#60 - Cleared for Takeover: Collin Hathaway on the Boomer Business Buyout Boom

[00:00:00] Welcome back to Passive Income Pilots everyone, Tait Duryea here with Ryan Gibson. How are you my friend?

[00:00:06] I'm doing great. I'm excited to learn about all these

[00:00:09] ways you can buy your own businesses and you can operate them for a good profit and there's

[00:00:14] an awesome guest today that we're going to talk to about that. Stoked, need to say.

[00:00:18] Stoked as well. You know, I think that this topic, I certainly came away from it

[00:00:24] with a much better sense of how this works. That's the idea on this show, right? Is to

[00:00:30] give you some context, show you, okay, give you some ideas and some context so you can feel it out

[00:00:35] and see if it's something you're interested in pursuing further. I didn't even know that this

[00:00:39] was a thing. Certainly that a thing that was accessible to the average person before a couple

[00:00:46] years ago and so I was really interested to learn about it. What are your thoughts?

[00:00:51] Yeah, I think this show is about passive income, right? And it's for aviators who

[00:00:57] are, they want to learn more. They want to broaden their investment horizon and bring a

[00:01:04] left and right limit to the whole, expanding their knowledge. We could sit here and just

[00:01:07] talk about real estate the entire time or we could talk about what we do but what we don't

[00:01:11] want to do is we don't want to limit the investment professionals, the thoughts and

[00:01:16] thought leadership on the show. So we're trying to like find amazing guests that can come in and

[00:01:22] talk about something that we've never even thought of as pilots and I think Colin nails that today

[00:01:28] which is in 2008 he went out and bought a plumbing company and turned it into a multi-million

[00:01:36] dollar business and sold it and he had really no experience other than just like the grit

[00:01:40] and the tenacity to go take it on and we're going to dive into how he did that and as

[00:01:44] a pilot you might be thinking, okay well what if I'm going to be passive? I don't want to buy a

[00:01:48] business but maybe your son, your daughter, some of your neighbor, maybe you invest in one so this

[00:01:52] is just broadening your landscape of like who actually owns that plumbing company or who owns

[00:01:57] that landscaping company or how do you even go about finding a company to buy? And I think

[00:02:02] that's what makes this episode really fun is we go basic level and we dive into all those

[00:02:08] things in the show with somebody by the way who has done it numerous times and if you live around

[00:02:15] Seattle you know these brands Southwest Plumbing and the guy on the door of the truck that is

[00:02:21] waving, Guardian Roofing I mean these are big name brands that Collins company Flint Group owns

[00:02:26] and he manages and benefits from them so a little bit about our guest he got his MBA

[00:02:31] from Stanford University graduate school of business as well as a BA in economics from

[00:02:35] Stanford and while in business school Colin founded Skylight Capital which is covered in

[00:02:40] pool house just off of the Stanford campus known as his world headquarters we're laughing here

[00:02:45] and his apartment and he currently serves as the chairman of Flint Group and Guardian Roofing

[00:02:50] Colin lives here in Seattle right near me and his wife has he's got two young kids he's a

[00:02:55] diehard Stanford football fan Seattle Seahawks and the Sounders and good friend of mine I say

[00:03:00] we'll leave the show off with a couple of topics right as you listen to Colin speak he's going

[00:03:04] to really try to make it basic but you might hear this word multiple of EBITDA so a multiple of EBITDA

[00:03:10] and I when you might hear this and as an as a pilot you may think what is that well EBITDA is

[00:03:15] earnings before interest taxes depreciation and amortization that's just a fancy word of saying

[00:03:21] basically your profit before you pay any taxes interest or amortization so what your net

[00:03:27] is to the business but not necessarily your overall profitability because if you take

[00:03:32] loans or leverage and things like that on a company you're going to have to pay those expenses in

[00:03:36] addition to below the line expenses that EBITDA doesn't include so right businesses are valued

[00:03:41] this way I kind of give this example on the show where if you buy a business that is producing

[00:03:46] $1 of EBITDA you have to ask what the multiple is of that EBITDA to determine what the value

[00:03:52] of the company is and so if you have a company that's trading at a five times EBITDA

[00:03:58] and you have a $1 of EBITDA that's a $5 company very simply put so we go into that we dive into

[00:04:04] a lot of those discussion points on the show but the reason why you would take EBITDA versus just

[00:04:09] net profit is because there's a lot of variability right the debt might look different

[00:04:13] very different from one company to another that's why real estate we take NOI net operating income

[00:04:18] that does not take into account debt service because one person might have a bunch of debt

[00:04:24] one person might have not much debt and so if we compared those apples to apples

[00:04:28] you wouldn't be comparing apples to apples right it would skew the numbers and so

[00:04:32] we stripped those things out that's where EBITDA comes from I will mention Collin is absolutely

[00:04:36] hilarious this show this episode is anything but clean so if you're listening to this in

[00:04:41] the car with kiddos maybe save this one for one of those one of those commutes when you

[00:04:46] got some headphones in we like to have natural conversations with guests and not bleep out

[00:04:51] everything so just yeah but no I think what's interesting too is Collin's been on a lot of

[00:04:56] shows and he's pretty popular guy when it comes to the private equity space it was interesting

[00:05:00] I listened to an episode that he was on he said 95% of plumbing and AC companies have less than

[00:05:04] a million dollars in revenue and it's a very fragmented market so if you buy one of those

[00:05:10] companies you're not going to have 300% growth like a tech company but you're also not going

[00:05:14] to be put out of business of like new technology and by the way toilets are

[00:05:18] recession resistant right what there's you know people are still going to go to the bathroom and

[00:05:21] the toilets are still going to break even when you have a good economy or bad economy so

[00:05:24] we're going to talk into is there still an opportunity in that space and is there an

[00:05:28] opportunity to buy businesses because a lot of baby boomers are retiring and they don't

[00:05:33] have errors to their business so where do these opportunities lie we're going to talk

[00:05:36] about that on the show so with that let's get to the show welcome to passive income pilots

[00:05:44] where pilots upgrade their money this is the definitive source for personal finance and

[00:05:50] investment tactics for aviators we interview world-renowned experts and share these lessons

[00:05:56] with the flying community so if you're ready for practical knowledge and insights let's roll

[00:06:02] Colin thanks so much for joining us we appreciate you coming on the show thanks for having me

[00:06:05] yeah so I know that you are in ypo with Ryan you guys have a good friendship from that

[00:06:11] and we appreciate you coming on and talking about buying businesses can you

[00:06:14] it's a friendship we talked to I just want to clarify we're the same great

[00:06:18] and so you're forced to be friends just so you know I like that's right same neighborhood too

[00:06:22] right sort of yeah it's sort of stalker ish he's a hell being your group and i'll live near you

[00:06:26] and then you should come talk to us this is gonna be a fun episode I said before the show Colin

[00:06:31] I love your humor can you give us a little bit of background we read your bio in the intro

