It's difficult to develop products without understanding customer needs, and it's difficult to understand customer needs without a variety of customers. That's the problem their business model is it solving.
This sounds like they're going to be collecting a large amount of data from a huge variety of small businesses that all operate in different ways and have very different clientele.
I wonder how practically useful all of this data collection is going to be, and whether doing it will be accurate and result in insight.
Learning about small niches where modest profit can be made (which is where many small businesses tend to fit, IMO) is not the typical/theoretical "scale to the heavens" startup plan, but if just getting ideas is the goal... good luck?
The people doing real estate forecasts want actual numbers to crunch and would enumerate the fleas on your dog and rank sort its name on the date of sale if you let them. They think confounding variables are for quitters.
There’s a whole world of folks who do this, with acquisitions and sophistication ranging from really small businesses[0] to ones in the range the article discusses[1]. It does seem like a numbers game where it makes sense to pool the risk.
Doesn't make any sense to do that without a financial upside as well, as the businesses are unlikely to spend more their entire valuation on fintech products (and 84 mom and pop shops owned by the VC signing up isn't much of an illusion of growth to boost the fintech companies' valuation either)
The financial upside is that they also own 85% of the company shares, so get 85% of the profits, reducing to 20% over 20 years by selling shares back to the employees. Selling here implies they'll also make profit from that too.
Employees who'll likely withstand lower than market rate wages and/or poor conditions because of sunk-cost fallacy. Sucking up profits from both the captive businesses using software licensing, revenue, and employees (as they buy shares from the startup) is well-thought-out evil genius, OR a path towards fully automated luxury worker-led communism, but I'm guessing it's the former in the guise of the latter.
That’s how it looks on the books but it has to be part of compensation - it’s booked that way in the GL with the company paying for the shares as incentive out of earnings. Employees in these kinds of business just aren’t going to be buying stock in the company they work for.
Right, but as the small company is on the hook to buy the shares from the parent company, before passing them to the employees as comp, the parent company gets cash for their stake.
"force" sounds so dark. Small businesses use all kinds of solutions to run themselves. They want to end up with a product that they can pitch to external businesses, it's more like they are using these acquired businesses as market research and testing.
Less bad if you add some nuance. Some dental procedures are “you might not need this right now” or cosmetic. There are bad incentives that can be at play for sure - but procedures aren’t a clear line of “necessary”/“not necessary”.
Thanks for sharing that. Good read. Everyone who reads it should know upfront though, that the article was published in 1997. I didn't notice until the end.
So multiply all of those prices by >2.5x to account for the inflation of costs.
Safe Harbor I think buys marinas as owners age out of them. A marina tends to start out small and grow over time under a single owner, until they are successful yet unattractive for any one other individual to plunk down $x million. So they get bought up by the big org and it gets harder to find reasonably priced mom and pop marinas.
That sounds like a cherry on top to me. I mean, considering the cost of the business that they paid for, fintech expenses shiuld be negligible. Otherwise it sounds like a great business - buy successful businesses without successors, shape them up, motivate employees and reap the benefits, long term. Win-win-win for everyone involved and society too.
It's like any acquisition, you don't let the acquired shop keep running workday if the main company is running base camp. It makes sense to consolidate.
Do you think so? Their profits are their mothership's profits, so any expenses are, too. It's like putting from one wallet to another and harming the businesses (assuming their fintech solution is not optimal) along the way. I don't get it, but from the article I don't think this is what is happening anyway. It wouldn't make sense either.
> It's like putting from one wallet to another and harming the businesses
Sort of, but they'll be pulling money from a joint wallet that's 80% owned by other people. I expect even if the workers gain majority ownership, they will have no control - so the fintech service contracts will likely outlive the businesses.
Instead of saving on labor costs by pretending your employees are contractors like Uber and friends, they go in the opposite direction. You're not a contractor, or even an employee, but an owner.
Just imagine how big your milkshake will be once you all own 80% of the business! Admittedly, a business where this company has slurped out most of the value and saddled you with various software license fees or whatever in perpetuity. But a business nonetheless.
And now when the business goes belly up and these owners are destitute, the HN logic applies-- hey man, most businesses fail. So why not just learn some python and code up some nice fintech that extracts value from other rubes?
> the HN logic applies-- hey man, most businesses fail. So why not just learn some python and code up some nice fintech that extracts value from other rubes?
