The SwitchCase Group Charter
The SwitchCase business model has the following attributes:
- The SwitchCase Group will generally be the only investor in a new venture and the ownership will be limited to the SwitchCase Group and the principals of the venture – a simple capital structure with stakeholders sharing common goals.
- Candidate businesses are expected to require a modest infusion of capital and a relatively short timeframe to reach cash flow positive operation – larger scale ventures should pursue other sources of capital and support.
- Candidate businesses should have a realistic opportunity to dominate a small but meaningful market – we are not seeking home runs.
- Candidate businesses should have a lean staffing model which is heavily based on outsourcing to larger scale partners on a variable cost basis – we should insource only the critical and unique skills needed for success.
- Candidate businesses should derive meaningful benefit from the business, technology and market development capabilities of the SwitchCase principals – it is strategic to leverage the Group’s unique people and their unique skills.
- Each candidate business will be operated over an extended period of time and make a meaningful ongoing cash contribution to the stakeholders – we are seeking long term successful portfolio businesses, we are not seeking exits.
- The compensation model for all stakeholders is based exclusively on sharing the positive cash flow generated by the portfolio businesses – we believe that this is the best way to align the interests of all stakeholders.
- It is not a group objective to seek a liquidity event for any business but if such an event is deemed in the best interest of the stakeholders, the proceeds will be shared among the capital providers and other stakeholders at the time of the liquidity event.
- It is the intention of the SwitchCase Group to build an enduring institution that can thrive and grow over many generations.
What is Partner Capital?
Partnership + Capital. There are three significant differences between Partner Capital and Venture Capital.
We Are Long Term Investors
Venture Capital is founded on a model where the investors purchase shares in a venture. They then drive that enterprise to a liquidity event so the shares can be sold or distributed. Venture funds are closed-end funds with, typically, a 10 year life. They are required to return capital to their investors within that 10 year window. As discussed elsewhere on this site, this drive to liquidity creates cultures and behaviors that are destructive to the long term interests of the other stakeholders of the enterprise.
Partner Capital is a long term investment. The SwitchCase Group is an open-ended investor. We are interested in businesses which grow revenue and generate strong free cash flow. We want to hold onto that investment indefinitely. We are owners, not traders. We are more like a mini-Berkshire Hathaway than like a mini-Kleiner Perkins.
We Build Deep and Broad Partnerships
SwitchCase Group is building a family of enterprises not a portfolio of shares. Our principals are engineers, marketing executives and experienced business leaders. We roll up our sleeves and go to work with you and for you. If you need development support to build your product, our engineering team will provide it. If you need help building your business strategy, our business executives will attack it with you. If you need to land your anchor accounts, our marketing executives will link arms with you and take your product to market. Our support reduces your need for capital, shortens your time to market and creates a lean and flexible staffing model for your enterprise.
We Nurture a Shared Vision
The SwitchCase vision is not new. It is a rediscovery of an old model; a model where entrepreneurs and their partners built enduring institutions instead of buying low and selling high; a model where the objective is to dominate important markets rather than simply to get rich. We want to make a difference.
Who are our Partners?
The most important characteristic of our partners is that we have a shared vision. At the SwitchCase Group we partner with entrepreneurs who want to make a long term commitment to building an enduring enterprise.
Businesses we sponsor usually have the following characteristics:
The business should be launched with a modest amount of capital (< $1M) in a year or less from an investment.
The business should have a realistic opportunity to create and dominate a meaningful market. We are looking for markets where the TAM is in the $50-$100M range. Business is increasingly moving to a winner-takes-all end game. We believe it is better strategy to seek to dominate a small market with minimal attention from the deep pockets than to go to war in the big markets. Risks are lower, investment is lower and probability of success should be significantly higher. We plan to succeed every time!
The business should benefit from and leverage the human capabilities of the SwitchCase Group. We need to be involved in order to both receive value from and provide value to our partners.
In general we will pass on businesses with complicated capital structures. We prefer businesses where the principals and the SwitchCase Group comprise the entire ownership group. In this way we create and sustain a shared vision and common goals.
The 21st century business model is a lean organization with significant outsourcing of non-core activities to strategic partners. This provides the lowest costs and the maximum agility. We seek businesses that embrace this model.
“Know the rules so you know when to break them.” – The Dalai Lama. We want to work with really great people. The rules come second.
We are not the only firm you can partner with. We do not believe we are right and that other firms are wrong. We are a group of talented and committed people who share a set of values, a vision on how to enable entrepreneurs and a commitment to a collective future. Are we right for you? Ask yourself a few basic questions.
Do you share, deep down in your soul, the SwitchCase Values?
- Live and act with integrity.
- Create something of enduring value.
- Work hard, play hard and have some fun.
- Work with people you like and believe in.
- Make money and share it with everyone involved.
- Do you have a deep passion about what you are doing and do you want to commit yourself to creating an enduring enterprise around the realization of this passion?
Does your business roughly fit the parameters outlined in the description of our partner model?
If the answer to these questions is yes, then the SwitchCase Group offers a unique opportunity. We bring significant talent, energy and experience to your venture. If you become part of the family we will work as hard as you do to assure your success.
Meet us and decide for yourself.