[00:06:35] talked a little bit about what you've done but yeah where are you now and what does the

[00:06:39] space you play look like yeah so for the so thanks again for having me on for the last 17 years

[00:06:46] I basically bought and built small businesses so I started my career as a low man on the

[00:06:53] totem pole private equity guy in 2002 went to business school in 2005 back at Stanford and then

[00:06:59] in 2007 started my own firm called skylight which is a misnomer that it's a firm it's just me

[00:07:05] you know CIS safe house with a little shingle that says skylight so that's my thing and

[00:07:10] the whole idea what defines those are global global headquarters that was your global yeah

[00:07:14] that's right in a pool house this is still the global headquarters it's just I moved from

[00:07:17] downtown Seattle to like right behind a mall in an non-descript building not because I'm famous

[00:07:23] but because it was closer to my house and the rent is cheaper so I'm killing it destroying it

[00:07:28] so yeah for the last 17 years I started trying to buy small companies and I didn't really set out

[00:07:33] with any specific goal in mind and what happened is I bought a plumbing company in Sacramento in

[00:07:37] March of 2008 and the strategy was pretty simple it was close to where I was living in San Francisco

[00:07:44] the owners were amazing and they were going to keep 20% and help me and I was I think 29 or 30 and so

[00:07:50] wanted their support and encouragement and they had a lot more experience than I did

[00:07:53] and then I thought we should buy a plumbing company because everyone my friend's like why

[00:07:58] would you do that I said you all say a recession is coming I'm pretty sure

[00:08:00] toilet still break in a recession and they're like that's the dumbest thesis I've ever heard

[00:08:04] I'm like it's not a thesis it's just available I need to buy a company to make this work so

[00:08:08] I bought it great recession hit and we grew 50% of the next three years and that was really the

[00:08:13] start of now I mean it's it's not all linear but I think I've probably invested in our bots

[00:08:19] 17 to 20 companies and it really developed this niche in home services and that's like

[00:08:26] plumbing air conditioning electrical now roof residential roofing slurred with pest control

[00:08:30] didn't go that well and the short version is I started a I bought a company in Texas in 2011

[00:08:37] that turned into a big group of four companies that grew to 150 million and we sold it in 2016

[00:08:42] I got kicked off the fact I got basically ejected out of that company by the New York

[00:08:47] private group from the bodice so I bought a residential roofing company in Seattle my wife

[00:08:52] said why would you do this and I said it's close dollars are awesome it's like the same story

[00:08:56] I was like it rains a lot here I bet Ruth sleek and she's that is a horrible plan I'm like it's

[00:09:01] going to work she's you're going to lose all her money I'm like I probably won't she's really I'm

[00:09:03] like I have no idea and so we've owned that company for seven years called Guardian Roofing

[00:09:08] and it's grown from 10 million to 30 million and then in 2019 I raised 30 million dollars

[00:09:13] to go start a group called the flank group which was basically another version of what I

[00:09:17] did before we bought plumbing and air conditioning companies we bought seven companies in five states

[00:09:23] 70 million of revenue we grew to 160 million we had probably thousand employees and we just sold

[00:09:28] last august to a big private company firm called General Lanick so I'm the executive chairman of

[00:09:33] the flink group one of the owners of Guardian Roofing and then I've been involved in some

[00:09:36] other boards and so forth and I'm in YPO with Ryan two kids 1311 and married 15 years

[00:09:43] and lived by Eurydice Washington that's quite a story especially the flint part

[00:09:47] Colin missed the party from Flint Michigan another Michigander from the Pontiac area originally

[00:09:53] Pontiac Waterford so really cool to hear another Michigan success story Colin what

[00:09:58] for a pilot listening right that's just flying the line and doing the thing and looking for

[00:10:02] passive income and maybe they're thinking about being active can you kind of talk globally

[00:10:06] about just what like there are so many baby boomers retiring now and and abandoning

[00:10:12] these businesses because there's no errors that want to take them over or whatever and

[00:10:19] the kind of the opportunity that's out there right now it is sort of either invest in somebody

[00:10:23] else's business or invest in and buy your own and operate your own business kind of speak

[00:10:27] you know high level to that yeah so there there are there's one thing I realized when I first

[00:10:33] started in 2002 and it's changed a little bit it's been 22 years but there are so many small

[00:10:38] businesses out there so there's big private equity firms and maybe we could even just give you

[00:10:44] give like a is it okay to give like private equity 101 before we talk about absolutely that's yeah

[00:10:50] that's why we're here yeah yeah so I think private equity is in the news a lot Mitt Romney ran

[00:10:55] and he was part of private reform and hit the news when he ran for president and it's got some

[00:10:59] good elements it's got sort of some bad reputational elements but essentially private

[00:11:03] equity is like this giant umbrella and so there's usually five different areas of private equity

[00:11:09] so there's hedge funds which invest in like public market stocks if you've seen billions

[00:11:14] that's like a hedge fund my brother worked for the guy who I think billions of a based off of

[00:11:18] Steve Coen who owns the Mets that's called SAC he worked for him for 15 years so that's hard

[00:11:24] to get into for someone who isn't a huge university or pension fund or whatever but they invest in

[00:11:29] public stocks typically and do a whole host of other things there's venture capital which is early

[00:11:35] stage investing primarily in tech the folks investing Google and eBay and Airbnb and so forth

[00:11:42] high risk high reward sort of it's very cyclical it was really big in the 90s then

[00:11:47] bombed out and then got really big again and bombed out and when it's sort of going through

[00:11:51] a little come up in right now there's growth equity which is essentially like buying you

[00:11:57] invest in a stable business that's growing really fast that needs money to expand faster

[00:12:01] it could be a consumer product company or think about like when Red Bull was small and they

[00:12:06] might have taken on a hundred million dollars to get distribution all over the world and

[00:12:10] the person would own 30% of the company and that now you're getting closer to what I do

[00:12:14] which is leverage buyouts which is generally what people refer to as like private equity but

[00:12:20] it's essentially buying a house you can buy a house for cash or you can take out a mortgage

[00:12:25] buy a house and oftentimes we take out some version of a mortgage and if we're going to buy a house for

[00:12:30] 100 bucks we'll borrow 20 to 80 bucks to buy that company and that's so the leverage is a

[00:12:38] synonym for debt so you use debt and equity private equity private money from someone to buy

[00:12:43] a company and then the fifth element is this thing called private credit or private debt which

[00:12:48] is where big friends are loaning and so instead of going to Bank of America to get

[00:12:52] or JP Morgan to get a loan to buy a business we have to put up your house

[00:12:57] and pay 6% or 8% you'll go to a firm that's basically raised hundreds of millions of dollars

[00:13:03] to loan people money like myself to buy a company and they'll charge 10 or 12% and

[00:13:07] there's versions of that so those are the five things I think the one you're most interested

[00:13:11] in maybe or at least the one I'm most familiar with is the leverage buyouts

