The Power of Owning Your Platform

As I reflect on the path ahead for BDE Capital, one theme has become increasingly clear to me: the power of platforms—both personal and corporate—is reshaping the future of business, especially in M&A. Typically, I focus on dealflow in my updates, but today I want to share some broader insights I’ve gained recently that directly influence how I’m thinking about the future of our firm.

Over the course of my career, from 2007 to 2021, I’ve seen firsthand how platforms can make or break companies. Early in my career, platforms like Salesforce, Facebook, Twitter, Google, and Amazon became the foundation for many SaaS businesses. I was part of that wave, watching and contributing as tools built on social media platforms led to some incredible outcomes. From 2007 to 2012, I was fortunate enough to witness a period where these tools saw exits at 10-20x revenue multiples. These startups were selling to giants like Salesforce and Oracle, who were scrambling to catch up in the social media game. The true value? The enterprise customers that these SaaS platform add-ons captured.

I spent 2021 consulting as a go-to-market (GTM) advisor for a B2B marketplace that was part of a private equity portfolio. The company owned its own proprietary platform. During that time, the company also made strategic shifts, relying less on Google’s ad platform and diversifying their marketing channels to those they owned. As a result, they became profitable for the first time in two years. This experience underscored the importance of owning both your platform and your distribution channels, ensuring more control and stability in the long run.

In recent years, as I’ve delved into mergers and acquisitions (M&A), I’ve started noticing a powerful trend around platforms in niche verticals. For instance, take the example of large dental practices. If you buy one big dental practice, then strategically add smaller practices as add-ons, you create a powerful platform. Suddenly, you’re no longer selling your business for 3-5x earnings; you’re looking at 15x+. This is solid platform investing because you control the platform—there’s no reliance on third parties.

What’s fascinating as an add-on to this strategy is the rise of personal platforms and their impact on M&A, particularly in the lower middle market (LMM) and middle market (MM) space. We’ve seen how influencers like Mr. Beast can make millions simply by mentioning a product. But it’s not just about B2C; there’s a growing trend of individuals building platforms within specific niches and using them to disrupt industries.

John Wilson, for example, has already built a significant portfolio by acquiring HVAC companies in Ohio and is now focused on scaling a $100M home services empire. His success shows how rapidly someone can grow a platform in today’s flattened world. What once took decades to achieve can now happen within months, thanks to the power of distribution and visibility.

Similarly, celebrities are evolving from passive investors to active operators. Baron Davis, for instance, is not just putting his money into businesses; he’s taking the time to get to know the operators and the communities behind them. This focus on relationships is helping to create deeper connections and more sustainable success.

Then there’s Elizabeth Knopf, who has moved from venture capital to M&A, leveraging her platform to get an edge in deal flow and capital. Their rapid rise illustrates how the digital age allows anyone to exponentially grow their platform in a fraction of the time it used to take.

As these personal platforms grow, I see the return of “walled gardens.” In the early days of platforms, we built on top of third parties—Facebook, Amazon, Google—but as personal platforms gain power, they’ll become self-contained ecosystems. These micro-influencers will, in essence, be building mini-sovereign nations, controlling their own distribution and data.

As AI accelerates the ability to copy and replicate data, privacy and security are becoming critical concerns. I see a movement back toward on-premise servers and hybrid solutions, especially as personal platforms grow into actual businesses. Thought leaders like David Heinemeier Hansson (DHH) have already started pushing this shift, arguing that we need to move away from the few private cloud server providers like Amazon, Microsoft, and Google. As these personal platforms evolve, I believe they will adopt a mix of on-prem and cloud solutions to protect their data and customers.

As I look to the future of BDE Capital, I believe that embracing the power of platforms—whether built by micro-influencers, niche operators, or through strategic M&A—is essential to staying ahead. This is more than a trend; it’s a structural shift in how value is created. By focusing on platforms, we not only tap into new opportunities but also position ourselves for long-term growth and stability.

This is the lens through which I’m viewing our future acquisitions and strategic moves. It’s not just about finding the right deals; it’s about building platforms that we can control and scale, unlocking exponential value for both our investors and the businesses we acquire.