Host: Today's guest had a great job at a publicly traded tech company, but was ready for a change. She had lots of experience in home services startups, so when she came across the concept of buying a boring business, and specifically a home services business, well, you know what happened next. Today's interview with Christiana Laugen is another story of buying small. The pool cleaning and service business she acquired in Southern California was just five people, $300,000 in SDE. There are a few angles to listen for today as we unpack Christiana's comfort in buying a business well below the SDE threshold that the conventional wisdom would advise the age of the business, Growing the business and how it should be faster to grow a low SDE business than an already high SDE business. And finally, vision we might see a tiny five person pool business. Christiana sees the raw ingredients for a much larger enterprise. As it happens, she has a track record of diving into a challenging, unglamorous project that others wouldn't touch and making it a head turning success. So now, when people scratch their heads about her decision to leave her career and buy this blue collar business, she refers to the same pattern. Yeah, it might come off a bit odd, she says, but I just have a lot of confidence in myself and in the business and where I think I can take it. So I think it'll hit a lot different in a few years. Please enjoy this interview with Christiana Laugen, owner of RD Pools, Spas and Fountains Announcements webinars. You'll hear entrepreneurs refer to their cap table and who's on it. But do you have a good understanding of what exactly that means? This Thursday, October 24, attorneys James David Williams and Bill Barlow, whose entire practice is devoted to business acquisition, return for legal office hours. This month's topic Cap Tables 101 How Capital Structure works when buying a business Structuring your deal for outside capital how to allow your seller to roll equity how to grant your new employees equity post closing Negotiating with your partner in the search if you have one and more now as office hours, there will be ample time to answer all your legal questions, not just those related to cap tables. So come get any legal question you have about your deal or your search answered by James, David and Bill it's this Thursday, October 24th noon Eastern link to register for that webinar in today's show notes or on the Acquiring Minds homepage acquiringminds Co. Then next Friday, November 1, Johannes Haack will do a presentation on how to move fast when evaluating acquisitions in order to avoid the notorious long multi year search. Increasing the velocity of your deal analysis will allow you to look at more deals and arrive at the one faster. Johannes and his partner ran a two year search in two months and closed in under six months and he's going to show us how they bought an artificial turf business in Texas and have grown it considerably. You can hear his story in episode 186 from October of last year. So come learn how to look at deals and quickly decide Go no go A key skill for an efficient search. That's next Friday, November 1st link to register for the webinar in today's show notes or on the Acquiring Minds homepage. Acquiringminds Co. 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. A PEO run by a searcher for searchers if you're running a company with less than 100 employees and providing health insurance to them, you you may secure better benefit plans at a 15 to 30% discount through a professional employer organization or PEO. Aspen HR, run by search fund veteran Mark Sinatra, understands the needs of search operators and provides HR compliance, flawless payroll, HR due diligence, support for your acquisition, and Fortune 500 caliber benefits, all for a fraction of the cost. And tis the season to evaluate your employee benefit plan. Most new clients reach out to Aspen 90 days before year end or their renewal date. So before they get slammed, check out aspenhr.com or contact Mark directly@markspenhr.com Christiana Laugen welcome to Acquiring Minds.

[5:26] Guest: Thank you for having me. Excited to be here.

Host: Christiana, you're a veteran of the tech world. You actually worked at a tech company whose focus was home services.

Guest: Yep.

Host: Then you went out and bought an actual home services business, a pool maintenance and repair business.

Guest: Yep.

Host: This is recent. You're three months ish. So we're eager to hear how it's going and the full story. Please start us off. Cristiana with some background on you.

Guest: Yeah, so after college I, like many undergrads, didn't know exactly what I wanted to do with my life. So I did what many before me had done and went into general management consulting at a firm based out of New York. I think it was a fantastic first job to have learned a lot of great skills, got a lot of mentorship, got to see a lot of different businesses and their inner workings, but kind of very quickly decided that it wasn't for me. I wanted to be a Bit closer to the impact of my work, feel a bit more connected to it. Like I mentioned, I was based out of New York at the time. So I left consulting and joined an early stage startup. Well, at that time, an early stage startup called ZocDoc. So if you're not familiar, it's a platform for patients to book online doctor's appointments. I was on the strategy and operations team there and it was everything I, it was everything I wanted. When I was leaving consulting, I did feel a lot more connected to the impact of my work. I loved the mission of the company, I loved the team. I got to work on a lot of different interesting projects. So not particularly looking to make a move, but kind of as these things go through some friends of friends, I got connected to some entrepreneurs based out of Berlin and they had something very exciting going on, which is they had a startup that was growing like wildfire in the German market. It was a home services startup focused on large ticket services. So think roofing, flooring, painting were kind of the, the big ones that they were doing, or customers could call in, get a fixed price quote for one of those services and Home Bell would fulfill it. And so like I mentioned, was growing a lot in the German market and they were very keen to open a U.S. market. So we're looking for somebody to lead that effort. Found me, we had some great conversations and it just seemed like such an exciting opportunity for where I was at in my career at that phase that I packed my bags, moved off to Berlin, started getting onboarding there, and then repacked my bags, moved back to the US and opened the Home Bell Phoenix office, where I started to get things off the ground going in Phoenix, Arizona for the Home Bell model. So I got things going there, started growing the team, copying the playbook that they had established in the German market. And after nine months, you know, after hiring a team of 20 people and getting the business off the ground and growing quite a bit, I ended up firing a team of 20 people and filing the company for bankruptcy. Once we had kind of ripped through a lot of our, not just the Home Bell US office, but a lot of the Home Bell offices had kind of went through our funding quickly and didn't have a great pathway to, to unit economic profitability. So that was a pretty crazy experience. It was very much a whirlwind and certainly, you know, got the, the side of the startups that you don't hear about as often, which is, you know, when, when they failed. And so after that kind of took a Step back, started thinking critically about what I wanted to do next, Decided I love building things. I love, you know, this sort of entrepreneurial feeling. But for my next move I wanted to go somewhere that had found its products market fit. So at this point I felt like I had some knowledge in home services and certainly some knowledge in building. And so I found a home at a kind of more mid stage startup based out of New York called Handy Technologies. So what they were doing was fixed price, small ticket home services. So at the time I joined, they were known mostly for their subscription cleaning service, but they also did furniture assembly, AC installation, you know, a long tailed small ticket services. And when I joined there, I joined what was then called the growth team at the time, tasked with overseeing a number of different growth initiatives. One of them was a early stage partnership we had with a large Fortune 500 retailer that sold product and was looking for somebody to do the service component of their product. So, and this grew to be quite large. So Handy started partnering with companies like Wayfair and Walmart and Costco and Crate and Barrel. And what they were doing, what we were doing at the time essentially was the assembly or installation component of some products. So was overseeing some various partnerships on the Handy side for a number of years, growing them from nothing to very large multimillion dollar partnerships. And it was sort of a blend of P and L management growth and also partner management. Handy got acquired by Angie or Andy's list, which is now just all one Andy, which can covers a number of different brands. So I got to stay on for the acquisition, continue in the partnerships role, eventually pivoted over to more of a marketing role where I was overseeing one of the online marketing channels for Angie and did that for some time. And then how these things go, you kind of blink your eyes and you're like, wait, I've been at this company, Handy plus Angie for, for coming on seven years. And at that point I kind of took a moment and decided, all right, is this still what I want to do? And the answer was I don't think so. I wanted to again be closer to something a bit more entrepreneurial. So I decided to take some time off, think about what I wanted to do next and heard about this concept now very familiar with of ETA buying a small business. And it just really.

