Host: Welcome to Acquiring Minds, a podcast about buying businesses. My name is Will Smith. Acquiring an existing business is an awesome opportunity for many entrepreneurs and on this podcast I talk to the people who do it. Today's episode is with Kelsey Larik and it's all about E Commerce acquisition. Kelsey and his business partner made their first E commerce acquisition in 2017. So not that long ago they used that first acquisition as a platform business and have continued acquiring other companies and now have six E Commerce brands within their holding company of 365 Holdings. Kelsey and I touch on a bunch of different topics. E Commerce and why he likes it, how somebody considering acquiring an E commerce company should think about about it, other types of businesses, non E commerce businesses that Kelsey likes for acquisition, personal guarantees and the role they play in acquisition, entrepreneurship, the entrepreneur in residence program. That is a really interesting opportunity for somebody considering the path of acquisition, entrepreneurship and much more. This is a tightly packed conversation with Kelsey Larik. Enjoy. Kelsey Larik, thank you for joining me today on Acquiring Minds.

Guest: Thank you for having me.

Host: You're the CEO of 365 holdings, which is an E Commerce holding company. You are the owner. 365 holdings is the owner of six E commerce brands. You've acquired them all, I believe, and your path for growth continues to be acquisition. You've done three acquisitions this year. So what we're going to talk about today is your story, how you arrived at this, doing this business, which is kind of a dream for a lot of people, you're building an E Commerce empire through acquisition. And then I just want to get your thoughts on a bunch of themes around this, around E Commerce, around acquisition, entrepreneurship, around your entrepreneur. I want to hear about your entrepreneur in residence program. So lots to talk about. Why don't we start with, as I said, with your backstory. So give us your professional and if you want to go a little bit further back than that, feel free. But all of your background that's relevant. How did this start?

Guest: Awesome. So we probably need to go back about a decade when I first met my business partner, Justin. The two of us have been working together in businesses for about 10 years now. And for the first six years of our relationship we had a series of small offline businesses. And if you were to look back through time every year, we would grow revenue income, however you want to measure it. And we never really achieved any meaningful scale. There was no team, there was no infrastructure, it was very scrappy and there was no funding. It was very small business. We had a payment processing company. We had some home services businesses, timekeeping company where we sold time clocks to government agencies. We did all kinds of stuff. Four years ago we bought our first E commerce business that came with a couple of contractors and employees. And that was kind of the foundation of, of what 365 is today. A couple months after we bought that business, we drained the bank account and maxed the line of credit and bought business number two, which we've since sold. But it's kind of the beginning of the hold code that is what we operate today. So 365 in its current form is about four years old. And yes, it's a portfolio today of six brands. And my role is strategy, M and A. And I really help a lot with marketing and growth while Justin's role is really operations leadership. Day to day P and L management. We subscribe loosely to the EOS framework. So I'm more that visionary in the business and he's more the integrator making sure that we're hiring, firing, training, prioritizing work. And I'm worried about what's next, big picture, long range planning, things like that. Great.

[4:03] Host: And that first acquisition that you did four years ago, what was the brand

Guest: that has what we now refer to as Steel River. So it's gone through some rebranding and some growth and some upgrades, but the Steel river family was that first acquisition.

Host: Okay. And sorry, what is the, what is the product or the product family is.

Guest: Yeah, that's outdoor gear, particularly sharp pointy things. So think pocket knives and machetes and things like that.

Host: Cool. Okay, so when you guys had been doing for six years you've been partners working on these businesses. From the tone in your voice, I feel like they were not very successful.

Guest: They were successful in that we supported our families. They were not successful in any outside metric, which maybe it's a vanity metric for employees or revenue or anything other than to say we were more self employed partners than we were business owners.

Host: Okay, great. So the decision then to acquire an E commerce company, where did that come from?

Guest: We had always wanted to acquire. It was the first time that we had the liquidity to qualify for an SBA loan. And I don't think our thesis at the time was E commerce. Our thesis at the time was take as little money down as possible for as big a loan as possible for as much cash flow as possible. And we probably spent with me kind of leading the charge six to eight to nine months looking at all kinds of deals, probably more software and tech and landed on our first e Comm acquisition.

