LaSean Smith Episode #27
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LaSean Smith – unlocking values-based business & personal success

LaSean Smith is a visionary investor and business strategist. With a background in software at Amazon and Microsoft, LaSean has deep expertise in artificial intelligence, behavioral economics, and systems engineering to reshape the landscape of business strategy. With over $450 million in capital deployed and several patents to his name, LaSean is a trailblazer in utilizing AI and machine learning to drive business success. His book, Values-Based Business Design, is an Amazon bestseller, reflecting his successful approach to high-growth product development. As founder of CAGR Investments, he propels software companies to exponential growth, emphasizing financial returns, relationships, and time efficiency. LaSean’s philosophy, deeply rooted in Stoicism, focuses on reaction mastery and the vital roles of position, people, and process in achieving business success. 

Key Learnings

  • Know thyself. LaSean has a concise personal North Star that guides his values and decisions: “Know thyself. Make things. Stay free.” This keeps him focused on what’s important.
  • Focus on the “why” first. LaSean believes leading with your purpose and values (the “why”) builds trust and attracts the right people to work with. People want to understand what you stand for.
  • Embrace lifelong learning. Entrepreneurship allows LaSean to learn new things constantly, which he sees as a key perk. He has an insatiable curiosity and values personal growth and expanding his knowledge across disciplines. His diverse background and self-education contribute to his success.


Recorded at The Union in downtown Seattle, Washington

LaSean’s company CAGR Investments

LaSean Smith on LinkedIn

LaSean’s book Values-Based Business Design: Modern Produce Development for High-Growth Companies

Book Recommendation: The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel


LaSean Smith has led an impressive entrepreneurial journey, from selling candy at age 9 to becoming a visionary tech investor and business strategist. With experience at Amazon, Microsoft, and multiple startups, LaSean emphasizes reaction mastery, positioning, and process to drive business success.

In the podcast, LaSean outlines his guiding personal values – know thyself, make things, stay free – which he’s honed over time by avoiding common traps like status-seeking. He urges entrepreneurs to articulate their “why” to attract partners and capital.

On tech innovation, LaSean argues most companies shouldn’t pursue invention but instead focus on operational excellence – finding an innovative product and optimizing how customers discover, trust, buy, use, and recommend it. He sees AI as a huge opportunity for companies to document processes and set metrics, upon which AI can then optimize performance.

LaSean recently founded CAGR Investments to acquire and grow small but profitable companies, taking a long-term approach based on free cash flows rather than quick flips. He wants to focus further on CAGR’s niche to keep finding hidden gems.

Ultimately, LaSean stresses the importance of speed – taking customer feedback and making improvements within 24 hours. Compounding small gains through quality processes beats banking on a “hockey stick” trajectory.

LaSean’s Recommendations:

  • Articulate your core values and stand by them, even when it means turning down money or opportunities that don’t align
  • Focus on operational excellence over pure invention for most companies
  • Document your processes thoroughly and set metrics before applying AI
  • Acquire profitable smaller companies for the long term rather than chasing “moonshots”
  • Listen to customers and make incremental improvements daily

Kyle Knowles:
Hello there. Welcome to the Maker Manager Money Podcast, a podcast about entrepreneurs, solopreneurs, founders, business owners, and business partnerships from startups to stay ups, to inspire entrepreneurs to keep going and future entrepreneurs to just start.
My name is Kyle Knowles and I’m in Seattle, Washington recording at the Union in downtown Seattle. Today’s guest is LaSean Smith, a visionary investor and business strategist with a background in software at Amazon and Microsoft. LaSean has deep expertise in artificial intelligence, behavioral economics, and systems engineering to reshape the landscape of business strategy.
With over $450 million in capital deployed and several patents to his name, LaSean is a trailblazer in utilizing AI and machine learning to drive business success. His book, Values-Based Business Design, is an Amazon bestseller, reflecting his successful approach to high growth product development.
As founder of CAGR Investments, he propels software companies to exponential growth, emphasizing financial returns, relationships, and time efficiency. LaSean’s philosophy, deeply rooted in stoicism, focuses on reaction mastery and the vital roles of position people and process in achieving business success.
Welcome to the podcast, LaSean.

LaSean Smith:
Kyle, great to be here. Let’s keep it loose. Have some fun.

Kyle Knowles:
Let’s do it.

LaSean Smith:
All right, where should we start?

Kyle Knowles:
Where should we start? Well, I mean, I just finished your book, Values-Based Business Design.

LaSean Smith:
Cool, appreciate that.

Kyle Knowles:
I totally wish all my podcast guests had written books that I could read before doing their episode since I feel like I know you so much more and better than I otherwise would have. So I guess my first question is what are the words that describe your values?

LaSean Smith:
Well, I’ll start with two things. First, my personal values are easy and top of mind. I have a North Star. I think everyone should have a very concise North Star or constitution. Mine’s six words and three sentences. Know thyself. Make things. Stay free. And it’s primarily to make sure I don’t break into jail and do something because of inertia or chasing status or because it was the easy way. And I’ve really found that having that set of words keeps me honest, it holds me accountable. And so that’s at the very core. Now if you expand beyond that, there are words like, stay curious. I believe to a large degree, entrepreneurship is just an excuse to be a lifelong learner that pays you very well. And so there are so many things around facing our fears, our self-development, moving without fear, being highly transparent. These are all values that to me are non-negotiables and not just nice to haves.
You probably have been into a building that has nice furniture and it’s good lighting, and then there’s a culture poster that has some words on there and you’re like, “Do they really live this?” And so I really try to hone down to a list of things that I really can defend and hold myself true to. And then it’s a lot easier to find, whether it’s co-founders, investors, employees, vendors, customers, people who want to go along on the journey with you because they’re like, “All right, I understand the promise that LaSean has made both by himself and through this company.” And I just think it’s requisite in today’s world that’s hyperpolarized for us to really communicate what we stand for before we get into telling and talking about what we’re selling.

Kyle Knowles:
I love it. I love the answer. And how many years did it take you to sort of arrive at your values then?

LaSean Smith:
Well, I will say in a very young age, I had the hints of this, but I kept messing up and I kept violating my values. So it wasn’t so much that you couldn’t talk to… I mean, we could go way back, middle school, high school. I had a couple things that worked to my advantage is one thing for whatever reason, and there’s a couple of moments that happen in our lives that leave a mark with us, but I just felt adults didn’t know what they were talking about and not like, “Hey, you’re misinformed.” There was just some weird energy where I felt they were giving me the answer that they wanted me to hear, the do as I say. And I was just like, “I don’t know about these adults.” And so that may have been misplaced, but it really gave me the confidence to just try out myself.
And so early on I had figured out that I should not listen to the crowd, but I couldn’t articulate. And social pressures and other things would have me violating those all the time. And so the way I might reposition the question is when did I start staying true to my values? And that probably wasn’t until my early 30s, right, where I had enough confidence to say, “I’m not listening to these people.” And so that has been really the journey for me, not just to be able to articulate those, but to make sure I don’t violate them.
And I use that word violate kind of like aggressively because you need to hold yourself accountable to whatever you say. And so for some people, and I’ve had this conversation with many folks that I coach or mentor, a quick sidebar, if you hear me say those words, I have this flow of you coach folks with a framework, a toolkit, not very personalized. You mentor folks for their situation at hand. And then if they’ve demonstrated that they’re someone that you really want to kind of see get to the next level, you need to sponsor them, you need to use some of your social capital to help them open the next door. It’s not enough to just give people advice. You have to put yourself on the line. And there’s a process to get to know someone, observe their behavior to see if that’s worth it.
But when I coach and mentor folks, one of the things I talk about is, all right, where do you really want to go? You get to define where your destination is. I’m not here to tell you what winning looks like, but once you articulate what that is, okay, now I want to put together systems to hold you accountable because you said this was your destination. And so many times I hear folks saying, “Well, I don’t want to be in the hustle culture,” or “I don’t want to work this hard.” Okay, no one’s saying you have to do these things. You told me your destination was X. Is that really your destination? Or do we want to go old school, change the directions in the Google Maps and go somewhere else? But if you’re saying this is where you want to go, you want to get there predictably, you then have to ask yourself, how bad do you want that?