[12:11] Host: Let me, let me stop you there before we pivot into your discovery and falling in love with eta, some quick back follow up questions. So the. So when you say performance marketing, you were doing performance marketing at Angie. That was for. That's basically marketing that is tied to. Directly to customer acquisition. So affiliate stuff and, and PPC, Google AdWords. So you're controlling budget and really. And it's not, it's not branding. In other words, it's like very quantitative marketing.

Guest: It was very. What we called it at Angie was performance marketing.

Host: Right.

Guest: Very metric focused, very, you know, cost per click and conversion and. And also the, the quality of the leads they were, we were getting, you know, how. How are they performing for our, for our network of providers. So yes, it wasn't what you would think of as more as branding and creative. It was very performance marketing heavy. Yeah.

Host: And so were you bidding on terms that were some home services category and trying to capture those leads and then distribute those leads to the providers at Angie that were part of the Angie family network?

Guest: That's the crux of it. Yeah.

Host: And so are. Does that. Did you envision? I'm maybe now I'm jumping ahead a little bit, but applying that skill in your own home services business. So if you know how to drive leads for home services, are you, is that a skill you're going to lean on in the pool business?

Guest: You know? Yes, absolutely. But I actually think some of the previous work I was doing with before the marketing role with the P and L management applies even more so in the sense that there was a particular partnership that I was working on that grew incredibly fast. We just had so much demand to capture and the profitability kind of got away from us in the process of that. And so one of the big projects that I worked on one year was with the team was really right. Sizing that partnership, going over every single part of the. The business all the way from when customers enter to, you know, when we complete a job and really understanding every single lever we had in that P and L and optimizing it. So do I think the, the marketing skills that I acquired is something I want to apply to the pool business? Absolutely. But I also think a lot of the holistic P and L understanding, are we pricing correctly, are we paying correctly, are we operationally efficient? All of these things I think also very much play into how I think about the business.

[15:01] Host: Great. And then maybe related to that home Bell, the German company was basically trying, I assume, trying to generate demand for these big ticket home services, roofing, painting and then subbing those out or selling those leads to an actual two teams and technicians and contractors.

Guest: It was acting like a contractor, Correct.

Host: Right. And why do you think that model ultimately didn't work in the handy model which was the same, I assume the same model you just said, just lower ticket items. IKEA assembly. And what was the, what were some of the home cleaning? Why did it work in the. You what were the, what made one work and one not? Or did it work in handy or was it a money losing startup that just happened happily got acquired?

Guest: Yeah, no, it definitely worked handy. And it's not just handy. I mean you see other models out there. You mentioned Ikea, which is Taskrap, it is owned by Ikea. And so you know, so we know that that model works. I think the, there's a couple key differences. I think one of them for these smaller ticket services and I do think a lot of the work we do in the pool business, but I might be jumping ahead. Fits, fits its model is you can scope them very tightly, right? You can say exactly what's involved in the service versus what's not involved in the service and then have a pretty high level of confidence in how you're pricing them. So I think just the sheer scope, I mean once you start talking about a roof or you know, ripping up someone's floors, the sheer scope of what can, what can happen and just the scope of the work can really creep up. So I think that's one large thing is just the ability to price them with confidence in your margin. And then I think too, I'm not quite sure the right words to use here and it might be related to scope but the variation in quality, it's easier to say if you have successfully installed an AC unit. Right. Whereas if you're painting an entire house as an example, the variation and the quality of that can be quite high. Right. Like are you kind of getting the paint everywhere? And whereas I think with these small ticket services it's more binary, yes or no, you know, it was done. So I think it's. And just the simplicity of the services overall makes them better candidates for pricing scoping all these things. Not to say that the large ticket services, there's not a way to make it work. There probably is. I just think you have a longer road ahead of you.

Host: So August Felker is a two time successful searcher. First with a traditional search fund. The second time around he did a self funded search. Today August runs Oberle Risk Strategies, an insurance firm with a dedicated practice group for searchers and acquisition entrepreneurs like you. If you've got a business under Loi Oberly will provide complimentary due diligence on that business's insurance and benefits program. A great no risk way to get to Know August and team. They love helping searchers. They've worked with hundreds. Oberly is a specialty insurance brokerage for searchers by a former searcher. Check out oberle-risk.com O B E R L E- risk.com link in the show notes you are looking around for something new and you discover eta. How do you discover eta?

[18:52] Guest: Totally. Yeah. So like I said I was in a very exploratory phase and by a quick side note here, anyone who's on what they want to do, if you can take time off right. Like you don't have to jump straight to the next thing because I think the time off was absolutely critical for, for exploring. So I was going to a lot of different talks and just, just kind of networking, seeing what was out there and I went to gosh. I there was a co working space that was having an event. A speaker came and, and she mentioned and I came up and chatted with her Oscar and said oh I really liked your, your talk. And she asked me what I was up to and what I'd been doing and I told her I was kind of looking in the home services space. Then she said oh, like a boring business. And I yeah, I didn't know what, what she was talking about. And so she, she brought up Cody Sanchez and this concept of oh, a boring business. That these are actually very lucrative opportunities because they're, they're cash flowing and many of them might not be optimized right for, for profitability or might, you know, might have a lot of growth potential. So she kind of gave me this word, you know, Cody Sanchez boring business. Went online, started watching some of the videos, listening to some of the content, you know and then of course heard about all the, the books like the Buy, then Build and, and started reading them and then really became more and more aware of this world out there and the more I learned about it the more it really started appealing to me and yeah started looking for a business full time in January.

Host: Full time in January. Great. We're about to hear about the search but what of the change in identity this was going to require? You were kind of this in hard charging startup environments doing well. Even the startups may or may not have been doing well. But you're, you're certainly progressing in your career. It sounds like it was actually a pretty great role you had at Angie, which is a public company. What of going from that glamour that might be a little generous but to, to into the sweaty quote boring world of small business was that going to require did it was it going to require an identity tweak?

