Michael Arrieta·March 13, 2023

How to Build a HOLDCO Around Company Culture | Michael Arrieta Interview

Michael Arrieta is the founder and CEO of Garden City Companies (also called Garden City Equity), a people-first permanent holding company he launched in February 2020 — one month before COVID hit. Coming from a decade in Silicon Valley (chief of staff roles at WISE Technology and Dell, then VP/chief of staff at DocuSign through its IPO and run-up to a $60B+ market cap), Arrieta left tech to build a holdco acquiring blue- and white-collar service businesses in the Southeast US, inspired by the permanent-equity model championed by Brent Beshore. Garden City raised a fund from roughly 50 mission-aligned investors — including CEOs of DocuSign, Uber, Equifax, Chick-fil-A, and athletes Drew Brees and Tim Tebow — using them not just as capital sources but as a proprietary deal-flow network and enterprise sales engine (4 of 5 deals came through LPs). By early 2023 the firm had made five investments: three majority acquisitions (an undisclosed first company now struggling, Duncan and Sons janitorial founded in the 1970s with ~500 employees, and Connext IT services carved out from a larger MSP) and two minority stakes. The episode's core insight is Arrieta's evolution as an operator: he started believing culture, tech, and sales were equally important levers, but now ranks sales first, culture as table stakes, and technology only valuable when addressing a genuine pain point. He candidly discusses a painful first acquisition made under time pressure, where fixation on diligence checklists crowded out the big questions about market quality, team trust, and owner dependency. He also articulates a distinctive culture philosophy rooted in Horst Schulze's Ritz Carlton framework — workers want belonging, voice, and upward mobility more than money — and a preference for hiring failed searchers as portfolio company operators.

Deal facts

sde ebitda: target range $2m-$8m EBITDA per company
revenue: target top-line $10m-$100m per company
financing structure: no debt used; fund capital called down on deal-by-deal basis; seller equity rollover available
notes: Garden City has made 5 investments total: 3 majority/control acquisitions (unnamed first company, Duncan and Sons janitorial, Connext IT services) and 2 minority stakes. Connext carve-out: $3m+ EBITDA for the IT deployment department. Duncan and Sons: janitorial, ~500 employees, founded ~1970s. First acquisition undisclosed and now experiencing difficulties. Fund raised from ~50 'mission-aligned' investors (CEOs of DocuSign, Uber, Equifax, Chick-fil-A, athletes Drew Brees, Tim Tebow, etc.). Management fee covers team salaries; carry/promote paid after full return of investor capital on deal-by-deal basis.

Why this business

Michael had always been fascinated by service businesses — dry cleaners, car washes, HVAC — since childhood, growing up around parents in service jobs. After a decade in Silicon Valley (WISE Technology, Dell, DocuSign IPO), he asked himself 'if money were no object what would you do?' and kept returning to service companies. He was also motivated by a deep desire to impact the workers in those companies, having seen his parents never feel valued or purposeful in their service jobs. He discovered the permanent-equity holding company model (inspired by Brent Beshore) and built Garden City to buy, grow, and forever hold blue- and white-collar service businesses.

What's working

Investor network as deal-flow engine: 4 of 5 deals sourced directly from the 50+ mission-aligned investor LPs, who actively introduce sellers and open enterprise sales doors
Strategic sales introductions: using investor relationships (CEOs of major corporates) to win large B2B contracts for portfolio companies, nearly doubling Connext EBITDA in under a year
No-debt, fast-close model (58 days for Connext) as a competitive differentiator against auctioned processes
Culture-first operating philosophy: town halls, managerial one-on-ones, internal promotions, and belonging-focused HR practices drawn from Horst Schulze / Ritz Carlton framework
Hiring searchers who couldn't find a deal as operators/CEOs for portfolio companies — they have the right mindset without needing the sales phase
Holding forever and allowing seller equity rollovers and board seats, which attracts sellers who care about their people and legacy
Duncan and Sons janitorial growing into new geographies (Knoxville TN to Utah to Nashville), with 500 employees, and customer relationships dating back 50 years

What's hard

First acquisition made under pressure at the 18-month mark out of fear of failure; got lost in minutiae of diligence checklist and missed the big questions (market, team trust, owner dependency), which has led to ongoing difficulties
Change management mistakes: reactive, piecemeal changes to operations (payroll system deployment, empowering purchasing without controls) caused margin/inventory problems
Technology as a lever is frequently oversold; most tech implementations that weren't addressing a genuine dire need caused disruption without commensurate benefit
Rapid expansion of sales introductions overwhelmed the CRO at Connext — inbound volume exceeded follow-up capacity
Carry/promote only realized after full return of investor capital on each deal, making patience essential
One of the five portfolio companies (the first) is experiencing significant difficulty tied to macroeconomic headwinds (inflation, interest rates, supply chain)

Notable quotes

The worst deal you could do is a bad one. It's not making a deal, it's having a bad deal.

I allowed myself to focus on all the little tiny nuances of diligence — a thousand things — and I didn't just stick to why I even got into the first place: is this a good industry, do they have a good brand reputation, is there a good team, how important is this owner to the transaction, do we actually even trust this owner?

Culture has fallen — culture is just what we do, there's nothing that makes it better or worse, it's just how we love on people. Technology has fallen way lower unless it's a dire need. And sales has skyrocketed to the top as a lever of growth.

People support what they help create. There's nothing more complex than that. It's just that simple.