Learn. Share. Evolve…

0:00:01 If you’ve ever thought about buying a business,
0:00:03 then this episode is gonna be for you.
0:00:05 Because on the internet, there are a lot of people
0:00:07 telling you about how amazing it could be
0:00:09 to just go buy a business that’s already working.
0:00:11 You just take out a loan, you put very little money down
0:00:13 and boom, you’re cash flowing and you’re working passively.
0:00:14 But those are also people
0:00:16 that are kind of selling you the dream.
0:00:19 Now, my buddy Dan, is one of my best friends from college,
0:00:20 just actually did this.
0:00:22 A couple of years ago, he bought a business,
0:00:25 a very random, unsexy business that he had no experience in.
0:00:27 He didn’t have a lot of money coming in.
0:00:29 He had never bought a business before, but he did it.
0:00:31 And it’s actually worked out pretty well.
0:00:33 And I asked him to come on and tell the real story.
0:00:35 So tell us like, what was it like?
0:00:37 What’d you do the first hundred days?
0:00:38 How did you actually find buying the business?
0:00:40 How much money did you have to put down?
0:00:41 How much money did it make?
0:00:42 What are the downsides?
0:00:42 What are the traps?
0:00:43 All the real stuff.
0:00:46 And I love it because Dan was very honest.
0:00:48 He was very open about all those things.
0:00:50 And then at the end, he actually brainstormed
0:00:52 a couple of business ideas that he saw.
0:00:53 Because when you buy a business,
0:00:55 you look at hundreds of businesses.
0:00:58 He actually saw, has a couple of his favorite spaces
0:00:59 that he thinks people could go into.
0:01:01 And we brainstormed that at the end.
0:01:03 So this episode, I think, is going to be a lot of value
0:01:04 for anyone who’s ever thought about buying a business.
0:01:07 And then we have a fun brainstorm also at the end
0:01:08 for other businesses that people could check out.
0:01:09 All right.
0:01:10 Enjoy this episode with my buddy, Dan.
0:01:12 I feel like I can rule the world.
0:01:15 I know I could be what I want to.
0:01:18 I put my all in it like my days off.
0:01:19 On the road, let’s travel.
0:01:20 Never looking back.
0:01:21 This is a special one.
0:01:23 My buddy, Dan, from college is here.
0:01:26 And me and Dan, we’ve started a sushi restaurant together.
0:01:28 We’ve owned a pet mouse together.
0:01:30 We’ve tried to bring down the house at a casino together.
0:01:33 We have gone through many schemes and dreams.
0:01:36 And then Dan called me a couple of years ago.
0:01:39 And I convinced him to try to buy a business.
0:01:41 And then he has done it now.
0:01:41 He bought the business.
0:01:46 And he’s here to tell the story of that whole journey of going from a guy who never thought
0:01:49 that he would ever buy a business to now owning one of the most random businesses that you’ll
0:01:50 ever hear about.
0:01:53 And then I got Sam here, who doesn’t know Dan.
0:01:54 So it’s me and my college buddy.
0:01:56 And then Sam, you’re sort of the third wheel on this date.
0:01:57 Are you ready for this?
0:01:58 Yes.
0:01:59 Sign me up.
0:02:00 This isn’t the first time it’s happened.
0:02:04 But I’m going to ask questions that usually what I think is what the audience thinks.
0:02:06 So I’ll ask some questions.
0:02:07 Yeah, exactly.
0:02:07 All right.
0:02:09 So Sam, where do you want to start?
0:02:10 Just maybe first question.
0:02:11 Who the hell is this guy?
0:02:11 Who are you?
0:02:12 Yeah.
0:02:13 Who are you?
0:02:14 Sertner.
0:02:14 Dan Sertner.
0:02:17 So I wasn’t his roommate in college.
0:02:18 I was like the next door neighbor.
0:02:21 So for the Seinfeld references, I was like the Kramer.
0:02:23 I’d show up from time to time unannounced.
0:02:26 Live with this guy for four years.
0:02:27 So I go way back with Sean.
0:02:34 And by the way, Sam, the funniest part of meeting Dan the first day of college, I walk in and
0:02:38 Dan, the way he looks now, he looked exactly the same at age 18.
0:02:43 And so Dan is standing there and he used to wear a visor because he’s like, I don’t know,
0:02:44 cool guy from New Jersey.
0:02:45 Cool back in the day.
0:02:47 So I thought he was someone’s dad.
0:02:50 I was like, this guy with a visor, I saw him from the back and he knew everything.
0:02:51 He was like, laundry’s down there.
0:02:52 Yeah, you have to do this.
0:02:55 You know, your meal plan is not going to work until you activate it.
0:02:56 You have to go.
0:02:59 He knew everything about the campus and I was totally clueless.
0:03:01 I didn’t know anything about going to college.
0:03:06 And so he was, and he had a, he had a single, he was like one of the smart guys who like
0:03:09 requested having a single room, didn’t have to have a random roommate.
0:03:11 So Dan’s been ahead of the game for a long time.
0:03:12 And okay.
0:03:14 And what business did you end up buying, by the way?
0:03:17 So I bought a company called Fleet Packaging.
0:03:19 So it’s a packaging distributor.
0:03:25 So effectively we work with large retailers in the U.S. who need any sort of packaging.
0:03:29 So if, you know, you go to a mall, you know, you leave with one of those to-go bags.
0:03:31 We help companies buy those.
0:03:34 And then we help with warehousing distribution.
0:03:37 We make it easy to buy bags overseas.
0:03:41 So he is Dan the bag man now, which is all you really need to remember.
0:03:42 Dan the bag man.
0:03:46 But to get there, I think it’s a fun kind of journey, right?
0:03:48 So we’re going to skip the part about me and Dan in college.
0:03:49 And then the company we tried to start together.
0:03:50 We’re going to skip that for now.
0:03:51 We can go back there later.
0:03:58 I think the buying a business story starts where, in actually kind of a funny way.
0:04:04 So after we kind of try and fail at our first business, we go off and do different things.
0:04:05 I go move to Australia.
0:04:07 Dan moves to San Francisco.
0:04:08 And he goes and gets a job at Facebook.
0:04:11 A few months later, Dan calls me.
0:04:14 And he’s like, oh, yeah.
0:04:19 Sorry, I don’t know what he said, but he was like, yeah, I was just quickly just fixing a bug.
0:04:21 And I was like, fixing a bug?
0:04:22 What are you talking about?
0:04:24 And he’s like, yeah, I’m coding now.
0:04:25 He’s like, you’re coding?
0:04:29 He was like an economics, he was like our finance guy.
0:04:33 Why is our finance guy, what are you doing in code?
0:04:36 And basically what he did was, I don’t know if you know this, Dan, but I guess at Facebook,
0:04:40 they have just like a coding academy internally at Facebook.
0:04:42 Dan, is that how you describe it?
0:04:42 Like a boot camp?
0:04:48 Basically, any non-engineer could go like become an engineer just while on the job.
0:04:48 Is that how it works?
0:04:49 It’s not explicitly.
0:04:51 So it’s actually for the engineers when they show up.
0:04:54 So when you show up, and I actually think they just got rid of this like a few weeks ago.
0:04:55 So this might be old news.
0:05:00 But, you know, for the first 20 years of Facebook’s existence, you know, when you get a job as an
0:05:05 engineer at Facebook, you go to this eight-week crash course on how to be an awesome Facebook
0:05:06 engineer.
0:05:09 And it’s not typically open to non-engineers.
0:05:12 But, you know, why accept the status quo?
0:05:17 Uh, so I was actually one of the few people who early on was able to take classes there.
0:05:19 Um, so I started in fraud.
0:05:21 Do you have a good Farmville fraud story?
0:05:26 What, what does an average person like us not know about like fraud on a farm?
0:05:28 Like Farmville sounds like the stupidest thing in the world.
0:05:30 The fact that there’s even fraud going on.
0:05:33 It’s like, you know, am I stealing crops from Sam’s farm?
0:05:34 You are stealing crops.
0:05:39 Well, what you’re doing is you’re probably, you’re wanting to make a better farm than Sam,
0:05:40 but you don’t have time.
0:05:41 Is this for pride or money?
0:05:44 It’s, well, the fraudsters are doing it for money.
0:05:46 So the, the buyer is doing it for pride.
0:05:50 They’re like, I want a bigger farm than Sean, but I don’t have time to actually spend my time
0:05:51 playing the game.
0:05:53 So I’m going to go online to the black market, wherever that is.
0:05:59 And someone’s going to sell me whatever, 200 mushroom seeds to plant in my farm.
0:06:03 And they’ve procured those illegally because they’ve stolen someone’s credit card.
0:06:06 And there’s this whole world of Facebook games fraud that existed.
0:06:10 So, so Farmville was basically like, I don’t know, is this, is that the laundering part?
0:06:16 Basically the guy steals the credit card, uses it in Farmville, sells the Farmville stuff
0:06:19 to me, which looks harmless and he gets cash out the other side.
0:06:20 Precisely.
0:06:23 This is like a much less cooler version of the wire.
0:06:24 Pretty much.
0:06:28 Well, there was also like real money laundering too, where like people would make their own
0:06:30 app and then launder money through that.
0:06:32 That one was, was a little more intense.
0:06:36 Dude, Sam, one time I was like, dad, what are you even doing at Facebook, dude?
0:06:37 What do you mean fraud?
0:06:38 What is the Facebook fraud?
0:06:41 And he goes, have you ever opened up your timeline on Facebook?
0:06:42 Had you just seen a dick?
0:06:43 And I go, no.
0:06:44 He goes, you’re welcome.
0:06:45 No, that was it.
0:06:47 Oh no, that, that, that was the later iteration.
0:06:54 I moved on to community, uh, community tooling, but effectively preventing porn on Facebook.
0:06:56 So that, that was my go-to line.
0:06:58 And, uh, what’d you do after Facebook?
0:07:05 So after Facebook, um, I all of a sudden, you know, had transitioned into engineering.
0:07:07 I went to a startup, uh, called Namely.
0:07:12 Uh, it was a payroll company and I joined as an engineering manager, eventually worked my
0:07:14 way up to be CTO of that company.
0:07:19 You got to tell Sam the, uh, the brilliant, uh, so Dan’s, Dan’s actually a marketer at
0:07:19 heart.
0:07:25 He just never worked in marketing for some reason, but the way he, uh, framed himself in the job
0:07:26 market was amazing.
0:07:29 So he’s, he’s, he’s at Facebook, he becomes an engineer there, right?
0:07:32 So it’s not like he’s like MIT computer scientist, right?
0:07:37 Like when you think about like, who would be a Duke Spanish major, he’s a Duke Spanish major.
0:07:40 When he was at Duke, he kept, he kept taking this class called lemurs where he’s going to
0:07:42 the zoo and looking at lemurs all day.
0:07:43 Like Dan was, that’s what Dan was doing to do.
0:07:45 But then he trains himself to be an engineer.
0:07:50 And then when he goes into the job market, he has this brilliant way of framing himself so
0:07:53 that he ended up becoming a CTO of this like fast growing startup.
0:07:54 All right.
0:07:55 So I leave Facebook.
0:08:00 Um, as you will see, most of these things are schemes that Sean and I have done in our lives
0:08:04 that slowly elevated to good ideas, but I left Facebook, um, you know, basically the
0:08:08 best of the best at the time, like it was, you know, still is, you know, one of the best
0:08:09 technology companies.
0:08:12 Um, but I’d say, you know, I was, I was, I joined Facebook.
0:08:12 There were 3000 people.
0:08:14 I left when there were 60,000 people.
0:08:18 So I saw a lot of things and I’m not like old school Facebook rich.
0:08:18 I missed that.
0:08:20 And I wasn’t an engineer in the beginning.
0:08:21 So just want to clarify that.
0:08:25 But I left and I had, you know, kind of this weird amount of experience.
0:08:29 Like I had whatever, four or five years of coding experience, which is cool.
0:08:33 Maybe enough to make me like an eng one or eng two at a normal company.
0:08:38 Um, but you know, I had moved into management while I was at Facebook and the way that I
0:08:42 positioned it was, you know, I am a Facebook manager.
0:08:44 I know how things work at Facebook.
0:08:49 Let me come into your startup and let me whip your team in shape.
0:08:52 Let me help your team run like a Facebook engineering team.
0:08:54 All right.
0:08:59 So I’ve built a few companies that have made a few million dollars a year and I’ve built
0:09:02 two companies that have made tens of millions of dollars a year.
0:09:06 And so I have a little bit of experience launching, building, creating new things.
0:09:11 And I actually don’t come up with a lot of original ideas.
0:09:16 Instead, what I’m really, really good at, what my skill set is, is researching different
0:09:20 ideas, different gaps in the market in reverse engineering companies.
0:09:22 And I didn’t invent this, by the way, we had this guy, Brad Jacobs.
0:09:23 We talked about him on the podcast.
0:09:27 He started like four or five different publicly traded companies with tens of billions of
0:09:27 dollars each.
0:09:30 He actually is the one who I learned how to do this from.
0:09:35 And so with the team at HubSpot, we put together all of my research tactics, frameworks, techniques
0:09:40 on spotting different opportunities in the market, reverse engineering companies, and figuring
0:09:45 out exactly where opportunities are versus just coming up with a random silly idea and throwing
0:09:47 it against the wall and hoping that it sticks.
0:09:50 And so if you want to see my framework, you can check it out.
0:09:52 The link is below in the YouTube description.