Host: Where did you find that acquisition? Out of curiosity?

Guest: That was brokered by quiet, light, quietly brokerage.

Host: Sure. Okay.

Guest: Okay.

Host: And so, but just help me understand the psychology of going from starting your own businesses to acquiring something. Did you sort of make a decision? That acquisition was more attractive if you could do it, if you could pull it off.

Guest: So even the ones that we had prior were all purchased in some way, shape or form, but I'm talking like a $10,000 purchase. So my background was before all this, I was a business broker and Justin was a financial advisor. So the first business that we bought was literally $10,000 of which I think eight grand was a seller. Note, he had his thousand dollars. I probably had to borrow mine from my dad or something at the time because it was really straight out of college and married and not a lot of money and like needed to find a way to be self employed. And that's where the genesis of where we started growing was very small acquisitions.

[6:25] Host: Okay, all right. And I think you said you weren't necessarily committed to E Commerce when you went on your search. So why did you choose an E commerce company? And how did you then evolve into being quite focused on EE Commerce and DTC direct to consumer specifically?

Guest: I think at some point after realizing we had a good deal that we could close on that fit our financial profile, kind of risk reward, comfort level, kind of all the criteria we had at the time, we could finance it, we felt like we could operate it even if things were bumpy with the team and there wasn't a good transition. We were just generally comfortable with that first deal. After that first meaningful acquisition happened, I began to think more about E commerce as the platform for the future and less about industry diversity. I think I didn't have a good answer. Other than the two of us working together, we seem to work well. I think we can be successful. We need to find a platform to build on. Once we found the platform of E Commerce, there was kind of no looking back.

Host: Okay, so you acquire this company and you feel good about it and you decide that it's going to be a platform. It's going to be what you use to make further acquisitions in the E commerce space. Because you basically liked what you got and felt that you guys could be really competent at this.

Guest: Yeah, we felt like we build skill sets around core competencies and then copy those brand to brand to brand with efficiency of scale. Yeah.

Host: Okay. And that was 2017.

Guest: Early 17.

Host: Okay. And looking back, do you feel like that early inkling of a Thesis was. Was correct. Sure seems like it was.

Guest: Yeah. I mean, I guess you could point to the evidence of where we are today is. Yes, we've certainly learned a lot and the thesis is now much more nuanced and mature. Yeah. And there's been a lot of bumps along, along the way, but yes, I think that the thesis was correct.

Host: Okay. And after that first acquisition, you sort of make a decision that you're going to be a holding company and a platform company that acquires others. So I'm just trying to understand the genesis of 365 as it exists today.

Guest: Yeah. The initial brand was bought in February of 17. In May, we drained the checking account and maxed the line of credit for brand two. And in June or July, like the actual 365, LLC was, was filed. So that's partially for tax, partially for legal, partially for, hey, we have two now we need like this parent brand. I don't want an email address every time I buy a new company kind of thing. Yep. But yeah, it was February, May, and then June, July.

[9:02] Host: Okay, very cool. Now, e commerce. So this is of course a really hot space to state the obvious, and there's a lot of interest in it from acquisition entrepreneurs. Do you think that I personally am intimidated by E commerce for a variety of reasons? I shouldn't say intimidated, but kind of put off by it. You've got these big aggregators out there. You've got really high multiples on successful e commerce companies. You've got Amazon. Are you going to sell on Amazon and have Amazon undercut you? There just seems like so many pitfalls to E commerce. Every business is difficult, but would you recommend to an acquisition entrepreneur or somebody just starting out that E commerce is a good place to start? Or would you say run for the hills and try not to be biased because of course, the fewer people who are buying businesses in your space, the easier it is for you.

Guest: Yeah, it's terrible. You definitely, definitely don't want to do this, right? No. I think this answer is probably universal. Regardless of the context, the answer really is you need to know yourself and your skill sets and your strengths and beliefs. I think there is a real factor of business buyer fitness and that is both the market you're in and the actual asset you buy. I could probably identify markets that are not e commerce, that broad brushstrokes aren't a great fit for me as an entrepreneur, but I can find an asset in that market that I would love to own and vice versa. I think many people are interested in E commerce, but the bulk of the deal flow that they may come across doesn't or wouldn't suit core competencies or skill sets that they have.