Kyle Knowles:
I like it. It’s interesting because in the book you talk about, you use two different words. I’m trying to remember the two words you use, the sort of intention versus your willingness to actually do the thing. When you talk about destination, you can say, I value something, but then your actions are showing that you maybe don’t value that. Can you talk a little bit about the discrepancies between one’s actions and one’s values?

LaSean Smith:
Yeah. I heard a great articulation of one small tweak you can make to how you commit to things where you say I will instead of I can. So if someone says, “Can you write this memo next week by Tuesday morning? Can you join this committee for such and such? Can you go talk to this customer? Can you invest this money?” All of those things have an out. And if you say, “I will invest this,” now you’re like, “Oh, I’m on the hook.” And what you’ll find yourself is communicating with more precision, you’ll say, “I will invest if these things are true by this date,” you’ll find yourself forcing more discipline in how you communicate and clarity because there’s a commitment. I will. And so that’s a good starting point, but if we were to summarize, I think what is, for me, one of the most important takeaways from the book, it is really figuring out what values you’re willing to go out of business to defend.
And to me, this is where rubber meets the road. This is not just marketing copy that you get to change next year. You have to dig deep and say, “What do we stand for?” There was a great, I don’t know how deep the science was, but there’s an entrepreneur. His name is Patrick Campbell. He started Profit Well. Sold for a couple hundred million dollars and he did a study on simply applying more societal values to a company. So let’s say you sell cupcakes. And what he found is if you go really hard articulating the values, you can get a 20 to 40% lift on revenue. And I love that because it gives us directionally a real number. What is it worth to go and live your values as a company?
And so that’s a starting point. I think where it gets mixed up sometimes in the media is when we look at what’s happening, this is top of mind right now with Elon, folks are saying, “Hey, my values don’t align with Elon.” “My values do align with Elon.” Folks like Disney came out with their financials over the last few days and they said, “Hey, we’ve maybe over-indexed and alienated some of our customers.”
And my point is, I’m not on either side of the fence from a business standpoint. I just think if you attempt to say everyone is your customer, in today’s society, it is going to be very hard to make all of those customers happy because you’re going to have this homogenized, watered down version of whatever you offer. And if you’re a small company, and when I say small, this could be small in employee count, it could be small in top line revenue, but for the most part, if you’re not working at a public company or some massive five, 10,000 plus employee company, you’re probably small enough if the leadership has the courage to lean into this and you can compete with a Disney in a way you couldn’t years ago because folks are really yearning companies that say we stand for something.
I’ll give you one more anecdote. I think it was Downy or Bounty, it’s one of these CPG companies. I don’t want to get the wrong company, but recently they had made a commitment that said, we are going to stand strong and plant a tree for every such and such action we take to make these paper towels. And that was in the ZIRP, the zero interest rate policy period. And what happens? Times get hard and interest rates are at a different price point and they released a press release saying, “Hey, we’re going to reposition this.” It’s like Tom’s Shoe saying, “We don’t give the one shoe forever you buy…” You’re just breaking the promise. And so the reason this values-based approach is so powerful is it’s a proxy of trust. And so many times, whether it’s marketers, salespeople, the founders themselves, they use these proxies, these words to kind of infer what they stand for.
And in a world where it’s so hard to cut through the noise and get attention, sometimes you just need to say it. You need to be explicit. This is what we stand for. And if you don’t break that promise, goodness, you have so much runway and you may never be able to take that company and then say, we are going to grow to serve everyone, but if you have the right type of investment and capitalization strategy, you never need that. And this is, we’ll get to maybe how I think about how to fund and capitalize businesses. One of the reasons I think so many companies should never go the traditional, leveraged PE route or the kind of VC-backed startup route is because you have an edict to get to a certain size in a certain time window. And that’s going to force you to start expanding and serving more customers. And invariably it’s going to test your values versus your profit seeking interests.

Kyle Knowles:
It’s fascinating. And do you have any examples of companies that are doing this really well, standing by their values?

LaSean Smith:
Well, I mean the obvious is on the political front. I mean, you can see conservative coffee brands emerging that say, “This is what we stand for.” And then on the flip side, you’ll see folks who have much more liberal policies. There’s a indirect piece that you see in some places where it’ll really talk about anything from Made in America, right? I think a common thing where it’s just whether it’s protectionism or some underlying value, for some people that’s a huge turnoff and they’re like, “We’re a global economy and we need to help everyone.” And other folks are like, “If it’s not made in America, I don’t want to buy it.” And so I think it’s WeatherTech. They make inserts for trucks. If you listen to any of their advertisements, it’s very clear they’re underscoring the Made in America to project their values.
And for some people, again, what I love about it, is it’s polarizing. For a long time, if you looked at someone like, let’s say Ellen, the reason I find the rise in, I guess I call it fall, but at some point everybody has to exit stage in entertainment. But the fall of Ellen was so fascinating because they kind of propped her up as this very popular person where she’s very likable, but folks were mostly apathetic. And so if you said, “Hey, do you like Ellen?” Most people would say, “Oh, yeah. Talk show host? Yeah, she’s cool.” But people weren’t ready to ride and die for Ellen. And so as soon as some controversy entered the conversation, she’s done. And you counter that to folks who are highly polarizing, let’s say like a Kanye West, it took him doing some really egregious and extreme things for his core fan base to say, “Okay, this is enough.” Right? But they stuck with him for a ridiculous amount of time, and some of them are still there, which is quite surprising.
Again, back to the Elon conversation, there are folks who are highly offended and are turned off by what he stands for, and others are like, “That’s what I’m seeking.” And I think we’re seeing this on a public scale. The closer it is to a B2C company, the more I think this starts to matter. So if we’ll stick to the Elon example, as we think about X, there’s all this drama going on on the conversations he had at that recent interview. At the same time, they’re a little more muted at Tesla. People are like, “Well, the cyber truck is this dystopian thing and Tesla’s lost their magic.” These are the same reporters just kind of bleeding that over. But then you get into SpaceX and it’s a little quieter. You get into Starlink and it’s like you don’t hear any of the conversations.
And so I do believe there’s a thread here that how can you use values to really drive is I think at least for now, going to be more amplified on the B2C side than you might see on B2B.

Kyle Knowles:
Okay. So I want to talk a little bit about technology. You mentioned Tesla, but just for any companies out there, what do you mean in your book that pursuing technological innovation might not be the winning strategy for all companies?