0:09:58 But Sam, isn’t that great to just be like, how to rebrand yourself to be like, I’ll make
0:10:00 your engineering team run like a Facebook engineering team.
0:10:04 And if you’re a startup founder who’s, you know, sitting, like namely who’s in New York,
0:10:04 right?
0:10:09 That’s kind of aspirational to have somebody say that versus just, I have five years of
0:10:09 experience, right?
0:10:10 Yeah, man, that’s great.
0:10:11 Yeah.
0:10:12 It’s all about storytelling.
0:10:16 So the story is so far is like, you know, whatever, pretty good.
0:10:17 You’re stumbling into things.
0:10:18 Just a smart guy.
0:10:21 A smart guy with a smart guy with a dream and a little bit of scheme.
0:10:25 And now you’re in a position where you’re like, I’m at this startup.
0:10:27 We just raised a bunch of money at a good valuation.
0:10:29 I’m the CTO.
0:10:30 I got these shares.
0:10:30 I’m going to be rich.
0:10:31 Going to be rich.
0:10:32 What happens?
0:10:34 Didn’t get rich.
0:10:35 Second time.
0:10:36 Facebook.
0:10:36 Cool.
0:10:37 Really didn’t get rich.
0:10:38 This time didn’t get rich.
0:10:44 You know, so, you know, long story short, we found ourselves in a place where in order
0:10:48 to do what we needed to do, we needed to sell the company.
0:10:50 Or in order for the company to do what it needs to do next, we need to sell the company.
0:10:56 And it became very clear that this wasn’t going to be kind of this massive windfall that
0:10:57 I had been expecting.
0:10:59 Long story short, the company sells.
0:11:03 I find myself out of a job because as part of the transition, the acquiring company was
0:11:04 like, we have a CTO.
0:11:05 So we don’t need you.
0:11:11 So it’s like five years of hard work and kind of that dream of like, hey, we’re going
0:11:15 to take something and turn it into something else kind of goes away pretty quickly.
0:11:19 And that’s kind of where things start to get interesting because, you know, I have Sean on
0:11:20 speed dial.
0:11:23 So I had a fortuitous conversation with him that day.
0:11:25 Was he the one who inspired you to do this?
0:11:26 Or did you listen to the MFM?
0:11:28 Or how did that insight come to be?
0:11:36 Because like, it’s not normal for a Facebook, a Duke Facebook unicorn startup guy to buy business.
0:11:37 Correct.
0:11:41 So no, it was, it wasn’t even like a, hey, Sean, I need advice.
0:11:43 It was just like a random, like, let’s catch up.
0:11:44 Catch up call.
0:11:44 Yeah.
0:11:44 Yeah.
0:11:45 Let’s just catch up.
0:11:46 It’s been a while.
0:11:46 Wait.
0:11:48 So Sean, did you say like, I use this bag company?
0:11:50 No, no, no.
0:11:52 We’re on this college catch up call.
0:11:52 What’s going on with you?
0:11:53 What’s going on with you?
0:11:55 Dan tells us this story.
0:11:59 We got acquired, you know, there can only be one CTO.
0:12:00 They already have one.
0:12:01 So great.
0:12:01 I’m going to be.
0:12:04 And so he was just saying like, if you know any cool companies, let me know.
0:12:05 I’m going to be looking.
0:12:09 And then I kind of just mentioned to him, I was like, dude, Dan, you’re so like, like ever
0:12:11 since I’ve known you, you’ve been entrepreneurial.
0:12:15 And I think like Naval said this once, he goes, you know, other people sometimes see your gifts
0:12:17 easier than you can see them.
0:12:20 So he was saying for Naval, he also used to think I’m going to be a scientist.
0:12:21 And his mom was like, no, no, no.
0:12:22 You’re going to be a business person.
0:12:22 He’s like, what?
0:12:23 Oh, science.
0:12:24 Right.
0:12:27 And she’s like, oh, like every time we walk by a pizza shop, you’re telling me all the
0:12:30 three different things that they should be doing to run their business better.
0:12:31 Like you’re always doing that.
0:12:33 You’re naturally, you’re a natural fit for a business person.
0:12:34 Like that’s what you’re good at.
0:12:36 And so Dan, same thing.
0:12:39 Dan was always somebody who was like shooting his shot.
0:12:43 Like when our freshman year at Duke, all of a sudden there’s like this huge package and
0:12:46 Dan has like a lifetime supply of stride gum.
0:12:48 And I’m like, damn, why did you buy this much gum?
0:12:49 He said, I didn’t buy it.
0:12:50 I want it.
0:12:52 And he would always be entering contests.
0:12:59 I went, you know, one day with Dan, I go to, I go to work and Dan goes, hey, I got to get
0:12:59 off early.
0:13:00 I got an audition.
0:13:01 I’m like, what?
0:13:02 What are you doing?
0:13:05 He’s like, I’m going to try to get on wheel of fortune right now.
0:13:09 And so we, I went with them and we both got casted onto wheel of fortune.
0:13:10 Well, yeah, you, you leave out the point.
0:13:13 We like, we came, we were doing the sushi restaurant at the time.
0:13:16 So we like, we’re both like been working all day.
0:13:17 We have the bright green headbands.
0:13:20 Like we have not, like we came in with knives.
0:13:21 Like we had our sushi knives on our belt.
0:13:22 We come into this interview.
0:13:24 Like, no wonder we got cast.
0:13:25 It was like, this is good TV, man.
0:13:29 These clowns, but he was always doing this.
0:13:34 He was always like, he, early on, he started recording like product review videos for like,
0:13:36 I don’t know, two cents a pop or something like that.
0:13:39 Like he was just doing random shit all the time.
0:13:42 So it just seems strange to me that he was like going to get a corporate job.
0:13:44 Like this didn’t, it’s not like the vision I had.
0:13:46 So I was like, Dan, you ever started, thought about starting a business?
0:13:48 He’s like, ah, I don’t really have like a killer idea.
0:13:50 I feel like I need like a killer idea.
0:13:53 If I’m going to like put my whole life on the line for something, I go, oh, that’s fair.
0:13:57 I said, you know, I’ve been doing this podcast and it’s not something I was doing a lot
0:14:00 of, but like we’ve met a few people who go and buy businesses.
0:14:03 And it’s honestly seems like a little bit of a cheat code.
0:14:08 Like, um, as in the business, if you find a business, it’s already working, you don’t
0:14:09 have to come up with a genius idea.
0:14:10 It’s already validated.
0:14:11 It’s already working.
0:14:12 It’s got years of profitable history.
0:14:14 You can buy it at a fair price.
0:14:17 And then if you’re good at executing, like you can grow it over time.
0:14:20 And, you know, there’s retiring business owners, like there’s reasons these are up for sale.
0:14:22 And so I just kind of like planted that seed.
0:14:25 It’s like, would you, I don’t know, like consider that?
0:14:30 And Dan, I don’t know what your first reaction was, but I bet it was probably just like lukewarm.
0:14:30 I don’t know.
0:14:31 It was lukewarm.
0:14:35 I mean, it was two part one, you know, I, in the beginning I said, Sean, you know,
0:14:36 always knows what he’s talking about.
0:14:38 Seems to, seems to have his life figured out.
0:14:40 My first response, like Sean has no idea what he’s talking about.
0:14:41 He’s never bought a business before.
0:14:45 Uh, to this day, that is still my first, you know, my, my main thing.
0:14:46 It’s like, you don’t know, man.
0:14:50 Um, but the second one was like, but Sean is a pretty smart dude.
0:14:53 Like, and he, you know, if he’s saying this is a good idea, it’s a good idea.
0:14:58 But, you know, my real, my second reaction after that was with what money am I buying
0:14:59 this business?
0:15:02 Cause let’s recall, missed the boat on the Facebook riches, missed the boat on the namely
0:15:07 riches, but it actually turned out and, you know, we’ll, I’ll get into this more later.
0:15:09 Like you don’t need that much money to buy the business.
0:15:10 That’s the crazy part.
0:15:14 And I think it, it took a little bit of digging initially, um, to figure that out.
0:15:16 And I’ll, I’ll talk more about that in a minute.
0:15:18 Let’s do a quick Tarantino.
0:15:19 So let’s give the ending first.
0:15:26 So let’s say you, you buy, you, you ended up buying a bag business as in like, literally
0:15:31 if you go to a shopping store and you buy something and they have a custom branded bag when they
0:15:34 check out, like, there’s a decent chance I made that bag.
0:15:36 So it’s, it’s, it’s, it’s that big.
0:15:37 It’s that big.
0:15:40 I unfortunately can’t, I like, I’m under confidentiality agreements with most of my
0:15:44 clients, but if you go to a mall, there’s a pretty decent shot that you’re going to touch
0:15:44 one of my bags.
0:15:46 We’re going to get it out of you somehow.
0:15:48 We’re going to, we’re going to get it out of you.
0:15:49 I mean, I’ll tell you after.
0:15:51 I’m not bound by any confidence.
0:15:53 Maybe I can say some things.
0:15:53 All right.
0:15:55 So, but, but Dan, let’s give the headline.
0:15:57 So you buy a business.
0:16:00 Let’s, we’re going to, we’re going to work backwards for like, cause it’s going to sound
0:16:00 cool.
0:16:02 And then we’re gonna be like, here’s the crazy journey of how I got there.
0:16:02 All right.
0:16:04 So how much did you buy that business for?
0:16:07 I bought the business for $3.4 million.
0:16:10 So he buys a bag business for $3.4 million.
0:16:14 That business had been around for how long and about how much money was it making when you
0:16:14 bought it?
0:16:14 Yep.
0:16:17 So it was about 15 years old.
0:16:23 Uh, the business had been making anywhere from, and it was right after COVID.
0:16:29 So it was a weird few years, but it had been making anywhere from eight to $11 million a
0:16:29 year.
0:16:36 in revenue and it was doing on average about $800,000, um, in profit.
0:16:38 And what’s the URL?
0:16:39 What’s the URL?
0:16:41 Fleet, fleet packaging.com.
0:16:42 Best bags in the business.
0:16:43 Best bags.
0:16:45 Do you have like a, do you have like a slogan yet?
0:16:47 So we’re, we’re working.
0:16:50 Oh, maybe we could come up with it later on the brainstorm later.
0:16:56 It’s like, uh, no, we’re working on a rethink your packaging partner or rethink packaging
0:16:57 partnership.
0:17:00 Cause what we’re trying to do is, you know, there’s a lot of people that sell packaging,
0:17:02 but what we’re trying to do is just do it better than everybody.
0:17:07 Just kind of go that extra level of like, let’s make your life easy as a packaging.
0:17:07 So Dan explain.
0:17:12 So you said you bought this business this about 18 months ago, it was doing 11 million in
0:17:17 revenue, about 800,000 in profit that the seller, that the, the guy who owned it was able to,
0:17:18 that was his living.
0:17:20 He’s making $800,000 a year.
0:17:23 And now, uh, last year, how much revenue did it do?
0:17:24 You grew the business.
0:17:26 Last year, uh, we had a record year.
0:17:33 I think we did, we did about 13, 8 million, uh, in, that was, that was pretty easy to
0:17:34 get the information out of them.
0:17:36 Didn’t he just say, he can’t, I just thought I can’t share a client.
0:17:38 I just thought I can’t share client names.
0:17:38 I’ll share everything else.
0:17:43 How much money did you put down to buy this business?
0:17:45 Cause again, you talked about like, dude, I didn’t, most people assume if I’m going to
0:17:47 buy a business for three and a half million dollars, cool.
0:17:49 Where am I going to get three and a half million dollars from?
0:17:49 Yep.
0:17:51 And really quick, how much profit does it do now on the 13?
0:17:56 On the 13, we did like $1.7 million profit last year.
0:17:58 So you, you, you’ve creamed it.
0:17:59 I mean, you crushed it.
0:18:00 You, you, yeah.
0:18:03 Last year was, I killed it from the, suck on that Zuckerberg.
0:18:04 I don’t need you anymore.
0:18:05 There you go, man.
0:18:05 Got it.
0:18:10 So you bought a business that made 800, uh, K and profit to, uh, you’ve more than doubled
0:18:10 it.
0:18:11 Yeah.
0:18:15 And there were lots of, and you know, was it every, you know, things that I did that
0:18:15 doubled it.
0:18:16 Certainly that was part of it.
0:18:21 A lot of it was getting out of COVID and figuring out how we position it.
0:18:25 Um, and it turned out, you know, the business had not kind of reached its potential yet.
0:18:28 And back to what Sean said, you bought it for 3 million or so.
0:18:29 Where’d the money come from?
0:18:30 3.4 million.
0:18:32 So we did it through an SBA loan.
0:18:38 Um, and we ended up putting 200,000 down.
0:18:41 I say we, cause I say me and my wife, cause we put our house.
0:18:41 On the line.
0:18:43 Like we went, we went all in on this business.
0:18:47 Uh, we spent, uh, 150,000, uh, from our savings.
0:18:50 And then my wife took a loan off her 401k for the other 50.
0:18:55 Um, so that was the, again, house on the line, 401k on the line.
0:18:55 Like this was it.
0:19:00 Was she just down from day one to do this or what did you, did it take a lot of persuasion?
0:19:03 How did you position this with the wife to, to make that happen?
0:19:04 She was down.
0:19:10 I mean, she has a similar kind of philosophy on, you know, we should do something that’s going
0:19:12 to be kind of a step change in where we’re at.
0:19:16 You know, if we’re going to bet on someone, we should bet on us.