[00:13:14] but that's the backdrop of it just so folks understand because it gets thrown around

[00:13:19] and people that's fantastic that was a really good breakdown of the different

[00:13:23] sub sectors yeah can you you know when I first heard someone say one on a partner that I work with

[00:13:29] said I'm not as interested in the real estate deals this year I'm really interested in all these

[00:13:34] all these blue collar high cash flow businesses and I'm like huh get in line really it did

[00:13:40] yeah right it didn't really resonate with me at first because it's not something that I

[00:13:44] understood and I didn't realize the tidal wave of these businesses that are sort of hitting the

[00:13:50] market can you speak to as sort of Ryan alluded to the all of these blue collar businesses

[00:13:56] why there there are so many on the market are there so many on the market or is that a

[00:14:00] misnomer it seems like it's a buyer's market right now where because we did an episode with

[00:14:05] Aegis and there's like this big wave of baby boomers retiring and the kids don't want to

[00:14:09] take over the roofing business and so it hits the market at a at an attractive multiple is

[00:14:13] that true or no no yes and no and so and I might totally abathing your listeners of how easy this is

[00:14:22] to go do but it's interesting that's okay yeah so what's happened in our space is or in the blue

[00:14:28] collar space just more generally is when I started in 2008 I bought a plumbing company a

[00:14:33] residential plumbing company they're different residential go fix mrs john's house commercial

[00:14:36] might be go fix a big building or air conditioning same thing you have contracts and so forth

[00:14:41] I only do residential stuff so for most listeners if you own a house there's plumbing problems

[00:14:46] electrical whatever that's what we service when I started I was the only one who had that I knew

[00:14:51] of that had bought a plumbing company up through about 16 2016 and there's a company called ARS

[00:14:56] American Residential Services that owns Rescue Brooder and they had done it too what I didn't

[00:15:01] know is a bunch of people had tried to do this five years before roll them rolled them up put

[00:15:05] a bunch together and then blew up so had I known that maybe I wouldn't have done this but I

[00:15:10] was too dumb to know that so I bought one and figured out so what's happened in the last few years is

[00:15:14] like no one cared about these spaces there wasn't like there was no synergies there was it was pretty

[00:15:21] hard our businesses are beneficial in the sense that you grow 100% you got to add like 98% more

[00:15:27] bodies to the company you know it's not like software if you grow 100% you just had some

[00:15:30] sales people and some dev people and quality assurance people so they're really hard and

[00:15:37] they're super fun and I love them but they're not like we're going to grow a rethink of me 100%

[00:15:41] and we're going to add 95% more people so that's exciting but you know it's a lot more bodies

[00:15:47] and what happened was a couple things my group did pretty well a couple others did pretty well

[00:15:52] and we sold for 200 million in 2016 and a couple private equity firms got interested in that

[00:15:57] and didn't get didn't buy the company they didn't win the bid so they started buying some companies

[00:16:02] on this they didn't get so they started their own group and then my company they sold for 200

[00:16:05] million that I had bagged our private equity firm that backed me to not to sell so for 750 million

[00:16:12] three years later and some of that was growth and some of that was the multiple of EBIT

[00:16:18] EBITDA multiple profit went up quite a bit so they got the both they got growth and the

[00:16:23] multiple went up it's what people would pay and then it was like game on in 2019 is when

[00:16:28] it's sold again and that's actually when I started Flint all of a sudden more and more people

[00:16:32] private equity firms in general are like lemmings I have this amazing idea I'm like tell me about it

[00:16:37] they're like residential home services I'm like wow that's amazing how like how did you come up with

[00:16:43] an idea like that he's like well I saw a bunch of people are buying and selling them I was like

[00:16:47] interesting good original thinking so like the and then on top of that there was like

[00:16:53] ton you know we had like this a massive growth in the economy and some more money was rushing

[00:16:57] into private equity and private equity is like any other business like it responds directly to the

[00:17:01] financial incentives put in place for the people managing the money and their incentives are to

[00:17:05] basically raise a bunch of money because they get a fee from it invest it quickly hopefully if it goes

[00:17:12] well they get a percentage of the upside of that and then raise and and then show a good track

[00:17:16] records you can raise a bigger fund and charge a bigger fee to invest more money to maybe get

[00:17:21] more upside and raise a bigger fund and just and then guess what happened COVID hit

[00:17:25] and a lot of our businesses did pretty well when people are sitting at home

[00:17:29] and the government injected a boatload of money in the economy which they had to put somewhere so

[00:17:33] they put it into private equity so like more and more money drove up more and more is like we saw

[00:17:37] in housing or real estate or whatever like interest rates are low people could use more and more

[00:17:42] debt so there's all these things that went into it and I would say in 2021 we put a stop to

[00:17:48] buying plumbing companies for a minute so we could digest what we bought but also

[00:17:52] purchase multiples had gone up 100 to 125 percent not like 25 percent if we paid

[00:17:59] six times profit EBITDA we call it but like not we call it and I hate to say that

[00:18:05] like something I like to call EBITDA I'm like everyone calls it that for people who don't know

[00:18:08] it's this way we measure kind of pseudo profit if we were paying six suddenly people were paying

[00:18:13] 12 to 14 times for no other reason they said their synergies and they figured out technology

[00:18:20] and they could do cost savings but they're full of shit I think in which I think they are and what

[00:18:25] was happening is they would push all this EBITDA together and then sell it to and maybe they buy

[00:18:30] them for eight times or 10 times and they put a lot of it together and then they'd sell it to

[00:18:34] somebody else for 15 times and so there was this greater full theory happening and like

[00:18:39] someone's going to let holding the bag and it's happening interesting can I just rewind real

[00:18:45] quick because I know that EBITDA might not be a term that our listeners know so I just

[00:18:50] made up it's like if your business it's actually Colin coin coin the phrase technically everything's

[00:18:55] made up so it think of it this way if you're buying a company and it makes $1 a profit

[00:19:01] and you sell it for one times EBITDA that company is $1 right that's right yeah if your company makes

[00:19:08] $1 a profit so all the expense well whatever $1 profit and it trades at 15 times EBITDA

[00:19:14] you just take that $1 profit multiply it by 15 and so when Colin's talking about I'm buying these

[00:19:20] businesses between four and six times EBITDA he's basically buying them for a good price

[00:19:26] and then all these private equity companies are coming in and paying 10 times EBITDA then 15

[00:19:30] times EBITDA and he's basically saying at what point is someone going to be caught holding the

[00:19:35] bag way overpaying for a business that may not have any value to squeeze out of it

[00:19:40] and who may not have another buyer to squeeze out of it so anyway I just wanted to make sure

[00:19:44] that that's right even out you can look at it and we can I can explain it's basically like taking

[00:19:48] the net income of a company how much it probably really makes its earnings before interest taxes

[00:19:55] depreciation amortization you should google it it's it's essentially a financial tool that

[00:20:02] people generated so that they could measure what a company would look like if you didn't have