[21:21] Guest: You know, it's funny, a few people have asked me that because it is true the way my career kind of progressed and in my more recent roles that are, you know, large publicly traded company, sort of this, this more strategic role. But to be honest, it didn't feel like an identity switch to me because especially when I hearken back to the homeval days, I mean, we were a startup. It was scrappy, like beyond. I mean, scrappy like hopping on the phone with customers, me hopping on the phone with pros. Like, this was, this was something I was doing all the time. And then similar when Handy was still a startup and you know, I was working on launching these, these partnerships. It's not as if when these partnerships started out that it was a huge team of hundreds of people. Like it was. Again, we were, we were just throwing stuff at the wall to see what, what stuck. Right. So again, I mean, these were these startups I was in these sort of more like scrappy roles. And so for me, I didn't feel like I, I was getting out of some. I had been out of my ivory tower right before. And so it didn't imagine very clearly in my mind what it would be like to be in these or I thought, right, I could imagine very clearly what it would feel like to be in this more small business and home services because I felt like I had lived that before. It's true I hadn't been in that role in a few years, but I had before. So it didn't really feel like an identity shift, more of sort of stepping back into somewhere I had been before. But, but not for a while.

Host: But, but, but Cristiano, let me press on that because what I feel, what I hear you describ nature of the work felt familiar. But what about the. This, this sounds so shallow, but when you introduce yourself, the, the cocktail party introduction, hey, I run performance marketing at a public company versus, hey, I run a. I own a pool business. It's. It lands differently. That piece.

Guest: It does land differently. But you know, I feel like a lot of. If you were to say, if you were to categorize some points in my career successes, which I do, I would actually attribute a lot of those successes to in many cases taking the role or the project. That didn't sound appealing on the surface. It was so funny. And this is maybe a bit of a side story here, but I remember there was a partnership I was on at Angie Eric, Handy rather than. That was so challenging in the early days, nobody wanted to be on it. Everybody wanted to get off of it. It was very hard. I raised my hand and said, I want to do was really hard. And when I would tell people at Handy that I was working on this particular partnership, everyone was like, ooh, that's, you know, interesting, interesting decision. But then after about a year or so working on it, it was doing phenomenally well. And I was at a. Know, a team or a. A company event where somebody was like, man, how did you. Like, you really rode that wave of this partnership. And it was so funny hearing them, because it wasn't a wave I had ridden. It was a. A project. Nobody wanted that. I raised my hand and said I wanted, and then I made it, you know, made it that. That wave. And so this kind of feels similar in the sense, like, yeah, I'm going from this cool, maybe sounding role to owner of a pool business, which kind of. Maybe to some, they're gonna be like, all right, interesting, interesting choice. But in my mind, it's this calculated kind of risk where, you know, knock on wood, in a few years or however long it takes, when I think it'll be a wild success, then I think that's a reframe in someone's mind. So, yeah, I mean, it might come off a bit odd, but I just have a lot of confidence in myself and, you know, in the business and where I can take it. So I think it'll sound. It'll hit a lot different in a few years, if that makes sense.

[25:34] Host: It makes perfect sense. And so to be clear, what you're saying is you have big ambitions for this business, so it is not. And that doesn't differentiate you from many of my guests. Many of my guests also want to. Want to grow. Not everybody. Some. Some people want the lifestyle to kind of grow incrementally or whatever. They're not. But. But. But you. This is. This is not the end game. This is the raw material. Raw material from which you are going to build something big.

Guest: That's how I feel. Yes.

Host: Excellent. Okay, fantastic. Now, January, we're here. We are January of this year. I should say that Sam Kramer introduced us, and one of the things that he was. That he wanted to highlight was how quick, how short your search was. You made it happen quickly. So we're about to hear that. But context. Giving people the context that you moved quickly, does that feed into your criteria? What were your criteria? What were you looking for?

Guest: Yeah, so my criteria was I wanted a home services business because I felt like that was where My background was I wanted something unoptimized. I guess I wanted something where the value adds were very clear. Right. Where I could very clearly articulate in layman's terms, like this is. This is the value I could add via, you know, the. The profitability's not optimized, the growth's not optimized, whatever it is. But the value adds were very clear because I wanted confidence, I could grow it quickly.

[27:08] Host: Can I stop you there, Christiana? Do you feel like in this world of people buying boring businesses, that that's something people don't do very well, that they assume there are levers to pull, but they don't actually answer for themselves ahead of time what levers they will pull? Because you're really emphasizing this point where, where. Whereas I. We all feel like there's the assumption here that when you buy a boring business with perhaps a boomer owner, that there's just going to be a lot of stuff there. You don't have to identify what it is at the outset.

Guest: Yeah, I feel mixed on this because when I listen to, you know, your pod or. Or I'm talking with others in the space space, sometimes there does seem to be this just underlying assumption, oh, yeah, this can be optimized. Right. But I don't always feel as if I'm hearing people articulate what exactly can. Can be optimized. So sometimes I do, for sure. Right. Where people are saying like, oh, they're not capturing all the demand that they're getting or, oh, they're not using technology. And that could, you know, I. Sometimes you hear it, but I feel like I don't hear it. Is Austin, as I would. Would expect, when you're vetting any kind of, you know, investment opportunity.

Host: Yeah.

Guest: People just seem to assume that there will be. And there probably is. They're probably not wrong. But I think very clearly articulating that was. And being able to put my finger on it from the onset was. Was very important to me.

Host: So as you evaluated Sims, as you evaluated the teasers that you looked at, you would find you would. You would need to. To use your word, articulate. Okay. This is what I would do to this business to make it better.

Guest: The one. But I wanted to have three things I would do where it was like, if I would do these three things, this would be a better business. Yeah.

Host: Great. Well, we'll be eager to hear what you identified in the pool business. Carrie, on with your criteria.

Guest: Yep. So home services, very clear value, odds, geographic constraints. I mean, my. My husband and I moved From New York to Los Angeles. And we, we love it here and are really trying to build a life. And so as soon as you put a GEO constraint on it, I mean that's really gonna, to make the universe of businesses smaller. So I was looking, you know, within a few hours of, of la.

Host: Although that is that, that does represent, you know, the, the GDP of many small countries. A few hours of la. But yeah, but no, no, it's, it's a constraint. Fair enough. But it's as a big, that's a big, there's a lot of population, but go ahead.