0:19:20 And, you know, she knows, Sean, she knows what we’ve been up to for the past, you know,
0:19:21 however long.
0:19:23 She knows she married a stallion who just needed to run.
0:19:27 So this wasn’t like a, oh my goodness, where did this idea come from?
0:19:28 This guy’s crazy.
0:19:30 It’s like, no, that, that sounds about right.
0:19:31 That this is what you’re doing.
0:19:32 How much of a loan have you paid back now?
0:19:33 But, but the same.
0:19:36 So he put, he put down to 200 K, he got an SBA loan.
0:19:39 And then he had a seller note also, which I think is a key part of this.
0:19:42 So do you want to explain where the rest of the money came from?
0:19:44 So 200,000 from you, where’d the other 3.2 come from?
0:19:45 Sure.
0:19:47 So 1.8 came from the bank.
0:19:50 200,000 came from me.
0:19:56 And then the other 1.4 came from the seller, which effectively we said, hey, like, you know,
0:20:00 we’re not going to pay this upfront over the next five years, assuming the business continues
0:20:04 to do well, you know, we’ll pay this second part of the business, or sorry, second part
0:20:04 of the debt.
0:20:09 So it’s a forgivable seller note, which means effectively, if the business doesn’t do what
0:20:13 it’s supposed to do, that debt’s forgiven on any given year.
0:20:16 So that was part of what made me feel better about the deal.
0:20:19 You know, because you run all these scenarios when you first buy it, it’s like, all right,
0:20:21 we’re going to put our life savings and house on the line.
0:20:23 What happens if things go bad?
0:20:28 And it’s like, all right, at least half of this debt, if things go bad, we’ll go away.
0:20:29 Why’d they want to sell the company?
0:20:31 That seems like a…
0:20:31 He was retiring.
0:20:32 He just wanted out.
0:20:33 He wanted out.
0:20:39 And that’s kind of the, what I loved about kind of this world, once Sean kind of turned me
0:20:45 on to it is, like, the baby boomers are retiring, like, the past few years, the next 10 years,
0:20:46 I forget what the window is.
0:20:49 But, like, a lot of them don’t have kids, or they have kids that don’t want it.
0:20:50 This guy had three kids.
0:20:51 None of the kids wanted the business.
0:20:55 Dan had told me, he goes, anytime I ran into a business that looked really cool, and the
0:20:59 guy who owned it was 26, he’s like, I don’t want to buy this off a 26-year-old.
0:21:00 Why are you selling this business?
0:21:02 He’s like, I want to buy from a boomer.
0:21:03 That is my goal.
0:21:06 I want to buy from a guy that wants to move to Florida and play golf.
0:21:11 Like, that to me is, like, this business has been great to me, and now I’m done.
0:21:12 I’ve made my money.
0:21:12 I’m ready to go.
0:21:14 Like, that’s the type of business I want.
0:21:17 And he would probably still answer your phone calls when you had questions.
0:21:18 Exactly.
0:21:21 Like, and, you know, spoiler alert, I found, like, the nicest buyer in the history of the
0:21:21 world.
0:21:23 Like, I got incredibly lucky.
0:21:28 Cutting your sales cycle in half sounds pretty impossible, but that’s exactly what Sandler
0:21:30 training did with HubSpot.
0:21:36 They used Breeze, HubSpot’s AI tools, to tailor every customer interaction without losing
0:21:37 their personal touch.
0:21:39 And the results were incredible.
0:21:42 Click-through rates jumped 25%.
0:21:44 Qualified leads quadrupled.
0:21:47 And people spent three times longer on their landing pages.
0:21:52 Go to HubSpot.com to see how Breeze can help your business grow.
0:21:56 So, to me, there’s two kind of good things out of this episode.
0:21:58 One, I get to hang out with my best butt.
0:21:58 All right.
0:22:02 The second would be for other people who are listening to this, that they hear what
0:22:05 I’ll call, like, the real-life take of this.
0:22:06 Because Dan’s not selling courses.
0:22:08 He’s not telling you, you should do this.
0:22:13 He’s not, like, a business-buying guru who’s got a book and a mastermind.
0:22:14 None of that.
0:22:17 I think he’s got good opinions and, like, a real story of, like, all right, where do you
0:22:17 start?
0:22:19 So, to me, this episode would be interesting.
0:22:22 Because if I’m interested in buying a business, I kind of want to know, what is it like from
0:22:29 a person who’s smart but came in with no experience, no money, and no, like, kind of clue where
0:22:29 to start?
0:22:32 Because even though I was like, hey, you should do this, it’s not like I was there helping
0:22:33 you every day.
0:22:37 Or, you know, you were wandering around figuring this out, you know, by yourself.
0:22:41 So, he told me this, I called Dan, like, last week to be like, all right, what do you want
0:22:41 to talk about?
0:22:42 He had said something great.
0:22:47 He goes, all right, I started, and I was high excitement and low knowledge.
0:22:49 So, I bought the book.
0:22:50 Oh, you ever heard this framework?
0:22:51 Like, D1 through 4.
0:22:58 It’s like, you start high excitement, low knowledge, and then you become, you know, you kind of go
0:23:00 up in knowledge and down in excitement.
0:23:05 You kind of enter into the pit of despair, which is low knowledge, low excitement, and then
0:23:09 you learn more, and you slowly kind of get out of this pit.
0:23:11 His quote was, this is great.
0:23:12 It’s going to be great.
0:23:13 This is going to be easy.
0:23:14 I’m going to be rich.
0:23:18 And he goes, then I started, and I realized, this is not easy.
0:23:21 This is not going great, and I might not be rich.
0:23:26 And so, do you want to talk about, like, how you actually, like, what’d you do?
0:23:28 Yeah, first, maybe 100 days, what’d you do?
0:23:30 Well, first, how’d you find the company?
0:23:33 So, I ended up finding the company through a broker.
0:23:34 Got it.
0:23:38 So, a lot of what I started to do, and I’ll go back to the beginning in a second, but,
0:23:41 you know, there’s a ton of business marketplaces out there.
0:23:44 Acquire.com, probably the most known for tech.
0:23:48 Biz Buy Sell, for kind of more of those main street businesses.
0:23:52 But there are these brokers that effectively represent buyers and kind of put together these
0:23:54 packets of, like, hey, I have this bag business.
0:23:55 Here’s what it does.
0:23:59 And most brokers, I was telling this to Sean, hate searchers.
0:24:03 Because they just assume, like, you know, people are, you know, they just saw a Cody
0:24:04 Sanchez video.
0:24:06 They’re about to buy a business.
0:24:06 Like, they’re pumped.
0:24:09 You know, this morning, they saw the video, and now they’re ready to buy the business.
0:24:10 So, they reach out to the broker.
0:24:13 This one broker actually, like, understood.
0:24:14 He’s like, I get it.
0:24:16 I understand this jump from tech to this.
0:24:20 And then, like, several months later, he calls me back, which is rare.
0:24:21 Like, most people didn’t.
0:24:22 He’s like, I got this business.
0:24:24 You know, check this guy out.
0:24:26 So, it ended up happening through a broker.
0:24:28 And to go back to Sean’s thing, the first 100 days.
0:24:31 So, the first thing, you know, hate Google.
0:24:33 Started reading books.
0:24:34 Started watching videos.
0:24:36 Started to just learn, like, what is a search fund?
0:24:38 That was something that, like, Sean didn’t use that word.
0:24:42 But eventually, I found it, where effectively, there’s kind of a few models to do this.
0:24:49 One of them is kind of a search fund where someone will actually, you know, you get someone to finance you looking for a business.
0:24:53 And then, you take a small piece of it, and they effectively own most of it.
0:25:00 Like, there’s lots of courses now in business schools, you know, teaching entrepreneurship through acquisition.
0:25:02 It’s kind of the fancy way of talking about it.
0:25:06 And then, there’s kind of, like, this other model of, you know, you just do it yourself.
0:25:10 You know, you effectively bootstrap it, find the money yourself, do it through an SBA loan.
0:25:13 So, first, it was kind of, like, educating myself on the different models.
0:25:17 You know, I thought a little bit about getting the funding.
0:25:21 But at the end of the day, it’s like, no, if I’m going to do this, like, it’s going to be me.
0:25:23 I don’t want to answer to anybody.
0:25:25 And then, it was really, like, finding this community.
0:25:28 And there’s a really cool community in search.
0:25:32 It’s been growing pretty steadily over the past, you know, call it five-ish years, I think.
0:25:36 But there’s a website called searchfunder.com.
0:25:39 Like, those were my people during the time.
0:25:41 Because search is, like, it’s a very lonely process.
0:25:44 When you guys say, look at 100, what does that mean?
0:25:46 Does that mean browse a website with 100?
0:25:48 Or does that mean actually due diligence on 100?
0:25:49 So, it’s something in the middle.
0:25:51 So, you basically see kind of, like, the headline on the website.
0:25:54 It’s, like, laundromat for sale, you know, $4 million.
0:25:58 Like, usually, you’ll get, like, the flashy headline and not much more information.
0:26:01 Then, you kind of got to double-click in and request information.
0:26:03 And so, you usually sign kind of an NDA.
0:26:08 And you’ll get something called a SIM or a confidential information memorandum.
0:26:10 So, it’s kind of look at, like, 100 of those.
0:26:13 Because that’s really going to show you, like, here’s the finances of the business.
0:26:15 Like, here’s kind of the story that they’re putting together.
0:26:18 It’s like a summary of the business today.
0:26:22 And so, that’s the one where it’s, like, you know, I think a mistake is people think,
0:26:26 like, you fall in love with the first few businesses you see.
0:26:27 Like, oh, this is great.
0:26:28 Yeah, I can buy this.
0:26:32 And you kind of really, like, I mean, you’re just like a teenager that just went through puberty.
0:26:35 And you just fall in love with the first, you know, the first set you see.
0:26:37 And you’re like, well, no, that’s probably not the right way to do this.
0:26:43 Let me actually just plan that it’s probably going to take me over 100 to even find one good one.
0:26:46 And let me have that mental expectation.
0:26:50 And let me start counting how many I’m looking at and not just, like, being desperate to find,
0:26:51 you know, the one right away.
0:26:54 And then you’re saying, like, you know, you’re looking at an HVAC company.
0:26:55 You’re like, I don’t know what HVAC is.
0:26:57 You’re looking at the financials.
0:26:58 You’re like, I don’t know which number to look at.
0:26:59 It’s overwhelming.
0:27:04 But you kind of got to go through those reps and figure it out before you even have any idea
0:27:04 of what you’re looking at.
0:27:09 I kind of liken it to looking for a house because I think that’s a, you know, or an apartment
0:27:12 even because that’s something that most everyone goes through, even if they’re renting.
0:27:16 You know, usually the first time you see it, you have nothing to compare it to.
0:27:22 So you end up kind of getting to a place where you can spot the winners from the losers faster.
0:27:26 But like Sean said, when I first started, it was like super exciting because it’s like
0:27:27 the ultimate career fair.
0:27:28 It’s like, oh, cool.
0:27:30 I’m going to be a landscaper.
0:27:35 I’m going to be, you know, I’m going to own, you know, a scrap metal recycling center.
0:27:37 It’s like you just get so excited.
0:27:42 And again, the business brokers, especially like they make these things sound amazing.
0:27:43 It’s like, of course I want to buy this business.
0:27:46 So what were some of the cool businesses you saw?
0:27:49 Like what’s one, what, give us an example of one that you kind of like, but you didn’t
0:27:50 end up pulling the trigger.
0:27:56 So my favorite example is I got pretty close to buying a sausage company.
0:28:00 It did about like $10 million a year in sausage.
0:28:02 You know, my favorite, my favorite anecdote on this one.
0:28:04 Sam is also a fellow sausage man, actually.
0:28:06 I know, I know that.
0:28:09 If we held an event, it might also be a sausage fest.
0:28:09 We don’t know.
0:28:13 You’re, you’re almost a purveyor of fine wieners.
0:28:13 That could have been.
0:28:14 I could have been.
0:28:15 And still maybe.
0:28:18 So you went, but you didn’t just like look at, you didn’t just read the same.
0:28:19 You’re like touring.
0:28:19 No, I went there.
0:28:24 I went to this, I went to this, I’m like walking through, like pretending to know what I’m talking
0:28:24 about.
0:28:26 Like, you know, how hot does this oven get?
0:28:28 Like, it’s like, that’s the biggest thing.
0:28:29 You gotta like figure out what questions to ask.
0:28:30 This is a really common.
0:28:33 Have you guys heard of the secretary problem?
0:28:33 Yeah.
0:28:35 Somebody, explain it.
0:28:36 Somebody told us that on the pod.
0:28:40 So I used it when I was looking for an apartment the other day, and it was actually pretty
0:28:40 magical.
0:28:45 And so the thing is, is that, so I’m repeating from memory, so I might get it wrong.
0:28:48 But basically, if you have, it started with the secretary.
0:28:55 If you’re hiring a secretary, you’d want to interview, let’s say you had 10 interviews lined
0:28:55 up.
0:29:02 You wouldn’t want to pick who to hire until you saw at least 37% of the applicant pool.
0:29:09 And so for example, if you saw 10, or if you had 10 to see 10 interviews, you’d want to go
0:29:10 through the first four.
0:29:15 And then after the first four, you would select the first person who you met that was of equal
0:29:19 value to or close to the highest person you saw in the first four.
0:29:19 Does that make sense?
0:29:26 So if you see an apartment, let’s say you go and see 100 of them, the first 37, you don’t
0:29:26 do.