I haven't really seen this here. Is there any need to perpetuate such silly stereotypes?
It was a big thing ten years ago - why not learn to code if your job has gone overseas? At the point Mayor Bloomberg tweeted something about learning to code, it seems Jeff Atwood felt it was time to weigh in[0].
That's my feeling, too. It reminds me of a scene in "The Founder", the movie about McDonalds: "You're not in the burger business. You're in the real estate business."
Replying to my own comment because I just can't get over how ingenious this is.
On HN we're used to FOSS devs acting quickly when, say, a proposed or implemented license change turns project X into project X'. Upon reading the diff, they'll fork from X and continue on with a new org, and X' dies on the vine. We've seen it recently on HN.
Employees of a mom and pops have specialized skills either in the frontend or backend of the business but typically only a basic idea of the fundamental business model. If they were to become owners in X it would take them at least a year and probably longer to learn the ins and out. E.g., how a change to even a few vendors can have a large effect on the bottom line. If they think they are getting X but instead get X', they won't know for awhile. In fact, if were talking about succession then the owner may be gone and they'll never know.
Perhaps I'm being cynical and fintech really is here to help the little guy. But something tells me that's unlikely.
Them setting terms for insurance and likely de-facto cotrolling all the firms' financial capabilities through their mandated fintech services surely helps hedging the risk, too.
Being an owner in a business is a typical way to route around labor laws completely.
If you're a restaurant or retailer that needs your staff to work 14 hour days 7 days a week, giving ownership is a fairly common scheme to CYA against future lawsuits. The ownership shares are usually miserly and forced-transferrable upon leaving.
Not saying that's what's happening here, but it could be.
They never get classified as employees. They start as owners to begin with. This is what cults like Twelve Tribes do with the Yellow Deli in Boulder, CO. The whole place operates on unpaid labor because they're all "owners".
I still can't tell whether you're being cynical or not. These businesses are mostly going to just shutter if PE doesn't take over. The ones left to a family member aren't necessarily going to do well for that succession either: that bequest can be an act of love more than business smarts. Furthermore, just because there may be important subtleties about which vendors to use, branding, and service processes that are vital to how things work, it does not mean that the prior owners were at all savvy about the nuts and bolts of modern financial products, and could have really been held back by traditional banks preying on that ignorance and ensnaring them in less than ideal solutions.
The important cog in this wheel is the one you haven't touched on, namely, that president Teamshares installs - wish they'd explain more about that. Teamshares' investors aren't stupid. They know very well the risk on their money if the company comes in like a bull in a china shop, quickly destroying the businesses it buys. There aren't going to be consolidation options and economies of scale like you see with medical practices - each of these mom 'n pop shops are somewhat special snowflakes.
The brilliance depends on whether it’s a scaled version of a Berkshire Hathaway like business, or some sort of reverse franchise. It sounds to me like the latter - a scheme to create captive customers for preferred source vendors who are close to the beneficial owners. This also sounds like medical consolidators like Schweiger dermatology who soak up independent dermatology practices. Similar models exist for dentists and attorneys as well.
I’m cynical because Buffet’s goal was very clear - he needs to generate cash flow forever to make more money. A venture capital entity has a different vision of success, which I can’t see being aligned with the “owners” of these companies.
Unfortunately, most mom-and-pop businesses are around because they've built a clientele, hired good employees, and mastered the basic economics in their local economy, which is all they need. Sophisticated fintech for them is just a frippery, as is big-time professional management.
I would bet the weaknesses of most mom and pops, and where professional management excels, is in the efficiency and vendor relationships. Lots of small mom and pop places pay exorbitant amounts for things like credit card processing, cash management and banking, tech, inventory management, etc.
If team shares can be a good partner to complement the strengths of the small business owners, they can increase the profitability significantly. By leaving the community element in place, theoretically it could be the best of both worlds.
Also: "Lots of small mom and pop places pay exorbitant amounts for things like credit card processing, cash management and banking, tech, inventory management, etc." is totally unsubstantiated. Like they're too stupid to know what they're doing?
We'll have no trouble at all finding stories of old businesses that changed ownership to a soulless group of MBA's, the customers heard about it, complained that it wasn't the same anymore, and quit coming. I doubt you can find many stories going the other direction.
> saddled you with various software license fees or whatever in perpetuity
Are they necessarily forced into it for perpetuity? Once they transition to 80% employee ownership (or 51%), don't the employee-owners decide whether to continue? Unless there's some kind of non-voting ownership stake or contract that never expires or something.