Host: And can you generalize about what a good E commerce business buyer fit would be like? What is it in E commerce?

Guest: I think you need to slice and dice E commerce a good bit. So the first dimension you could slice and dice by would be kind of the Amazon world and the DTC world. I think there's a big bifurcation there. I know we can go into the aggregator conversation a little bit here, but just maybe top down, operating an Amazon business where Amazon brings you customers, you have kind of one traffic channel, it's kind of its own operation. All you really need to understand is sourcing, listing management, basic customer service, supply chain, and the demand on that platform for your products is what it is. You can't really grow the demand very well. You can compete against other people in your category with reviews and rankings and optimizing your listings, but you're in a rented land ecosystem where you're renting space on Amazon and you are competing for market share. Whereas on the D2C side you can create demand, Facebook ads, Google Ads, content creation, you can do a lot to grow a business there. You have all the same challenges that you have on the Amazon side. You gotta have great customer service, great supply chain, great product development, but you have the opportunity to do growth initiatives that you wouldn't otherwise be able to do as a pure play and Amazon merchant. So you can kind of slice the world in that dimension. Okay, next dimension you can slice the world by would be thinking about if you're really going for a mass market demand capture business or demand creation business. So some businesses are really predicated on like category search or search intent, people looking for that thing. And you're vying for SEO ranking, you're vying for pay per click performance. Maybe you're buying an established brand that has a customer base that buys via email. There's certain ways you could look at those businesses and how they capture demand in the market versus businesses that rely more heavily on Facebook, Instagram, TikTok, other type of top of funnel demand creation platforms. And in our view, we want all of them. We want to both create and capture demand everywhere we can. We'll do it on marketplaces, we'll do it on wholesale, we'll do it across any advertising channel that performs. We want kind of a robust and durable business. But I didn't understand that in the first year or two of us Doing this, I didn't understand that we would be buying businesses that were probably captive to one, maybe two channels and that if we bought businesses that were had a core channel that was different than our others, we had to learn all of them really well. And you can't always cross pollinate all of them. So just because one business has a big affiliate presence and one has a big Facebook presence doesn't mean you can take every last tactic from that playbook and move it across those brands.

[13:21] Host: Because that's often one of the pitches by a business broker. For an E commerce company. It's like if they're not on Amazon yet or they're only on Amazon and not on Shopify, it's like, hey, just flip a switch and add another platform to this and watch your revenue go up by 40%. But now I hear a lot of skeptics to that. So how would you address that promise?

Guest: It's so easy. Why didn't they do it? That is the epitome of every. We could just do more sales and marketing and grow the business. Which is a common critique from buyers about brokers. And brokers have their obligation to their clients and I think there's really good ones out there that do a great job and there are legitimate opportunities. There are many more businesses positioned as just flip the switch and X will happen than is reality by a humongous factor. No, you can't be an Amazon business and just start a Shopify store and suddenly people will come to your Shopify store. You don't have traffic to that store, you don't have customers there. You don't know how to do the marketing that necessarily is required to grow that channel.

Host: Yeah, yeah, okay. Well when you bifurcate into, let's say kind of Amazon FBA or people who are just selling on the Amazon Rented Land vs DTC. What is the buyer fit for each of those?

Guest: Amazon is, and this is not demeaning, but it's E commerce with training wheels. You really do have demand that you can harness. They take care of all the logistics. Like if you can do decent product development and decent supply chain of inbound logistics, your customers are gonna get the best shipping in the world. They've got a bajillion credit cards on file. They will get you a lot of the way there. What is unfortunate is dealing with the bad actors in the platform. You hear about Chinese sellers and faked reviews and weird stuff. We have problems monthly with Amazon seller accounts and all of my friends in E commerce do too. It is a Real headwind that I wish all of the big tech companies, Facebook, Google, Amazon included all have not great support for their core constituent of merchants that frankly drive a lot of their revenue at the end of the day because we create the supply there on the systems and we're constantly fighting an uphill battle on all those fronts against their desire to use overseas labor or machines and not allow rational humans to assist with decisions. It's very hard to get things accomplished when you are at the beck and call of big tech.