LaSean Smith:
Yeah, I would say it’s probably not the winning strategy for most companies. There’s a guy, Matt Ridley, he wrote a book called, The Rational Optimist. I really like businesses or books rather, that can stand the sense of time and you can apply them to your business over the years. Sidebar, quick hack. One of the things I love to do when I find a book that has been around for a long time, I go on eBay and I want to go find first, second, third edition. So if someone says, “Hey, there was this great book on economics or human behavior and it was published in the ’50s,” I’m all about going and finding an old version and not the reprint. Two things. One, there’s just some kind of history to it I find cool and they’re so cheap, who wants these old books? But the other piece is sometimes they’re formatted or structured differently and you really get some magic by reading the old version.
And so I’m always looking for those books that are standing the test of time and then looking for modern current books the last 10, 15 years that I believe will stand the test of time. And this particular book is one of them. And the key takeaway is if you are trying to go and start a business, you are going to succeed or you’re going to have the highest chance to succeed from your ideation. We can talk about people process and positioning later on, but if you don’t have that core nexus of an idea, you need to figure out your point of view. What’s changed in the world that you believe is worth chasing that other folks don’t see?
And his point, which I really love, is what you want to do is be a contrarian that has an optimistic view, that is also pragmatic, IE rational. So that’s the rational optimist. And the reason I love the flow here is you’re trying to find things where the rest of the world sees everything going in one direction and you see it going in the other direction and it’s optimistic. And so AI is one of these things. When I see the media coverage, I find it fascinating that people want to project, and it’s not surprising, but it’s fascinating. They want to project the idea that if AI comes, they’re just going to make us work for them. That’s the human condition coming from a place of scarcity. For thousands of years, we’ve lived in a world where we didn’t have enough food, we didn’t have enough energy.
So our brain thinks, “Oh, well, when… we hit the AGI level, it’s just going to make us work for them. We are going to be their employees.” And it’s like, no, I believe that even if we get close to AGI what those tools, I’m not saying is it going to be sentient, but regardless of its capabilities, it’s going to say, well, what is scarce? Energy is scarce. All right, let’s go figure out maybe cold fusion is just a few large language models away from solving unlimited energy. What does that do to all the wars that we have to fight? We fight so many things around resources. And so I think so many things could be reshaped. Housing could become dramatically cheaper if we could take all sorts of raw materials and produce them without any constraints on energy. And so I don’t believe that AI is going to lead us down to some other kind of dystopian future.
Now I think the humans with more leverage with these tools are going to be who humans are. And so they might do bad stuff with these tools and maybe we can come back to AI later in the convo. But if you have a point of view, and my point of view here with AI is that I believe it’s going to be net positive and the acceleration that we’re seeing in potential job displacement, it’s already happened in other industries and regular working class folks are for the first time figuring out, “Oh my goodness, I’m going to have to re-skill every four or five years.” And that’s the real societal kind of change that’s going. And I look at that and say, “Okay, what are the companies we need to build for that?” And so getting back to the book and that punchline, finding ways to not only see the world differently, but finding a way where you feel like this is a unique point of view, but I think the world is better as a result. And then while everyone is frozen in fear, you can take massive action and go chase that.
So then, all right, so what do we do at that point as far as invention? The same author, he has a new book that talks about invention. And I think it’s not surprising that he’s written a couple books in the same category and he has this nice framework that says, first you’re going to look at the inventors and the inventors almost never win. Then you’re going to look at the innovators. And the innovators are the folks who go make it real. So if you look at someone like Apple for instance, Apple’s not really an inventor. There’s not a ton you can look at. There’s some material science and other things they’ve done that’s pretty cool, but they haven’t invented that much. And yes, they got plenty of patents and what have you, but orders of magnitudes, that’s not the place of invention. That’s the place for innovation.
I worked at Microsoft for a while and I would have buddies who say, “Microsoft just stole this idea from so-and-so,” and if you look at the history of Microsoft, there isn’t a ton of original invention. And we want to tell ourselves these kind of societal flows that, oh, the inventor gets compensated. Almost never does the inventor get compensated. I mean you can go way back to Tesla and Thomas Edison. It just does not work out that way. And so I believe that the inventors, if you’re drawn to be an inventor, go for it. Know that your ability to capture economic value for your invention is going to be low because over the course of time, ideas are worth zero, execution is worth everything.
Now, it doesn’t mean we shouldn’t celebrate these folks and give them accolades and find other ways to support. But the idea is not really the magic. This is one of the reasons people will say, “Hey LaSean, I got this great idea. I need you to sign an NDA before I share.” No. If your idea is so fragile that me hearing it puts it at risk, you’re not getting any money from me. And so I take Matt’s framework and I add a third pillar, and this kind of wraps it up back to your question, and add operational excellence. And so you can say, what business am I in? Am I going to be in the invention business? I’m going to do deep tech, I’m going to do something really complicated. It’s going to take me 20 years of a moonshot to go figure this out. Am I going to be an innovator and I’m going to bring the right messaging, the right production, the right manufacturing, efficiencies, all these things to go extract value?
Or am I going to be just a really exceptional operator who knows how to find a market, communicate to that market and deliver an innovative product to that customer? And if you look through those buckets, it’s fascinating because it maps pretty well to the different type of businesses and capital sources. A lot of the inventors tend to be VC-backed type companies because they’re chasing these moonshots, the biggest market cap companies in the world tend to be the innovators. People don’t love to hear that, but it’s like they have this labor and capital engine to go build things at scale like the electronics in an Xbox or a PlayStation. It’s amazing because of all the innovation and cost controls and other things that happened.
And then if you’re like, “All right, LaSean, we’re all over the place talking all this macro econ stuff.” If we get it back to, so what do we actually go do? I’m saying if you are not a big public company or you’re on the VC train, so what do you do? I’m saying you should go, don’t invent anything, don’t innovate anything. Go find an innovative product or service, use your unique set of values and go operationalize how you sell that. And you get super tight on how you run customers through that process that we understand, right. How do they know, trust, buy, use/retain and then recommend your product.
And that is the economic engine. And so if you say, I only have a half a million dollars to get going, don’t pick those first two buckets. You’re going to break into jail, you’re going to get in trouble. And what you really should do is focus over here on building a cash machine. And then over time, if you decide to move into one of these other places, your company grows up to IPO and it becomes an innovator. You want to carve off dollars for R&D and you want to chase a moonshot, all good. But I think most folks are going to be misserved if they start in bucket one or two.

Kyle Knowles:
Is commercialization another word for innovation or not?

LaSean Smith:
I think the Venn diagram is, it overlaps. When I think about that innovation space, there really is something in the way we celebrate artists and other types of creators where it feels dingy or dirty when it’s like, well, this person came up with the idea though, and then these folks just figured out how to sell it better. Or they figured out how to manufacture it for cheaper. And I don’t have a great comeback to why the world is unfair like that. But when I talk to fine artists, folks who are actually in art and culture, I talk to people who are doing creative endeavors in the context of capitalism, a lot of times they really struggle with the world’s not rewarding this idea. And I’m like, “All right, if you want to go out and march, go for it. But if you want money wired into your bank account, you need to embrace this truism and go figure out how you move further down the spectrum.”

Kyle Knowles:
I would like you to tell the story of getting into entrepreneurship when you were nine years old.

LaSean Smith:
Yeah, so many things are about our environment. Like I said, I had some peculiar behavioral things where it’s like, I don’t trust these adults, but generally my success has come from the people around me, having an amazing set of mentors and great family structure. We were most of my childhood coming from a place of deep financial insecurity. And it wasn’t to the extreme as others where maybe they’re homeless or what have you, but there was no question that we weren’t the family on the block that was doing it. And through my life, a few things happened. So I won’t go super deep on all the chronology but chronologically, but I think it’s important to hit a couple beats. I was in the inner city, south side of Chicago. My dad was a musician and he ended up getting sick and he had to figure out where we’re going to move.
At a certain point, he was in the military as a guitar player and he had been stationed in different places and there’s actually a job for that. I didn’t know that. They called it… It was the Navy show band had a subset where there was a five six piece, and actually his day job was to go practice and then go play on behalf of America. So pretty cool job. But anyway, he had to go figure out where he was going to live and he moved from… We moved from Chicago back to Arizona, which we had lived for a short stint and that’s where he decided to reboot and get settled in. And through that process of being a military brat, one of the things you learn is you got to meet friends quickly. You got to figure out, “I don’t know any of you all but hello, my name’s LaSean,” or you just go hide in a corner. And I picked option A.
But through that process, one of the things that was always in my brain was, oh, I met a new person, ask them a question. I met a new person, introduce myself, and we were living in student housing. My dad was in grad school and my mom was with a friend. We went to some type of wholesaling place, not quite a Costco or Sam’s Club, but something similar to that. And I’m like, “I want to go in.” And they’re like, “Why does this boy want to go in here?” ‘Cause I’m just curious, right. And so that curiosity led me to kind of tag along and I felt like I was in some magical place because I start seeing all of these bulk purchase items and my arithmetic was okay, and I was like, “How is it this price? This is half price, 35 cents on the dollar.” My brain is like, “Is there something illegal going on? Where have they taken?” And I’m like, this is like nine, 10 years old. I’m very young at this point, but I felt like it was this magical place.
And I said like, “Well, how do you get this?” And she’s like, “Well, you have a wholesale license and then you can come buy this.” And I was just like, “What in the world?” So short part of that segment of the story, I got $20 from birthdays or whatever and bought a box of candy through this relationship. And then I went to the playground and I just sold it and I was like, “Oh, my goodness,” I thought I was rich. I took this $20 and I had $45 bucks. I was like, “Oh, my goodness.” And so I didn’t really want anything. I’ve had this moment a few times in life and I’ll date myself by this, but there was a point when digital music was getting disrupted and Napster had come along and you could go on these threads and download albums. And I was so fascinated. I was like, “This is going to go away. I could get all these albums.” I was staying up till 2:00 AM, like, “I found another great one.”
I wasn’t even listening to the songs. So I’m here pirating music, downloading this music to a hard drive because I felt like this was so amazing. That feeling that I felt then is the same thing I felt with this little candy situation. I was like, “This is going to go away.” And so I wasn’t trying to take this money and buy something. I was like, “I need to take this money and go buy some more as quickly as possible because this is going to go away.” And my little brain was just too immature to understand how business worked. And so it gave me all this irrational motivation and I just kept moving through this process and I learned so many things from there, how to accommodate what people wanted versus what I wanted, how to kind of leverage that into other things.
I ended up buying video equipment and computers and I was like, by the time I hit my teenage years, I had a crazy amount of equipment in my bedroom and it was just from selling this candy. And it never left me in my brain that if you could find a kind of a unique pain point for some folks and you weren’t afraid to build the sales muscle, you would just have money. And for a long time there, I didn’t even have a bank account. And so we would move from different places and I would have all this cash in these odd little kid boxes and containers, and I didn’t want my parents to quite know how well it was doing.
And again, I thought I was doing something wrong, right. Now I wasn’t paying taxes. So I guess I was doing something wrong there, but I was like, “Oh, my goodness,” I had all this cash. And so through that process, what I again really took away was you could control your destiny if you could find a good problem and weren’t afraid to sell. And that’s kind of permeated through a number of steps in life.

