We've officially entered my absolute favorite time of the sports calendar year. As millions of others around the country have done this past week, I sat down to fill out my bracket for the annual Van Essen Family Bracket Challenge (not to brag or anything, but family champion in 2024, 2019, and 2016 over here).
As I was filling it out this year, I kept finding myself thinking about the places where March Madness and investing intersect (I know, but they really do).
Every March, millions of people convince themselves they've found the winning bracket. A hot mid-major. A blue blood that looks "due." A 12-seed with just enough momentum to feel dangerous. And then, by Friday afternoon, chaos erupts.
That's part of the fun. It's also what makes the tournament such a useful mirror for investing. Both activities force you to wrestle with the same tension: uncertainty. The best investors I've ever known aren't people who eliminate it; they're people who learn to operate intelligently inside it.
March Madness works the same way. You can study matchups, coaching histories, injury reports, efficiency metrics, travel schedules... all of that matters, sure. But no amount of diligence guarantees an outcome. A cold shooting night, foul trouble, or one player catching fire can wreck a carefully built bracket.
Investing done well has the same humility baked in. You can do the work, understand the industry, analyze the management team, the capital structure, the downside cases, the path to value creation… and still have things turn south. Markets shift or key customers leave. Financing dries up or great businesses hit rough patches while mediocre ones catch temporary tailwinds.
That doesn't mean the work was pointless. The work was never about certainty in the first place… it was about improving your odds. The most consistently successful investors are the ones who follow a process, embrace uncertainty, and try to block out as much noise as they can.
Leadership in business matters for the same reason coaching matters in March Madness: talent alone rarely wins at the highest level. In both settings, success comes from building a culture of trust and accountability. Trusting your team to execute when you have to make adjustments to the game plan. Providing your players with enough agency to operate at their best, but providing the right guidance or course correction when necessary.
My Duke Blue Devils are a perfect example. They’re a one-seed (and a favorite to win the tournament), and we nearly got upset in the first round by Sienna, a sixteen seed. The first thing Duke head coach Jon Scheyer brought up in the post-game interview was that he thought he'd been outcoached. Duke is undoubtedly more talented than Sienna... but all of that talent can be wasted without the right game plan and coaching.
That’s because a great coach does far more than just draw up plays; they build a winning culture such that their players can grow into the best versions of themselves across seasons. That way, when the big moments arrive, the players are already ready for what the game throws at them. Strong business leaders do the same. They shape culture, make tough calls with incomplete information, and put people in positions where their strengths can actually show up.
In our small business acquisition strategy, we're constantly evaluating leadership for both new opportunities and our existing portfolio companies. It's become one of the most important parts of our diligence process. We've seen firsthand how much good leadership can shape the course of a small business.
The disciplined investor is usually searching for asymmetry. Where is risk misunderstood? Where is the field overconfident? Where does the public narrative diverge from the underlying fundamentals? In basketball terms, that sometimes means avoiding the trendy upset everyone is suddenly picking.
Every year the public falls in love with a story. Maybe it's the underdog with a charismatic coach. Maybe it's the powerhouse program everyone assumes will "turn it on" when it matters. Those narratives can be directionally helpful, but they're often overpriced in the court of public opinion.
Investing works the same way. A great story can seduce people into paying too much. And paying too much, even for something good, is one of the easiest ways to generate mediocre returns.
Sometimes the best opportunity isn't the most exciting one. It's the boring 4-seed that defends, rebounds, and limits turnovers (aka, the team with strong fundamentals). If you spend enough time around investing, you start to appreciate how often boring wins.
That's especially true in the small business acquisition world. The business with recurring customers, steady margins, modest capital needs, and a clear operating model may never make headlines. But it doesn't need to be sexy. If it delivers, consistently, it may be the exact kind of winner we want to partner with.
The teams still standing in the second weekend usually aren't there by accident. They tend to do simple things well, over and over. That consistency doesn't get as much attention as a buzzer-beater… but it lasts longer.
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