[15:50] Host: Well, one of the many reasons that E commerce to me as an outsider just looks really unappealing frankly. And it looks increasingly competitive. I mean there's how many Amazon FBA courses are out there. Just encouraging would be entrepreneurs to get into the space. So it just seems like unless you're, you know, got into it a few years ago as you did, or you acquire companies that already have some traction, some brand, it just, it doesn't seem like a space I'd want to be playing in.

Guest: So yes and no. Those issues means there is a flight to quality. So the A players get better and the, I don't know, the pretenders get washed out. If that's not the right way to think about that. But I think the harder Facebook gets and the better we get at running ads on Facebook, the less I'm worried about a drop shipper on the beach in the Philippines competing against me in my product category.

Host: Yeah, yeah, it's harder for him, sure. There was some an article on your website. I think it was the description of the EIR program where you talk about your primary markets of interest for a potential entrepreneur in residence. And you have E commerce, digital publishing and services and then secondary markets. You list a few others. But really what my question is what spaces or industries do you like for acquisition entrepreneurship? Recognizing that what you just said, that a lot of it depends on the individual circle of competence. But if there are just some objective parameters that are appealing about certain industries. Can you share what industries you look at and are like man, there's a lot of opportunity there.

Guest: Yeah, I like E commerce. Obviously the tailwind of consumer demand shifting online is huge. There's definitely headwinds from big tech. We already talked about that. But I'm just generally bullish on people buying stuff on the Internet. I think it's going to be harder as time goes on to have operational excellence in the space. And so the sooner you get started or the better of a quality of asset you buy, probably the better. I do really like the sweaty offline Business, sweaty services, businesses, plumbing, H Vac, all those kind of durability, high demand service categories. I think there's just a wave of kind of the stereotypical boomer generation retiring great assets to be handed over. And there's a lot of opportunity for value add there.

[18:15] Host: Digital value add. Like their website doesn't look right and let's update it.

Guest: Yes, and also operational value add. I think the stereotype of a lifestyle business owner who is maybe golfing on Fridays and isn't that worried about the website and lets the phone go to voicemail after 4:30 that isn't hungry and doesn't need the growth because they've had a long running fantastic career and it's comfortable. Is a great opportunity for somebody young, hungry, ambitious and fired up that wants to put in a lot of work to go capture unrealized value in the business that's just sitting there.

Host: Yeah, on that point often we touched on this. It'll be like a SIM will say something about like well the business just add sales and marketing or just diversify off Amazon and it's like, well why didn't the existing owner do that if it were so easy? But in fact what you just said is there are many cases of existing owners resting on their laurels. They're older, they're comfortable, they're just not motivated. So I feel like on the one hand it can be oversold by business brokers that there's all this opportunity just ripe for the picking in a business. On the other hand, there's truth to it.

Guest: Yeah, I couldn't agree with you more. I think that a competitive edge that I have now as a buyer is I can know the difference between the two. I don't know how easy it is for somebody entering a space to know the difference between the two. I would argue that it's probably easier in the nuts and bolts. Businesses call it home services or maybe something offline because you don't have to be an expert in the tactical Google AdWords execution of digital advertising. As an example, you can walk into somebody's office and see the stacks of paper and the number of man hours that goes into processing it and you can think, gee, I bet you there's some software that would just make this all a lot easier. I think it's Nick Huber who said, you know, go find people that still use fax machines and compete with them. Yeah, yeah, like that's a very real thing.

Host: Well he also talks about like when choosing an industry like call around in your hometown like three or Five vendors of X service of like plumbing and see who doesn't get back to you. Like what industry do people get back to you the worst and that's where you go compete. But maybe a twist on that would be like go try to acquire one of those existing three to five businesses.

Guest: For sure. Yeah.

Host: Cool. Okay. I've now referred to it a number of times. Tell us.