Plus, 20 years is the timeline to transition to employee ownership. So for the first 10 years, if the acquired business pays software license fees, the parent company is mostly paying itself, which isn't revenue. More importantly, that means whatever tech stuff they supply to the acquired companies needs to actually pull its weight.
It seems more likely they just want to keep proven businesses going so they can tap into that established revenue year after year. Giving ownership to the employees probably helps with retention and continuity so that the company doesn't fail after being sold. The corner pizza shop's customers still see familiar faces, the plumbing company's customers still recommend them to neighbors, etc. People don't say, "It used to be good, but it's not the same since it was bought." The point of handing over 80% is keeping the goose healthy to keep laying golden eggs.
Yes, being a supplier to these companies you own 20% of is some nice gravy. But you also want the revenue (and expansion), so you really can't bleed them dry.
>Admittedly, a business where this company has slurped out most of the value and saddled you with various software license fees or whatever in perpetuity. But a business nonetheless.
didn't I see an episode of The Sopranos where this was the plot, albeit in mafia dress.
I think with proper terms this would be a good launchpad for tested and tried businesses to transition into worker owned cooperatives, which I think would be a noble endeavor.
As it's set up currently it reads more or less like a tribute system, which is pretty trashy - it draws a line in the sand where they're effectively minimizing risk to themselves and slowly foisting responsibility onto others in exchange for a quasipermanent deal. I'm curious as to how the "ownership" works, as well, I'm sure there are caveats written in that secure the stake of Teamshares.
Private equity rolling up small businesses is extremely common for decades. There is even a major plot in the 2000s HBO show “Six Feet Under” of the evil PE guys buying up all the mom and pop funeral homes to corporatize it. Nothing new or innovative about this.
This is not a fintech company, it’s a holding company. Selling their financial products they said is a secondary new revenue stream - their primary revenue stream is from the companies they acquire, which for some reason decreases over time as they sell back stock to employees.
Maybe they’ve identified that employees in small business will overpay for stock in the company they work at. Then this is just a financial move to own that stock and sell it overvalued to employees?
Well, it sounds like the long term strategy is to develop business software solutions that work perfectly for their various arms, that they can then take external and pitch to other small businesses.
it sounds like it square bought food truck businesses that weren't using square pos and basically installed square pos and resold the business with contract stating they couldn't switch pos providers....I mean it's a way to guarantee vendor lockin but it's also risky. I do hope they follow through with the 80 percent ESO plan later on, as I'd love to see that the norm not the exception in the next generation.
It’s generally a bad idea to buy stock in the business where where you work. It’s the opposite of diversification. If it’s equity compensation OK, but you should diversify that into other investments as soon as you can.
You need a bit more substance than association by guilt (and not even a strong association) to criticize an article or a headline. My reading of e.g. "quietly" is that either they're claiming a scoop, or they're critical of the acquisition, not of bad faith.
I did mean guilt by association. The comment's author assumes the articles uses cheap devices based on an association the word "quietly" with bad faith arguments.
“Quietly” is a way to imply wrongdoing in something purporting to be a news article. Which is funny because you can use “openly” the same way, and it seems to me that every action can be characterized as either quiet or open.
That’s why it’s bad faith. It’s a cheap shot that purely injects a negative feeling without actually expressing an opinion.
“Teamshares buys mom and pops to lock them in as customers” or “Teamshares screws small businesses to make a buck” would be honest, good faith headlines. Innuendo is never good faith.
I agree. I've started avoiding almost any headline with the phrase "this X ..." where you've got to click to see what X is. Almost invariably, the headline could have easily specified what X was but then you might know you don't have any interest.
The headline would feel less like clickbait if it omitted "this": "Venture-backed startup has...". The word "this" in a headline has become strongly associated with low-effort articles that try to draw you in by being simultaneously provocative and non-informative.
So is the idea that they acquire the company for debt they place in the company and then they offer a complete suite of fintech products (including servicing that debt) to each of the companies they acquire? They aren’t too worried about giving away much of the company because with the debt inside the company the valuation is near zero? But if the employees can successfully grow the company it represents a decent return since they’ll be able to share 80% equity.
Protip: If someone says they are trying to be like Berkshire Hathaway, and their business plan doesn’t include a strategy for cornering some segment of the insurance market, they do not understand and will not become like Berkshire Hathaway.