Guest: Correct. There's a lot of businesses. And then I wanted the size of the business to be such that I could, even if I took investment, I could have the vast majority of it. So you know, I really, the number I had in my mind was I wanted to maintain, you know, 70% ownership of it. So those were, those were, those were the, the big ones.

[30:00] Host: I have in my notes here a quote from our pre call. I, I want to, I want to eat what I kill. And I, and, and I feel like we're getting away from the moment for that quote. So how do I teach? How do I tee you up for that? Christiana, Were you just referring to kind of want to. Doing your. Wanting to do your own true business being become an owner, in other words, become an owner.

Guest: And so look, I mean I like we covered kind of in my background. A lot of my background is in startups. I think I've had a great career so far. I do think one thing I observed with, with startups is that it's when there's an exit, right? It's often the owners, the, the founders, if you will, who see the most out of that. And I, and I think that makes sense, right?

Host: And so from somebody who said that they want to own 70% of their business, it should make sense, right?

Guest: And so look, I don't really do New Year's resolutions. What I do is more of a mantra, right, for the year. So I'm not going to say, oh, this year I'll stop biting my nails or you know, whatever it might be. I'm more like what's sort of the mantra for the year. And some of my friends and I do this together. And so in January when I had kind of committed to I'm gonna buy a business, that that's what I'm gonna do. And my, my group of friends and I were sitting around kind of saying, hey, what's our mantra for the year? What popped into my mind Was I wanna eat what I kill. Right. Like I want to be what, whatever I kill. Which maybe, maybe it's not gonna be very good stuff, but I hope, I hope it is that I want to kind of be master of my, my destiny, have a bit more control of, of my life. But then again, really what I, what I'm killing. So if I'm doing fantastically well, I want to be able to have that. If I'm not, you know, that that's the flip side of it, it as well. But I think that that has really been the guiding mantra of, of this year and, and a lot of how I was thinking about, about my search.

Host: Well, I, I love the expression, you know, you hear that expression, I don't know. And maybe kind of sales jobs or whatever, but, but I do think it kind of captures one of the core reasons people become or are attracted to becoming an entrepreneur. It's not necessarily some of the fluffier things that you might hear in the press. It's just that sense of self, of self direction and actualization. And I love how just sort of cavemany primal it is.

Guest: Great.

Host: All right, one other thing. Going back now to your criteria, jumping around the 70%, but how did that play or how did that plus whatever was on your, your balance sheet, how did that play into size that you were targeting?

Guest: Yeah, so I would say the, the size I was targeting was. I would, I put kind of a maximum on it, which I. Acquisition price of, I don't know, somewhere around like 5 million or something like that. Felt like the absolute max I wanted to go. And then I guess there was no specific minimum, if you will. But I, in my search, I was in general trying to look at businesses that had an SDE higher than 2, 200,000. So quite small. I mean, we're talking about a really, a really big range here.

[33:35] Host: Yeah. And interesting that you capped it. You capped the upside. Usually people cap the downside. Not, not no smaller than. Although I guess you did too. But 200 SDE, let's push on that number a little bit. Cristiana. So I'm going to assume you were making 150 easily at Angie. 150 north of 150. Just being conservative. The 200 SDE, if, assuming you use an SBA loan, half of that plus goes immediately to the SBA loan, leaving 100 left over for you to live on, a big step down in terms of income. And that doesn't even take into account the J curve and the reinvestment into the business. So this 200 SE is, is really when you, when, especially for somebody who's coming from a great salary, is really small. How did you get comfortable with such a small number or business?

Guest: Yeah, I mean you hear some, you hear a lot of different schools of thoughts right in this space. And I think one school of thought is get the biggest possible business that you can responsibly handle. And I think there's a lot of logic to that. But for the small businesses, which is more what I ended up getting the really small ones closer to that 200 SDE, I think the amount of growth upside is probably in general larger. Right. It's going to be really hard or a lot harder. A business that's, let's say like a $10 million ticket size, it's probably going to be a long road to grow that 20, 30% year over year. You know, I, I just don't, it's pot, maybe it's possible. But I think once you start talking about the smaller businesses, I think these types of numbers of, you know, 10% growth, 20% growth, like they don't sound as crazy if. And so I think the way I got comfortable with it was, you know, each business that I was seriously considering, I would do my little financial modeling and all right. And I did feel like it was possible to grow this business, you know, double digits, maybe not right away, but I think at a much faster clip than you would be able to a very large business. And I saw this firsthand. It, you know, the contrast between Handy and Angie. When Handy was a small startup, we were more lean. I mean we could, we could achieve really big gross numbers because if you're starting from zero, like you know, whereas at Angie certainly we have some high growth business lines, but it's a bigger company, you know, it's going to be more incremental, more, more measured. And so I got comfortable with the small, smaller end of that just because I, I felt for this business anyway that the growth numbers potential was, was higher.

[36:24] Host: It's such a good point. And just to put some numbers behind it, it's, it's easier or it's. If you can successfully grow your business, it is faster to grow a sub million dollar, call it 300,000 SDE million dollar business to a million dollars in SDE than a million dollar SDE business to three million dollars of SD.

Guest: That's what I. Yeah, yeah.

Host: And I think that that's a fair generalization. Now on the flip side, let's just spend some time here. The $300,000 which does happen to be your SDE number, the $300,000 SDE number. Business is more fragile and more risky. So one crew member quits and there goes 25% of your SD.

Guest: So 100%. Yeah.

Host: How did you get comfortable with that? Those, those risks?

Guest: Yeah. So I feel comfortable and I'm going to talk like specifics here because you know, I got comfortable specifically with this business for a couple reasons. One, this business is old. I mean it is 40 years over 40 years old. And not to say, you know, 40 year old businesses don't just disappear overnight, but I think it really had that like track record of longevity that made me more comfortable. That and you know, it's, it's seen different churn over the years and people come and go and all of that and had periods of turmoil and stability and recessions and it had just weathered a lot of storms incredibly well. I will add. So one, just the business itself felt quite stable, established. Two, and we haven't touched on this yet when I met the owner of this business and because, and this is California we're talking about here, we do repair. This is a licensed business. The owner has a contracting license. So he, he would have to stay on. Yeah, I don't, I don't have a poor contracting license. So the owner and I really clicked in a way I didn't expect to, to click with, with owners. But I mean I, he's, he's my business partner. Right. Essentially because he does still hold a percentage of the business. But I also feel like I gained like a mentor in some ways a family member. So just the, the, and this owner, he, this business put his kid through college. I mean he bought his house off the back of this business and he had many other offers for, for this business. And I know and think because he told me the reason he picked me is just because we clicked. And I also think he saw the ability for me to do similarly what he had did with the business and grow it over time and make it my own little nest egg. And so to answer, this is a long winded way of answering your question, but I really felt like I had the backing of the seller and the support of the seller in this business, which over the past 40 years a lot of its success is, you know, probably a lot attributable to him. And so I felt like, all right, I have the seller in my corner here. He's still going to be involved in the business. He's invested in me. He genuinely really wants myself and the business to succeed. So that made me comfortable. And then there were kind of some more quantitative factors about the business. I mean, so a lot of the revenues recurring, you know, which is, which is a nice component to have. The margins are very solid on this business. So there were a few things that. And just conceptually like taking macro steps back. Do I think pool cleaning as a service is going to get displaced, you know, in the next five to 10 years? Like, no, not really. I don't think AI is coming for pool cleaning. Like, so there were some micro, macro, personal. There were a lot of different factors that got me comfortable with this specific business. Despite its size.