Kyle Knowles:
And so you take this money and you buy your first computer, right?

LaSean Smith:
Well, not my first one. My parents bought my first one.

Kyle Knowles:
Okay. That’s right. You had a TR or-

LaSean Smith:
It was an MC 10.

Kyle Knowles:
MC 10 that plugged into the TV.

LaSean Smith:
This was not the…

Kyle Knowles:
The high-tech.

LaSean Smith:
Yeah, you weren’t going to build the next Facebook with this computer. But that gave me, that was the entree into the world. And then I said, “Well, hey guys,” to my parents, “You need to buy me this other computer.” That’s ridiculous amount of money. And so then the candy unlocks it, my ability to go buy those, add-ons, kind of chase the latest thing. And it was really powerful because back then there weren’t a lot of folks who were like, “I write code.” And so you could talk to almost anybody in the space and they would strike up a conversation with you because it was such an odd thing. And they’re like, who is this little kid?
By the time I was a teenager, how does this kid know about any of this stuff? And so back to the power of mentorship and coaching, I just met some really nice people who would take me to the site and be like, “Well, it doesn’t actually work like that, but since you’re interested, go do this.” I found that if you take their feedback and come back really quickly to them and say, “Thanks for the feedback, here’s what I did,” they would get energized. They’d give you more information. And so that’s another kind of tactic I’ve used throughout my life. But yeah, I would use this candy money to go get this equipment, and I had no idea that technology would be this massive lever that you could use to create economic value.

Kyle Knowles:
And so you taught yourself to code. And what was the first programming language that you learned then?

LaSean Smith:
Well, back then it was basic and assembly. Assembly was like, oh, to this day, writing assembly is this thing in my brain that really hurt. And I realized, all right, I love more of the applications versus the operating system, and so that’s where I wanted to play. But the takeaway there was I kept learning, what do the people want? And so I would always try to find a project that was based upon what some other folks want.
In our house, we would play a Scrabble. That was one of our family games. And I was obsessed with building the perfect timer. And in my brain, I’m thinking everybody plays Scrabble twice a week at their house. And so I have this massive market, so many things that were really intelligent on my side, and then so many things were so dumb, it was just like, all right, I was just way off base, but I was so convinced that everybody was off playing Scrabble in their homes and I was going to build the perfect Scrabble timer ’cause we played time-based Scrabble.
And so I was always rebuilding this app over and over and over. And my mom would get frustrated because not surprising, sometimes my little app wouldn’t work. And she’s like, “LaSean, can we just play the game? Your thing doesn’t work.” And I had, this is an old school computer, so I’m like bringing the computer over there to the table. And they’re just like, “Okay, just let him get through a little bit more before we cut him fully off.”
But those were the types of problems I was solving. And for anyone who’s into marketing, here’s a little quick hack. Folks may be familiar with the copy method where you actually, through wrote, type what other great writers write, and you force yourself, usually by hand, to actually write great copy and it will actually train you if you get enough reps on how to be a great copywriter.
I actually did that with code. I would get these magazines and these printouts of code and I would just type other people’s code for hours. There was no great debuggers or any types of tools then. And so stuff would break all the time. And it was just those reps that really helped me get good. And the thread, whether it was writing code or learning how to sell to people, is that those iterations and those repetitions matter. The consulting company PWC, they have this framework called the BXT and it stands for Business, Experience and Technology. And they’re obviously selling consulting services, but their pitch is most businesses have a owner on one of those three.
So if you’re in entertainment, you got someone marketing the business, you got someone doing the creative, you got someone on the craft of the crew actually producing the movie. If you are making Doritos, you have somebody has to go figure out what’s the flavor and all those things. Somebody has to go run the supply chain and manufacturing, somebody has to go do the next TikTok Super Bowl ad or what have you.
And so I really like the idea that regardless if someone’s listening to this and they’re like, “Well, I’m not into coding or I’m not like…” That’s not the takeaway. The takeaway is there are these elements that almost every business needs, and if you really invest the time in rapid iterations, you’re likely going to get there more quickly. And as there’s that saying, success favors speed, you really need to move fast to win.

Kyle Knowles:
And then so from early days of learning how to program and copying code and things like that, take me to going to university, ending up at Amazon and Microsoft and what was that kind of journey?

LaSean Smith:
Yeah, so much I believe of our success is again, our environments, what we get exposed to, but also filling and seeing what’s possible. So I was doing all this stuff with code and it wasn’t until there was someone in our church and it was totally random, I’ll say, I’ll use the word random here, but there was this serendipitous moment where he said, “Hey LaSean, you want to ride with me, but I got to stop at my office.” And here’s how my world was. When I was young, I didn’t know anyone who worked in an office. Zero, zero people. I mean plenty of my family, they were blue collar workers or whether they worked for the city or my mom was a teacher. I didn’t know anyone who went to an office every day. And I was just like, “Whoa, I want to go to an office.”
And when we got there, there were all these computers and I was like, “What are these computers for?” My brain is like, “Other people have, they use their computers at work?” I had no idea what was going on here. He said, “Yeah, we do data processing.” And he started breaking down what it was. And there was two things. One, I saw it and it wasn’t some fancy office, this wasn’t a nice place, but it was so real. And there was a guy who looked like me and I was like, “And so what do you do here?” And he’s like, “Oh, I own this business.” And I was so confused. My whole world construct was like, okay, this is a thing. So I ended up finishing high school early and I went to junior college. This is another really interesting part of my journey where I was doing so many dumb things, but I finished high school at 15.
And so I start full-time at a junior college because I was nowhere near mature enough to go off to a proper college myself. But my parents were like, “Well, what are we going to do with this guy?” And so they put me in this community college. We were in Arizona at that point, back in Arizona. And I’d have this crazy schedule where, think about a kid at a JUCO. They don’t have that much to do in class. And so here I am, I would show up. At this point, the languages were COBOL and Pascal and some of these other things. I think the database was dBase. Another thing I did there, my hubris got in the way, and one of my first classes I got a D. And this was horrible. I still have that transcript as a reminder because I was just on autopilot. I was like, “I got this. This is light work.”
But anyway, so I got in order, I got on top of the grades, got back to being focused, but I just had all this time during the day because 1:55 or whatever, your Monday, Wednesday, Friday classes were over. Now, not a big deal for a college kid, but for a 16-year-old, all sorts of trouble. And so I would just get on the city bus. I didn’t have a car at the time and I would ride all around the city, I’d go into stores, I’d meet people. I was just a really odd kid. But this taught me so many things. I mean, I don’t even know if today’s parents would let their kids roam around a large city on the bus by themselves. And I wasn’t asking my parents this. They’re at work trying to keep everything together, but I just didn’t have anything to do during the day.
And to me, it speaks to something that I value now is that you need to give yourself space to breathe, observe the world, and kind of find these moments of opportunity. And sometimes we’re packing our calendars so jam packed that you can’t find that moment where there’s a spark, where you see something that’s an opportunity that you’re uniquely qualified to go and tackle. But nevertheless, I decided that once I was wrapping up that associates program, I’d go home one day and I don’t remember what my parents were talking about, but they were trying to give me some more responsibilities and I was like, “I’m out of here.” So I borrowed my dad’s car and I drove to the military recruiting station and I bounced around from a few of the recruiters. The Navy guy had the best deal and he seemed to be the one who was following the rules the least. I was like, “That’s my guy.”
And they gave me a really good package. I went in the military and finished my undergrad while I was there. And during this whole process, it was just kind of this oscillation between me being fascinated by media production, but also just in love with coding. And so once I got out of the military, I still didn’t really understand corporate, I didn’t understand capital investments. I didn’t understand how the large companies like a Microsoft even hired. I didn’t think like, “Well, I should just move to this city and just go get a…” I am an adult now and I’m still so ignorant.
And so I moved back home and I start working for these small web development shops and other types of things. And then at a certain point I just got a break and one of my friends worked at a place that was working on agency work for some national level clients. And they said, “Hey, this LaSean dude, he can code and he can do some front end kind of design things.” And so just by making myself useful, people started again coaching me, mentoring me, sponsoring me.
And then that led through a course of startup opportunities I got to work at, I had a great friend who brought me in as a CTO for a venture backed startup they were working on. And I was by far the youngest person on this team. I’m in my 20s, I’m the CTO of this business. I knew nothing about venture capital. We had raised, I think we were at eight and a half million at that time, and then we did a small mezz round. And so for me to even be in this world was some crazy talk because I understood the tech, but I just kept hearing them talk about the business stuff. And I was like, “This is interesting too.” But they’re like, “You’re the tech guy. Go figure that part out.”
And I was confused why I didn’t get a say, right? And so I became obsessed with what do they know that I don’t know. And the woman who ran the company, she had a JD MBA, so she had both a law degree and an MBA, and this was a cluster of folks who, they’re pretty well-educated. She had gone to HBS, Harvard’s Business School and had worked at Goldman and there was all these steps. And I was like, “All right, so what is this path,” right? Because I started researching net worth and how much these hedge fund manager people. I was like, “This is crazy.” I thought tech money was good, this money is bananas.
And I just looked around and said, “Look, these are smart people, but they’re not smarter than me.” I don’t know the language, I don’t have the skills, I don’t have the network and all of that can be learned. And so I really believe in focus on what you can control. And so from there I decided to go to business school. That led me to product management roles and then I ended up spending over a decade as an executive at Amazon and Microsoft as a result.