Guest: I need to get the left hand turn that you weren't expecting on markets for acquisition.

Host: Right. Hit me.

Guest: FedEx routes.

Host: Tell me more because I see these on BizBuysell constantly. I know they're business brokers who specialize in it. So what's the deal with those?

Guest: I had one under LOI and it didn't close and I went really deep and I've got a lot of thoughts on it. The really short version of the long story is it's a fantastic business to operate. It's a hard business to grow and it has some unique risks that make a roll up less likely than the multiples warrant. The multiples trade relatively high and my idea was to do a multi unit roll up to exit at a higher multiple. What I learned along the way is that's hard to do. FedEx doesn't want their operators being rolled up. Really. And then two, it is a cost reduction business. There is no real way to grow it. As FedEx grows or shrinks. Probably going to grow. Back to my E comm thesis. As FedEx grows, your revenue will grow but it's not very easy to grow incrementally beyond that. Yeah, you can buy routes. Yeah, you can expand, you can do some things. But they trade at relatively high multiples and there is not a good exit opportunity on a multiple arbitrage basis.

[22:06] Host: So sorry, what was the tailwind that FedEx is going to grow? I mean why did you like it?

Guest: I liked it because I thought it was going to be easy to finance and it turns out it's really not.

Host: Okay. And it trades at a high multiple

Guest: and I thought I could roll it up and you really can't and it

Host: trades at a high multiple. But I presume that means. Because there's a lot of demand for them and that's usually a bad sign for somebody who for an undiscovered opportunity that would suggest that it's very discovered

Guest: they traded a high multiple that I got comfortable with until I realized how much capex there was and how hard it would be to underwrite as a new operator. Future CapEx needs. Yeah, there's a lot of ebitda I'm not convinced there's a lot of free cash flow and I didn't have a good way to understand future capex needs the trucks basically and I saw no viable path to executing the roll up that I wanted to.

Host: Okay, very interesting.

Guest: Maybe we'll do a thing though. If you want to buy an easy business that just cash flows, it's probably a good one. If you want to just own a small business that runs for the next decade, probably a great business model.

Host: Okay. Okay, well maybe we'll devote an entire episode to a deep dive on that because as I said, those get a lot play on biz by sell. So I know there's a market for them and I know there are people interested in them. I didn't even know it was a thing until eight or nine months ago, so very, very interesting. Okay, anymore. Shall I move on to your next question?

Guest: We can do the next topic. I just wanted to go down the FedEx rabbit hole because I spent a bunch of time on it once and occasionally people online bump into talking about it, but it's still to your point, very undiscovered and very misunderstood.

Host: Yeah, cool. Really cool. No, I'm glad. That was an awesome rabbit hole. Okay, so your entrepreneur in residence program, which I've been referring to, let's get into it. So just tell us 30 seconds what it is. It's pretty self explanatory but and then I just want to understand the thinking behind it and of course, have you found an EIR yet?

[24:13] Guest: Yeah. So the EIR program is an opportunity to come work at 365 holdings in a full time role. So you join the marketing team, you join the operations team, the admin team. You have a job here that Requires at least 40 hours a week to do a functional role at an entry level salary here in the market. On top of that you spend another 10, 15, 20, 30 hours a week executing a search. Since your employer is interested in you completing your search, you can swap your work hours and your searching hours and accomplish things like broker phone calls during the day and put in your work hours at night, which is some flexibility that you might not have if you're working at a big corporation. It's hard to take broker calls at 2 in the afternoon when your boss expects you in a meeting. This is a high work requirements opportunity for the right person that wants to learn the ins and outs of an operating business and go through our leadership development and training program and then on the other side have the opportunity to have financial backing to Execute the acquisition. So the original thesis was it could be two parts. One, talent magnet. So recruiting high performance people to work in the business for a good period of time. And then two, a way to diversify our balance sheet by taking retained earnings and being part of the equity investment in those acquisitions. I feel like if somebody can pass the onboarding and screening and application process and then can spend 6, 12, 18, 24 months working here while searching and be successful in closing an acquisition that I want to invest in, A, they will have been a fantastic value add in our business while they were here and B, I'm presuming they'll also be a fantastic investment for our balance sheet going forward. So really kind of accomplished a number of goals simultaneously for us.