0:29:32 But the next one after the first 37 that you see that is as good as the best one that you
0:29:34 previously saw, that’s the one you select.
0:29:36 And that’s called the secretary problem.
0:29:38 So you can’t go back and buy that first one?
0:29:38 You can’t go back.
0:29:39 You cannot go back.
0:29:44 But you need to spend time exploring the first third to see what all is out there.
0:29:46 That’s fair.
0:29:48 I bought the house that I found on the first day of touring.
0:29:51 So I just want to make sure I didn’t violate the secretary problem.
0:29:51 But I did.
0:29:52 You did.
0:29:54 But you didn’t with the business.
0:29:55 I didn’t with the business.
0:30:00 And so of the 100 or so that you saw, were there any that looking back, you’re like,
0:30:00 that was a winner?
0:30:09 No, it wasn’t until we saw and, you know, there were a few close ones where like, I think
0:30:12 I was under LOI, maybe three or four times.
0:30:16 For example, that sausage company had like one huge client.
0:30:17 They had one huge client.
0:30:18 And no contract.
0:30:18 No contract.
0:30:20 But you thought they were amazing.
0:30:24 That’s kind of my point is you thought of some were so good that you’re under LOI.
0:30:28 Yeah, but then you get, you know, you’re under LOI and then you get, you know, the full amount
0:30:30 of information and then you very quickly see like.
0:30:34 LOIs are also in this business is like a very, it’s kind of like.
0:30:38 Agreeing to a first date more than it is an engagement.
0:30:40 People, people make LOIs.
0:30:42 They’ll have three LOIs out at the same time.
0:30:44 And it just says it’s an agreement.
0:30:46 We agree to look more, right?
0:30:49 We agree to take this seriously to show you some interest here.
0:30:53 But it’s not like, it’s not binding in the way that you would, that you think when you
0:30:54 first go into this.
0:30:57 Or if you’re the seller, you’re like, oh, we got an LOI.
0:30:58 It’s like, well, hang on.
0:31:03 I would bet the LOI to close ratio is probably, I have no idea, but I would guess it’s like
0:31:07 under 20%, you know, in terms of just LOIs received during a process.
0:31:11 Yeah, because, you know, you’re not giving the, a lot of the information you’re not even
0:31:13 getting until that point anyway.
0:31:15 So, you know, you’re checking all the boxes up until there.
0:31:16 Like, this seems good.
0:31:18 I think this is going to be good.
0:31:22 And then, you know, you get their financials or you go tour it and you find kind of that,
0:31:24 oh, this is why, you know, you’re selling it.
0:31:26 Or this is why it hasn’t been bought yet.
0:31:27 That’s another thing.
0:31:29 One thing you did that, that was great.
0:31:33 I think, I think I kind of was like, the one piece of advice I think I was pushing on you
0:31:36 was like, hey, write a memo for every one of these deals that you like.
0:31:40 Basically, he would, he would write me like a one page notion memo that was basically
0:31:41 like, what is the business?
0:31:44 Why does it, you know, like how, like, what is the current state of it?
0:31:46 Just speak in numbers only, right?
0:31:47 Why is the seller selling?
0:31:50 You know, what’s the one reason that you would buy this business?
0:31:52 What’s the one reason you would not buy this business?
0:31:56 You know, what are the kind of, and you would just go there and you would write these memos.
0:32:01 And I feel like that was key because I remember you would call, you were like excited about,
0:32:04 let’s say, like, I don’t know, what was an example of one you were excited about that?
0:32:06 But then after the memo, we talked it, we beat it up.
0:32:08 And then we were like, no, this is not worth doing.
0:32:10 It was a Clover app.
0:32:11 I remember the conversation.
0:32:15 So basically, like, so the Clover point of sale system, like when you’re like checking
0:32:18 out of a restaurant, it’s like, you know, they flip it and you’re like, what’s your tip?
0:32:20 This guy made different apps for it.
0:32:23 So like, you know, like when you round up for charity, for instance, I think that was one
0:32:24 of his apps.
0:32:26 So it was actually pretty interesting.
0:32:28 It was like, hey, Clover’s a growing super niche.
0:32:29 Yeah, very niche.
0:32:31 But he owned 20 of these things.
0:32:34 It was, you know, more up my alley in terms of tech.
0:32:38 But, you know, when I actually hashed it out with Sean, you know, it was kind of like at
0:32:42 the end of the day, it was very niche, very small.
0:32:47 And there wasn’t necessarily a good path to grow that business.
0:32:51 It was just something that like was interesting now, but probably didn’t have the longevity
0:32:54 of, hey, you’re, you’re about to swing.
0:32:57 You know, this is going to, that’s another thing you said to me, Sean, you were like, this
0:33:02 is going to be, you know, don’t, don’t listen to all those like blogs out there of like, yeah,
0:33:03 you’re going to buy this, flip it.
0:33:05 And the next year you’re going to buy two more businesses.
0:33:08 Like, no, you’re probably going to be working in this business for, for a little bit of time.
0:33:10 Make sure it’s good.
0:33:11 Make sure it’s lasting.
0:33:15 And I think that first one was an example of like, for sure, if I was going to buy 10
0:33:16 businesses, maybe that was one of them.
0:33:18 But like, that’s not the game we’re playing right now.
0:33:20 A couple other, I thought like key points.
0:33:23 One was don’t buy a job.
0:33:27 So I think early on when you go to search, you see big price tags and you get scared a
0:33:29 little bit because it’s like, how am I going to afford this?
0:33:31 And like, this is too risky.
0:33:36 And so you gravitate towards things that feel like kind of safer and more achievable, but
0:33:39 it’s actually a bit of a trap because it’s like, yeah, this is safer, more achievable.
0:33:41 It nets a hundred grand a year of profit.
0:33:47 I can buy it for only, you know, he only wants 180 or something like that.
0:33:50 And so you get excited because it seems cheap.
0:33:54 But the problem is it’s still going to take all of your time to own, to buy this business,
0:33:55 to run this business.
0:34:00 And you basically bought a job versus the thing you bought, which was like $11 million in
0:34:03 revenue, doing a million dollars a year, almost a profit.
0:34:04 Real dollars.
0:34:04 Yeah.
0:34:05 That’s not a job anymore.
0:34:06 Now that’s like an asset.
0:34:07 That’s like a real business.
0:34:10 And yes, it took more risk and it took more time to find a good one of those, but it was
0:34:11 like well worth it.
0:34:13 So I feel like that was another kind of like key learning.
0:34:17 I think we both had during this process, like became blatantly obvious.
0:34:17 Yeah.
0:34:22 Not rushing the search and you want to trust me, like call it like five months in, you know,
0:34:25 when you really hit this pit of despair of like, I’m never going to find anything.
0:34:30 Everything under $5 million is trash, you know, private equity scooping up, scooping up all
0:34:34 the good stuff and anything that’s left, you know, under this point, like there’s a reason
0:34:35 it’s there.
0:34:38 You kind of just get to this place like you’re never going to find it.
0:34:42 It’s easy to want to just grab one and say like, those things are fine.
0:34:45 Like we’ll kind of ignore those, those holes in the business.
0:34:49 I’ve made so many bad decisions, like most all bad decisions that I’ve made.
0:34:54 It was, I could like, it’s like I had principles leading into this and I got fatigued and I didn’t
0:34:55 stick to my principles.
0:34:57 Yeah, exactly.
0:35:01 There was one that was like an SEO business as it was actually like a good business, but
0:35:03 what was the situation with that one?
0:35:03 Yeah.
0:35:07 So that one was, it was like a competitor for like a SEM rush.
0:35:09 You know, it was a solid business.
0:35:14 It made, I think it did like a million, it was like half a million to a million a year in
0:35:14 profit.
0:35:16 Like it was, it was a nice business.
0:35:22 But this was right as, you know, AI was really starting to becoming kind of the center point
0:35:25 of the conversation, especially as it relates to search.
0:35:28 I helped a friend buy a company that was in the SEO space.
0:35:33 And anytime an SEO company wants to sell, it’s sort of like at a time, do you guys remember
0:35:34 Bitcoin miners?
0:35:40 like the, it’s like, so if these are so good, why are you selling a money printer?
0:35:41 Like a literal money printer.
0:35:41 Yeah.
0:35:47 And SEO is sort of the same way where it’s like, wait, so if you’re just getting like a
0:35:50 fountain of traffic and customers, why would you want to get rid of this?
0:35:51 Well, that’s the same thing.
0:35:55 It’s like when you meet a 30 year old selling a business, it’s like, you know, why?
0:35:56 And that, that was exactly that.
0:36:00 And I think going into, you know, let’s call it the AI headwinds.
0:36:03 It was like, there’s a lot of reasons this business might be completely different.
0:36:08 And I think Sean said, like, unless you feel like you’re the best suited to take this SEO
0:36:13 company into the, you know, the next five years, there’s more risk than upside.
0:36:14 And it’s like, that is not my background.
0:36:16 You know, that’s not the game I want to play.
0:36:22 And funny enough, I was actually in LOI with this SEO company when I found fleet.
0:36:25 And I, I was, I almost wrote off fleet.
0:36:26 Like it seemed really interesting.
0:36:30 And I like, there was some part of me that, you know, didn’t have me rejected, even though
0:36:33 I was kind of in very late stages with this other company.
0:36:35 Thank goodness.
0:36:36 I, you know, I made that pivot.
0:36:38 So let’s tell the story.
0:36:41 So you, you, the broker calls you, says, check out this business.
0:36:42 What happens from there?
0:36:48 So from there, um, I think this was before I was under LOI, but, you know, effectively fleet
0:36:52 looked very different than a lot of these other companies.
0:36:55 Like the finances at first glance, like we’re super clean.
0:36:59 Um, you know, the story made a lot of sense.
0:37:03 Like a lot of these Sims and a lot of these brokers, like, you know, yes, they’re padding
0:37:08 things and trying to make things sellable, but, um, there was always like a blatant
0:37:11 gotcha in a lot of these, like, let’s take the sausage example.
0:37:13 They’re like, Oh yeah, this makes half a million a year.
0:37:13 Oh.
0:37:17 And by the way, he also makes another 400,000 in cash.
0:37:19 Um, but we don’t pay tax on that.
0:37:20 So like, you can’t see that anywhere.
0:37:23 And it’s like, a part of me is like, that’s kind of cool.
0:37:27 It also sounds a little dangerous, like selling $400,000 worth of sausage on the side of the
0:37:27 road.
0:37:32 Um, but like, there’s always something like that, uh, with a lot of these businesses, but,
0:37:34 but fleet was like very clean.
0:37:36 Like everything was kind of buttoned up.
0:37:40 The story was really tight and it kind of checked all the boxes of like, this is a recurring business.
0:37:43 Like people are rebuying the bags several times a year.
0:37:45 They have these amazing clients.
0:37:49 They have these amazing factories that like, it looked very different than, than these other,
0:37:50 than these other companies.
0:37:51 It sort of sounds like Denner Mifflin of bags.
0:37:52 Exactly.
0:37:52 Yeah, exactly.
0:37:54 I am Michael Scott.
0:37:59 Um, you know, it’s, it’s, it’s a, it’s a necessity that these companies need.
0:38:00 Um.
0:38:01 So what’d you do?
0:38:02 You go, you meet the guy?
0:38:04 I was actually going to say no to the broker.
0:38:08 Um, because again, this SEO thing was heating up.
0:38:11 I hadn’t had my, you know, come to terms talk with Sean yet.
0:38:12 He’s like, Hey, the seller wants to meet you.
0:38:14 You know, let’s all go out for lunch.
0:38:16 Um, I was like, all right.
0:38:17 I’m like free lunch.
0:38:17 That’s cool.
0:38:20 Um, so we meet for lunch.
0:38:24 Um, and like my goal was like, you know, entertain this business.
0:38:26 But at the end of the day, like I’m under LOI.
0:38:28 So I really shouldn’t, uh, free lunch.
0:38:28 Yeah.
0:38:29 Free lunch.
0:38:30 I should, I should break up with him.
0:38:36 After this lunch, but we start talking and like, you know, just had this instant connection
0:38:36 with this guy.
0:38:38 Like he was the most standup guy.
0:38:43 Uh, I had met in, in the past few months, especially when it comes to like the business ownership,
0:38:49 you know, he wasn’t trying to, um, you know, pull something over my eyes.
0:38:50 Like he wasn’t trying to spin the story.
0:38:51 He’s like, this is the story.
0:38:54 Like a lot of people like, you know, put lipstick on a pig.
0:38:58 Uh, this guy was like selling a rabbit or selling a different animal.
0:39:01 Like it wasn’t like, he kind of said it as it is.
0:39:02 And it was, it was very refreshing.
0:39:07 Um, and like in that moment, it was like, I kind of abandoned the, like, I’m going to break
0:39:08 up with you.
0:39:09 And like, we kind of went the other way.
0:39:11 We started talking about like, okay, well, how are we going to work together in the transition?
0:39:12 And how are we going to grow this?
0:39:19 Um, and then my favorite part is they, uh, you know, they asked if we wanted any dessert
0:39:22 and he’s like, oh, do you want to share a tartufo?
0:39:24 And I was like, yes.
0:39:26 And we shared a tartufo.
0:39:30 I don’t think I’ve shared dessert with my wife ever, but I shared a tartufo with this guy.
0:39:35 And like, I remember calling my wife after and I was like, you know, I didn’t do what I was
0:39:36 supposed to do.