[00:20:07] debt or you could structure it different ways and like KKR which is a big private

[00:20:11] firm started using this back in the day and Warren Buffett hates it and thinks it's ridiculous like

[00:20:16] you shouldn't use it it is not equal to profit it is not because if it's earnings before interest

[00:20:23] we still have interest to be of debt so okay that that goes down if you did you pay taxes

[00:20:27] LLCs don't have to pay taxes but they should send money out to pay taxes for the investors

[00:20:31] so like you probably pay those so that goes down depreciation amortization are not actual

[00:20:36] cash expenses but it's a little bit of a misnomer it can get a little funky and it's funny

[00:20:41] because what we're seeing now is when you said it's a buyer's market it is but now every Tom

[00:20:46] Dick and Harry who has a home service company is pretty sure they're like oh mine's worth a 10

[00:20:51] multiplier and I was like guys there's like actually math that goes into this involves like

[00:20:55] your actual profit your percentage of profit your growth rate like a bunch of things but everyone

[00:21:02] doesn't care they just say oh I want a 10 or 15 I want a six but there's real math that

[00:21:06] goes into it 90s like a one page excel model that works just as good as the 50 tab models but

[00:21:12] there's math you have to do it because you have to buy trucks and you have to do all this stuff

[00:21:15] and you have to make sure there's no cash to pay for all this stuff is there is that limited to

[00:21:20] the home services when you say home services plumbing air conditioning roofing so stuff like

[00:21:25] that or our landscaping businesses sort of a different animal that haven't been exposed

[00:21:29] to the private equity space are there still opportunities out there in different sectors

[00:21:34] of these sort of high cash flow blue collar businesses so there there are still a ton of

[00:21:39] opportunities out there I mean that's one thing that is just been mind blowing is there are so many

[00:21:42] companies out there so what I don't want to give the impression that there's not

[00:21:46] still opportunities for folks to buy businesses I would say that the more astute run higher

[00:21:53] profitable bigger companies are expecting more for their companies than they sell

[00:21:57] there's still sort of small businesses that make 300 grand or 500 grand of profit

[00:22:02] that you can snipe up for less money it's just riskier and it's not bad guardian roofing didn't

[00:22:09] make a ton of money when we bought it it was a great culture and great business but it just takes

[00:22:13] a little more work and there's less stuff you can do unless you're willing to get involved

[00:22:17] or know what you're doing if that makes sense that makes a lot of sense yet when you were

[00:22:23] looking at your first business 2008 buying a plumbing company okay toilet service

[00:22:28] session resistant that's great how did you even find this thing where did you even go to

[00:22:34] like where I guess Google was around but you know how do you even find a

[00:22:38] a suitor someone who's willing to sell it's way better for your listeners now than it was for me

[00:22:43] so I had spent 2002 to 2005 building up a broker database so there are business so again

[00:22:50] there's all kinds of in the financial financial world or whatever people haven't been exposed

[00:22:54] you'll hear about Goldman Sachs or Morgan Stanley's an investment bank and they

[00:22:58] take companies public and they sell businesses they do M&A mergers and acquisitions

[00:23:02] they're like the ones selling like Clorox or taking you know Clorox for a big thing then there's

[00:23:06] like you go down and there's like middle market ones and then there's like Harry the business

[00:23:11] broker he's like think about real estate brokers right they're business brokers all over the

[00:23:15] country that talk to the gas station owner in South Carolina and this company in Utah that

[00:23:21] made like racking systems for cans and like it's a company and so like they their job is basically

[00:23:28] to find small businesses and then take them out to market when I started it was highly inefficient

[00:23:33] there was email lists and conferences and stuff and I knew how to get in that what's cool now

[00:23:38] is there are tons of resources online like biz buy a cell you have to Google it I'm not sure

[00:23:45] I don't do this very often I get like 10 a day from just being around forever so like I don't

[00:23:49] go online very much but like biz buy sell international business brokers association

[00:23:55] generational equity on their website they have a gajillion companies and you can go look so if

[00:24:02] you're thinking about doing this you have to do way less work than I did to at least just see

[00:24:07] and you could say hey I want to see this car wash or a car wash as a we have gotten really

[00:24:11] expensive too but like landscaping company in Myrtle Beach and they'll say we need an NDA

[00:24:17] okay sign you sign a non-disclosure agreement says you won't tell anybody about it and then

[00:24:21] they'll sometimes send you a book sometimes they'll say we need to see your do you have money

[00:24:24] when I first started I just said I did and if they asked for more information I would just

[00:24:28] do this a lot and then usually they'd give in and send it to me um so you know if you

[00:24:34] have a lot of money you're welcome to put I have a lot of money or a million dollars

[00:24:37] or whatever and I can afford to buy this or you can just do this and usually you'll get

[00:24:40] it anyways business brokers wouldn't like that or just exaggerate and then you get the thing and

[00:24:46] you can decide if you want to buy the Myrtle Beach landscaping company but I know a lot of people

[00:24:50] who just spend a lot of time on those websites just looking and that's partly how I started was

[00:24:55] just like seeing what might make sense and what resonated with me and what I thought just

[00:25:00] frankly wouldn't go out of business because I had 110 confidence and zero percent skills

[00:25:07] so like I was perfectly set up to do well amazing like a lot of entrepreneurs in their

[00:25:13] early stages you gotta be like most 29 year old men just yeah that's fair like Dunning Kruger like

[00:25:18] all the way just pure idiot with the peak of Monts stupid yep so can we talk about due diligence

[00:25:23] it's kind of a perfect segue into okay you find a business on facebook marketplace or or biz by

[00:25:28] sell you find the landscaping business in Myrtle Beach and they say all right here are the

[00:25:34] books you can fly out and see it what are you looking for like how do you conduct due diligence

[00:25:39] on this yeah so I'm not the best at this part because there's so I have a completely different

[00:25:45] approach because when I started I was like oh we're gonna do all this fancy diligence and

[00:25:49] whatnot like when we sold the flink route a bunch of groups spent a lot of money hiring consultants

[00:25:55] and doing all the stuff and going through our financials seven figure plus and then they

[00:25:58] got to bid on the company buy it for a lot of these companies like the Myrtle Beach landscaping

[00:26:02] company you're gonna get some information it might be it's called a sim a confidential

[00:26:08] information memorandum maybe you might just get financials on the one page thing you might

[00:26:12] just get their website and some loose financials when I started I was like oh I gotta do all this

[00:26:17] work and pay lawyers and these there's a there's financial groups that will actually

[00:26:21] bet the financials for you they're called quality earnings groups there's a great guy named

[00:26:25] Elliott Holland of the company called Guardian we found him on twitter he's fantastic no he's

[00:26:32] just a grinder so so you can do all these things but I would say like don't do any of it

[00:26:36] don't just don't fly out basically especially now nowadays so you look at the information you

[00:26:41] say this might be interesting especially if you lived in Seattle you're like okay how