Host: Really interesting. Okay, and have you had any takers?

Guest: We've had some applicants we had. Somewhat of the genesis of this program is one person that was internal to the team already that we thought was kind of the prototype or maybe a beta tester, if you will, for this experience. And that individual is currently in the middle of their process. So it's not as formalized or scaled as I wanted it to be. I wanted to put it out into the world and see what came back. We got some really interesting applications, some that if we had a more formalized at scale program, would probably be great candidates. But I have not put a ton of time into marketing it widely because I wanted to just see what opportunities it brought us.

Host: Okay, and was this, Is there a model for this or did you come up with it in turn? I mean, I know in eat there's an EIR model, but for ETA specifically and doing what you're doing, did you

Guest: come up with it roughly following the traditional search fund economic model? Roughly, but no. I just wanted to have a program to attract talent and then say if you're really good, we'll help you invest in your company and we'll help you search for one.

[27:07] Host: Cool. And to be clear, this is not virtual. So the person would move to Akron, Ohio.

Guest: Correct.

Host: Right.

Guest: Cool.

Host: Okay.

Guest: We are a mostly on site, mostly in house, full time team. Yeah, when I say mostly, I mean 99.9%.

Host: Which by the way is kind of for acquisition entrepreneurs out there who have the fantasy of a completely virtual business. And that's one of the appeals of E Commerce. But to do it at a higher scale, you let that go, you become pretty hands on operation.

Guest: Yeah, we, we would not be here in a virtual format, period. Under discussion. Not possible.

Host: Right.

Guest: I'm not saying somebody better than me or different than me or different circumstances. Couldn't pull it off. I am saying we would not be here if we were not together as the team functioning as a quote unquote, real company. I have a lot of respect for the virtual businesses. I don't know what the leadership format is and the operations format to accomplish that is it's just not a fit for us.

Host: Sure. Okay, back to the topics of acquisition entrepreneurship. With Microacquire, the growth of Microacquire, you see a lot of opportunities to buy quite small businesses. Is there a get your feet wet version of acquisition entrepreneurship where you could buy a $25,000 or $75,000 business and e commerce, let's say, and decide if acquis entrepreneurship is for you. The analogy would be, you know, before I go all in on becoming a, you know, a real estate developer, a real estate investor, I buy a single unit, a single apartment that I rent out to a single tenant. See if I like it, see if I have a taste for it. Is there a version of that in acquisition entrepreneurship?

Guest: Yes and no. So, yes, in E commerce, I think you could start a brand that sells on Amazon or sells direct to consumer, or you could buy a brand for 20 or $30,000 on Microacquire or Flipa or something. I think the challenge there is missing out on how to understand product market fit and scalability. If it's a E commerce business, which should be inherently scalable, and the founder of that idea can only take it to 20, 30, 50, 100,000 in revenue, whatever that number is, for a business that trades it at 20 or $30,000, I don't know that that product has product market fit to be scaled. Could you get your feet wet? Sure. You can source products, you could run ads, you could fill order. You could do the job. I don't know that you could segue that into the real learnings for the kind of business that you would buy to take that same money and instead use it as a down payment on an SBA loan? So you take $50,000 and you put it 10% down on SBA loan and buy a $500,000 business. That'd be a very, very different experience than buying a $50,000 business. Much like buying a condo to do on Airbnb is very different than buying the whole apartment building. Yeah. So yes, you get your feet wet. I think that it is a meaningfully different experience.

[30:29] Host: Yeah, yeah. Of course, if even if you took that 50 and did an SBA loan for a $500,000 business, you're probably having to go full time with that for sure. You're making a commitment to it and quitting whatever your day job is.

Guest: Yeah, I do think that there's been some chatter online about the whole like personal guarantee thing and financing. I come down pretty hard on one side of it, which is you're either the right person to run a company or not. And if you are, you should be really comfortable signing for it. It's your business, it's your opportunity, it's your upside. You're going to hire people who their livelihood now depends on you. If you're not comfortable signing your name on it, you probably shouldn't do it.

