Our Investment in Tegus

@Patrick O'Shaughnessy

@September 28, 2022

A great investor recently told me that he’s always searching for “maniacs on a mission.” The best way to learn is to align yourself with those people - those "maniacs" - who are doing their life’s work and who are constantly pushing the envelope. There is a rare breed of entrepreneurs who do this compulsively, deploying their learnings to build companies at an incredible pace.

I met Tom and Mike Elnick, the co-founders and co-CEOs of Tegus, in 2020. They were one of our original sponsors for the Invest Like the Best podcast. I’ve slowly gotten to know Tom, Mike and their team at Tegus over the past two years. They fall into this rare category of maniacal entrepreneurs. Every time I speak with them—even hours into a conversation—I’m learning and taking furious mental notes.

You can see this characteristic in companies, too. Certain companies are learning machines, with each part of the company improving at an impressive rate. This is not common. Usually, you see the “best” that a company has to offer at the beginning, when they are trying to impress. And then as you dig in further, reality sets in: exceptional businesses are rare.

But Tegus is a business that gets more interesting and more impressive as you spend more time on the product and with the team.

At Positive Sum, we are on a constant search for founders like Mike and Tom, and for companies like Tegus. So I’m delighted to announce our investment into their business, and the start of what we expect to be a very long term partnership.

When I first met Tegus, it was focused on serving professional investors by delivering a peerless library of expert call transcripts. At the time, a professional investor researching a company could turn to Tegus to both schedule expert calls and to read call transcripts from customers, ex-employees, and other industry experts. There is a lot of duplicative, low value work in the world of professional investing. Investors often conduct the same set of expert calls as every other investor, and gather similar information. It takes forever to schedule and conduct these calls. By providing a searchable library of these call transcripts–a radical idea at the time–Tegus made it possible for professional investors to skip much of this repetitive work and learn about a company faster and more efficiently than ever before.

Tegus spent years achieving product-market fit around this original idea. But now, Tegus has become a fully fledged research platform for professional investors. Customers use their platform as their core research engine. They use Tegus for expert calls and to review a huge and growing library of call transcripts. They use BamSEC to review company filings and earnings transcripts. They use the recently acquired Canalyst product as a baseline for building financial models, and for hard-to-gather, company-specific KPI data.

These products all have something in common: they help investors understand companies faster. While investors themselves will always drive the key insights behind great investment decisions, Tegus helps them get high quality, company-specific information at lightning speed. Their suite of products helps investors spend less time on undifferentiated schlep work, and more time on proprietary analysis and insight.

Jason Warner, the former CTO of Github, once told me that Github’s goal was to be the “first tab open, and last tab closed” each day for their customers. Github wanted to be the “hub” for their customers’ work, a “professional home base.” I believe that Tegus is doing the same thing for professional investors. The many customers that we’ve met use Tegus’ platform all day long: opening Tegus, BamSEC, and Canalyst first thing in the morning, and closing them after everything else at night.

We believe that the very best software companies become a critical part of their customers' workflow, and I expect that more and more investment processes will be built on top of Tegus in the future.

There are plenty of tools that let investors get basic information on the companies they own or are researching. But no platform allows investors to get the nuanced understanding of companies that Tegus does, and we believe that makes it uniquely valuable.

Sam Teller said something memorable to me once. He’d been Elon Musk’s chief of staff for years, and I was curious to know how that experience had most shaped him.

Here’s what Sam had to say:

When I recently spent two days with the Tegus board and team, I couldn’t get Sam’s idea out of my head. I left my time with the board with a renewed sense of excellence across several dimensions of company building.

We love the Tegus platform of products, and its vision. So do their customers. But excellence doesn’t stand still. While we are impressed with Tegus’s products and business today, what we are betting on is that their unique learning style and pace of work will compound for decades.

Tegus has a clear focus: building products to help professional investors move faster and more efficiently. They operate in a distinct way: with incredible pace, intensity, and focus on the customer. They are demanding: of themselves and of their investors.

It is brutally hard to build a large, successful business. We believe it's only possible if the company wins, shareholders win, and, most of all, customers win. So far, Tegus has built a win-win-win business. We consider ourselves lucky to be new investors. I can’t wait to watch them continue to build, and to learn from them for decades to come.