[40:20] Host: Fantastic. And the. But going back to STE and you know, kind of what you might have been used to in previous salaries, were you going to need to pay yourself immediately out of the business? What was the program there? Or were you going to just reinvest everything or what did that look like?

Guest: Yeah. So you have to keep in mind, I went into this buying a business mindset saying, all right, this is going to be at least two years. Right. And so when I found myself very quickly, oh, I very well might own this pool business, you know, the question came to my mind, how much am I going to pay myself? What I ultimately decided to do with this business and again, very specific to this situation is I decided, you know what, the STE on this is small. I found it quite quickly. I was already emotionally committed to not taking the salary for two years as I searched. So I decided won't pay myself for this business for at least a year and then reevaluate from there. So I decided the money would be better spent reinvesting into the business, de risking it, doing all the things. So that was the calculus. Had I had a different business or had I been maybe further in my process, maybe I would have made a different calculus. But that's what I decided for this one.

Host: I love that because the cliche that we all know time is money, we understand this, but let's apply it to search, which you basically just did implicitly. If you decide to do a full time search and you tell yourself, okay, you look at your balance sheet and you say, okay, I can do this for two years based on how much money I have saved and, or my partner's salary or whatever my needs are, I can do this for two years. If you find a business after six months versus the full two years, you have the, let's call the, let's call it the total cost purchase price is basically less because you have, you have saved 18 months of no salary.

[42:30] Guest: Correct.

Host: I, I've never really had it quite distilled like that. But every month that you shave off your search, assume now we're, again, we're assuming you have kind of allocated your two years of your savings to do this every month you don't do it is, is money in your pocket. And so, so, so, and, and then if you kind of like all bundle it all together in the way you think about it, finding a business after three months versus 24 is a cheaper business. It's effectively you've paid, paid less for that business. Very interesting.

Guest: Working for a search fund or whatever, you might not be thinking of the same calculus, but I mean a self funded search, it's, it's a very real expense, you know, to be living, living off your savings. So I. Yeah, yeah.

Host: And so when did you first see this business?

Guest: So let's see. I think I first saw it in maybe February. So I started in January first saw it in February, liked it. But I was early in my search and so I wasn't quite ready to start throwing out Lois. But I did like it and I did think there was something there. And so I was kind of like, all right, I'll, I'll keep exploring this, this business. And then the broker, because this was a, I found it through a broker called me and was like, hey, not trying to pressure you. Yeah, probably is trying to pressure. Seller really likes you. He just got his first offer. It's a good one. It's asking price. So if you are interested, you know, there's a, there's a limited window. And so I was like, you know what, I do like it. Putting on an offer does not mean I am the, the buyer. Right. So no time like the present, right. So I put out my offer. He got six offers in, in total and I, I knew two of them were, were other pool companies. And so I was like, all right, well at least this is a good exercise and, and putting out an loi. And you know, I, I had to go through everything with, with the banks as well to make sure that I actually could get a loan against it. So it was, I was like this was a great exercise and at least knowing what it will be like to put out an loi. But it seems like he's pretty well poised here. I don't know why, why he would, you know, necessarily go with me. But then as we continued the conversations it seemed increasingly clear that, that he would go with me. And so I was like, all right, well I think I, I like this business, let's go deep on it during diligence and make sure that everything I believe is, is actually there. And if I can't think of a real reason not to get it other than, oh, that was quite fast that I found it. You know, this, this question of what else might be out there.

[45:24] Host: Sure.

Guest: That's my only hesitation. That's not a great hesitation because there's always something else out there. Right. Like didn't want to be one of the searchers for five years. Just, you know. And so as I went through the diligence, you know, I kept having to come back to the does this meet the criteria that I outlined? And the answer kept being yes. So it, you know, I, I went forward with it despite the, the quick pace at which I found it.

Host: Great. I, I love, reminds me of a story or two I've heard where it's like the search was like. I kept waiting for there to be a deal breaker. I kept waiting for there to be a red flag. No red flag ever emerged. So I had no excuse but to buy it.

Guest: Correct. And not to say that it's a perfect business, you know, no business is. As I was going through it, there were things not perfect, but they were, they were the things I, I new or expected or want deal breakers or all of that.

Host: So yeah, what do the following acquiring minds guests all have in common? Doug Johns, Morley Desai, Tim Erickson, Chirag Shah, Shane Ursum. They all went through the Acquisition Lab, the accelerator in community for people serious about buying a business. But they represent just a sliver of the Lab success stories. The number of deals across the Lab's cohorts now stands at over 120 with over $300 million in aggregate transaction value. The Acquisition Lab was founded by Walker Deibel, author of Buy Then Build the book that introduced so many of you to the very idea of buying a business. The Lab offers a month long, intensive, almost daily Q and A sessions with advisors, live deal reviews with Walker Deal team introductions and an active community of serious searchers. Check out acquisitionlab.com link in the notes or email the Lab's co founder, Chelsea Wood. Chelseaivethenbuild.com well, let's hear more about the business. I've already said that it's 300,000 of SCE. What is revenue? How many employees? Revenue mix please. Some more points.

Guest: So 675 in revenue. So as you can do the math there, that's incredible, you know, margins. But I kind of almost did. No, I don't Want to say discarded that. But I was going to run the business in a very different way, you know, so I, I kind of took that as. Because the, the owner was very involved. He was working in the business. Right. Which, which I knew I wasn't going to do, so I kind of had to rejigger the, the P and L a bit more for, for how I would do it to make sure the math worked.

[48:15] Host: So which by the way, that effectively lowers your SDE because you're gonna have one less technician. Wait, was he, was he a technician?

Guest: He was doing, he was, in a sense he was doing some of the more high ticket repair work. Not all of it, but some of it. And so I had to factor that in to, you know, taking that out of the sde.

Host: Yeah. So you. So the sde. So remote lowering sde.

Guest: Correct?

