Want to learn about the pizza crust business? Interested in changing the way food is grown? Surprisingly, private equity might just be the space for you. Last Thursday, Joe Bute sat down with the current cohort of interns at Acta Ventures.
The decorated entrepreneur with a storied and diverse career, started out working in community development and social justice. Joe eventually transitioned to the private sector with a civic-centric mindset “to save businesses and avert layoffs” in the local community.
This work led to Joe helping hundreds of family-owned, small-to-medium sized businesses that were desperately close to failing. “You were stuck with cold-calling them, giving them the whole ‘Hi my name is’ routine. Business owners generally don’t want to talk to you, especially when things are going rather poorly.” The sector began to trend upwards by the 1990s, which is when Joe transitioned to a buy-side investment bank.
At the time, there was an influx of major companies doing roll-ups of smaller businesses. They were buying and merging with other companies simply because the target was in a similar industry and the company was awash with capital. This quickly developed into “buyer’s remorse”, leading to the firms dumping their newly acquired companies within 3-5 years. These divestitures allowed private equity firms to scoop up cheap businesses. One industry experiencing these carve outs was the food space, which Joe capitalized on. “The executives [at this rolled-up conglomerate] sat down and realized that they had acquired a pizza crust business, and said, ‘what do we own a pizza crust company for?’”
This eventually led to formation of Hollymead Capital, the private equity firm co-founded by Bute, which acquired Tomanetti’s, a local pizza crust supplier that provides pre-frozen crusts to many businesses in the Pittsburgh region. The thesis was simple: “pizza is king of the US food industry, and will continue to be for some time.”
Joe closed his remarks to the group of Acta Ventures interns with two key considerations on how to choose a career: what you are passionate about and what makes you happy? Instead of looking to make a ton of money, the emerging generation should ask “What have I really done that has been impactful” and “did I help people”?