I would even go so far as to say that if someone says they are trying to be like Boeing, but their business does not involve manufacturing jumbo jets, they do not understand and will not become like Boeing.
Seems like sorta a middle ground between a bs PE buyout, a roll-up, and a holding company. I think they're hoping the fintech fairy dust is going to give them tech multiples.
This is pretty strange. The real business model could probably be described in just a few blunt sentences, but without that happening we're left to speculate.
> Certainly, it’s among the more unique fintech models this reporter can recall.
Its not a fintech business model.
This is more like a McDonalds franchise model where they are extracting value by forcing stores to buy amounts all mannner of services from Food to Ordering Automation along with paying a percentage of gross sales back to Corporate.
Except in this case TeamShares won't even provide for good marketing support or branding to drive traffic.
McDonalds always had the implicit promise that you'll work hard, make us very rich but you'll also be "small town rich" too. TeamShares doesn't even pretend to deliver on the last part.
This idea is potentially so terrible I almost feel bad for the founders -- if it also wasn't scummy. The crux of their problem is that these businesses have a very finite lifetime regardless of the succession plan. The succession plan is completely secondary, the bigger question is the viability of the business plan, which for many small businesses, is not robust. TeamShares is merely acquiring customers until they abandon after the business plan is replaced and changes the quality or price of service.
Of course business owners who are selling to them are happy because they can buy their business back for less when TeamShares goes tits up. TeamShares is probably going to find this scheme will only work if the businesses being acquired are very homogeneous. Trying to scale something which inherently cannot or should not scale is kinda silly.
This sounds a lot like the Search Fund model except at scale. Typically in a search fund an entrepreneur raises a small pool of capital for operations and search for a traditional low tech company to acquire where they can optimize operations typically leaning on their MBA education. When a target is found, they make a capital call to the investors and buy out the company.
This basically seems like a search fund run at scale. Its actually a cool concept that I suspect is quite profitable. From the article though I don't really know if there is a tech component. It's more like a pure-play private equity company, e.g. finance. That said, there are a lot of interesting opportunities here and probably limited competition.
> The plan instead is to generate revenue from a growing array of fintech products that it sells to the businesses it buys.
If these products were any good, couldn't they make money with them on the open market? The only thing that owning gives you is the ability to force them to buy from the company store, so to speak.
This isn't tech. This is pure capitalist financial engineering: extracting money from people who actually do real work for real paying customers.
It just assumes that only people that work for companies like Amazon and Tesla have the pedigree to manage a company.
I look at it like how every politician either elected or appointed seems to have gone to one of 10 well known universities -you know Harvard, Yale, Stanford..etc. It's not about what they know or what they want to do as much as the fact that they are all in the same club. I've always said that being a CEO is just a game of playing follow the leader -one CEO cuts their 401K, they all cut their 401K, one CEO switches to "unlimited vacation" they all switch to "unlimited vacation". It's not a surprise that these companies all act the same, all the leaders all went to the same schools with professions that went to the same schools. They've all bee taught to think alike, they aren't disruptive-it's just group think.
When was the last time you heard of a CEO that went to community college and some shitty state school -even if they founded the company they are quickly replaced by a person more suited to be the CEO- someone for a Ivy school/FAANG once they IPO.
It being a negative depends on which end of the table you sit. I agree it's telling on the kind of leadership they expect, given the reputation of the environments and people who work at those organizations.
Aging business owners should look at Employee Owned Trusts. They exist in the US and UK with slightly different structures. Canada will have some legislation around EOTs sometime soon.
Looks like PE and venture-backed tech have a bad rep these days given how cynical the comment section is...
It seems the core problem at hand attempting to be solved is baby boomer small business owners retiring and having no one to buy their business (or pass down to who actually wants to run it)...
That seems like a worthy problem to tackle. Definitely will keep an eye on this company over the years to see if the model pans out or not.
This reads very much like a franchising arrangement, except instead of goods you pay for back office services. Even if the acquirer's products would succeed on the open market, a captive audience of guaranteed business seems like it might align the incentives of the parent company to _not_ bleed their acquisition dry.
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[ 4.8 ms ] story [ 218 ms ] threadArchive link because clickbait can die in a fire.
I wonder how practically useful all of this data collection is going to be, and whether doing it will be accurate and result in insight.
