Why Patron Companies Wants to Be an Outsider

Why Patron Companies Wants to Be an Outsider

In the world of business, conventional thinking often promotes centralised control and strives for the elusive goal of seamless integration. Yet, a handful of visionary CEOs have shown that there’s another way to create exceptional value—by becoming an “outsider.” In The Outsiders by William Thorndike, we’re introduced to eight remarkable CEOs who pursued a contrarian approach, focusing on decentralised operations while centralising capital allocation. These leaders, including Warren Buffett of Berkshire Hathaway and Tom Murphy of Capital Cities Broadcasting, achieved staggering returns, compounding shareholder wealth at rates few others could match.

At Patron Companies, we’re inspired by this outsider philosophy. We’re modelling ourselves on these successful strategies to create lasting value through disciplined capital allocation and a decentralised approach to managing our businesses. Here’s why we’re choosing the outsider path and how it translates into real, long-term gains.

The Outsiders’ Playbook: A Formula for Success

The CEOs featured in The Outsiders didn’t just break the rules—they rewrote them. Their shared playbook boiled down to a few key principles:

1. Capital Allocation as Priority #1: Outsider CEOs centralised the decision-making on where to invest capital, treating each dollar as a resource that could go to the highest-return opportunity.

2. Decentralised Operations: Instead of trying to control day-to-day activities, these leaders empowered each business unit to operate independently. This approach encouraged agility, accountability, and focus.

3. Long-Term Focus: They avoided short-term pressures, aiming for compounding growth over decades.

4. Selective Acquisitions: Outsider CEOs were strategic acquirers. They bought quality companies at good prices and let them continue to grow independently, only intervening if necessary.

Each of these principles has shaped Patron Companies’ own approach to business, driving us to work towards building a high-value portfolio of small businesses while minimising operational friction.

The “Outsider” Success Stories That Guide Us

Several of the CEOs highlighted by Thorndike provide clear examples of why this model works. Here are a few whose methods resonate with our own goals:

• Warren Buffett (Berkshire Hathaway): Known for his brilliant capital allocation, Buffett built Berkshire into one of the most valuable companies in the world by acquiring diverse businesses and letting their management teams run independently. His strategy demonstrates the power of letting skilled operators do their jobs while directing cash flow to the highest-return opportunities.

• Tom Murphy (Capital Cities Broadcasting): Murphy focused on lean operations and a decentralised structure, allowing Capital Cities to make impressive returns on invested capital. His approach, which relied heavily on empowering managers to run their own businesses, is foundational to our thinking at Patron Companies.

• Henry Singleton (Teledyne): Singleton followed an opportunistic acquisition strategy, repurchasing stock during downturns and acquiring businesses that had strong cash flows. Singleton’s contrarian moves helped Teledyne deliver a compounded annual growth rate of 20% over 20 years, showing the power of patient, strategic capital allocation.

Each of these leaders understood that compounding value isn’t about centralised control but about smart capital allocation, independent operations, and trust in the people running each business.

Why Patron Companies Embraces the Outsider Model

We're looking for small businesses with sustainable, high quality growth

At Patron Companies, we’re adopting the same principles that made these CEOs successful, but with a focus on small and medium-sized businesses in Australia and New Zealand. Our approach, which combines centralised capital allocation with decentralized management, allows us to deliver value in three key ways:

1. Efficient Use of Capital: By centralising our capital allocation, we ensure that every dollar of profit from our acquired businesses is reinvested wisely and at high rates of return. This approach lets us direct resources to acquisitions with the highest potential return.

2. Independent Operations: We allow each of our acquired companies to operate independently, managed by experienced leaders who understand their markets. This model enables quick decision-making, customer focus, and operational excellence—qualities that are harder to achieve in a highly centralised structure.

3. Compounding Value: Like the outsider CEOs, we’re in this for the long haul. We look to compound value over decades, reinvesting cash flows from each acquisition into new opportunities, creating a self-funding cycle of growth.

The Real-World Potential of Patron’s Approach

Our strategy isn’t just theory—it’s backed by proven results from the world’s most successful serial acquirers. Here’s what this approach means for our stakeholders:

• For Investors: A strategy focused on high return on capital, a strong cash yield, and long-term compounding potential. By making selective acquisitions and focusing on decentralised operations, we aim to deliver returns on par with—or even better than—the benchmarks set by these outsider CEOs.

• For Small Business Sellers: A chance to partner with an acquirer who values their independence and expertise. Rather than folding companies into a rigid structure,  and potentially destroying or damaging the culture that made them attractive to us in the first place, we allow them to maintain their identity and operations, supported by the financial strength of Patron Companies.

• For Patron Companies: A scalable model that avoids the inefficiencies of large, centralised corporations. With each acquisition, we add to a growing flywheel of cash-generating businesses, supporting future growth and providing reliable returns.

Becoming Australia’s Own Outsider

Patron Companies is on a mission to emulate the success of outsider companies, but with a unique focus on small businesses in our region. By focusing on disciplined capital allocation, decentralised management, and selective acquisitions, we believe we can unlock significant value in an underserved market.

This approach isn’t just about growth—it’s about sustainable, high-quality growth. It’s about honouring the hard work of the businesses we acquire, providing them with the resources to thrive, and giving our investors access to a new class of opportunities that combine stability with exceptional returns.

Why We Think Patron’s Strategy Will Work

Here’s why we believe our outsider-inspired approach will lead to long-term success:

• Proven Model: The strategies we’re using are time-tested and have delivered decades of impressive returns.

• Scalability: With our focus on capital allocation and decentralised operations, Patron can grow consistently and sustainably without excessive overhead.

• High-Quality Acquisitions: We carefully select well established companies with strong fundamentals, good cash flow, and solid market positions—similar to the criteria used by outsider CEOs.

• Aligned Incentives: Each of our businesses is managed by skilled professionals who are invested in their success, aligning with Patron’s goals.

Conclusion: Why We’re Proud to Be Outsiders

At Patron Companies, we embrace the outsider philosophy not only because it works but because it aligns with our values. We believe in empowering businesses to succeed, supporting their unique strengths, and ensuring that each dollar is allocated to its highest and best use.

We’re not just following a playbook; we’re joining a legacy. We’re proud to be outsiders—focused on doing things differently, for the benefit of our businesses, our team, and our investors.