more SMB's, run the same playbook all while selling your vSaaS to other companies in said vertical Seeing more and more of these. A few examples: @metropolisio for parking lots Splash for pool routes

Very excited to see Atomic come to the NYC startup ecosystem :). Reach out if interested!

@girdley Thanks for posting this. How do you manage the phantom stock and make sure you get the calcs right? Excel?

You want an employee to be incentivized like an owner. So you give them stock — and now you have a partner. One problem: What happens if the employee quits? There is a middle ground to solve this: Phantom Stock (1/x)

@Rick_Zullo @EqualVentures Congrats bud!

Today, I’m happy to announce that @EqualVentures has raised $175m to “Bridge the Digital Divide” While I’m proud of what we have accomplished, I couldn’t be more excited about our future Thank you to all of our amazing founders, LPs and teammates! @EqualVentures/5f5ac816ebed" target="_blank" rel="nofollow noopener">medium.com/@EqualVentures…

@rafaquinn Sounds a lot easier than other business I've seen :). Do you have any incentive structure in place for the subsidiaries? Or are these all in industries where this isn't necessary to hire sufficient talent?

@MichaelStenclik We own 100% of each subsidiary in the US. So no need for a cap table. In our Panama HoldCo we have one company with a minority shareholder, but again pretty simple.

In 2020 we established a HoldCo focused solely on buying US companies. Unlike our first HoldCo we decided to not go it alone and raised outside capital. We were looking to invest a total of $40,000,000. My partner and I invested $12,000,000 of initial equity and the capital raise would be $28,000,000. We had yet to buy anything, so the investor was entering a blind pool. We gave them guidelines of what types of businesses we would buy and that they would be in the US. We would have a total of 5 years from the first acquisition or the limit of $40,000,000, whichever happened first, to deploy the funds. We offered the investors two different convertible debt instruments. The first paid 8% interest. As we are buying established cash-flowing businesses, we can make interest payments from the very beginning. The convertible debt had a warrant attached to it. The warrant gave the holder the right to convert up to 20% of their debt for common stock. The conversion would take place on the 5th anniversary (or when all funds had been deployed) and would occur at par value. In essence, the investor would have a “free look” at the companies we bought and how we operated them before deciding to become a shareholder or not. But they would be able to enter at the same valuation as the businesses were acquired for. Each calendar year after that moment we follow a repayment schedule for the remaining debt position. The second debt instrument was non-convertible. It paid a fixed 10% coupon but had no warrant attached to it. All debt holders would follow the same amortization schedule. We charged no performance fee. We do receive a management fee in line with what all our companies pay us for shared services. We buy our businesses for a 4-5X multiple and when combined with the 30% of equity my partner and I invested, the HoldCo starts each deal with a respectable 4:1 interest coverage ratio. What do the investors get? A decent coupon with the upside of private equity-like returns. Investment in a blind pool, without the risk of equity in businesses they do not yet know. A low-risk interest coverage ratio and scheduled return of their capital. We verbally committed to a public listing or share repurchase program beginning in year 10 for those who want to exit their equity investment. What did we get? Well-negotiated leverage. We are not charging a performance fee. We are not money managers or asset accumulators. We are building a business. The terms of the debt we were provided are highly favorable. Our interest payments are based on our results, so default risk is nearly inexistent. Our repayment schedule is based on a percentage of our earnings as well. So once again, default is nearly impossible. We secured $28,000,000 of leverage for our US business while nearly eliminating default risk. For that, we gave up a piece of the equity. We made our first acquisition in February 2021. So, in February 2026, or when we deploy the full $40,000,000 the “conversion date” will occur. We have bought two companies so far and are closing our third acquisition. After that acquisition, we will have invested 67% of the $40,000,000 and probably have one more left until full deployment.

@rafaquinn Makes sense, and thanks for the fast response! Are the cap tables similarly simple for the portfolio companies? Or do you have something more complex to incentivize operators to perform?

Our cap table is pretty simple. Currently, my partner and I own 100%. Once conversion occurs we will emit new shares to replace part of the debt. Since we do not have multiple rounds, it is pretty clean. As far as updates, we send 2 a year. They include consolidated financials and individual financials for each portfolio company. The annual communication will generally include a brief letter from us with highlights from the year and looking forward.