0:39:39 Like I was supposed to break up with this company, but like we shared a tartufo and
0:39:41 like, I think we’re going to buy a bag business now.
0:39:44 Um, and it was just like this, like complete 180.
0:39:47 Um, but in hindsight, literal Michael Scott, right?
0:39:48 Isn’t there even a scene at Chili’s?
0:39:49 That’s like exactly this.
0:39:50 Yeah, exactly.
0:39:53 It would be like a lava cake or something like that.
0:39:55 A tartufo.
0:39:59 A tartufo is very, I don’t, I don’t think that was my first tartufo I’ve ever had too.
0:40:01 Who knows what a tartufo is?
0:40:02 I had to Google it.
0:40:05 You’re, you’re my type of people, Dan.
0:40:06 I’ll tell you that.
0:40:07 There we go.
0:40:11 And then, you know, from there, I, you know, I broke it off with the SEO guy.
0:40:13 You know, we ended up like diligence took a while.
0:40:17 That’s like the second part was like, okay, like now you’re committed to buying a business.
0:40:19 How are we going to do this now?
0:40:22 Um, and like, it actually took four months.
0:40:26 Um, cause again, like I’m signing my house away, signing my life savings away.
0:40:30 Um, like I needed to be damn sure that this thing was going to be solid before I did that.
0:40:34 Um, and then like the world of search, like took on kind of like that next chapter of like,
0:40:38 all right, well, how do you actually like figure out, you know, are the assumptions you’ve made
0:40:43 in this quick few week period of dating, like, are they correct?
0:40:46 And we kind of transitioned to that, uh, that phase of the process.
0:40:52 What, uh, what, uh, what, what was wrong and what was right for your assumptions and what
0:40:55 was the difference in his asking versus the paying?
0:41:00 So we actually negotiated the price of it pretty early.
0:41:05 Like that part actually happened during the LOI for the most part, or like 99% of it.
0:41:09 And there were actually five bidders, which I thought was a lie.
0:41:15 Like I kind of assumed this was, um, them bluffing because they were like, yeah, we got four
0:41:18 people in the packaging industry that want to buy and then there’s you.
0:41:21 So, you know, it’s going to be competitive, blah, blah, blah.
0:41:24 But again, I just figured that was a tactic to try to drive the price up.
0:41:27 Um, but to this day, the, you know, the seller maintains that that was the case.
0:41:30 So at this point I have no reason not to believe it.
0:41:36 We ended up taking, I think they wanted three, five or three, six for the company.
0:41:38 So we ended up, uh, agreeing to three, four.
0:41:42 The part that took the most negotiation was that forgivable seller note.
0:41:50 Uh, so the biggest kind of, uh, red flag in the business, uh, was that one client was over
0:41:52 50% of their revenue.
0:41:57 So my biggest fear, rightfully so was, you know, everything’s great today.
0:41:59 They’ve been a client for 15 years.
0:42:03 You know, what happens if next year they leave all of a sudden is a very different business.
0:42:09 So what we did was, you know, kind of ran the numbers of the bank and said, Hey, in order
0:42:13 for us to finance this, like this is, this is the number that we’d have to have if for whatever
0:42:14 reason we lost that client.
0:42:20 So that part was probably the, you know, the most intense of the negotiations, but for better
0:42:23 or worse, like most of what he said ended up being true.
0:42:24 Like there weren’t any of these.
0:42:26 And then he said that in the sim, like that, that wasn’t news.
0:42:34 What was surprising to you or what was different than the dream that gets sold on social media?
0:42:39 So if you watch the videos and you see Cody Sanchez telling you to buy, just buy a laundromat,
0:42:42 it’s going to, you’ll be rich, whatever, that, that type of shit.
0:42:44 Like, was it in line with that?
0:42:45 Was it different than that?
0:42:47 What was the difference if there was one?
0:42:52 Yeah, it’s not nearly as easy as a Cody Sanchez makes it seem.
0:42:55 And I, I probably went a little more overboard.
0:43:00 I think like when I think about the amount of time I spent in diligence, the amount of money
0:43:06 I spent in diligence, you know, I like, I’m a risk taker for sure, but I’m a calculated risk
0:43:06 taker.
0:43:12 So it’s like, before I make this gigantic gamble on the rest of my life, I want to make sure I’ve
0:43:14 done everything humanly possible.
0:43:17 And I think when you watch a lot of these videos about buying the business, like they
0:43:22 make it seem like, you know, you can just find one and then kind of transition right away.
0:43:23 And the whole process is really easy.
0:43:28 Like the process of getting the loan, like some people liken it, actually, I think Cody Sanchez
0:43:29 likens it to this.
0:43:33 So maybe, maybe she actually isn’t setting unrealistic expectations, but it’s like, it’s a financial
0:43:34 colonoscopy.
0:43:36 Like they want to know everything about you.
0:43:39 And like that part’s tough.
0:43:44 And then you give the company a colonoscopy to try to figure out everything about it, quality
0:43:45 of earnings, that sort of thing.
0:43:49 And one of the things that I did, I think that I’m happiest that I did because it got me the
0:43:53 most comfortable outside of, you know, paying for accountants and lawyers to scour things
0:43:56 was I shadowed the guy.
0:43:57 So every week.
0:43:59 Cause he, he happened to live in New York city too.
0:44:00 Oh, the whole thing was serendipitous.
0:44:03 Like he lived 20 minutes from my house.
0:44:03 Wow.
0:44:08 And I, the, the, the, you know, before I signed the SIM, it was like packaging distributor in,
0:44:09 in the Northeast.
0:44:11 So like, you know, it could have been in Boston, could have been wherever.
0:44:13 Uh, this guy lived 20 minutes for me.
0:44:15 That’s how the Tartufo was so accessible.
0:44:21 But I literally went to, I went to the office every week, sat with the guy, um, for several
0:44:23 hours and just, he walked me through packaging.
0:44:27 He walked me through his day to day and it just gave me it, you know, it started
0:44:29 my training of like, okay, well, how am I going to run this business?
0:44:33 But it allowed me to really kind of take what was on that paper and figure out, you know,
0:44:37 okay, this is, these are the skills that I will need to run this business.
0:44:39 This is how I might be able to grow it.
0:44:40 This is where I might need more help.
0:44:42 Um, it made it more real.
0:44:46 And I think I was lucky in that I was able to do that because I’ve talked to other searchers.
0:44:48 I was like, you know, let’s go back to the laundromat.
0:44:49 You know, you buy a laundromat.
0:44:53 I would imagine day one, you kind of walk in and the machine breaks and you’re like, oh crap.
0:44:54 Like, what do I do?
0:44:56 I know nothing about these machines.
0:44:57 Now I need to find a mechanic.
0:45:02 Like everything is a little more complicated and nuanced, uh, with regards to even like
0:45:04 how laundromats are, you know, I went down the laundromat path.
0:45:06 Like I spent a while thinking that was going to be my destiny.
0:45:10 And it’s like, well, no, like valuing a laundromat, like actually has a number of facets and you
0:45:12 need to kind of really get into the weeds there.
0:45:17 So, you know, I’d say like the biggest takeaway is like, it is hard and it takes time.
0:45:20 It’s not something that you can just do, you know, for a few minutes a day.
0:45:24 Um, like you really got to invest in making this happen if that’s what you want to do,
0:45:27 or you’re going to end up, you know, with some surprise down the road.
0:45:31 I think that’s probably my biggest relief is like, I’ve been waiting for, you know, the
0:45:32 shoe to drop somewhere.
0:45:33 And like, this is what I missed.
0:45:36 And like, you know, knock on wood, haven’t had that yet.
0:45:38 How many hours a week are you working on it now?
0:45:39 And how many hours a week was he working on it?
0:45:47 He was probably working, let’s call it 25 to 40.
0:45:49 I think he definitely was working less.
0:45:51 He kind of had it on autopilot.
0:45:57 I think he had started to, you know, kind of tune out a little bit, but not in a way that
0:45:58 like he neglected the business.
0:46:00 It was just like, he’d been in packaging all his life.
0:46:01 Like he could run it in his sleep.
0:46:07 He wasn’t as focused on kind of doing the growing or renegotiating things with suppliers,
0:46:08 building the supplier base.
0:46:13 You know, I’m probably working on, you know, 50 to 60 hours.
0:46:15 Like I spend like a bunch of time on this.
0:46:18 How much were you able to take home?
0:46:21 So that’s the million dollar question.
0:46:22 It’s like, okay, cool.
0:46:24 Your business is making all this money.
0:46:30 You know, at the end of the day, two years in, I’m still only making, you know, 150 a year.
0:46:36 Like I take the minimum amount that I need to for, you know, IRS compliance because I’m
0:46:38 saving the rest in able to finance growth.
0:46:42 Like I, like I’ve made enough to pay back the loan, but I’m not paying back the loan because
0:46:43 I need that cash to fuel the growth.
0:46:49 It’s a very cash intensive business and I’m not in a place quite yet where I can take as
0:46:50 much off the table.
0:46:54 Although Sean has been giving me some other frameworks saying like, Hey, you actually should
0:46:54 be doing this.
0:46:58 What’s that framework, which is like, if you want to replace yourself, you have to pay yourself
0:46:59 the replacement costs.
0:47:01 No, not that.
0:47:04 But basically I did this in one of my businesses.
0:47:09 It’s not right for everybody, but I think it’s easy to go into rainy day mode as a business
0:47:09 owner.
0:47:13 When you play like two conservatives, you know, several of our businesses right now have just
0:47:17 like, like one of our businesses has just like two, $3 million just sitting in the bank
0:47:17 account.
0:47:20 And the bank, like it goes up every month.
0:47:24 It’s not like we have this like wild swings where you need this big cash reserve buffer.
0:47:26 It’s not like a heavy inventory business.
0:47:29 It’s like, you know, your, your, all of your operating expenses is a salary and you know
0:47:30 your salaries.
0:47:32 So there’s no surprises coming next month.
0:47:36 And even if there was like one of my friends, uh, our buddy, so we told me this, I was like,
0:47:37 how much do you keep in there?
0:47:39 Like three months of working capital, six months, 12 months.
0:47:43 Like, I think I have like 12 months of working capital sitting in the bank right now.
0:47:45 He’s like, no, I just take it all out.
0:47:46 I’m like zero months.
0:47:46 He goes, yeah.
0:47:48 He goes, I own this business myself.
0:47:51 So if I ever need the money, I just lend it back into the business.
0:47:53 Like I just, I can always write the check back.
0:47:55 It forces you to make a profit as well.
0:47:56 Yeah.
0:47:59 And so Andrew Wilkins, I came on this podcast and had this book, he was talking about profit
0:48:00 first.
0:48:04 And I really liked the philosophy of it, which is basically with normal business, you have
0:48:06 your revenue, then you have all your expenses.
0:48:11 And then it’s like, surprise, here’s how much profits left over after all that.
0:48:15 And usually what actually happens is there’s not as less profit than you would have guessed.
0:48:17 And it’s why, because expenses were a little higher, blah, blah, blah.
0:48:20 And you’re always in this profit comes last.
0:48:22 Profit first was basically you decide upfront.
0:48:24 You say, okay, I want to have a 20% profit margin.
0:48:29 So you take your revenue, you set aside money for taxes, which you know is going to be,
0:48:34 so you take your revenue, you take your profits, you set aside amount for taxes.
0:48:37 What’s left is your expenses budget.
0:48:41 So instead of making profit, the thing that comes last, you make the expenses come last.
0:48:42 And then you have to say, all right, cool.
0:48:47 Then my marketing budget can only be this much because I’ve decided to take this much as a
0:48:50 as a profit, a set profit margin out of my business.
0:48:53 And I don’t adhere to it 100%.
0:48:55 I don’t think it’s right for every business.
0:49:00 But I do think that, you know, Dan, in this case, I think he’s being a little overly conservative
0:49:01 as to how much cash he’s leaving in the business.
0:49:02 I did that too.
0:49:07 And the longer I delayed it, I took away one very valuable thing, which is if you have,
0:49:11 if you pay yourself every month out of the business and one month that’s light or another
0:49:14 month that’s heavy, the body just reacts to it.
0:49:15 If it’s light, you’re like, yo, what the hell?
0:49:18 And you will go fix a part of your business that was broken.
0:49:22 If you just leave it in and it’s just like a P&L, it’s just numbers on a spreadsheet.
0:49:23 It’s not money you actually receive.
0:49:27 You know, you’ll wait 15 months before you end up correcting that problem because it’s
0:49:29 all fictitious money anyways.
0:49:30 It’s not money you’re actually getting.
0:49:35 And so I think that actually getting that check every month creates this feedback loop that’s
0:49:37 actually quite valuable to a business owner.
0:49:42 It’ll cause you to scrutinize unnecessary expenses or like go after it.
0:49:44 Because once you taste a big month, like Sam, we have this with MFM.
0:49:48 If we have a big month in the next month, I’m kind of like, well, I kind of like the
0:49:49 feeling of that one.
0:49:50 Yeah, let’s do that again.
0:49:50 What do we need?
0:49:51 One extra episode too?
0:49:52 Should we go get a guest?
0:49:54 What’s Monish doing today?
0:49:55 Let me see what’s going on over there, right?
0:49:59 Like you start to think about what you could do to go drive it back up.
0:50:02 And I think there’s an unhealthy version of that, but there’s some healthy components to
0:50:02 that.
0:50:03 Yeah.
0:50:07 So I think that’s a lesson learned for me.
0:50:10 I think I’m still in the very conservative, you know, what if I need this money?