[00:26:45] about we set up a zoom call or teens or something and like we'll meet or and then I basically see

[00:26:51] how that goes if it works well with me then I basically just make an offer what you have

[00:26:55] any visit I know hold on let's just see if it if we're in the ballpark because I went once

[00:26:59] met an owner in Dallas with a three million dollar company revenue we had already had a company there

[00:27:03] it was in a neat area Dallas we could just add it in and be fine he's like I cannot wait to work

[00:27:08] with you this is gonna be great I said I'm excited this is awesome you need like 50 year old plumbing

[00:27:12] company and he's okay cool so I just need 30 million and I was like what he's like 30 million

[00:27:17] I said dude that's crazy he's like all right 22 I'm like nope he's like 18 I was like no way

[00:27:22] he's like 12 I was like first of all I just got you down 18 million in like 60 seconds

[00:27:28] he's also good I'm like no we're not good that's pretty good right 18 million 60 seconds

[00:27:34] and I was like why do you want 30 million I want to jet I was like yeah I'm gonna fucking jet too

[00:27:39] but guess what like I don't just get one so like we didn't have to have any more meetings

[00:27:44] and I was already in Dallas so it's free so like you'd rather figure out if you're like

[00:27:48] now you just figured out you're in a range so if you say hey I really like this I think it's

[00:27:52] gonna be in the 300 dollars to 500 whatever it's a hundred dollar company I could pay you three to

[00:27:57] 500 dollars they're like yeah it sounds good then you fly out and then you send them a due diligence

[00:28:01] list which they can get online or I can give them or whatever and start to get the free stuff

[00:28:06] the handbook the insurance whatever and see if there's any like big red flags then you hire the

[00:28:11] quality earnings firm which is like anywhere from and we used to do a thing where it was

[00:28:14] like a $10,000 check and if the financial okay then we do a little more and then you hire

[00:28:19] the lawyers you already hire them but then you get them started because the whole price process can

[00:28:24] cost 50 to 300 thousand dollars but you can usually find figure out most of the stuff for free

[00:28:30] early because you don't mix a lot because I've done the other way where I did everything at once

[00:28:35] and then it blew up and I owed like 120 grand when I had no money and that sucked so now I do the

[00:28:40] other I do the half away cheap version you know it's funny that's exactly we do we dig into

[00:28:46] the financials and the feasibility but that's exactly how we buy real estate there's no point

[00:28:50] we get an LOI in place but we've done all the computer desktop research at works why would

[00:28:56] we spend any money anytime on anything until we know we can do the deal and then of course we

[00:29:00] do our due diligence that's like really parallel and really good advice just yeah do it all up

[00:29:06] front or get a get an idea of are we even close on price up front before you get on a

[00:29:10] plane and fly out there and fall in love with something that's going to be overpriced

[00:29:14] that's tough because where I come my peer agree of cruising more established or bigger firms

[00:29:19] like they have a bunch of money and they're more like cya so like they want to have all the boxes

[00:29:23] checked everywhere and they're sort of price agnostic I'm more like I just want a good deal

[00:29:28] and I'm like price sensitive so I'm like and I can probably I'm a little more comfortable with

[00:29:34] just like not being quite as orthodox about like like oh have you checked your insurance due

[00:29:39] diligence I'm like yeah I had a guy look at it and said it's enough like what's the analysis

[00:29:44] like that was it you know have you checked your their DEI policy I'm like no I didn't

[00:29:51] that I don't know what it is they have the maternity paternity leave and they offer healthcare

[00:29:55] yeah we're probably good like this isn't Google like I like that style because if I think if we

[00:30:02] had someone on that was talking about all these boxes that you had to check it would just

[00:30:05] it's unsurmountable I think but for me or anyone listening to this show so that's cool to hear you

[00:30:13] say that what about so can we talk about what it looks like when you're like yeah I think I want

[00:30:18] to do this like how do you wire the money and not get ripped off what does it look like the

[00:30:23] first day when you show up and everybody's who's this guy so I think there's a few steps ahead

[00:30:29] of time like I when I started I didn't have any money and I had a guy backing me and then I had

[00:30:34] he sort of turned the great financial crisis he ran out of money so I had to go raise money from

[00:30:39] different people so hopefully the people listening don't have to do what I did which is basically

[00:30:43] tell the sellers oh this is great yeah I've got money aligned up and then I would turn around

[00:30:48] and make a little pitchbook and then go to the buyers and be like hey I found this great company

[00:30:52] like if you've done dollars I'm like yeah totally it's all checking out and then I'd rate money

[00:30:56] over here while I'm telling these people I had the money and so I'm basically like a shell

[00:30:59] game until like it all came together at the end now it's worked out financially and I've made

[00:31:03] great returns so everyone that was that's what was happening so they can be done making it so

[00:31:08] that is hilarious but I have been ripped off I had a my second deal ever was a horrible investment

[00:31:14] I bought a mining services company so they would literally go on mine sites and vulcanize

[00:31:20] rubber where they steam make basically take rubber and vulcanize it by steaming it and it's

[00:31:24] super gnarly or they have equipment sent in and they would service it and I bought it from

[00:31:29] a developed woman dude who was committing fraud and forging OSHA records using the hookers and blow

[00:31:35] sales strategy to basically generate 90% of their profit which I should have known because like he

[00:31:41] had like an account at like this El Conevada casino in the room I stayed in had the mirror on the

[00:31:46] ceiling in a hood in like a hot tub and it there was like a lot of morning science but if

[00:31:51] someone's going to commit fraud or forge stuff like it's really hard to catch it the legal

[00:31:54] documents usually have some recourse for that but in this case it was there was like it

[00:31:58] was like the perfect storm of fraud safety violations and stuff that we ended up losing

[00:32:04] two-thirds of it saved the business but had to do some gnarly gnarly stuff just to keep it viable

[00:32:09] and keep our employees working for like five years and then we sold it to the GM who's a great

[00:32:13] guy so what's it like when you wire the money there's always some risk I guess I would say

[00:32:17] so I've done whatever I said 16 17 deals and I've had one super gnarly one every other

[00:32:23] one has that stuff that I did not expect so like part of that's also like I would not pay

[00:32:30] the maximum price because I knew there was stuff in there like you have a financial model which is

[00:32:36] basically bullshit it's like assumptions which are also like you can people can spend things

[00:32:41] exactly creating yeah you can create all these assumptions and then you're like okay but

[00:32:45] wait if I just change this one from six to nine it's like the best deal ever if I

[00:32:48] change from six to four it's the worst how do you pick six and like did something work on

[00:32:52] them and I'm like wait so you just pick six I'm like yeah okay that's fine like just say I pick six

[00:32:58] per set it's fine so I think you have to have a little bit of you have to be cool with being

[00:33:03] risk seeking and you have to know that in general you didn't max out if you have 100 grand

[00:33:09] and that's all you have don't put I did this but don't do this you should put like all your