Kyle Knowles:
And in the book you mentioned you have two master’s degrees, what were they in then? One was business and one was?

LaSean Smith:
The other one’s in, it’s called EMC. So it’s media and computers and it’s really, again, I was at the time, this was like CD-ROMs, so this is-

Kyle Knowles:

LaSean Smith:
This is what it was called. And we were using a program called Macromedia Authorware, and this is a company that Adobe bought years later. It had flash and some other things in there. Anyone who’s into the tech scene, they will remember the time where the khaki-wearing Adobe people were in San Jose and then all of the kind of purple and blue haired folks were in San Francisco. So they were all Adobe after the acquisition. But there was this clear demarcation of kind of the environment.
And I got to Seattle by an interesting point. I actually had an offer from Adobe to go move to San Francisco to work on this product called Flash. And so the old school folks will remember Flash, and then in the 11th hour I got an opportunity to come to Microsoft and I was like, “Which one of these do I believe is the more durable place? I think I’ll have more fun in San Francisco…” I had all these ideas in my brain, but I was like, I don’t know, I have all these historical reference points and I was like a place that someone like Bill Gates built is probably going to teach me more than taking this other job. So that’s how I got to this region even. But the thread there again, was really just taking one opportunity, not being afraid to move from that to the next one, even though there was uncertainty.

Kyle Knowles:
So do you believe that it’s more about the who than about the how?

LaSean Smith:
It’s funny you say that word. This is, I don’t know if this is just trending right now, so I’ve heard that question a couple of times. I think it’s both who is the team but also who is the customer. And I don’t believe you can decouple those. I think you could have an individual or a team that is pointed at the wrong problem for the wrong customer and it’s still not going to work. And it’s really, really important, I believe, to do that assessment as early as possible.

Kyle Knowles:
Yeah, I think mean it more personally, I guess because I heard the other day your network is your net worth.

LaSean Smith:
Oh, yeah.

Kyle Knowles:
And so it just reminds me of people saying, focus on the who and it’s who you know know, it’s who you meet, that creates these opportunities, not necessarily how you go about things. I mean, you have to be ready obviously to take advantage of those opportunities, but when I’m listening to your stories, it’s like, okay, someone took you into this warehouse, someone took you into an office, someone said, “Oh, what about this opportunity?” And you ended up in these different places because of someone, I mean obviously you were talented, you knew your stuff, but it usually was someone that helped you to get to these different places. Does that make sense?

LaSean Smith:
I love that point. I would maybe rephrase it. I like to do semicolon ands on a lot of ideas. I would actually maybe park the why in front of that. So a hundred percent the who goes before the how. I would actually park the why in front of that because that gets back to the thread of this conversation on values. So why should that person care to use their time, their social capital to help a little kid out? And I’ve continually found that people who are very successful, not marginally or they’re just, they have their own imposter syndrome, like, no, folks who generally have figured it out, those are the folks who almost will always help you if they feel you’re doing it for the right reasons.
I’ve rarely met someone… You hear in our nomenclature, “I have all these haters.” I don’t have haters, I have doubters. I have people who love me, who in the past have maybe said, “Hey LaSean, I don’t know if that’s going to work,” because they’re projecting their fears, but I don’t have haters. And so I’ve really found that if I focus on the why and I’m very honest with myself, it’s okay if I meet someone and they’re like, “This guy doesn’t get it.”
I used to be really offended by my VC peer friends who really looked down on lifestyle businesses and I just realized they’re playing a different game and it’s okay and it doesn’t matter that I choose to move very differently. I’m not a big believer that OPM, other people’s money, is the best way to get to your first seven figures of liquidity. I think there’s so many other more predictable ways, but if those folks are playing that game, then they’re going to tell you, your path may be suboptimal. And so a hundred percent, I think the people who you surround yourself with are really critical to all of this. And whether or not, they decide to let you hang out with them, I think there’s a why that you need to be able to communicate, even if you’re still looking for the vocabulary.

Kyle Knowles:
I like that. I like parking the why in front of that and it does lead back to values. Let’s focus in on, and then you start CAGR. What was the shift from, you’re working for some very stellar companies, right? Amazon, Microsoft. What was the shift and what was the turning point for you to go, “I’m going to go out on my own and do this.” Going back to basically your roots of being an entrepreneur as a nine-year-old, and what happened in your mind to have that shift and go, become an entrepreneur?