Host: If basically. Yeah. Okay. Okay, confirming.

Guest: And so at the time I took over the business, he had four technicians for the business, so four plus himself. And yeah, that was sort of the, the makeup of it. The revenue.

Host: All technicians. No, no back office.

Guest: Correct. No, he was, he was weighing many, but he was doing a lot of the admin work, the scheduling. But to be honest, you know, the, he had the business pretty stable. There wasn't a lot of back office work. Yeah, he had an external accountant that he worked with, so that wasn't an employee, but he had an accountant who would do a lot of the bookkeeping and you know, managing, managing that. So, so, so that was good and sending the invoices and, and everything like that. But then in terms of what we would consider more back office work, like fielding customer calls and complaints and scheduling, I mean he was doing that, but he, not a lot of that was, it was very simple kind of stuff like hey, my, my heaters out, you know, okay, we'll come fix your heater. It wasn't a business that was getting, you know, 50 inbounds a day. He's constantly fielding and I think he, he had really gotten it to a place where it was quite easy for him to, to manage a lot of that, that admin type again because it's

Host: small and those in the four technicians plus him. So a pool business is very rowdy. So these, each of these four technicians are, do have a him have a route and then when they do a repair, is it still one man to one repair or do they ever double have to double up to do a repair or one, one.

Guest: There might be some repairs where you need a helper, if you will, because the equipment's really heavy or something like that. But it's more common. It can be done with one person.

Host: Yeah, yeah. So you got basically five kind of five routes sort of thing or four

Guest: routes because the owner wasn't doing his own route. He would step in for the high ticket repair work. So you more had like four routes

Host: and revenue mix and recurring versus project. What did all that look like?

[51:04] Guest: Yeah, so I. Taking a step back here, this pool business is a bit different than a regular pool business in the sense that the majority of the revenue comes from commercial work. So think homeowners association condos, you know, things like that.

Host: Yeah.

Guest: And so what sets these kinds of customers apart is one, they are getting cleanings much more frequently than your average once a week. A lot of the customers are getting three times a week cleanings because these pools are getting used so much by, you know, residents. So, so. And then two, because these pools are so high use, people are always in them, equipment's always on. Equipment breaks down much more often than what you're going to see in a residential pool. Cause it's getting a lot more use. So because of that, half of the revenue is recurring and the other half is, let's call it one time, you know, revenue from repair work. Work that comes up, which I don't think is representative of a like residential pool pool business. Where I think you're gonna. I think the vast majority of the revenue you're gonna see is that recurring cleaning revenue and maybe some ad hoc repair work.

Host: And, and when we think repair work, this is not. Even though a repair is kind of like a project, it's much higher quality revenue than pool construct than like pro, than a. Than, than construction or project. Because it's reoccurring. It's gonna. Stuff is gonna break. Right. How do you think, how do you think about the quality of the revenue of the repair work?

Guest: I think of it as very. I. It's not the same as the recurring cleaning revenue, but.

Host: Right.

Guest: But it. What I'm Starting to see 90 days into business, it's always going to happen. Once you reach a critical mass of accounts, there's always going to be a heater that gives out a filter that's old and leaking. You know, a pool that needs an acid wash. What I think once you hit a certain number of accounts, something's always going to be breaking. So I don't. It's not recurring. You still have to, you still have to work for it and be quick to address it. But it does feel like I would be very Surprised if there was ever a month where we didn't have some critical amount of repair work, so.

Host: Yeah, yeah, no, exactly. So. So it. It feels to me like higher quality revenue than you might think.

Guest: Oh, for sure. Yeah, for sure. I was pretty nervous the first month when it really hit me like, wait a minute, half of. Half of this revenue I can count on, but the other half, like, am I just sitting around waiting for a filter to. To leak? And it felt a little bit stressful, like. Cause you can't really. It felt like I couldn't really control that. Right. Like, if, if the equipment breaks, I have no. I have no impact over that. But. But now I feel much more comfortable. Like, it. It. It's. It is.

[54:07] Host: The phone rings. Yeah.

Guest: Yeah.

Host: Well, also, to your point about commercial. We love that. B2B versus B2C.

Guest: Yeah.

Host: Right. Okay. Yeah. Just making clear that you do have

Guest: a lot of residential clients as well. Well, but they, they are close to our commercial customers, like, physically located to be on the route. And again, I mean, the vast majority of the revenue is going to come from these commercial clients.

Host: Yeah. Yeah. Fantastic. Can you tell us what you bought the business for and how you structured that?

Guest: Yeah, sure. A little around 9. 900,000. A little north of that. I think we ended up getting up to like 920,000 or so. So that's a good multiple on. On the, the sde, if you're doing the math there. And then how we structured that was a 95% buyout where the owner stays on as my. My business partner and a 5% holder for.

Host: For the license and for the 95% you used how much of your own, how much was your deposit and how much was SBA?

Guest: So 10% down and the finance through SBA.

Host: So 10% you. 85% SBA. 5% he holds on to.

Guest: Correct. That's right. Great.

Host: And so let's hear about. Essentially, you have taken advantage of a change in the SBA regulations that happened just before you got into. Are you. You're aware. You're.

Guest: That's right. It's so funny that I talk to. And I mean, this is a little tip for, for searchers out there. Like it. Some banks confidently told me, oh, this is, this is. What you're asking to do is. Is impossible. It's. It's not allowed, you know, and that's just not true. Like, here I am, you know, and

Host: what were they saying wasn't possible?

Guest: Cristiano, the, the license holder component, the, the buying out, like, keeping him on is Is a license holder that he.

Host: That he would retain his equity, some piece of the equity indefinitely. The partial buyout.

Guest: Correct. I heard a couple different flavors like, oh, he needs to put a personal guarantee down, things like that. Or just that the SBA doesn't allow partial buyouts, which isn't true.

Host: Right.

Guest: So, yeah.

Host: But not to defend these folks should know better. But it is a recent change. It is a change that happened in 2023.

Guest: Correct.

Host: So people. Yeah, yeah. So this thing of him owning 5%, retaining 5% of the business indefinitely, that's not seller note, that's not stellar note on standby. That's true equity forever as. Or as long as you and he agree that, you know, that he wants to hold onto it is a. Is something that is only been enabled by this change, this 2023 change to the SBA rules. And, and in fact, when those rules happen, this is coming up a lot of my webinars. When those rule changes happened, there was a lot of talk about it, but it wasn't clear how much of an effect it would have. Well, one year later, a little bit over a year later, in fact, you're seeing it a lot in deals this

[57:28] Guest: h. You know, so.

Host: And so the, the 5%. So tie that into the license and how that enabled. Frankly, enabled the whole deal.