[00:33:15] money in one basket and just hope or you better be willing to dig in and go fix it if it's wrong

[00:33:21] but there's always stuff in every company that's a little different than you expected

[00:33:24] like I said I do like the free work the cheap work then the legal work and

[00:33:28] most of the time you don't get to even you might get to visit the company once

[00:33:32] it's like buying a house with no like inspection there's going to be stuff yeah even if you get

[00:33:37] an inspector they're not going to find it all anyway right and what's happened now

[00:33:41] like at Flint I'm we're good I'm good enough and I and sounds bad and I've done this long

[00:33:47] enough that and then Trevor who's my partner in Flint is one of the best operations ever met

[00:33:51] so we have a playbook and we've seen enough stuff that we're like oh these five things check out

[00:33:56] we can figure out everything else and it actually allows us to pay competitive or beyond

[00:34:00] competitive because we actually know that our growth is higher than we're the fastest growing

[00:34:05] company in the industry we're like oh so growth solves a bunch of problems but when I first started

[00:34:10] I didn't assume any of that stuff that's what 17 years of work will do is that now we

[00:34:14] just feel like we have a better mousetrap which let's us take more risk by paying more because we

[00:34:20] know that we have a good chance of making it work when I first started I was like

[00:34:24] geez I don't know I hope this works out yeah I hope it just doesn't go out of business if it

[00:34:28] didn't go out of business I'll probably be all right now when you finance something like this

[00:34:31] you talked earlier about private equity and you basically do leverage biologists which is

[00:34:35] a fancy way of saying you take a loan to buy the business and what bank is lending you money

[00:34:41] to something that necessarily doesn't have any hard collateral like a title to a house or

[00:34:46] title to a building or something like that what's that like oh no bank is lending you money no there

[00:34:51] will be none so especially it depends okay so there's a few different ways you can borrow money

[00:35:00] if you want to do this the government has a program called the sba small business administration

[00:35:04] at sba sb i c sba where you can get these amazing loans for like 10 years or 30 years

[00:35:10] something I've never used it but like it's great terms are great interest low whatever

[00:35:16] just have to put your house up is collateral which is a no go for a calling partly because I had no

[00:35:22] house when I started so I didn't even have that as an option but I do know some folks who've

[00:35:26] lost their homes so we generally do what's called a non-recourse loan which means like they

[00:35:32] can't come after your house when you get to a certain size some banks and then these private

[00:35:38] credit entities that I talked about will actually loan you money and there's two different ways you

[00:35:44] can do it there's an asset based loan so if you bought like a big manufacturing company with

[00:35:50] huge equipment that has a ton of intrinsic value you can borrow against that equipment or you

[00:35:54] can borrow against your receivables and inventory I've never bought companies that have all this

[00:35:58] stuff because inventory and receivables they eat up a bunch of money so I've never had that to

[00:36:03] loan against so you can borrow an asset based loan but generally like I remember use that so there's a

[00:36:08] cash flow based loan which is where they say okay the company makes a million bucks a year or two

[00:36:12] million bucks a year we will loan you two times EBITDA or one times EBITDA so but for Myrtle Beach

[00:36:19] landscaping at 350 a year there will be no one that'll loan you money unless you're going to

[00:36:23] put up your house so what you have to do in that situation if you want to borrow money

[00:36:29] is essentially you have the sellers be the bank and so the sellers will like you might say all right

[00:36:34] I'll pay you 700 grand I'll give you 350 make 750 grand I'll give you 350 in cash and I'll pay you

[00:36:40] 350,000 over the next five years with some interest rate and they're the bank and like when I bought

[00:36:45] Guardian Roofing it was too small that I probably could have pushed somebody to give me a loan but

[00:36:49] I just said hey I'll give you most of my in cash and you guys need to carry a small 20%

[00:36:54] of the purchase price as a note and I'll pay you off in two years either I'll pay it more

[00:36:57] out of my pocket or the company will and the company usually generates somebody to pick that.

[00:37:01] That makes a lot of sense we're all familiar with seller financing in real estate yeah

[00:37:05] yeah that makes a ton of sense what about day-to-day management right so the owner the original

[00:37:10] owner disappears you step in everybody's okay who's this guy and do you look for companies

[00:37:17] that have strong day-to-day management so that it keeps running like a well-oiled machine or

[00:37:22] are there is it a red flag if the owner is the one who's doing the scheduling and

[00:37:27] stuff like that because as soon as they disappear then everything the wheels are going to fall off

[00:37:32] right so it's changed a little bit and I think I'll go back to like when I first started because

[00:37:37] now we don't really care we feel like we have enough resources and people we can hire them on and

[00:37:42] I can hold it together long enough when I first started I did something a little bit unique

[00:37:48] I don't know if it's unique but like it was just different so there's a bunch of

[00:37:51] there's this thing if people want to look at up ETA entrepreneurship through acquisition

[00:37:55] which is a fancy way of just saying like buying a company I don't know why I have them in acronym

[00:37:59] but they love it and so and so like the ETA folks are all like I want to buy a company and be the CEO

[00:38:04] it's like buying a basically a CEO job in a small business it's great it's been around forever

[00:38:09] there's also these things called search funds where people raise almost like a one-time private

[00:38:13] equity fund to buy a business ETA is sort of similar variation in most of those cases they're

[00:38:18] looking to take over the job from the seller when I started every one of my deals from 2008 to 2015

[00:38:27] and even Guardian I guess in 19 or 16 sorry about the 16 the owners all stayed they all kept ownership

[00:38:33] a minority stake and I had the Utah guy who blew me sued him and he left and I had a one owner

[00:38:40] in Dallas who said he wanted to go and he saw how good things were with Sacramento and the

[00:38:45] partnership I had there and he said actually I'll keep 10% stay and a year later he claimed out

[00:38:49] which was just me learning that when people say they want to leave in 90 days it means like

[00:38:54] 15 days when they say they want to leave in a year it means like max 90 so they should

[00:38:58] have just listened to him when he said he wanted to go no matter how good our partnership was

[00:39:01] in Sacramento but so I had people there to basically who kept running it and so I didn't

[00:39:08] I never took over as the CEO job until Flint I was the chairman which my wife thinks is so

[00:39:14] ridiculous she's like what does that even mean I was like no one knows that way the owners are still

[00:39:18] like the owners they're less still in charge even though like I'm technically the chairman or whatever

[00:39:24] the boss I want them to have the feeling like it's still their company they're there it's their

[00:39:28] business and I don't want to be the CEO that they report to you Flint was a little different

[00:39:33] because we had a group and it was a different plan okay I don't know if she did but I mean I

[00:39:38] didn't I didn't have them all walk out the door so it was a little easier for me to get my

[00:39:42] bearings and I found the right fit and I just haven't seen that replicated at time partly because

[00:39:47] that's not the design everyone has and partly because most people I don't know maybe it's my

[00:39:52] background in sales or when I started or just that I'm so exceptionally likable but like