0:50:16 And I do have high working capital costs, especially around now, kind of pre-holiday.
0:50:17 I’m about to have to write a bunch of checks.
0:50:25 But very soon I should get to a place where I can take more out and or start paying back
0:50:26 some of the debt a little faster.
0:50:29 All right, listen up.
0:50:32 Turn the volume up because it’s your boy, Sean, and I got a little message for you.
0:50:34 I talk to hundreds of founders a week.
0:50:36 And when I talk to founders, everyone says the same thing.
0:50:39 That the one thing they need the most is not funding.
0:50:41 It’s not more resources.
0:50:43 It’s just having more time.
0:50:44 The goal here is to win.
0:50:48 And the way you win is you get yourself free time to do stuff that’s high impact.
0:50:49 How do you do that?
0:50:50 Well, I’ll tell you my solution.
0:50:52 The answer is Gabby.
0:50:54 Well, you might be wondering, who is Gabby?
0:50:55 Gabby is my assistant.
0:50:57 She is my wonderful assistant.
0:50:58 Gabby lives in Latin America.
0:51:01 And she helps me save about 20 hours a week.
0:51:06 So what she’s doing for me is every morning, my inbox is sorted and triaged.
0:51:10 And the most important stuff is right at the top with draft replies ready for me.
0:51:11 So I’m never behind on email.
0:51:15 And then as I’m on the go, I’ll just send her voice notes saying, hey, could you find my
0:51:16 kids a soccer class?
0:51:18 Hey, could you take care of this car registration thing for me?
0:51:22 All these little tedious BS things that would take up time in my day.
0:51:23 She takes care of for me.
0:51:25 And so that’s free time I’m getting back.
0:51:29 So if you are a CEO who’s serious about growing your company, you need to get yourself an assistant.
0:51:31 The best place to go is somewhere.com.
0:51:35 Somewhere sources the best assistance from low cost areas for you.
0:51:39 So you can get an amazing executive assistant who’s got business experience and has supported
0:51:43 other CEOs for seven, eight, nine, $10 an hour.
0:51:47 And so go ahead, go to somewhere.com, tell them I sent you, they’ll hook you up with a good
0:51:48 deal and get yourself an assistant.
0:51:49 And you can thank me later.
0:51:50 All right, back to this episode.
0:51:54 So Sam, I’m curious, what’s your reaction to this whole thing?
0:52:01 So I think that for people who have your personality type, which is you, you’re a very serious person,
0:52:07 I think like, like you’re a person like if I was a broker and I met you, I would not think
0:52:07 you were kicking tires.
0:52:09 I’d be like, oh, this guy’s for real.
0:52:11 Like it’s, you have the very obvious for real energy.
0:52:16 And if you have that very obvious for real energy, we’re like, no, I’m going to do this.
0:52:17 This makes sense.
0:52:20 I think that the path that you’re taking is so wonderful.
0:52:24 And I, my assumption is that you’re going to be wildly successful.
0:52:27 And so I think it’s very wise to do.
0:52:34 I think that if you, if you are an unserious person where you are not willing to put your
0:52:39 house up or something like that, that’s kind of like the, one of the tells, like if, so if
0:52:43 you’re like not serious like that and you are not willing to do the diligence and say, I’m
0:52:46 willing to look at 100 things, I would say, do not do this.
0:52:47 Yeah.
0:52:49 I think there’s also one, I think you said it perfectly.
0:52:54 There is one more thing to it, which is what situations do you shine the most?
0:52:59 And so like for Dan, I think he always had an entrepreneurial streak that was used as like
0:53:00 random side quests in life.
0:53:04 Like we would go try to win the McDonald’s monopoly game every year.
0:53:05 Like we tried to like actually win it.
0:53:06 Not just like hope.
0:53:08 We thought we were going to win it.
0:53:10 We were like dumpster diving, trying to, trying to win this stupid thing.
0:53:10 Right.
0:53:15 Like, or, you know, we started a blackjack club at, on campus and we’re running simulations
0:53:16 to see how much money we can make.
0:53:21 If we started a blackjack club, like we were always trying to come up with ideas.
0:53:26 It was more fun to come up with our own idea versus just like, go get a job and do the
0:53:26 thing.
0:53:33 And so I feel like if you know that you actually turn up the most, you’re the most version of
0:53:36 you when you’re doing this type of shit, when you’re like in control of your own fate and
0:53:41 you have your own project as arbitrary as like, you know, bags are, doesn’t matter.
0:53:42 It’s like, I’ll take bags super seriously.
0:53:46 I took, he took gum seriously, blackjack seriously, sushi seriously, like all those things.
0:53:51 I think that that’s the other part, which is not the part you said, but then also if you
0:53:56 really are like at your core, more entrepreneurial and you’re more switched on doing that, then you’re
0:54:00 going to have a better result doing this than you are if you, you know, stay in a more
0:54:01 traditional job.
0:54:05 That’s my, I think, I think people, you know, when I tell them about, you know, first
0:54:09 it’s always like the unbelievable way you do what, but then the second, like their mind
0:54:14 goes like, oh, I should do that because, you know, it sounds great in hindsight, right?
0:54:17 Like when everything works out, it’s like, cool, of course, this is easy.
0:54:18 Of course, anyone can do it.
0:54:24 But I think people miss the point that there’s a lot of ways that this doesn’t go like that
0:54:26 and it’s not necessarily the most glamorous.
0:54:28 I also think most people shouldn’t do this.
0:54:32 So for example, this is not something I like, this does not fall within my skill set.
0:54:38 So my, like, uh, if I had to guess you, when you were buying the company, like you guys were
0:54:41 negotiating over 10, 20, 30, $40,000 things.
0:54:47 Like if I had to guess you were incredibly anal about the paperwork, you were asking, you’re
0:54:50 like, what’s this 300, what’s this $3,000 charge?
0:54:51 What’s this?
0:54:53 That is not what I do.
0:54:54 I do not do that.
0:54:55 That kills me.
0:54:56 That does not fit my personality type.
0:55:01 So I have bought and invested and done a bunch of real estate stuff in my time.
0:55:06 And, uh, I lose on all of it because you make your money when you’re buying it.
0:55:10 And when you sweat the details up front, which is not, that is not what I do.
0:55:12 I don’t think necessarily that is what Sean likes to do.
0:55:17 And I think that if you are the type of person who plays a board game and you memorize all the
0:55:23 rules and you like sweat the details, um, and you have that attribute, then this, uh,
0:55:26 buying a company is, it could potentially work well for you.
0:55:30 I’m the guy that takes the rule book out of the box and reads it to explain to everybody.
0:55:31 Exactly.
0:55:34 If you have that trait, this could be awesome.
0:55:34 Life-changing.
0:55:35 Yeah.
0:55:40 So Dana, one of the other cool things about doing a search for a business is you realize
0:55:43 how big the universe of businesses is.
0:55:46 And I asked you, I said, you know, usually we try to brainstorm business ideas with people
0:55:47 like what opportunities do you see?
0:55:50 Um, you said you would come up with a couple ideas.
0:55:53 Give us a couple of your ideas of what you think other people could go do.
0:55:55 Um, this is just like the, the sort of random section.
0:55:56 Yeah.
0:56:00 I think the, I mean, the biggest takeaway, like from buying a business before I get into,
0:56:03 into the ideas, like everything’s a business, right?
0:56:07 Like you walked, you know, go look at any store, you know, every little piece of that
0:56:11 business is something that someone sells, like that display that says for sale, like someone
0:56:15 sells that, like the, the holder for the gum on the store, like that’s a business.
0:56:21 It’s like, I don’t think I really appreciated how random and how basic some of these businesses
0:56:21 can be.
0:56:24 And people make really good money doing it, uh, even packaging.
0:56:26 It’s like, you don’t really think about that.
0:56:31 Um, by the way, I’m pretty sure Robert Kraft, the owner of the Patriots, the, he owns the
0:56:32 Kraft group.
0:56:33 I think that’s a packaging company.
0:56:36 It could be, there are so many packages.
0:56:38 They make corrugated cardboard.
0:56:41 One of our best episodes ever.
0:56:45 If you want to go listen to a great episode is the Sarah Moore episode on this podcast.
0:56:48 And she’s the, I think it’s called the egg carton queen.
0:56:50 And her thing was, she, she did the same thing you did.
0:56:55 Basically she went and found a retiring guy who owned a business that sold, that sold egg
0:56:56 cartons.
0:57:00 Like not the eggs, the carton, they come in and you don’t even think that’s a business.
0:57:02 Like you, when you go look at, you’re like eggs.
0:57:03 Yeah.
0:57:03 Okay.
0:57:05 There’s a farm that sells eggs.
0:57:08 You don’t even realize that the farm has to then buy egg cartons.
0:57:12 And there’s somebody whose job is to make egg cartons and they sell it at the best price
0:57:13 and the best value, blah, blah, blah.
0:57:16 And so her episode, I think is amazing.
0:57:19 And you see that the other example, Sam, that I always give when I explain what this podcast
0:57:26 is to people is I talk about like, everything you see is there because someone sold it.
0:57:29 Like nothing gets there by accident.
0:57:34 And so I was like, you know, even in the workplace, if you go to your break room and there’s a poster
0:57:36 on the wall, that’s like the labor code.
0:57:38 There’s a guy in Minnesota that sells that.
0:57:41 He makes a million dollars a year selling you the poster every year.
0:57:43 Once I heard that, I was like, oh shit.
0:57:48 It’s like a physicist when he learns about string theory or some shit, you know, it’s
0:57:49 like, oh, it’s everywhere.
0:57:49 I get it.
0:57:51 Oh, the waves are particles.
0:57:52 You see the world of the components.
0:57:52 Yeah.
0:57:56 All the components themselves are businesses too.
0:58:01 And then you realize like, if you’re not making it in business, it’s mostly because of a lack
0:58:03 of creativity and effort.
0:58:07 It’s not because of a lack of opportunity because literally every item everywhere is itself,
0:58:10 you know, a business that somebody is running to get it there.
0:58:12 And so, you know, there’s no lack of opportunities in that sense.
0:58:12 Yeah.
0:58:16 So now I’m like hardcore on the other end of the spectrum of like, as unsexy as possible.
0:58:18 I want to do that.
0:58:21 Like, I want to, I want to be the guy that has like the most random thing.
0:58:22 I like packaging is pretty random.
0:58:26 Like, you know, in a, in a future world, once I, you know, if, and when I’m done with
0:58:27 this, like, I want to go even further.
0:58:28 Yeah.
0:58:31 By the way, do you have, when you lay, when you’re laying in bed at night, what do you
0:58:31 think?
0:58:33 Like in 10, 20 years, we’re going to, we could be this.
0:58:37 Like, do you have, do you, do you think this could be a hundred million dollar company?
0:58:39 Do you think you’re, you could sell it for a certain amount?
0:58:42 What’s your sort of North star that excites you?
0:58:47 So, you know, at this point, I don’t have any plans to sell it.
0:58:51 I do think it could be a hundred million in sales company easily.
0:58:57 Like there’s so like some of these big packaging players are huge and we’re able to compete
0:58:57 with them.
0:59:00 That’s kind of the, you know, we’re small in the scheme of things.
0:59:02 Like it’s a, it’s a nice size business, but we’re small in the scheme of things.
0:59:06 But what I’m finding is as we, as we work with these brands, like we actually do have a pretty
0:59:11 differentiated offering because we are small, we’re scrappy and people love that.
0:59:16 And, you know, as we’ve been able to kind of add clients I’m like, oh, this thing can
0:59:21 really take, like we can really scale this up and, and, you know, start to gain more
0:59:22 traction with these large brands.
0:59:27 And, you know, the crazy thing is people spend 10, you know, these big companies spend tens
0:59:28 of millions of dollars on their packaging.
0:59:33 So you could easily get like five clients to get you to a hundred million like, like that,
0:59:34 if, if it’s the right five.
0:59:37 So my goal is to grow it.
0:59:40 I do think in a few years I’ll, I’ll hire an operator to run it.
0:59:44 One of my biggest pieces of advice to people searching is like, don’t assume you’re going
0:59:47 to hire the operator day one, especially if you’re putting your house on the line.
0:59:51 Cause there is not a single person that I trust to run this business when I’m going
0:59:52 to get kicked out on the street.
0:59:57 If it fails, when I get to the place that I feel better about that, like only then will I
1:00:01 then decide, okay, well maybe I’ll hire someone and just do more strategic work.
1:00:04 But yeah, the, like I’m loving doing what I’m doing now.
1:00:07 So I think it’s eventually scaling my time.
1:00:09 So it’s not like I’m very involved in all the processes right now.
1:00:13 And I designed it that way because that’s how I learned, you know, I’d love to be able to
1:00:17 go away and not have to take a call because the blue isn’t blue enough.
1:00:19 Like, you know, I got a lot, I do a lot of color matching.
1:00:24 When we were doing the sushi restaurant, Dan was not only sweating the details in the finance
1:00:29 side, but we were like, dude, we don’t really know how a restaurant works.
1:00:31 None of us have ever worked at a restaurant.
1:00:36 So Dan went and got a job at noodles and company and he studied them from the inside and we treated
1:00:37 it like it was like oceans 11.
1:00:40 Like every day he’d come home and we were like, what did you write a report?
1:00:40 Yeah.
1:00:41 Yeah.
1:00:45 And he’d like draw the workflows or he’d like, what did you learn?
1:00:45 And what did you bring me?