LaSean Smith:
Yeah. Well, one thing I will not give, many things I will not give myself credit for, but one thing I have to say out loud is I’m fairly risk averse, all things considered. I take a very measured approach to things. However, I have strong conviction. And so back to the young version of me where I thought adults didn’t know what they’re talking about, I still don’t think they do, including myself many times. And so when I see the media covering things or I see a CEO on stage at a keynote… I know, at this point it’s not always just ulterior motives. Many times they just aren’t informed. They’re moving with incomplete set of data. And so I have found extreme conviction that if I believe the way I see the world is right, I’m not going to listen to other noise and I don’t know if that’s a superpower and a kryptonite, but it is definitely part of how I move.
And the part I wanted to call myself out on is I didn’t say like, “All right, I’ve learned all of these things. Now it’s time to go in entrepreneurship.” I’ve had, entrepreneurial experiments is what I like to call them, in between some of these jobs. So I’ve started four plus one companies, two of them failed horribly. One of them was an acquihire, one was a success, a sale, and then the fifth one, I wasn’t really the operator, it was just one of my first kind of all in investments and I had to shut it down. And so it wasn’t so much I learned all these things. Now I’m ready to graduate to Capital Allocator and become… No. Period, no. And so what happened was I first started to, one of the first businesses I started was, beyond all these little side businesses, like real businesses. I started an agency and I just kind of gave up because I got burnt out really quickly.
Then I went back to a job. The next business was a music discovery service and we were kind of too early, even though we had good talent, some other pieces and we just couldn’t crack the customer acquisition cost kind of nut. Next was an SMS to big screen startups. So we were trying to do stadium interaction where a big sponsor could go and sponsor some game and what do they get out of it? They would get all these SMS numbers so they could retarget them. That was actually not a bad business, but we ended up doing an acquihire and someone bought that. Then I started and sold a mobile enterprise company and that was the first time where it was like, “Oh crap, there’s some real money in my bank account.”
And I did a bunch of stupid stuff. Now, I did have a great mentor who was like, “LaSean, don’t buy anything dumb for a year. Just let that money sit there. Don’t worry about inflation, don’t worry about, ‘I got to go hire a money manager.’” And he’s like, “Don’t worry about it.” He’s like, “You’re going to make more mistakes trying to move quickly. You need to go get educated not just on who are the right support structure folks to put around you, but how do you want to leverage this? Do you want to move into capital preservation? Do you want to use this to go find your next win? Do you want to start giving back now or do you want to give back later?” All sorts of questions that I was coming from such a place of ignorance on just how to use and have this type of money that in my brain it was like, “Oh my goodness, this could be very stressful just to even navigate all of this.”
But I did do stupid things and I just got lucky. I invested in multiple feature films. We were able to do pretty well with that. Knowing what I know now, I was like, “Oh my goodness, no way should I have done any of those things.” Another thing that I invested in is a couple spec homes, and it turned out that what I learned is I really don’t like real estate as a job, so I think this is another know thyself type piece. You might hear a bunch of folks who are like, “Oh, real estate is the way.” It is a way. Mathematically, it is one of the best ways, and I know LaSean doesn’t need to do it because it just does not interest me. It’s too much admin and paperwork and the sales part of it is not differentiated enough. It’s regulated. There’s so many things about it that I just don’t like.
But I don’t look at it like, “You shouldn’t do that.” I look at it as I know myself. I should stay away. And so I did all of these things. I started angel investing. I’ve probably done about, I’m over somewhere in between middle 30s to maybe just below 40 angel checks that I’ve written. And so to write that many angel checks, you have to kiss a lot of frogs and look at a lot of deals. And so through all of this, I was moving in and out of jobs and I like to remind folks, it’s not that the job you may have sucks or the job that you have doesn’t have enough financial upside, so you have to start a business. Make sure you double check that your skills aren’t applicable in some other industry because maybe you just bet on the wrong industry.
And I was just reading a LinkedIn post from a friend that he sent me and was talking about someone had this job making a couple hundred grand and they’re like, “I didn’t chase the next promotion ’cause I would only make $250,000 more and it wasn’t worth the 70, 90 hours. Instead, I learned real estate and I learned…” And the whole narrative makes sense. The piece I call out is to remind folks, while there are many industries, likely most, where they’re going to overwork you, not compensate you properly, there are other places where the tailwinds of that industry are just amazing. And you would be startled by how much an employee can make at certain places. And I got really lucky.
So I ended going back to Microsoft after I sold that company. And in corporate they give you these things called RSUs, restricted stock units. And I came in somewhere around $35. And so anyone who knows the Microsoft stock price today is, that was a crazy run. And so all of my bad business mistakes got cleaned up by one job. And so I don’t look at it like, “I’m smart.” There’s so so so much luck involved in this. But at a certain point, what I realized was I had accumulated all of these interesting experiences and skills that created options and just like a financial option, if I don’t exercise it at some point, it’s worth zero. And I considered VC, I considered traditional private equity. And where I found in micro private equity was a way to play the game on my own rules where I didn’t have to follow other people’s playbook, but I could still kind of do the type of work that would get me energized.

Kyle Knowles:
So what does CAGR do?

LaSean Smith:
Yeah, so CAGR invests and well, acquires and incubates companies, and it’s an investment vehicle that I created to do what’s called micro private equity in permanent capital. And really what that means for folks who are like, “What’s that? Is that an option I should consider?” It’s investing in businesses where you have no predetermined timeline to return the money. And most, we’ll put hedge funds to the side, but most VCs and private equity firms will use a lot of leverage. They’ll use debt. Back in the ’60s, there was this thing created called the LBO, the leverage buyout. It got really popular in the ’80s. The big kind of historical deal was Revlon.
Basically the way LBOs worked is, and they still work, is let’s say you’ve built a company and it has the equivalent of a FICO score, it has a business score and you can use that to go get loans. That’s what S&P and some of these other companies actually were founded on. They were there to kind of rate the credit worthiness of a business. And so private equity general partners would come in and say, “This company has a great credit score.” And they would go raise a ton of debt, get a big loan, then they would pay what was called golden parachute to all the executives. And then the executives would sign off on this deal that may or may not be in the best interest of the company, but they’re like, “Crap, they’re going to give us all these crazy exit packages.”
And then they load the company up with debt, they take a distribution from the company to pay themselves early, upfront, and then maybe, maybe not the company does okay. And this is how private equity has been run for decades. It’s also why sometimes it gets a bad rap, but there are folks who are great operators who do the right thing. And then there are other folks who, they’re definitely bad actors. And then there’s massive companies that are so big, it’s kind of hard to unpack if every deed is evil or every deed is good. I’m talking the massive folks like KKR and Carlisle and Apollo and some of these folks. And they routinely do three, $4 billion investments.
But the core with all of that is, where are they getting that money? Mostly institutional capital and retail money from our 401Ks. And so there might be a pension, a university endowment, all these folks are giving them money to go buy companies and run them. And they typically have a time horizon, three years, five years, seven years where they have to go return that money. And there’s a artifact called a PPM, a private placement memorandum. And that is the document when you’re raising money for your fund that you have to say, “Here’s the type of companies I want to invest in. Here’s how we’re going to use that money. Here’s when we plan to return it.”
And this has all sorts of security and trading rules attached to it. So if you say something in this PPM and then you’re like, “No, we’re actually going to go buy solar plants and go arbitrage that.” The SEC is going to come knocking at your door and you’re probably going to go to jail. And so your fiduciary duty on this whole thing is super, super important. And so I looked at that and I was like, “All right, I like the idea of learning an industry, finding a problem for a specific customer, target audience, and then investing in that. But I don’t want to have to deal with all of these rules. I don’t want to have to go eat random steak dinners in Omaha. I don’t want to do all this stuff that’s required to make sure you keep your limited partners happy.”
And if you take their money, you have to do all the accounting and all this stuff for years. Many times a fund doesn’t wind down for 10 or 12 years, so you can’t just break up with this idea because you have a new thing that you want to chase, you got to commit there. And I know myself, right? Know thyself. Make things. Stay free. And I was like, “That ain’t me.” And so I said, how can I take the structural elements of private equity and go do something different? And what I found was what today is pretty popular in note is a holding company where you have private, usually family offices where they hold a collection of businesses, sometimes they’re related, sometimes they’re not. And when I found this structure, I was like, “This is it.”
And the beauty of permanent capital is that you’re making a promise that you don’t have to sell this company in three, five, seven years. You’re structuring it so you get paid off of just the profitability. And so the cash flow. So the number one metric I look for all of my investments is just free cash flow. I’m not trying to take a company public. I am not trying to do an M&A deal and sell it to someone else. I look at very small deals that most folks will ignore, typically under $5 million of enterprise value. And so the beauty there is I can be pretty sophisticated in a space where there’s a lot of unsophisticated people and at the same time there’s so much deal flow because so many people have something to sell. Now there are people who sell companies because the company’s trash. Like I said, people process position, they’re not selling to the right folks. The talent or the management team is not the right set of people or their go-to-market is weak.
So those are just bad companies. I don’t really love turnarounds, but there are other times where the owner is aging out or there’s somebody on the cap table of the company that needs to get off. So maybe it’s two people who founded the company, one of them wants to leave, the other wants to stay. You can buy out the shares of the other co-founder. Other times it could be a VC or someone else who’s like, “Listen, we need cash because this is only going to be a 2X and our portfolio needs to invest in 20X or 30X companies, so we need you guys to liquidate, go do an acquihire or something else so we can get this cash to go invest this into another company that can maybe hockey stick.”
So there are all these reasons for why a company might go and want to sell. And what I found along the way is there’s a really sweet unserved area of helping businesses start, grow and sell themselves. And so that’s kind of the mission that CAGR is on right now is to go find companies I can acquire or incubate that help other companies start, grow and sell. And it’s really just a culmination of all these things we’ve talked about.
I’ve looked at so many different types of businesses. I’m fascinated by Proptech and construction trades, but when I have to put my money where my mouth is, I’m like, what, LaSean, do you know really well? I know how to start a business. I know how to grow it. I know how to get it ready for selling. And when you look at the companies in that value chain, there’s just a lot of poor brands. You can’t name who the winner is. They’re not very well run. And so there’s just so much opportunity in that category. So it’s just like a little niche, a little lane, and it’s really exciting because I get to take all the pieces from this journey and apply that almost every week.