[00:39:57] it's been worked out pretty well the work together we've had really good partnerships and

[00:40:01] then there's like a bunch of douchebags who like are like I'm way smarter than the owner and not

[00:40:05] like you need to get the heck out of the way and I think what they generally find is those

[00:40:09] owners got it to where it was because they're pretty sharp maybe don't have a fancy degree

[00:40:14] but I would not underestimate the intellect and operational expertise of the owners that you're

[00:40:21] taking over from and if you do buy business for the need then you just better make sure so that's

[00:40:26] why we haven't done a commercial deal because a lot of the smaller commercial companies the owner

[00:40:31] knows the hundred people that's who maintains a relationship and so when mrs. Jones doesn't

[00:40:36] really know who owns the plumbing company we own but the supervisor at the big building downtown

[00:40:42] knows that his contact is the owner and the owner leaves and timmy walks in or susie right or one

[00:40:48] like you better be willing to hang out with the supervisor and figure that out real fast

[00:40:52] or figure out a way to make sure the owner stays involved long enough with a seller note or

[00:40:56] equity to help you with the transition that's such good advice I think back to when I bought

[00:41:02] my first house I was 25 years old and I took a taxi to see it for the first time because I bought

[00:41:08] it set in seeing in Las Vegas sounds like a great 25 good job I get out of the yeah right it worked

[00:41:14] out right after night in Vegas you're like what did you do I'm like bought a house a sight I've seen

[00:41:18] yeah flew in on a red eye so I'm wiping sleep out of my eyes and I show up and I look at this

[00:41:23] house and the landscapers are there and the doors are open the moving trucks are leaving

[00:41:26] and it was like there was nobody to help so I can put myself on the shoes of a pilot that

[00:41:31] like finds this landscaping company or this roofing company and they're like I bought it

[00:41:35] and the owner leaves and they're like oh my god now so that's great advice I love that

[00:41:40] here's the only thing I say about the different so in my head real estate is super easy because

[00:41:45] yeah because I always think it's really easy so I'm like oh you just buy it

[00:41:50] then they pay you every month and there's never any delinquencies or interest rate issues

[00:41:54] or whatever or squatters and then and you don't have to do anything and I'm like I want

[00:41:57] to be in real estate because all I deal with is people all day so I'm like I just want to do the

[00:42:02] thing where they just pay you and you don't have to do any of this I know that's not how it is

[00:42:06] so I just I don't want to screw up everyone's goal of owning a landscaping company in mortal beach

[00:42:11] I will say for the blue collar space specifically they are operationally intensive businesses

[00:42:18] and if you aren't planning to be there then you better make sure the owner is still there

[00:42:24] or that Juan or Susie or Timmy or whoever is there or have somebody you can stick in there

[00:42:30] or be ready to take a three-month sabbatical and go figure it out. That's good stuff

[00:42:34] and do you find that seller financing is a good way to keep the owner around

[00:42:38] because they're getting that monthly payment and they're like I better make sure this business

[00:42:42] stays profitable so these checks keep coming in. Yeah I think it helps and it also helps if

[00:42:47] it's a bigger chunk particularly for smaller businesses there aren't like a gajillion

[00:42:51] buyers for a $300,000 landscaping company so like you can get I said like half down you could get like

[00:42:58] all of it paid and seller financing the guy might just be like for the gal might just be like

[00:43:03] I'm tired I don't want to deal with this anymore I've got all these visas for guys to come in

[00:43:08] for the summer and I'm out so if you're just have it and pay me a hundred grand a year for

[00:43:12] the next five years and we'll call it like good so that's cool but he may also just be like

[00:43:18] I'm literally moving to Wyoming and I don't give a shit and so you want to try and suss that part

[00:43:23] out will they actually help does 500 grand for a guy worth five million matter right now.

[00:43:28] So good advice yeah this is fun so we've talked through like how to find the business in today's

[00:43:35] world. It's all like cotton-wathered by this call like remembering all this summer

[00:43:40] I'm like oh god I'll be like in a tank top and George's here in a few minutes.

[00:43:46] Don't cut this out. Yeah this is great this makes it a little more natural.

[00:43:51] It's all natural. You know some of the things you talked about in previous shows have been

[00:43:57] by the way a lot of really good episodes on Colin if you want to learn more

[00:44:00] we can put that in the show notes but you said that one of the things that you look at is like

[00:44:04] treating people how you would expect to be treated and that's one of the first couple

[00:44:07] things that you do when you take over a business you help with hey what's the health

[00:44:12] insurance and what is PTO like and I remember you recall the story you took over a company

[00:44:18] were holidays you actually had to take PTO to take a holiday and how ridiculous that was that your

[00:44:23] controller CPA or whatever was requesting time off for Labor Day or something. Can you talk to

[00:44:29] the net kind of culture and how you add that seasoning onto a business that might really

[00:44:33] make the difference between it being successful or not. This goes back to that whole thing

[00:44:37] get on the get on teams resume with them first see how it goes and see if you connect

[00:44:42] because there's going to be people that you just now you might love their business but like it's

[00:44:46] there someone you just can't really relate to I think it's harder because it's just going to

[00:44:50] get worse the transactions are stressful when they leave they're less inclined to help you

[00:44:54] whatever and then I also just think like I ask a ton of questions about how the business operates

[00:44:59] how they think about things their family all this stuff you're not allowed to ask in regular

[00:45:02] HR questions nothing crazy but I just want to understand like the makeup of how they think

[00:45:06] about things because generally these companies have been around a long time and the owners

[00:45:12] have impacted the culture immensely right with how they treat the people and what the expectations are

[00:45:17] and if they're taking shortcuts as an owner or kind of like poo-pooing customer service

[00:45:23] there's a good chance that's exactly how everyone else at the company treats them

[00:45:27] because no one usually cares more than the owner so like I try and figure that out

[00:45:31] at a time and there's there are some operational things that I think we can

[00:45:35] identify or like oh we can probably do that better I mean simple our 401k plan better than a lot of

[00:45:39] people's whatever you know some of that stuff but if like the basic intentions of the owner and how

[00:45:44] they run the business are don't align with my value system then I just assume it's probably not

[00:45:49] going to work because it's really hard to change the culture of a business and that example of

[00:45:56] taking time off for Labor Day that that wasn't a big deal but like in that same company

[00:46:02] they used to train all the managers on taking people to small claims court for 400 to 1200 buck

[00:46:07] meanwhile there was like all these other things in the business that would have more than paid

[00:46:12] for that if we just would have done it better and like our reputation with the customer base was

[00:46:17] not that great so like if we like to me I'm like it's worth four to six hundred bucks just to

[00:46:23] make sure the customer is happy Trevor my partner who's amazing at this stage you just

[00:46:26] want them to be happy use you again and not talk badly about you you take someone of small

[00:46:32] claims court they tell everyone you know and so I think for me and getting so getting I always

[00:46:37] start from it needs to be like 80% or more like sort of aligned with how I'd want it and maybe