1:00:47 Give me the pesto cavatappi.
1:00:47 Yeah.
1:00:52 Then he’d bring the pesto cavatappi and he’d be like, trust me, do not eat the tomato basil
1:00:52 soup.
1:00:53 We’re like, why?
1:00:54 It seems just tomato soup.
1:00:56 He’s like, don’t eat the tomato basil soup.
1:00:58 And so he was like, went undercover.
1:00:59 And he was like willing to go to that.
1:01:03 And then I had like the big reveal, like the big undercover boss reveal at the end when
1:01:03 I quit.
1:01:04 Yeah.
1:01:08 By the way, were they blown away by the fact that you’re like, I am creating a sushi chain?
1:01:13 I think I tried to hire the GM and she’s like, all right, like that sounds better than what
1:01:14 I’m doing here at Noodles & Company.
1:01:17 Like she was like, like, I thought you’d be like, you betrayed me.
1:01:18 It’s like, cool.
1:01:20 You’re like, oh, you’re trying to move next door.
1:01:21 Great.
1:01:23 Like we can trade food at lunch.
1:01:30 So Dan, you, um, let’s do, uh, let’s do, actually, do you have that, the business plan
1:01:30 that we made?
1:01:31 Do you still have that binder?
1:01:32 Yeah.
1:01:32 One sec.
1:01:33 Let’s find it.
1:01:39 So the story here is that, uh, not only did Dan work undercover at Noodles & Company
1:01:40 at some point.
1:01:43 Also, this was not a, I didn’t just put that there.
1:01:46 Like that’s lived there behind, behind me.
1:01:46 You just keep that there?
1:01:47 I don’t have one.
1:01:48 I need to get a copy of this.
1:01:48 All right.
1:01:48 I have this.
1:01:51 I also like our Sabi sushi hat is right there.
1:01:52 Oh, nice.
1:01:53 Yeah.
1:01:56 So basically the first business we, me and Dan, uh, and our buddy Trevor had out of
1:01:59 college was to create, it was a brand called Sabi sushi.
1:02:01 The idea was to create the Chipotle for sushi.
1:02:05 So go get, go get sushi the way you eat Chipotle, where you can just walk down the line, you pick
1:02:07 your ingredients and you get the thing.
1:02:08 This is our big idea.
1:02:09 And, um.
1:02:11 Which was, I maintain a good idea.
1:02:12 Uh.
1:02:12 At the time.
1:02:13 I think it’s been proven.
1:02:17 It’s been proven it’s a bad idea, but like I still want it.
1:02:17 Okay.
1:02:23 So, so we, not only did Dan work undercover at noodles and company, we then go in, I don’t
1:02:26 know how we get a meeting with the founder of noodles and company and we show up to this
1:02:27 meeting with this binder.
1:02:29 This binder is our business plan.
1:02:33 We had been working on this for months while we were searching for a location.
1:02:37 And can you just hold up the thickness of this binders as people see it?
1:02:37 Oh yeah, it’s thick.
1:02:38 Uh, let’s see.
1:02:39 Yeah.
1:02:44 Like this is probably a couple hundred pages of a business plan in there and there was stupid
1:02:44 things.
1:02:46 So part of it is what you would expect.
1:02:47 Like here’s the startup cost.
1:02:51 But part of it was dumb stuff like the uniforms and how we’re going to like progress people
1:02:54 from, from entry level to manager and what their values are and all.
1:02:59 We had not sold a single role to a single customer and we’re worried about all this other shit.
1:03:03 So, but what we think we’re tricking ourselves into thinking that planning equals productivity
1:03:06 and you know, spoiler planning did not equal productivity.
1:03:09 Uh, we’re basically doing a very fancy form of procrastination.
1:03:12 And so we get to this meeting with this guy from noodles and company.
1:03:15 I think his name’s Aaron, if I remember correctly.
1:03:16 And he, um.
1:03:17 I forgot that guy’s name.
1:03:18 He’s like, all right.
1:03:19 So like, what’s the plan?
1:03:23 And we think we’re about to wow this guy.
1:03:24 And we’re like plan.
1:03:24 Oh, funny.
1:03:25 You should ask.
1:03:27 Whip out that binder.
1:03:29 Slam it on the table.
1:03:31 It’s basically like, here’s our plan.
1:03:33 Look how great this is.
1:03:34 And I remember he looks at it.
1:03:36 And first of all, it looks like a kid’s project.
1:03:41 Even the cover is like, we inserted this colorful thing in the front plastic thing.
1:03:44 And then he flips through and he’s like, realizes pretty quickly.
1:03:48 Oh, these idiots wrote a 250 page business plan for their sushi restaurant.
1:03:50 And they don’t even have a location.
1:03:51 They don’t have any customers.
1:03:53 They’re starting on, you know, from scratch.
1:03:57 And I remember the look on his face.
1:04:01 And then I remember like the moment that was rock bottom for me in the whole sushi journey,
1:04:04 which was that he should have just ripped us and be like, guys, what the hell are you doing?
1:04:06 And this is so ass backwards.
1:04:10 Like, why don’t you get out there, start testing your concept, see if people actually want this.
1:04:12 And then like, you know, you’ll learn by doing.
1:04:16 And instead, he kind of took pity on us and didn’t say that.
1:04:18 I could tell he wanted to say something.
1:04:23 And then he was like, and then he just tried to be nice about it.
1:04:27 And I was like, oh, my God, we’re so bad that he feels like he needs to be polite about this.
1:04:30 That means we’re even worse than just being bad.
1:04:34 And I just remember realizing like, well, I don’t know what the right answer is,
1:04:35 but whatever we’re doing is dead wrong.
1:04:38 I could tell you that right now after that meeting.
1:04:43 I just remember years later, years later, someone did tell us that, though, in Boston.
1:04:47 You know, we were talking about, we were about to sign a 10-year lease.
1:04:50 And we literally just met this guy like 10 minutes ago.
1:04:55 And he, oh, he was, it was a guy, he like owned a bunch of Boston markets.
1:04:56 I don’t know if you remember that.
1:04:57 Yeah, John Prendergast.
1:04:58 Prendergast.
1:04:58 Oh, my goodness.
1:04:59 Nice call.
1:05:00 That’s his name.
1:05:04 He was doing a tech company now, but he was like,
1:05:08 you know, early in my career, I own 20 or 30 Boston markets.
1:05:12 And so he’s like, so I know a little bit about the quick service industry.
1:05:13 Let me, you know, be your mentor.
1:05:14 Yeah.
1:05:17 But he basically just tore the whole thing to shreds, like within five minutes.
1:05:19 It was like, this is wrong.
1:05:20 Don’t sign that lease.
1:05:24 And like Trevor, like wasn’t in Massachusetts with us when we were doing this.
1:05:25 We like, he was like about to sign the lease.
1:05:25 We like called him.
1:05:26 We’re like, wait, no.
1:05:28 Um, well, this guy, this guy was great.
1:05:32 Cause he’s like, you know, so like he asked us a question and we gave him the answer we’d
1:05:33 been giving everybody else.
1:05:37 So I think he was something like, you know, so what makes you think that there’s like, there’s
1:05:38 demand for this?
1:05:40 And we were like, well, you know, sushi has been on the rise.
1:05:42 We gave him this like spiel.
1:05:44 He’s like, all right.
1:05:45 So is this going to work or what?
1:05:48 And he basically cut through the nonsense and he’s like, how do you know?
1:05:49 Are you testing this?
1:05:53 You’re just going to sign a 10 year lease with a personal guarantee with no clue if this, if
1:05:56 the market actually even wants this, like, doesn’t that seem insane to you guys?
1:06:01 And he gave us real talk and I’ll forever be grateful for him, uh, for giving us that real
1:06:01 talk.
1:06:03 Cause he saved our ass from signing that, that lease.
1:06:04 And he gave us a different plan.
1:06:08 And he was like, why don’t you test this rent out a commissary kitchen, like bakers and
1:06:10 caterers use there.
1:06:12 What turned out there were like $20 an hour.
1:06:13 It was like super cheap.
1:06:14 No, and no long-term commitments.
1:06:18 And he’s like, rent those out, do a delivery only validate the demand.
1:06:21 See if people like your recipes, people like the price points.
1:06:22 You’ll learn so much by doing that.
1:06:25 And then you’ll know what you need out of your first location.
1:06:26 If you’re going to go there.
1:06:29 And, um, that saved our ass, that advice saved, saved us.
1:06:35 And you know, that if I, whenever somebody asked me for like any advice or help, um, I just
1:06:40 remember like, can I, can I give them one 10th of the value John gave us is the new like
1:06:42 North star for that, that situation.
1:06:42 Yeah.
1:06:47 I remember he introduced us to like lean startup and, you know, actually figuring out, um,
1:06:52 you know, we, we used to pull people were like, you know, would you eat sushi once a week?
1:06:53 Like how many times a week would you eat sushi?
1:06:55 Which is a bad, badly phrased question anyway.
1:06:56 Yeah.
1:06:59 Uh, in hindsight, they’re like, Oh, I’d come two to three times a week.
1:07:05 And it’s like, we, we did this proof of concept, um, on the cheap, um, as, as quickly as we
1:07:05 could.
1:07:11 And like, the answer was like, not even once a month, um, like night and day, right?
1:07:16 Outside of, outside of like LA SF, New York, the answer is like, if I eat sushi at all,
1:07:17 like, right.
1:07:20 To make a concept like this work, it needs to work in Texas, Colorado, you know, it needs
1:07:21 to work everywhere.
1:07:25 And the answer was, if I eat sushi at all, I eat it about once a month and I’m happy with
1:07:25 that.
1:07:26 I’m not trying to eat it three times a week.
1:07:28 And I’m going to go to the nice restaurant to do it.
1:07:29 Right.
1:07:33 And we were looking for like the three people who validated us rather than, and ignoring the
1:07:35 97 people who were saying no, we were like, yeah, see those three.
1:07:43 Um, he also did one other amazing thing that as an entrepreneur, I now see like this pattern
1:07:44 over and over again.
1:07:47 So he suggested to us, he’s like, do it delivery only.
1:07:51 And we were like, ah, but he like saw the look on our face.
1:07:51 He’s like, what?
1:07:53 And we were like, delivery just sucks.
1:07:56 And we, we started, you know, he’s like, why?
1:07:57 So we’re like delivery.
1:08:00 I mean, you order food, you don’t even know when it’s going to come.
1:08:01 This is before DoorDash, by the way.
1:08:06 I think the biggest thing is we, we probably invented DoorDash, uh, and didn’t know it.
1:08:10 And we were fixated, we were fixated on the sushi, but we really, you know, came up with
1:08:10 a better model.
1:08:11 Exactly.
1:08:15 So, so this is before all those, we were like, you, you know, you call in an order, you
1:08:16 don’t know when it’s going to come.
1:08:17 It shows up an hour later.
1:08:19 The packaging is all shitty.
1:08:20 The food is cold.
1:08:23 It’s leaking out the bottom and just feels cheap.
1:08:26 And, uh, we’re like, that’s why, like, it sucks.
1:08:29 And our takeaway was, therefore, no.
1:08:34 And his was, wow, looks like you found all the things to improve to make this a 10x better
1:08:35 experience.
1:08:37 And like, since then, now I see this all the time.
1:08:41 If you talk to entrepreneurs, it’s like, you think about a space and you’re like, oh, that’s
1:08:42 horrible.
1:08:43 That’s horrible for these reasons.
1:08:47 And like the entrepreneurial response, the customer response is it’s horrible.
1:08:49 The entrepreneurial response is, wow, what an opportunity.
1:08:53 Because if I just change those four things, I’ve now have created this huge, like, you
1:08:55 know, level up in the customer experience.
1:08:59 And so we ended up doing it where our delivery times were sub 30 minutes.
1:09:01 You knew exactly when it was going to come.
1:09:03 We stamped on the food when we made it.
1:09:04 So you knew it was fresh.
1:09:07 We put a webcam in our kitchen so you could see us working on your order.
1:09:11 We did like all these other things to try to make delivery actually a cool experience.
1:09:16 And the bar was so low by basic delivery standards that that kind of actually worked.
1:09:19 And so I thought that was the other like really brilliant thing that John did for us.
1:09:19 Yeah.
1:09:25 Rethinking, rethinking what, you know, everyone kind of assumed we would make with a restaurant
1:09:26 and kind of flipping it on its head.
1:09:29 And it allowed us to fail faster.
1:09:32 So back to the business ideas.
1:09:33 You had a few here.
1:09:35 Are there any that you think are cool or interesting that you think somebody could go to?
1:09:39 I am very into what I’m calling fun to run businesses.
1:09:42 So I actually looked at a few of these towards the end.
1:09:46 I think I found Fleet when I saw some of these like laser tag, bowling alleys,
1:09:49 like kind of these family entertainment businesses.
1:09:52 And I have kind of two hypotheses around them.
1:09:54 One is like I think I saw like one or two P&L.
1:09:56 Again, do your own research.
1:09:58 Don’t just blindly accept that this is a good space.
1:10:03 The one or two I saw like wildly profitable, very low cost.
1:10:08 There’s probably a high startup cost in the beginning, but like climbing gym or something
1:10:08 like that.
1:10:11 It’s like once you get it set up, they have like these autonomous ones now, too.
1:10:12 You don’t even need that much labor.
1:10:15 But also as a dad, I have two kids.
1:10:18 Like I’m always spending money on these things.
1:10:21 Like my son had a laser tag birthday party.
1:10:24 There’s like one person working at this laser tag thing.
