Jesse Jacobs and Mike Kerns are co-founders of The Chernin Group, an investment firm known for their involvement in companies including Barstool Sports, Food52, MeatEater, and so many more. Part of the reason they have found such success is because they have been diligent with executing their thesis.
In this episode, we discussed quite a few topics, but a few jump out to me…
On helping operators without stepping on toes
While they believe it is valuable that they’ve been former operators because they can empathize with the journey the founders are going through, but as Kerns said, “we are clear about the fact that we understand that there is a very clean, clear, and distinct line between operators and investors.”
And that doesn’t change even if they own a majority of the business. In their mind, the business they’re in is advice giving and offering guidance to these founders. But the executive teams are the ones who actually have to do the work.
The big question that Kerns had to answer was: “are you ready to be an influencer and not a decider?” As an investor, you can influence decisions, but you can’t make the decision for the business.
On TCG’s investment thesis
“The fascinating thing about the internet is there is an unlimited amount of real estate. We are looking for the brands and the companies that people really self identify with,” said Jacobs.
For TCG, the area of focus for the investment is less important than the importance of people self identifying with the brand, which is why they’ve invested across anime, food, watches, baseball cards, etc.
The companies also tend to be labors of love for the founders because it’s what they love to do. Over time, 5-7 years into it, they find its turning into the company and those are the opportunities TCG really find appealing.
On their passion for collectibles
About 10 months ago, they started noticing there was an increase in the discussion and interest in collectibles and sports cards. And then they went down the rabbit hole, analyzing trends, talking to everyone, and visiting companies that were most interesting.
Another reason this has them interested is that interest in collectibles is tied to the rise of sports gambling. You can’t speculate on a specific player on sports gambling sites, but with collectibles, you can do that. If you buy their card, you can speculate on the player.
On the digital side, they are also spending a lot of time looking at NFTs. “If you look at the confluence of factors behind NFTs, it’s middle of the fairway for TCG.” Between the very niche passion subjects and the desire for active investment makes a very compelling case for focus.