Kyle Knowles:
And how long has CAGR been in business then?

LaSean Smith:
So we just hit our anniversary year. So this is year one, full-time. One of the things that I love to tell people is go try this stuff out on other people’s dime. So I was still working in big tech while I was starting my investments. And so as I said, I started as an angel and then I started looking at these more esoteric deals, did some real estate syndicate deals and these types of things. And so I’ve been investing for about a decade. And the other piece that we didn’t talk about is at a certain point when I was in corporate, I was given a checkbook to actually invest on behalf of other companies. And through that lens I’ve invested hundreds of millions of dollars. And so you get forced to learn how to deploy and allocate capital when that level of pressure is on you because you are writing checks for others.
And so that was almost a proxy to other people’s money, but it was just through an employment job. And so when I quit, somebody else takes that job and now they’re the capital allocator. But those were the steps along the way to both give me, I think, enough reps and the clarity on how to focus. Also, the beauty of doing a low leverage model today, it’s just myself, my capital and two family offices for the capital that I deploy. It’s not a complicated set of conversations on when to write a check. I can many times get to a term sheet in two days. And so I don’t need to string people along, have all these kind of crazy conversations.
Now, they may not like my number because they’ve romanticized that they’re worth four times revenue. And I’m like, “No, you’re worth two and a half times EBITDA or cashflow.” And I’m pretty apathetic about it. I’m not here to save people, but at the same time I want to be very honest and if I’m not the deal for you, I don’t want to waste your time. And so it’s a really interesting world because there is so much opportunity and even in this first anniversary that we’re hitting, as I’m looking, I’m like, I need to focus even further. I described that niche and I’m like, I need to focus even further because there’s so many things you can almost get distracted talking to so many folks, looking and taking so many calls, talking to so many business brokers. And at a certain point you’re just like, “All right, the more we hone in on something unique from a thesis standpoint, the more I’m going to be able to find these kind of hidden gems where other folks may be ignoring.”

Kyle Knowles:
Congratulations on your one-year anniversary then. And what does the future hold then for CAGR? What does it look like?

LaSean Smith:
Well, I think the biggest thing is applying a lot of the things that I talk about when I coach and mentor folks. It’s like how do we operationalize that? I keep coming back to this theme that why does most businesses break down? People process and position. I don’t have product in there. And a lot of times people are like, “Oh, if I just had more money, I could make my product better.” If you think your product is like your favorite recipe, it’s a sandwich. Your sandwich probably doesn’t taste good. And so yes, you should go make a better sandwich. You’re going to make a better sandwich by having a better process. You know what I’m saying? You’re not going to know how to improve this unless you’re moving quickly.
And so one of the things in the military that I learned was the OODA loop. And so this is where you are creating a feedback loop to go figure out how you take action. And so many times people think they’re moving fast and they don’t understand what fast is. I like to say big corporations move in months and years. Mid-size companies move in weeks. Fast startups move in days, and if you’re just getting off the ground, you need to move in hours. And so because the more you increase the signal, collect some information from a customer, feedback, what have you, you go create an experiment, you go deploy that to your product or service, you go test if it works and then you go get more feedback from them.
That flywheel, if anybody brings me a business and the structural nature of that business says it’s going to take them six months to build something, and then we’re going to go put it in front of the customer, then we’re going to see if they like it and then, oh, that’s not enough. We got to do some type of marketing campaign to make them know that it exists. That’s way too slow. You’re going to run out of cash months later.
I want to see businesses that can run in days. We can run experiments in days because then we can compound our way to success. And that’s the nature of the name of the company. Compound Annual Growth Rate is the name. It’s what CAGR stands for. It’s a term that the finance nerds might connect to, but I look at it as we’re not just compounding the cash, we’re compounding the product, but also we are compounding relationships based on trust because folks showed up for those values. And so all of this is connected and the way you connect some of this qualitative kind of touchy-feely stuff on the values with core finance and process automation, to me that’s the thread that can really make a small business stand out and be successful. And I’m trying to bring that to more of the CAGR companies.

Kyle Knowles:
You use Slack as an example, and the two things that they did, they listened to their customers and they basically iterated within 24 hours, right?

LaSean Smith:
There you go.

Kyle Knowles:
How did you say that in the book? It was listen to your customers and add value within 24 hours.

LaSean Smith:
Yeah, exactly. So if you don’t have a team culture or maybe you’re a solopreneur, you’re just getting started, you might want to think, “Oh, I’m going to go write this down later. I’m going to go and I’m going to think about this.” And it’s like, “No, you need to take action,” right? There’s great training. You’ll hear folks who come from the finance or investment banking world, they’ll say, “If you can solve the problem in five minutes, you don’t take an action item. You do it right then.” And you’ll just find that you move so much faster when you move that way. But the reason I like and use that rule is that when you get signal, ask yourself, “What can I do to go put this into action in the next 24 hours?” Now maybe there’s business day delays, and so your Friday is a Monday, but the takeaway is don’t say like, “Oh, well let’s discuss that on our next standing Wednesday meeting.”
I had to catch myself when I used to manage teams. As I started managing large and larger teams, I would get into this trap that was like, okay, I need this business rhythm to be predictable, and so I need to break this thing in chunks so my admin knows how to manage my schedule. But I was introducing all of this time suck, and I just kind of broke the rule and said, “This is all on demand. When you all get this signal, go escalate to me if you can’t make the decision on your own. And if you can’t make the decision on your own, let’s ask ourselves why the process is leading to that point of view, because this should only come to me.”
As you’ve heard, probably politicians and CEOs say the leader should only be getting proposed the impossible questions because everything else people should have sorted out already. And even those become lessons learned to model behavior to say, here’s how you could go solve this in the future because you need your organization to be a decision making machine. And so when you force yourself to think the next day is when I have to take action, not the next week or next month, you’ll just find yourself moving so much more quickly.

Kyle Knowles:
All right, there was so much more to get to. We’re running out of time. I do want to ask a couple more questions than I’ve just got a lightning round of fun questions to get to know you a little bit better. But is AI or the possibility of especially generative AI, I kind of feel like it’s an opportunity for companies to get better, right? Because you can’t really apply efficiencies that maybe AI will bring to you unless you have those processes, those workflows, those kinds of, you can’t optimize your business unless you’ve got those all documented. You can’t just say, “Oh, we’re going to apply AI,” but what are you going to apply it to? So do you feel like this is a great opportunity for businesses to get better just in order to apply AI, get the processes documented, get their stuff together? I feel like it’s a great kind of reckoning because people that have that together can immediately apply AI to those workflows and automations. People that don’t have their stuff together can’t.

