The HoldCo Inversion: Everything You Learned as an Operator Is Backwards
Running a holding company is the exact opposite of running a company, which is why most successful operators fail at it.
- Difficulty
- Advanced
- Time to result
- ~ongoing to results
- Steps
- 6
- Confidence
- 85%
Michael Girdley — whose holding company spans a fireworks business, a software roll-up, a coding bootcamp, a drive-thru coffee chain and an offshore hiring startup, over $100M in revenue and 750+ employees — identifies two failure modes in the current holdco boom. The first is people entering because it looks easy; his response is that it is really hard. The second, and the substantive one, is that a holdco inverts every habit operating success builds. His concrete example: when a problem appears in a portfolio company, the operator instinct is to sprint to it and fix it. The holdco response is to say 'man, that really sucks — what are you going to do about that?' Girdley frames this as a wiring question rather than a skill question. He is explicit that he is a poor optimiser, finds accounting and HR among the most boring things imaginable, and realised six years into running the fireworks business that he was precisely the wrong person for it. The business then exploded over five years specifically because he stopped running it. Shaan pushes back usefully — everyone claims to be an ideas person, and he estimates a ratio of a hundred self-described idea guys to every one person who genuinely loves executing. Girdley's answer is that he only saw the distinction clearly after leaving the Silicon Valley bubble for San Antonio and meeting people who love optimising a grocery chain at 3-4% EBITDA margins.
Origin
Girdley ran Alamo Fireworks as CEO for six years before concluding he was the wrong person for a business that is a game of inches, and rebuilt his role around holding rather than operating.
Core principles
- 01The holdco response to a problem is a question, not a rescue.
- 02Operating skill does not transfer; it actively interferes.
- 03This is a wiring question — not everyone is built for it, and that's fine.
- 04Almost everyone believes they are the ideas person; very few are.
- 05Removing yourself from a business you are wrong for can be the growth unlock.
- 06You need real operators who genuinely love the game of inches.
How to run it
- 1
Diagnose your own wiring honestly
Girdley's self-assessment: he wants to live at 80,000 feet in idea space, has a poor memory, and finds optimisation, accounting and HR the three most boring things he could be asked to do.
- 2
Identify the business you're wrong for
Six years into running the fireworks business he concluded he was precisely the wrong person, because it is a game of inches requiring constant optimisation.
- 3
Replace yourself with a genuine optimiser
Get the right people on the field. Girdley credits the business exploding over five years to this, and insists 'it's the royal we, it's not me.'
- 4
Invert your problem response
Stop rushing in to fix. The holdco move is to acknowledge the problem and hand it straight back: what are you going to do about that?
- 5
Take the board seat, not the job
Girdley is explicit with his operating partners: 'I don't want their job, and I'm not — I wouldn't be good at it.' He offers strategy, insight, best practices and connections instead.
- 6
Test the claim against people who love execution
Girdley only understood the distinction after leaving Silicon Valley and meeting executives at HEB who take pride in operating at 3-4% EBITDA margins.
In the wild
Girdley ran the inherited fireworks business as CEO and found it the hardest business in the world to run — predicting demand 6-12 months out, fronting all the cash from January, opening 200 Texas locations, and not breaking even until 7-8pm on the 4th of July. He concluded he was the wrong operator for it.
→ The business 'exploded' over the following five years under other people, including basics like moving from handwritten to digital point of sale.
Girdley points to friends who are senior executives at HEB, the largest private grocery chain in America, running at 3-4% EBITDA margins and thinking it's great. When Trader Joe's came to San Antonio, HEB reportedly flew its product, location and store-experience executives to California and told them not to come back until they had the best of every competitor product.
→ Proof that people genuinely wired for optimisation exist and thrive — and that Girdley is not one of them.
Common mistakes
Entering the model because it looks easy
Girdley's first diagnosed failure mode. He asks people why they're doing it, hears 'it seems really easy', and tells them it's really hard.
Bringing the rescue instinct into the portfolio
Sprinting to fix a portfolio company's problem re-creates the operator job across many businesses at once, which is unsustainable and undermines the operator you hired.
Assuming you're the ideas person
Shaan's challenge: he doesn't know anyone who doesn't think they're an ideas guy, estimating roughly a hundred claimed idea people per genuine executor.
Is it for you?
Best for
Operators and senior executives considering a holdco or portfolio structure who want an honest read on whether they are wired for it.
Not ideal for
People who derive their satisfaction from being close to the work — the framework's whole point is that this is a legitimate and common answer.
From the transcript
“everything you do in a holdco is exactly the opposite ... when there's a problem you don't rush in and fix it for your company…”
“i am precisely the wrong person to run this business cuz what you're talking about is this like game of inches where you have to…”
“there seems like there's a ratio of 100 idea guys to every one guy who just truly loves executing”
From the episode
Michael Girdley: Why Fireworks Are A Cash Cow and How to Operate a Holdco Worth $100 Million
Michael Girdley