Guest: Yeah. So actually this was a bit of a unique deal in the sense that he was offering. He was operating this business as a sole proprietor business. You can't buy out a percentage of a sole proprietor business. That's not possible. And we both really wanted to make this work, so we came up with this, with the help of my counsel, we came up with this sort of fancy structure that was a bit of a headache, but I think actually ended up working really well where he created an llc. So I haven't bought it yet, but it was a condition of the. The sale. He created an llc, assigned the assets of his sole proprietor business to this LLC ahead of the sale, and then I bought out a percentage of that llc. So it was sort of this weird, roundabout, like asset. It has a lot of the benefits of an asset purchase, but is definitely a stock sale or equity sale, I should say, rather.

Host: And why is that important? Why is it not an asset sale and it is a stock sale? This again, is tied to the license, I assume.

Guest: Yeah, it has to be. Yeah. For the license, you cannot buy the assets unless you yourself, the. The entity that's buying it has a license, which I don't. So.

Host: Exactly.

Guest: So. So it would have been impossible to, to facilitate it as an asset sale. Which is again, a quick side note, as I was talking to a lot of searchers, you know, there's this canon of, oh, asset sales. Asset sales. And I understand why, you know, they, they are preferable from I guess like a risk point of view. It will. But you know, some businesses like this one, it's just not possible to do it any other way. So.

Host: Yeah, yeah. So he was a sole proprietor. So he was totally exposed to the loss. I mean, there was no corporate veil to be pierced. I mean, he was, it was just him flapping in the wind for 40 years or however long he did it.

Guest: And he didn't, you know, come up again and again. Another thing that got me comfortable with the business. Forty years, you know, steady growth year over year, and he never had a big, he was never opened up to a big legal, you know, liability that, that ultimately ruined it.

[1:00:04] Host: Yeah, yeah, but okay, so, so he's, there is no entity. He has to create one into which he pours assets, the goodwill, which is really the, you know, in, in a lot of these businesses, what we're buying, the goodwill of the business is transferred into the asset. The license is transferred. Excuse me, into the entity. The license is transferred into the entity, and then you buy 95% of the entity. On this, just on this point about asset versus stock. And the reason searchers prefer asset sales is because you're not, you're not carrying forward any of the liabilities that might later attach to the entity. If there was no entity for his 40 years, if some lawsuit had come along, somebody, somebody from five years that he serviced, whose homie service five years ago, tried to sue him. Maybe because there was no entity at the time, they couldn't. You would have been protected anyway. Yeah, perhaps because the entity didn't exist when.

Guest: Yeah, no. If something came up from five years ago, there's no way they could come after this entity because it wasn't even around. Yeah, so.

Host: Right.

Guest: Yeah.

Host: Right. Interesting. Okay. Just on the, this point, this, this 5% that an owner, this partial buyout, which by the way we hear partial buyout, it sounds like, you know, some small percentage, but in fact you're, you're still effectively buying the whole thing. It just doesn't happen to be 100, it's 95. I always find that partial buyout kind of a little bit of a misleading term. But you are buying 95 of this business and he retains 5%. There is some risk to that, that you're now co owners with this person. You've already said how strong the rapport was, how strong the trust was. But does it feel, how does that feel to basically have a partner in this person, even though they're only 5%?

Guest: I mean, so far it honestly feels great. You hear, and you hear a lot about like, hey, when you take over, get the seller out.

Host: Yeah.

Guest: Day to day operations as quickly as possible. And I am so impressed with this seller in the sense that if I had built this business over the course of the last 40 years and someone like me who doesn't have a background in pools, you know, comes in and is like, I'm gonna buy your business, I would be like, all right, sure. But, you know, I, he has been so I think he's done a really good job of toeing that line of support when, when I, I, I know I can call him when there's something going on and he will, he will be present, he will help me, he will give me his, his pointers and advice, but he is not, he, he's ready to retire. You know what I mean? He's, he's been supportive, but has absolutely not been, you know, trying to.

Host: Territorial.

Guest: Yes, correct. I think, and which is very impressive I think, considering what the, what he's, how long he's had this business and, and what he's done with it. So, so far, I mean, it's been 90 days, you know, but so far I think this partnership is off to a very strong start. And I feel like every day I'm leaning on him less and less for sort of the, just random questions and operational things that come up. And, you know, we still have a nice, nice rapport. We're planning a little trip soon with our respective spouses. We'll go do a little like winery day and you know, have a, have a whole thing. So I really do think I got quite lucky with the, the rapport of, of the seller. And I'll do a really quick, you know, side story here.

[1:03:42] Host: Yeah.

Guest: One of the things I uncovered and the diligence is that, you know, there were a couple technicians that I felt, you know, maybe weren't the best fit for, for the business going forward. And I, firing is, is absolutely one of the worst parts of any leadership position. You know, it's, it's hard in corporate America. It's hard in small businesses. It's just hard. It just really sucks. And so when I did let go of, of one of the, the technicians and he took it quite poorly, I was extremely upset after it, you know, and quite emotional. And tried to pull in my spouse. First they were busy. Then I called the seller and I mean just the like level of support, like emotionally that he was giving for it. I was, I hung up the phone. I was like, man, I got really lucky with, with this seller that we can have this kind of rapport. And he was like, you gotta do things your way, you know. And I think the way this person reacted shows their true colors, shows you're making the right decision. Like you've got this, you know, and was very supportive. Support above it.

Host: Christiana, we are, I'm going to start wrapping, wrapping us up. But let's one thing before we close by hearing how things are going, how it's been for these last 90 days. We talked about how you, whatever business you were going to buy, you wanted to be able to articulate very clearly to yourself what levers you'd pull, what improvements you'd make when you got in there. What were they for this business?

Guest: Yeah, I think one kind of ticking through the list is the operational efficiencies outside of, you know, some QuickBooks that the accountant was using. This is very much a pen and paper business. So think about the universe of things that could be done there. I mean at a minimum, I wanted to bring all of the pools into like a pool route management app, which I did, to more efficiently track all of that and really also just bring in the efficiency to track the profitability at a pool pool by pool level to, to be able to get micro in a way we hadn't been able to before. So I think one kind of universe of thing is just adding some technology to, to really make the, the business more efficient. Yeah. Then I think another hiring. So you know, Robert started this business in the 80s. There was no, indeed there was not. You know, it was just kind of word of mouth and, and all of that. And like any business, any, any business, I think I, I kind of think 60% of the battle is hiring. Right. How do you get good people? How do you get good people to stay, you know, all those things. And so I wanted to introduce like a true hiring funnel to, to the business to, to get kind of the, the best in class folk for it. And then of course, growth levers. Again, this business really has no online presence whatsoever. I mean no Google or Yelp or certainly no online marketing. Pure word of mouth referral. And you know, I have.