1:10:26 They like own the laser tag game in town.
1:10:30 They charge you for the adult standing at the birthday party.
1:10:32 And I’m like, wow, like I could do this better.
1:10:33 I want, you know.
1:10:34 And they have you hostage.
1:10:34 Have you hostage.
1:10:35 All the arcade games.
1:10:36 You got to buy their food.
1:10:43 Kind of these very easy to run, like almost a single person.
1:10:45 But, you know, let’s call it like a teenage business.
1:10:46 You hire teenagers to work there.
1:10:48 Like anything that they’re not going to mess up.
1:10:50 Yeah, like a bowling alley.
1:10:50 A bowling alley.
1:10:53 And then how do you find things that like have multiple purposes?
1:10:54 Like there’s a bowling alley in my town.
1:10:57 And, you know, it’s, you know, during the day it’s for kids.
1:11:00 Like they have the kids activities and like after school activities.
1:11:03 And then at night it’s the bowling league for the adults.
1:11:04 And they have a bar.
1:11:05 So it’s the local dive bar.
1:11:08 It’s like, you know, then there’s like five, you know, five vending machines in there.
1:11:09 Again, teenager working.
1:11:11 Like the no frills.
1:11:17 But I have to imagine if you can find the right business like this, kind of great to be able to just go bowling at your bowling alley.
1:11:19 I can’t do much with my paper bags.
1:11:20 Like I go and I check them out.
1:11:21 I maybe walk around with them.
1:11:22 But like not much to do.
1:11:25 Like why family entertainment?
1:11:26 Why this out of home entertainment?
1:11:27 Why now?
1:11:29 Like is there anything that’s changed in the market?
1:11:29 Why?
1:11:31 Because, you know, these have been around forever.
1:11:33 Laser tag, public golf, bowling alley, whatever.
1:11:35 My hunch is they’ve been profitable for a while.
1:11:39 Like I think a lot of these are like sneaky businesses that you don’t think of.
1:11:42 You know, I think there’s also kind of more of a trend.
1:11:43 I was reading about this.
1:11:45 Like, you know, millennials like don’t drink as much.
1:11:47 They want more like sober events.
1:11:53 I think this idea of doing more like games is starting to take on.
1:11:56 Again, you know, small sample size of things in my town.
1:12:00 But like, you know, you go to these like unlimited, you know, there’s an arcade in my town.
1:12:02 It’s like you pay like eight bucks for an hour.
1:12:03 You can play unlimited arcade games.
1:12:04 This place is packed.
1:12:07 You know, that sort of thing never really existed.
1:12:11 But I think there’s like this desire to like leave the house and do things.
1:12:12 Maybe it’s a post-COVID thing.
1:12:13 I’m not sure.
1:12:18 The thing that I think is really interesting about this is like, and this is probably true
1:12:18 across the country.
1:12:24 Like if I think about like I always drive by like these large commercial real estate, you
1:12:26 know, old malls, these big buildings that no one wants to buy anymore.
1:12:32 And then when I see one, when I see what people put in them, like it tends to be kind
1:12:37 of like these newer things, you know, more interesting things like pickleball courts.
1:12:38 Like I think I read something.
1:12:41 It’s like, oh, they’re taking all the old bed baths and turning them into pickleball courts.
1:12:46 So it’s like to like take something that maybe you can get that’s not being used and, you
1:12:48 know, make a climbing gym, make it a ninja course.
1:12:54 Boy, I think is like the most incredible marketing where they like just marketed gymnastics to
1:12:55 boys.
1:12:59 And now all of a sudden they’ve doubled, they’ve doubled the amount of like demand for this.
1:13:03 And then there’s like the climbing team and like this place is packed all the time.
1:13:06 So that one is one.
1:13:12 So, so one of my biggest investments over the past two years has been in my brother-in-law’s
1:13:13 commercial real estate.
1:13:19 So he does what everybody thinks is dying, but is actually like thriving.
1:13:23 So for example, these kind of like mall, like strip mall locations, not like a mall, like
1:13:28 an indoor mall, but basically a shopping center and a shopping center with a grocery store,
1:13:33 you know, maybe a, so there’s got a Trader Joe’s, there may be like a crunch fitness.
1:13:35 There’s like, whatever, there’s a bunch of these types of locations.
1:13:37 And then how do you fill up the rest of the boxes?
1:13:43 And people think that shopping centers are probably dead because e-commerce or whatever, everything’s
1:13:44 on Amazon now or whatever.
1:13:48 These things have like 97% occupancy.
1:13:51 It’s like really, it’s like higher than multifamily and office.
1:13:52 Like it’s a really great category.
1:13:57 And even the few concepts that are like kind of going out of business, like a Bed Bath & Beyond
1:14:03 or like Joanne’s Fabric, he’s replacing them with trampoline parks and pickleball and Tesla
1:14:04 charging networks.
1:14:06 He’s like, there’s just new tenants that are always there.
1:14:11 And he’s like, the best part of this entire model, because the returns are bananas for
1:14:11 this thing.
1:14:15 Like it’s like, it is by far like the thing I’ve been most bullish on in the last 24 months
1:14:17 has been investing into this.
1:14:19 I basically took all my spare cash, put it over here.
1:14:25 And the reason why was A, he’s a good operator, but B, there’s no supply.
1:14:27 So nobody builds any new cyber shopping centers.
1:14:33 Like even though, um, like, you know, every, everything else people build more, they build
1:14:34 more condos, they build more stuff.
1:14:36 Nobody builds new shopping centers.
1:14:38 And so it’s all just retrofitting existing centers.
1:14:43 You buy them usually like below the actual build cost of the, of the center themselves.
1:14:48 And so I’ve seen this, my kids go to this thing called, uh, little kickers.
1:14:52 It’s in, uh, San Ramon, like a little town, like, you know, in the Bay area.
1:14:54 And it’s exactly what you’re describing.
1:14:55 A teenager runs it.
1:15:00 Like I asked to speak to the manager and, um, the manager was 17 years old.
1:15:04 He was just like, yeah, like a chain on and like the F boy haircut.
1:15:06 And I was like, what are you in charge of this?
1:15:11 And he was great, by the way, he was actually like a really good, uh, good manager, but everybody
1:15:13 who works there is young.
1:15:14 Like he’s young.
1:15:18 He’s like, you know, probably, he’s definitely like, I don’t know, under 23 years old and
1:15:21 all the coaches, there’s two coaches per class that they’re all, they’re all also like
1:15:23 just kind of soccer players who are high schoolers probably.
1:15:28 And, but this thing is packed and it’s just like one large venue for kids soccer.
1:15:31 And, um, this thing has to be printing.
1:15:33 Like I just doing the rough math of it.
1:15:34 This thing has to be printing.
1:15:36 They have, you know, definitely over a thousand members.
1:15:39 It’s like 200 to $300 per month.
1:15:42 Um, you know, this is, this is a very big business.
1:15:44 That’s basically, like you said, sort of like a fun business.
1:15:44 That’s teenager.
1:15:45 Yeah.
1:15:47 And it’s, you don’t need to, and it’s AI proof, right?
1:15:49 Like, so like, if you’re looking for, where do I do business?
1:15:53 If I know the whole world is changing with AI, well, AI is probably not going to like
1:15:58 do a trampoline park or, you know, do a kid’s soccer center.
1:16:00 You know, like those are, those are pretty safe businesses.
1:16:01 Yeah.
1:16:01 And they’re predictable.
1:16:03 I mean, like their kids are always going to want to jump.
1:16:07 It’s not like you’re buying a product that, you know, all of a sudden you don’t know if
1:16:08 it’s going to last.
1:16:09 Right.
1:16:12 You put a bullet point on here, the least sexy business as possible.
1:16:13 Touch the taboo.
1:16:14 What do you, what do you mean by that?
1:16:18 So this is, I start again, when in the pit of despair, you start to, you start to go crazy
1:16:21 with ideas where they’re like, all right, well, what are what, you know, I started looking
1:16:25 at like medical ambulances, which I still think could have worked, but effectively, you know,
1:16:31 the government subsidizes medical transport for disabled and elderly from, you know, nursing
1:16:32 homes to their medical appointments.
1:16:35 So it’s actually government contracts.
1:16:42 If you have a fleet of, you know, these special handicap accessible vans, you know, you effectively
1:16:44 can immobilize this fleet every day.
1:16:48 You kind of fill up your appointments with the people and you just transport them to and from
1:16:49 super simple.
1:16:53 You don’t really think about it, but like the demand is, is there, especially as, as the
1:16:53 population is aging.
1:16:56 That’s a, that’s a good example of an unsexy one.
1:17:01 I would love to buy a funeral home, like something that’s just like, oh man, like you work in that.
1:17:03 It’s like, how do you, I mean, all of the deal, like,
1:17:07 if you want to find a deal that’s kind of like, you know, punching above your weight,
1:17:11 if you will, like, there’s going to be some hair on the deal, like at the lower end of
1:17:11 the market.
1:17:14 Like, like I said, like private equity is going to scoop up the easy ones.
1:17:19 There’s going to be something like, if that something can be that it’s just like weird
1:17:23 and like, no one really wants to touch it or, or think about it.
1:17:26 Like to me, that’s a great, a great reason to buy it.
1:17:26 Right.
1:17:31 Cause it, cause it might mean that, you know, let’s say there’s a really sexy business on one
1:17:31 side, right?
1:17:35 There’s a business that’s like, uh, maybe it’s like software only.
1:17:37 You don’t have to run it.
1:17:40 Um, you know, you know, it’s, it’s low operations, blah, blah, blah.
1:17:43 And it’s, it’s about whatever party planning or something fun.
1:17:48 The hair on that deal might be, it may be just that the valuation is extremely high.
1:17:50 So it’s going to take you a long time to get your cash back.
1:17:54 Or it might be some other, something else like, you know, users are very fickle.
1:17:55 The competition is very intense, whatever.
1:17:57 There’s going to be hair in every deal.
1:18:01 The good thing about what you’re saying is that if you choose the hair that it’s not the
1:18:02 most fun thing to run.
1:18:03 Well, yeah.
1:18:05 Or the hair is going to be like, you got to cremate someone.
1:18:07 It’s like, I actually, like, I don’t actually know if I want to do that.
1:18:08 Like now that I’m saying it out loud.
1:18:11 Like, that’s, I mean, I’ll hire a teenager to do it then.
1:18:13 Uh, but like, that’s a better hair.
1:18:14 That’s about a better amount of hair.
1:18:16 Like you kind of know what it is.
1:18:17 It’s like the hair is the thing.
1:18:17 Right.
1:18:22 Versus like the P and L has hair or the, there’s a lot of debt on the business already.
1:18:23 There’s other problems in other areas.
1:18:24 Exactly.
1:18:28 So if there’s something that like, yeah, like if 20 people are going to flock to the
1:18:31 software only party planning one, but only like two crazy enough people are like, well,
1:18:36 let me roll up these funeral homes, try to like, I’m sure people do this.
1:18:38 Like the, you know, I’m not the first one to think about this.
1:18:40 Um, but I like that.
1:18:42 The other thing I really like right now, party city just went out of business.
1:18:44 Who’s buying, where are you buying balloons?
1:18:48 Um, there’s a guy, like 20 minutes from me, he had a firework store.
1:18:51 His firework store happened to sell balloons.
1:18:55 The day party city went out of business, he rebranded, man.
1:18:56 Now his store is called balloons.
1:18:58 Uh, it used to just be called fireworks.
1:18:59 Now it’s called balloons.
1:19:02 He’s taking out all the ads on the street.
1:19:07 Um, and we went there, uh, you know, for my, for my son’s birthday and he’s doing awesome.
1:19:11 So it’s like, how do you like kind of, and don’t copy party city that clearly didn’t work.
1:19:11 Right.
1:19:15 But the demand for balloons still exists and will continue to exist.
1:19:15 Exactly.
1:19:17 The supply just shrank like a whole lot.
1:19:17 Right.
1:19:23 And I imagine as things change, like the landscape for better or worse is changing very rapidly
1:19:23 these days.
1:19:28 Um, you know, maybe something goes out of business cause they can’t compete cause of tariffs or
1:19:28 whatever.
1:19:33 Like, how do you think about being, you know, opportunistic in that sense and doing it?
1:19:34 And you can do it.
1:19:38 Um, like you don’t even need, like you could start selling balloons, like get a permit and
1:19:39 start doing delivery only balloons.
1:19:42 Like that, I actually saw a truck doing that.
1:19:47 When I went to Monish Pabrai’s house, he’s a great investor and he, on his desk, there’s
1:19:49 a, like where you have a name placard.
1:19:51 Normally you just have your name engraved on it, engraved on it.
1:19:53 It just said, trouble is opportunity.
1:19:55 And he just had it on his desk.
1:19:59 So, cause at all times, you know, he’s reading the news or he’s hearing something as a reminder.
1:20:00 Trouble is opportunity.
1:20:01 Uh, I love that.
1:20:02 Yep.
1:20:02 That’s awesome.
1:20:03 Cool.
1:20:05 Well, Dan, dude, awesome hanging out with you as always.
1:20:08 I’m glad you got to tell your story and congrats, man.
1:20:12 I’m blown away by what you did with the, with the business that you bought.
1:20:13 You are officially Dan, the bag man.
1:20:14 Thanks for telling the story.
1:20:15 Yeah.
1:20:15 Thanks for having me on.
1:20:18 It’s, uh, exciting to, uh, to be here.
1:20:18 Cool.
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