Learning about small niches where modest profit can be made (which is where many small businesses tend to fit, IMO) is not the typical/theoretical "scale to the heavens" startup plan, but if just getting ideas is the goal... good luck?
Prob buying at 1x revenue and selling stock to investors at 100x revenue
[0]: https://www.amazon.com/Buy-Then-Build-Acquisition-Entreprene...
[0]: https://www.amazon.com/gp/aw/d/B01KP33K4Y
"we sell our stock back over time to the companies until it becomes 80% employee owned"
If the fintech company has a controlling interest in the business (more than 50% of the share ownership), what's to stop them?
Entire model is about buying dental practices with cash, profit share with the dentists and then do all back-office work with economy of scale.
Pocket any efficiency gains and reinvest in more dentists, rinse and repeat.
I think this model might be a huge opportunity in Mexico.
So multiply all of those prices by >2.5x to account for the inflation of costs.
Isn’t this essentially a reworked trust?
And that's the rub - it'd be more profitable to thr mothership if the fintech expenses were not negligible over 20 years.
Sort of, but they'll be pulling money from a joint wallet that's 80% owned by other people. I expect even if the workers gain majority ownership, they will have no control - so the fintech service contracts will likely outlive the businesses.
Instead of saving on labor costs by pretending your employees are contractors like Uber and friends, they go in the opposite direction. You're not a contractor, or even an employee, but an owner.
Just imagine how big your milkshake will be once you all own 80% of the business! Admittedly, a business where this company has slurped out most of the value and saddled you with various software license fees or whatever in perpetuity. But a business nonetheless.
And now when the business goes belly up and these owners are destitute, the HN logic applies-- hey man, most businesses fail. So why not just learn some python and code up some nice fintech that extracts value from other rubes?
I haven't really seen this here. Is there any need to perpetuate such silly stereotypes?
[0] https://blog.codinghorror.com/please-dont-learn-to-code
On HN we're used to FOSS devs acting quickly when, say, a proposed or implemented license change turns project X into project X'. Upon reading the diff, they'll fork from X and continue on with a new org, and X' dies on the vine. We've seen it recently on HN.
Employees of a mom and pops have specialized skills either in the frontend or backend of the business but typically only a basic idea of the fundamental business model. If they were to become owners in X it would take them at least a year and probably longer to learn the ins and out. E.g., how a change to even a few vendors can have a large effect on the bottom line. If they think they are getting X but instead get X', they won't know for awhile. In fact, if were talking about succession then the owner may be gone and they'll never know.
Perhaps I'm being cynical and fintech really is here to help the little guy. But something tells me that's unlikely.
If you're a restaurant or retailer that needs your staff to work 14 hour days 7 days a week, giving ownership is a fairly common scheme to CYA against future lawsuits. The ownership shares are usually miserly and forced-transferrable upon leaving.
Not saying that's what's happening here, but it could be.
If someone wants to work 14 hour days 7 days a week so that their shares are worth more, that is their choice.
The important cog in this wheel is the one you haven't touched on, namely, that president Teamshares installs - wish they'd explain more about that. Teamshares' investors aren't stupid. They know very well the risk on their money if the company comes in like a bull in a china shop, quickly destroying the businesses it buys. There aren't going to be consolidation options and economies of scale like you see with medical practices - each of these mom 'n pop shops are somewhat special snowflakes.
I’m cynical because Buffet’s goal was very clear - he needs to generate cash flow forever to make more money. A venture capital entity has a different vision of success, which I can’t see being aligned with the “owners” of these companies.
If team shares can be a good partner to complement the strengths of the small business owners, they can increase the profitability significantly. By leaving the community element in place, theoretically it could be the best of both worlds.
Also: "Lots of small mom and pop places pay exorbitant amounts for things like credit card processing, cash management and banking, tech, inventory management, etc." is totally unsubstantiated. Like they're too stupid to know what they're doing?
We'll have no trouble at all finding stories of old businesses that changed ownership to a soulless group of MBA's, the customers heard about it, complained that it wasn't the same anymore, and quit coming. I doubt you can find many stories going the other direction.
(Emmet Shear’s 5 viral growth methods: https://twitter.com/eshear/status/1402449655208632321)
Are they necessarily forced into it for perpetuity? Once they transition to 80% employee ownership (or 51%), don't the employee-owners decide whether to continue? Unless there's some kind of non-voting ownership stake or contract that never expires or something.