Host: Yeah, great. That's a nice segue to my last question, which is many people who are considering buying a business ask themselves, well, should I just start something? So how would you differentiate between an acquisition, somebody who's suited to acquisition entrepreneurship, versus starting something from scratch?

Guest: Acquisition entrepreneurship is great for an operator. You can be an operator in the marketing sense. You could be an operator in the operations sense. I think if you look at myself and Justin, I'm kind of more the visionary marketing ideas operator and he's more the literal nuts and bolts scheduling and execution, supply chain and HR operator. Back to Jordan mentioned earlier, he can operate a plumbing business and operators can jump the line on scale by buying a business. And if you know your circle of competence and can identify what you're good at at a meta level, I think operators can make fantastic buyers and acquirers of businesses. If you are more end market passionate, if you're really passionate about software, if you're really passionate about physical products or some service, I do think that starting as a very different skill set, going from 0 to 1 versus 1 to 2 or 1 to 3 or 1 to 10, it is a different year. We have tried starting things here and they have never been successful.

Host: Really?

Guest: Yeah. Part of that is scale and like size of time and money investment versus the rest of the organization and things getting enough love or not. Also part of it is it's a different skill set to understand product market fit. To go from 0 to 1 is a different experience than to find something that works and take it from one to two.

Host: Yeah, but also even for people who successfully take something from 0 to 1, they don't do it on their first try. Generally they try and try and try and eventually get there. So. So just because you guys haven't done it successfully, maybe you haven't just had enough swings at bat, which is, you know, so maybe your track Record, if you kept at it, would be just as good as the quote unquote visionaries.

[33:22] Guest: Yeah. And I think it also could apply a little different by vertical in software and E commerce, the barriers to entry and the execution needed to go 0 to 1 is different than the 0 to 1 to start a new landscaping business.

Host: Yeah. So for like a sweaty, sweaty company. Go ahead. For a sweaty business like a landscaping or a plumbing business, there seems to be almost no reason to start that from scratch.

Guest: Depends on what you're buying. If you believe you're buying something in with an enduring moat, I would agree. I think that it's hard to find an enduring moat for sale. It'd be very easy to look at a landscaping business and say for the purchase price of X, how many people could I hire, how many trucks could I buy and how many lawnmowers would I need and how much more cash would I have in the bank? And is there enough demand that I can go out there and hustle my way to the same revenue number? If you're buying a landscaping business with commercial snow plowing contracts, there's a lot that goes into the quality of those businesses. And I do think back to a point earlier about our view on things now versus our view on things four years ago. Our biggest difference is in the way we think about and underwrite to quality metrics versus just the financial statement, top line, gross profit, EBITDA or SDE figures, dissecting profit centers and revenue drivers and cost drivers by durability, circle of competence, fit diversification. Those are the ways in which we've improved our process. And I think that that's where you start to see things break down on some small business acquisitions is the inability to underwrite for those variables. And where you could make the argument that this business, for X dollars, you'd be better off not buying it. You'd be better off spending X to start from scratch. And that may mean for you as an acquirer, as a wannabe entrepreneur. What would be entreprene entrepreneur? You should just go start it or you should keep looking for the right

Host: one to buy for the right one. Yeah. Great. Okay. Anything else, Kelsey, that I didn't ask you that I should have.

Guest: When are you hosting your first conference for the SMB space?

Host: Well, after this conversation, I feel like I'm going to go get that domain name and get started. You're supportive of the concept, so you'd come. Would you speak?

Guest: Happy to.

Host: Yeah. Okay. Actually, that's not the most important question. Would you sponsor that's the. That's the question.

[36:05] Guest: Ooh. Let's talk about what the sponsors get for their sponsorship package, but I'll look forward to that.

Host: I'll stop recording now, and we can. No. This was awesome. Kelsey, I hope to have you back on. This was. There were a lot of questions I didn't ask that I think the audience would benefit from. So hopefully we can do a round. 2 and 3 and 4 and 5. Cool. Thanks very much.

Guest: Appreciate it.