LaSean Smith:
No bingo. And Kyle, you’re hitting it on the head on documenting the process. I’ve seen multiple times at big companies where a large consulting company comes in, a Deloitte or an Accenture or somebody, to help document process. And a lot of times it’s not because the process is so complicated, it’s because no one in the company has the courage to simplify. And they’re like, “Well, if we actually move and automate this, what about Barbara’s department and all those people? And John’s over there, he’s a great guy,” all these weird interpersonal things happen. And it’s really hard, I think, for some people to really detach the humans from the process. But it’s so, so important. And I don’t think you need a special tool. There’s all sorts of dedicated process documentation software. Just go open a Word doc or Google Doc and get that thing kind of stubbed out.
And I think for every step, a really key piece is making sure you understand what metric you’re going to measure for each of those steps in the process and then what your target is, what does good look like? And that alone is so, so powerful. I’m surprised there aren’t more consulting companies who, they’re basically a fractional process officer, because it’s not so much about, oh, you need to be an AI expert. I believe you need to be an expert process engineer. And then it’s really easy to go canvas all of the available tools out there to then figure out, all right, can this particular tool solve this particular metric? Because now we know what good looks like because we have a target against that metric. Instead of like, oh my goodness, new AI, what should I do? The Claude LLM, Openaid just had a dev day. Should I pay attention or not?
It’s very easy to go parse these things. I will say a few things that I think are going to shift for anyone who’s specifically either a vendor or buyer of certain types of software or folks and startups who are in this space. I believe this, is a bet I’m making, that autopilots are going to be much bigger than copilots. And so if you look at what’s happening with folks like Microsoft, we’ll use them as an example, but almost every company is following the same model. They’re saying, listen, we already have a existing product, we’re just going to add a copilot to this. And the reason they’re incentivized to do that is because that’s just really simple expansionary revenue, like the math on that just makes sense. But I think that’s leading to the second piece that I think is going to really be reshaped is I believe per user pricing is going to be really under duress very quickly here.
And so the idea that your SaaS package at $29, $49.99, all the way down sometimes to $10 a month per user, and you’re like, “Yes, but we sell to these massive enterprise companies and we’re going to get 10% of their 10,000 employee base.” And so they do all this napkin math that we know on SaaS, and I think that’s going to be disrupted because more and more of the process is going to be what is the focus of the solution. And as those are autopilots where there’s no human involved in the middle, maybe in bookends of the process, you can’t justify charging each human because there won’t be many humans in the process. So anybody who’s either a buyer of this type of product or is thinking about starting or investing in this type of product, I think those are two things.
And the third, which I believe is related a lot of SaaS today, and I’m using SaaS because it’s a place I spent a lot of time, but it has knock-on effects that people can extrapolate to other industries. It’s a really simple product. It’s just what folks call forms over data, and forms over data means that you get a web form, you type in some information and some workflow kicks off. And most of SaaS is that. Very few is like, “Oh no, we do this live video streaming and we transcode on the fly.” No, stop it. Most of these things are just simple web forms, kick off a workflow, maybe there’s data connectors to other systems. And that’s mostly what it is. And I believe those types of that category is going to collapse and the salesforce and the other large players are going to be just fine because they’re going to figure out how to move into this next wave. But anyone who’s starting a new company and you’re like, “Oh, my company looks like the old SaaS companies, but we integrate some ChatGPT,” or something… No, that is not the winning strategy.
I will invest in zero of those companies because I think in the next 36, 48 months, you’re going to look at that and it’s going to just be reshaped. And we’ve seen this time and time again, there were high-flying billion valuation companies that did XML integration, SOAP integration. These were vernacular and acronyms that people use and they’re like, this is the future. And then little tiny things like JSON came and they’re like, “Oh, we don’t need pre-structured data. Just throw your data in this little format.”
And these are technical pieces, but I’m saying this is going to happen all over. So thinking from first principles, not saying like, “Well, we’ve always done this in the nonprofit industry. We’ve always done this in my manufacturing business. We’ve always done this in my professional service.” Don’t assume that the old way is what is just going to be supplemented. I think some of these things are going to be totally rethought, and unless there is a regulatory angle to it where maybe law can hang on a little longer, maybe healthcare can hang on a little bit longer, but outside of those, some of these other kind of products are going to be restructured very quickly. But that’s an opportunity for folks who are starting from scratch. But don’t get caught up on thinking, all I need to do is sprinkle a little AI on top and now I’m going to 2X my valuation.

Kyle Knowles:
Right. I love that answer. So let’s go through a lightning round of questions and then I might just have a couple more questions for you too. But, favorite candy bar?

LaSean Smith:
It is the Kit Kat.

Kyle Knowles:
Favorite music artist?

LaSean Smith:
My favorite music artist is going to be Jay-Z. And this is lightning round, but I have to say, many times when we think about artists, I have two things about artists. I think number one, you can’t say it’s your favorite artist if you don’t continue to listen to them. So you can’t say like, “Oh, I love this album.” No, if someone ran telemetry on your Spotify or Apple Music account, who would you listen to the most? And so I don’t care who that person is, but I think you have to really listen to it to say it’s your favorite. It can’t just be the nostalgia and I loved it when I was 18. The other piece specific to Jay-Z, I love the balance on creativity and business sense. And so that just really appeals to me.

Kyle Knowles:
I love it, ’cause I would say Prince, but do I listen to him today as much as I did back in the day? No. Yeah, I love that answer.
Favorite cereal?

LaSean Smith:
I love odd cereals. And so my favorite cereal is the oddest cereal at the moment, and this sounds weird, but as with many things, I like to taste the buffet. And so I don’t have any loyalty to the cereal aisle. Right now, I’m eating some type of weird almond vanilla granola type thing, and next month it probably will be something else. And so my favorite cereal is like, what’s the hottest club in your city? I’m always bouncing around. So the favorite one is whoever does something weird, tells a good story.

Kyle Knowles:
I love it. Let’s see, Mac or PC?

LaSean Smith:
Mac all the way. Even when I worked at Microsoft, folks gave me a hard time because I had filled out the exception to use a Mac. That’s just how I code.

Kyle Knowles:
So they allow them in Redmond then, right?

LaSean Smith:

Kyle Knowles:
Okay. Google or Microsoft?

LaSean Smith:
This is a great one. Quick call back to AI. So I have companies that are all Google Workspace, and then I have companies that use the Microsoft Team suite and all the stuff that comes along the side of that. One of the things that… I prefer the Google Workspace, however, I got exposed to Copilot, and this is a set of tools that Microsoft is offering on top. I talked just about these big companies are just adding the Copilot. The reason I wouldn’t compete against that space is I think folks like Microsoft are going to crush it there. And the idea that you can talk to your documents, you can talk to your Excel file, you can talk to your PowerPoint, you can talk to your Word doc, you can actually have it take action in some of the PowerPoints, write formulas that you never took the time to learn, that’s a $35 a month extra edition. So for $10 a seat plus $35, you’re at $45 per employee. It’s almost like hiring each of them an assistant for $45 bucks.
And so I’m a little torn because I’m waiting for Google to come out with their version of it, but I don’t think it’s going to be as good. So if it’s AI augmented, I go Microsoft. If it is kind of bread and butter simple, I go Google.

Kyle Knowles:
I love that answer. So dogs or cats?

LaSean Smith:
Cats. Dog lovers, don’t shoot me.

Kyle Knowles:
Phantom or Les Mis?

LaSean Smith:
Les Mis. I don’t like musicals and I own that Blu-ray. And I don’t know what it is. There’s just something about that story that connects. Maybe it is this narrative of you can make it in all sorts of environments, and that’s a thread that resonates with me.

Kyle Knowles:
What’s the book that you recommend the most to people?

LaSean Smith:
For folks who have run across a book like mine, that’s very simple to read, it’s simple to read on purpose because I want it to be more accessible. And so when I think about book recommendations, there are all sorts of books on stoicism that I don’t recommend to people because they’re complicated reads or econ books that there’s so much goodness in there, but it’s just like no one’s going to finish it. And so I really start from, will someone finish this book? And the book that I recommend the most often is, The Psychology of Money. And it’s a relatively quick read, but it’s very, very easy to read. And the punchline of the book is mostly money and money-making is a skill paired with our behavior. And you probably heard the statement, you haven’t really learned something until you change your behavior. You can have knowledge accumulated, but you haven’t learned it until you’ve demonstrated that your behavior changes.
And a lot of what’s broken, whether we come from a privileged background or from some type of traumatic environment in our relationship with money, so many times that your behavior was screwing you up, the privileged person may be greedy, they may be blindsided because they’re like, “I can’t lose.” The person who comes from a place of scarcity may not move with confidence. And I love that book because it really just exposes that we don’t have a lot of fingers to point on why our relationship is broken. But if we really understand that it can be reshaped, we are in control. I love the stoic nature of that. We can react in a different way. And so that’s a quick read that I think a lot of folks can get benefit from.

Kyle Knowles:
All right, LaSean, so thank you for being here. I could talk to you for hours. It’s very fascinating the stuff we’re talking about. We didn’t go down the rabbit hole on some of the things I wanted to get to, but you say in your book, and I’m quoting here, “People are willing to pay not just for the right to say they own something, but also for the right to have an experience that creates new relationships and memories.” And I can’t tell you how much that resonates with me.
This has been so awesome. I feel so grateful and privileged really to be here and to have the chance to meet you face to face here in Seattle and learn from you. I wish you massive success in the coming years with CAGR Investments and continued success in all of your personal and professional endeavors.

LaSean Smith:
Thanks for hanging out. Thanks for making the time. Thanks for joining me here in Seattle, and best wishes to you as you grow your audience. I really love when I feel the right energy from someone and what they’re doing. And yeah, I’m proud to be part of the journey.