Anthos Capital & Crossfit: A Look into the Public Image of Private Equity

The private equity industry for many years lived up to its name – “private”.  However, in the last few years this relatively small asset class has become a global player and a sought after target for the media.  Much of this has been brought on by a former private equity executive, Mitt Romney, running for President.  This quick and generally negative introduction to the public has happened rapidly which has  created an image problem for the private equity industry.

When I graduated from college I knew very little about private equity but was fortunate enough to land a job in this industry.  Since that time I have never looked back and have the utmost respect for those that work in this industry.  There is no doubt that this industry is comprised of some of the best and brightest individuals and also hard working as well.  Major media attention on the private equity industry has been strongly skewed towards the negatives which include job reduction, management overhaul and large profits. The fact is that none of these factors are bad unless portrayed in a certain context. Sometimes companies need to layoff workers and change management in order to survive or run more efficiently and there is absolutely nothing wrong with creating wealth. Wealth creation is what built the United States to what it is today.  Of course there are isolated examples of questionable motives but that can be said of any industry.

I believe that most of the individuals that choose this career path have a deep respect and admiration for entrepreneurs and want to support and guide those that have the courage to create and innovate.  I am now a principal in a private equity fund, DCA Capital Partners, and we focus on making investments into what we define as the lower middle market ($10 to $150 million in Revenue).   The companies we invest into have created some type of product and/or service and grown that company through hard work and dedication.  Our capital and strategic advisory will help companies to grow beyond what they have and ultimately create more value for themselves, our fund and ultimately the consumer.  This process is crucial to our economy and allows us to take big risks on new ideas and technologies.  The private equity industry as a whole is at fault and must do a better job in the future of demonstrating to the public the admiration they have for the entrepreneur and the health of the business community.

What motivated me to write this blog is the recent Crossfit and Anthos Capital transaction that is taking place.  This has been a very interesting development to watch considering I am both a Crossfitter and a partner in a private equity fund. I appreciate how passionate the Crossfit community is but most of the arguments and discussions that I am seeing from the community are not entirely accurate which is in alignment with the general populations view of private equity.

I can not speak on behalf of Anthos Capital but I can speak in regards to private equity investments. Private Equity funds are first and foremost concerned with investing into good growth companies that have strong management. It is purely arbitrage to buy low and sell high, no different than the public markets. If I were making this investment I would have no intention of  changing something that is already working really well.  The ideal role of a private equity investor in this scenario would be to make strategic suggestions but at the end of the day trust management to continue to grow the company as they have for years. This is not a hostile takeover or a buyout so this should indicate that Anthos Capital trusts Crossfit management team as an equal partner.

At some point in time whether the Crossfit community likes it or not there is going to be a major exit. Greg Glassman and the Crossfit management team will want to cash out at some point and that will be done through an IPO or sale to a strategic or financial buyer. An investment from Anthos Capital is only a stepping stone in that process to bring in additional capital and expertise to help create value.  I do not believe that the Crossfit brand or Crossfit culture will be compromised by this investment.  A smart private equity investor is not going to compromise the very essence of what makes a brand great, they only want to capitalize on that opportunity by offering additional capital and expertise to grow further.  What is exciting for me is that I believe Anthos Capital has the opportunity to bring strong strategic vision to Crossfit and help create new and different opportunities.  The greatest part of working in the private equity industry is you get to see hundreds of different companies, management teams and strategies in the market place.  This allows individuals in this industry to have a wide macro view of the markets and connect dots that would not necessarily be seen by a Company that is focusing strictly on their industry.  This type of strategic advisory could really help increase the value of Crossfit and bring new added value to the affiliates.

I am an optimist at heart and ultimately hope that Anthos Capital and Crossfit can find common ground and work together to better the brand and community we all love as Crossfitters.  I also hope that those individuals in the private equity industry use this example and others as a wake up call that private equity is no longer “private” and start truly showing the benefits of this industry to the business world.



  1. The CrossFit community is not hostile to private equity on ideological grounds. The arguments against Anthos are situationally unique, and you haven’t addressed any of it. These arguments are related largely to the actions of Bryan Kelly, the firm’s representative. His engagement with CrossFit has been nothing short of duplicitous: unethical at a minimum, and very likely illegal.

    To start, Private Equity firms don’t make passive investments. A Private Equity investment proposal absent a plan for management control is nonsense.

    (Wikipedia has good info on this:

    Bryan Kelly of Anthos Capital actually does have a track record as a successful entrepreneur from well before he became a financier. It’s one of the reasons CrossFit was willing to listen to his profoundly misguided notions on the proper business of CrossFit, Inc.

    It’s funny that you acknowledge that you can’t speak for Anthos, and then you tell us their exact intentions. CrossFit’s founder and key staff, on the other hand, have heard Bryan Kelly speak for hours on his plans for our company. These plans amounted to nothing more than fundamental confusions over value creation and an aggressive use of short cuts. CrossFit rejected them.

    You said:
    “No private equity investor is going to compromise the very essence of what makes a brand great, they only want to capitalize on that opportunity by offering additional capital and expertise to grow further.”

    And here you cut to the heart of the problem- Bryan Kelly has no understanding of what makes CrossFit great, and he has no expertise in our primary measure of success- the improvement of health. Bryan’s understanding of success is investment return, a view that is completely misaligned with our company and community.

    I am an optimist at heart too, and I know this covert-hostile takeover will end badly for the man who will apparently say anything to save his 20 million dollar investment.

  2. Russel,

    Thanks for the well thought out comment and you are absolutely correct that my wording was misplaced in how I represented Anthos Capital above. I have changed my wording to reflect my personal view of making an investment in Crossfit and/or the best practices from a private equity group.

    First off, I want to state that I have the utmost respect for Greg Glassman and what he has created, it truly is a life changing company. His recent “Health and Wealth” speech was spot on and I truly appreciate his free market thinking. I do not know the inside dynamics of the transaction so I can only speak from a high level perspective and ultimately try to establish some of the positive aspects of a private equity but in no way endorsing Anthos Capital.

    The only rebuttal I would have to your above comments is that private equity funds do make minority investments. Unfortunately the media focuses primarily on leverage buyouts which represents only a fraction of private equity and tend to financial engineer companies versus bring value which is looked upon negatively in the market. Our fund portfolio is made up entirely of minority investments in middle market companies and we believe in finding and supporting good growth companies and management teams through capital and strategic advisory. This is where much of my thoughts come from in how I would personally approach this transaction. I never like to see innovators, founders or companies taken advantage of by any financial firms and hope that Anthos Capital uses best practices if they become investors.

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