The New Breed of Investor

Feb. 1, 2004
I call it the new breed of investor. I remember a call in 2000 from merger and acquisitions specialist Ed Latek telling me that I had to talk to these

I call it the new breed of investor.

I remember a call in 2000 from merger and acquisitions specialist Ed Latek telling me that I had to talk to these investors who were buying Diamond Rental. The owners Maun Peterson and Lorin Winegar wanted to sell their Salt Lake City-based company, realizing they required capital to grow their seven-location company. They wanted a buyer that would be committed to the people who had built the company, and would maintain its culture and identity. They felt they had found the perfect mix in Rubicon Ventures, led by these two young men from California who wanted to buy a business and develop it and keep its name, to take what was good about the established platform and build it.

I was impressed by the enthusiasm in Latek's voice, the genuine confidence and trust Peterson and Winegar expressed and the message of commitment Mark Clawson and his partner communicated to me during several phone interviews. I knew that this would be a company to watch and a story to follow, and decided I would soon head out to Salt Lake City to see what they were doing.

I didn't get around to it for three years but it was worth the wait. A boyish 37, Clawson shared his thoughts with me over dinner in the foothills above Salt Lake City and throughout the next day as we visited several branches together. Clawson grew up in a family retail lighting business and had breathed in the culture of a family where everybody pitches in, the kids sweeping floors on weekends and in summer, eventually working their way up running the counter, helping in the yard and more. Although Clawson left his family business after college to pursue his own career, he had a desire to own his own company. He found a fit in rental where, he believes, he can provide a real service and create a model of sustained growth.

Several months after the acquisition, I was even more impressed to find out that they'd hired an outstanding operations man, the dynamic Leonard Sedillo, who did so much to turn Hotch Manning's A-1 Rental Center into one of the best-run rental companies in the West. I knew if the Diamond owners had hired Sedillo, they were sincere about running a topnotch company, and that if Sedillo had agreed to work there, he must have strongly believed in the new Diamond vision.

So far it's working.

I remember wondering, when the acquisition took place, if similar small investment groups might buy into the rental industry. Certainly quite a few of them explored the possibility — I know because I got phone calls and e-mail inquiries from many of them. But either they couldn't find a fit and went on to another industry, or just never put together the needed capital.

Clawson was lucky in that he found investors who weren't looking to double their money overnight, who didn't view investments like one potential shareholder who told Clawson: “Why should I invest in you when I can make $30,000 a week on the stock market?” I wonder how that gentleman is faring now.

Well it's one thing to talk the talk, quite another to walk the walk. How do I know this group won't grow Diamond and sell it as soon as it gets a good offer? I don't. More than one owner vowed to never sell his company but couldn't refuse the mind-boggling multiples that were tossed around in the late '90s.

Clawson never promised, in my time visiting Diamond, that he would never sell the company. But he did express a commitment to the long haul, to developing a great company, to growing it and expanding it within Utah and possibly beyond. He expressed a sincere concern and appreciation for the company's people. And while he wants to grow, he also likes running a business where every rental, no matter how small, is important, and where the opportunities for growth are enticing.

I've been wrong before and I'm sure I will be again. But I like the attitude I saw at Diamond. I like the genuine commitment to the customer, the enthusiasm to do things right. I hope it succeeds and advances the spirit of the rental industry.

I'm not disparaging any other investors that helped grow this industry. But I hope I'm right in saying that this is a new and unique breed of investor, one that I'd like to see more of.