Plus, 20 years is the timeline to transition to employee ownership. So for the first 10 years, if the acquired business pays software license fees, the parent company is mostly paying itself, which isn't revenue. More importantly, that means whatever tech stuff they supply to the acquired companies needs to actually pull its weight.
It seems more likely they just want to keep proven businesses going so they can tap into that established revenue year after year. Giving ownership to the employees probably helps with retention and continuity so that the company doesn't fail after being sold. The corner pizza shop's customers still see familiar faces, the plumbing company's customers still recommend them to neighbors, etc. People don't say, "It used to be good, but it's not the same since it was bought." The point of handing over 80% is keeping the goose healthy to keep laying golden eggs.
Yes, being a supplier to these companies you own 20% of is some nice gravy. But you also want the revenue (and expansion), so you really can't bleed them dry.
didn't I see an episode of The Sopranos where this was the plot, albeit in mafia dress.
Is that a business strategy now? Take some socialist idea and repackage it as a for profit one?
It's probably been a business play for a long time and I just never realized it
As it's set up currently it reads more or less like a tribute system, which is pretty trashy - it draws a line in the sand where they're effectively minimizing risk to themselves and slowly foisting responsibility onto others in exchange for a quasipermanent deal. I'm curious as to how the "ownership" works, as well, I'm sure there are caveats written in that secure the stake of Teamshares.
Maybe they’ve identified that employees in small business will overpay for stock in the company they work at. Then this is just a financial move to own that stock and sell it overvalued to employees?
Same here. You buy a small business, improve it by adapting your solution, and sell it back at higher price.
Of course, the "improve"-ment part better be real, but it sounds like a win-win business model if properly conducted.
And headlines using “This company” rather than naming the company are clickbait.
Funny that TechCrunch wants to cast aspersions using cheap devices like that.
That’s why it’s bad faith. It’s a cheap shot that purely injects a negative feeling without actually expressing an opinion.
“Teamshares buys mom and pops to lock them in as customers” or “Teamshares screws small businesses to make a buck” would be honest, good faith headlines. Innuendo is never good faith.
Its not a fintech business model.
This is more like a McDonalds franchise model where they are extracting value by forcing stores to buy amounts all mannner of services from Food to Ordering Automation along with paying a percentage of gross sales back to Corporate.
Except in this case TeamShares won't even provide for good marketing support or branding to drive traffic.
Of course business owners who are selling to them are happy because they can buy their business back for less when TeamShares goes tits up. TeamShares is probably going to find this scheme will only work if the businesses being acquired are very homogeneous. Trying to scale something which inherently cannot or should not scale is kinda silly.
This basically seems like a search fund run at scale. Its actually a cool concept that I suspect is quite profitable. From the article though I don't really know if there is a tech component. It's more like a pure-play private equity company, e.g. finance. That said, there are a lot of interesting opportunities here and probably limited competition.
> The plan instead is to generate revenue from a growing array of fintech products that it sells to the businesses it buys.
If these products were any good, couldn't they make money with them on the open market? The only thing that owning gives you is the ability to force them to buy from the company store, so to speak.
This isn't tech. This is pure capitalist financial engineering: extracting money from people who actually do real work for real paying customers.
"And so we recruit people from some really great companies — McKinsey, USAA, Tesla and Amazon — and train them to run these small businesses."
I look at it like how every politician either elected or appointed seems to have gone to one of 10 well known universities -you know Harvard, Yale, Stanford..etc. It's not about what they know or what they want to do as much as the fact that they are all in the same club. I've always said that being a CEO is just a game of playing follow the leader -one CEO cuts their 401K, they all cut their 401K, one CEO switches to "unlimited vacation" they all switch to "unlimited vacation". It's not a surprise that these companies all act the same, all the leaders all went to the same schools with professions that went to the same schools. They've all bee taught to think alike, they aren't disruptive-it's just group think.
When was the last time you heard of a CEO that went to community college and some shitty state school -even if they founded the company they are quickly replaced by a person more suited to be the CEO- someone for a Ivy school/FAANG once they IPO.
It being a negative depends on which end of the table you sit. I agree it's telling on the kind of leadership they expect, given the reputation of the environments and people who work at those organizations.
It seems the core problem at hand attempting to be solved is baby boomer small business owners retiring and having no one to buy their business (or pass down to who actually wants to run it)...
That seems like a worthy problem to tackle. Definitely will keep an eye on this company over the years to see if the model pans out or not.