[00:46:42] they're just missing some things but if it's how do I know this stuff about Utah and how they

[00:46:46] treated things like I never would have done it wouldn't matter if it made a good $1,000

[00:46:50] because right after I bought it made $0 you know you've got a good knack for interviewing

[00:46:55] you can pull really good information out of people can you speak to some of the things books

[00:47:02] you've read or strategies or things that have helped you become a really good interviewer because I

[00:47:06] think that's one thing I admire about what you interviews together by the way we have once or

[00:47:10] twice and that seems like you've got a really good approach to pulling out really good

[00:47:16] information from people that make it matter and I think that's what you're talking about

[00:47:20] your team's messaging or zooming this person and you're asking them question really good questions

[00:47:25] to get really good intel out of them yeah I guess I think I'm pretty good at the first first impression

[00:47:34] but like there's just a few things so like one if you ever have a meeting with someone you

[00:47:38] should have an agenda like you should have an agenda so if you want to go to biz by

[00:47:42] cell and you find a company and they send you some stuff don't just call have an agenda

[00:47:46] right I go through all the stuff and I write up all the questions they're not like mind blowing

[00:47:50] it's like marketing how do you do it what percent do you spend on digital versus this

[00:47:54] what's your health care like I just and even if you don't get them right this is like me

[00:47:57] practicing for years to get the list right so I can create it in three minutes but like

[00:48:02] you have an agenda that's one two don't take yourself too seriously well I'm thinking back

[00:48:07] to like when I first started like you want to have confidence but like be approachable

[00:48:12] normal that's a guy who this guy used to sit behind me at my old firm every call he

[00:48:16] mentioned he went to Stanford twice and he worked in Prague and all this shit and I'm like

[00:48:20] dude you know gives no shits about that the landscaping guy in fact he's gonna think like

[00:48:25] you're either kind of a douchebag or he's not gonna talk to you or he'll be intimidated

[00:48:30] and I want to talk to you so what are you doing and guess what like he didn't buy any

[00:48:33] companies because he was kind of unapproachable and unlikeable so hopefully he doesn't listen

[00:48:38] to this those are the first two and then there's a really good book it's not so much on

[00:48:42] interviewing like this where we talk to business owner but there's a book called Who by a guy named

[00:48:48] Jeff Smart that I follow religiously when interviewing for everything basically above a plumber

[00:48:55] plumbers technicians have like experience you gotta figure out if they have the expertise to do it

[00:48:59] but any type of like customer service job counting job supervisor manager whatever

[00:49:05] I follow this book I read it and I created cliff notes and then basically I just follow

[00:49:09] it and the screening interview alone has saved me like a jillians of hours because you can do it in

[00:49:14] 20 to 40 minutes you ask the same five questions whether it's the CEO or the customer service rep

[00:49:20] and I can pretty much flush out people and if it's only 40 minutes you just schedule three

[00:49:23] hours and there's two hours you get three done so just knock them out and then you go to the

[00:49:27] more advanced one where for customer service rep it might be 45 minutes an hour for a CEO it's

[00:49:31] two hours and you follow these same questions you just do just follow the book and just do it

[00:49:37] and the amount of stuff I've flushed out from that in hiring people it hasn't guaranteed they're

[00:49:41] a great hire it has flushed out some sketchy dudes and gals who are just lying Colin thank you for

[00:49:46] your time I know that we're at the top of the hour here this has been really helpful

[00:49:50] let's just let's end it with just a crazy story experience in the roofing company

[00:49:56] craziest rescue missions your team is pulled off on a job site what are some of the day to

[00:50:00] day fun stories that you would be willing to share or a story I think it was a blow one's

[00:50:05] hard to beat with the hot to the mirrors I was gonna say yeah that one's hard to beat but that's

[00:50:10] like my best yeah no I just think I guess like I don't have a crazy story I was like thinking

[00:50:15] about oh yeah like we dig trenches and people can't believe how expensive we are in sewer jobs and

[00:50:21] it turns out like this business owner is a helper died last year because they built dug a trench

[00:50:25] and it collapsed turns out like you well not not not in our company but we lost a job to a

[00:50:30] company that was cheaper and two guys died on the job site unfortunate unfortunate I mean

[00:50:36] I'm in companies that have a lot of employees and so when you have a lot of employees like

[00:50:40] stuff happens and we like guys get electrocuted not on our job site but just other stuff people

[00:50:44] have had some gnarly things I think I guess the thing I'd say this is not going to be

[00:50:48] all this panache but I love what I do I love it I I love that we what we get to do is we

[00:50:56] have these cool companies that are not like super sexy and they help people daily and they're not

[00:51:01] always that happy that we are helping them think about if you're toilet blew up or

[00:51:04] your roof's leaking you're not that excited but we get to help people and then basically we get

[00:51:08] to improve the lives of our employees because we have quite a bit of work we pay really well

[00:51:14] we give them opportunities to grow as we grow and it's like we're like the micro version

[00:51:17] of like the American dream in some ways right and I like it because I can understand it I don't

[00:51:21] really understand AI and I don't understand some of the tech stuff and I might think it's bullshit

[00:51:26] for us it's we just get to do good work every day and if we do really good our employees are

[00:51:30] better off the customers are better off than we do just fine and it's it's pretty simple

[00:51:35] it's really hard but it's pretty simple and I get I just I love it I feel so

[00:51:41] fortunate and lucky and for people who are thinking about doing this or doing something

[00:51:44] like this like it's really hard to own a small business it's so rewarding it's scary

[00:51:50] it's fun it's a lot of work but it's super rewarding I love it that's great that's

[00:51:55] you've ever owned a business you yeah you definitely know exactly what you're talking about yep

[00:52:00] the best and the hardest thing you ever do yep so can relate to that

[00:52:04] thanks Colin for coming on and thanks for having me so nice to talk to you guys yeah

[00:52:09] yeah sharing wisdom and when like 100 pilots buy roofing companies so we can go back on

[00:52:12] and have a big session not gonna do a little counseling exactly that sounds good

[00:52:19] you're consulting firm are there any things you'd like to leave the audience I don't know if

[00:52:24] if you want to give any way for people to follow you or contact you or resources that you might

[00:52:28] recommend probably not right you can follow I'm not on social media because I have like

[00:52:33] undiagnosed ADHD and like I had to get off Facebook in about 90 seconds because I couldn't

[00:52:38] be on any of those and I got on Twitter for two weeks and got so angry at all these people

[00:52:41] it was like an idiot echo chamber and I was like I can't be on this anymore so yeah I'm

[00:52:45] on Twitter you can follow me there I won't ever check it LinkedIn is good or if you need anything

[00:52:51] I'll leave it up to you to figure out how to get a hold of me perfect I love it thank you so much

[00:52:55] for sharing your wisdom Colin yeah my pleasure it was really fun thank you guys for having me

[00:52:58] all right everybody till the next show talk to you later