[1:06:54] Host: Does it have a website?

Guest: It does have a website, but I've tracked on Google Analytics. Nobody's going, nobody's finding this, this Website, which isn't surprising. Right. And so, and the website's about 10 years old at this point anyway, so. So when I was kind of taking down the universe of things, it was marketing, online presence, technology, hiring funnel. I mean, the list kind of felt like almost endless for the value adds that I could bring in to it. And so, yeah, so I've started executing on a lot of those things and it's been going, it's, I think, you know, some good advice I got that I didn't take when, when I bought the business. I was talking with other pool business owners that I could find and someone said, you know, this is a 40 year old business. When you come in, maybe just don't change that many things right away. Just kind of like see how it goes. Which is really good advice. And I did not do that. And I started changing things almost like week two, I was like, all right, we're all using this app, you know, week three, I'm starting to change personnel immediately and trying to get different people in the funnel. So I did really change a lot quite quickly, which I think made some things much harder than I needed to make them for on myself the first 90 days. But my logic was kind of like, look, I'm going to be deep in the J curve no matter what. Why not make it like, why not get all the pain out of the way as soon as possible? So, yeah, we're on an app now. We have a slightly different makeup of the team where we've changed up the routes and I'm hoping that this month or early next we'll have a bit of an online presence that I'll start fostering. So we're, we're, we're really firing on all cylinders here.

Host: And you know, part of the reason that we say not too many changes too soon is so that we don't disrupt the employees and so that there isn't this kind of this, this embracing or pushback by employees. How have your four technicians, plus four former owner, I guess three technicians plus former owner responded to so many changes by the young whippersnapper?

[1:09:06] Guest: Yeah, so, I mean, some of the, like I did. It's a. We have a very different team now. So I've, I've turned over some of, some of the technicians. So I would say the new. I've turned over all but one. Wow.

Host: And the previous owner?

Guest: Yeah, the previous owner's obviously still, still around. I don't really consider him a technician. I mean, you know, yes, he was doing some of the repair, but yeah, so I've turned over all but one of the technicians, so have three.

Host: And can I just ask how the, how the former owner feels about that? Because these are, you know, his guys. You could imagine. Although maybe he also, or not maybe he recognized that some of these people he should have let go and he wasn't the person to do it because the relationships were entrenched. He just couldn't. But new blood could come do something he knew he needed to do or what. What was the lay of the land there?

Guest: Yeah. So the lay of the land is he, he, he knew that there were some opportunities there, but again, he didn't have a true hiring funnel the, the way I did. So he was supportive and understanding of the decision and understood the logic behind it. I think he was surprised I did it so quickly, which is, is fair, but I would say overall supportive and understanding of the decisions that I made. And then he would be quick to admit that, you know, he struggled with, particularly around Covid time. I think a lot of home services business had trouble attracting good, good talent and he was no exception there. So I would say surprised by the speed, but supportive of the decision overall.

Host: Interesting. So he wasn't scared to do it because of the personal relationships he had with his people necessarily. It was more he didn't know how he would replace them. And you came in and built a hiring funnel quickly.

Guest: Yeah, exactly, exactly. I mean, he did have relationships with these folks, some more than others. And I think whether or not, you know, he did have relationships with some of them. And I, I think it's, it's nice that he, he still gets to maintain those and, and still have some of those relationships because ultimately it was, it was my decision and they know that.

Host: So. Yeah. Yeah. Well, it's interesting how much, how much the turnover is, Christiana, because you, you, you ask, you know, in these businesses, which are so often asset light trades business or any of the businesses that searchers target, they're so often asset light. What are you buying? You're buying the people. And in a business and the brand and the history and the, in the contracts. And so in your case that is a ton of the value. But you also bought the people. But in fact, 60% of the people you didn't really buy because you had to let them go. So only 40% of the people are still around. So does it make you think about what you paid or not really? Because most of the value is actually on the demand side, not the supply side, meaning customers and brand.

[1:12:15] Guest: Yeah, I really conceptualized this business, the value to be on the demand side, these long standing, loyal customers with predictable revenue. And again, over the course of 40 years, I mean he had seen quite a few people come and go. I think he was the big value add in the sense that people might turn over and this and that. But he was the, you know, the buck would stop with, with him. If someone's not doing a good job, he would step in and, you know, oversee it. So I think he, the demand and the owner himself was a lot of the, the value, both of which I got to maintain in the sale.

Host: So if you were talking to somebody else out there considering buying what, what the, the quote rules would say is a very small business, very low SDE business and, and you know, a lot of employee risk because there's only five of them, four technicians. What would you, would you say? What would you say?

Guest: I would say that this is for me, this is a long term game, right? This is, I need a, a long time horizon for this to play out successfully. Because if you took a snapshot of what it looks like now, I don't think you would call this like, oh, success, you know, it's a long play. So I would, I would urge someone with patience. I would urge patience. And to be honest, I, I do think maybe I made too many changes too quickly. I think they were all the right things to do. But I would say maybe if you have a lot of changes, maybe parse them out a bit just for your own, the sake of your own stress and your own livelihood. So I would say a small business, I mean the really small business, the size I'm operating at here and you have to be willing to get your hands dirty. I mean, if you're coming from a role where you don't, you know, you want to be very strategic and just looking at all the numbers and not talking to customers and not, you know, really involved in the trenches in the day to day. It's, it's, it's not the business for you. So I, I think those would maybe be some things I would, I would caution people as they're thinking about a business of this size, but, but the

Host: size itself is not, you don't necessarily think is the red flag that we're often told that it is. If you're willing to get in there and get your hands dirty, don't necessarily be scared off now also we should say you have the resources to forego a salary for some time so you can basically afford to buy a business that doesn't pay you an income immediately. There's that.

[1:15:03] Guest: I mean, I think the reason people encourage, you know, buy as big of a business as you can possibly handle is for a few reasons. One, you can afford to pay yourself. Right. So that's some hopefully healthy, healthy enough salary. So you're de risked in that sense. Right. But then also a bigger business is perceived correctly, I'm sure, as being more stable. Right, right. And so I think for this particular small business, I perceived it to be sufficiently stable to, to kind of get over that hurdle. And the salary. Yeah. I mean, I'm, I'm, I have a certain amount of resources. So, so that worked for me. I understand that doesn't work for everybody. So I think the big hurdles for a small business, if you can overcome the stability slash, you know, kind of salary piece, then, then I don't, I don't see a problem with it.

Host: Great. And, and let's, let's make that concrete. A 200 or let's say a $300,000 pool cleaning business that started two years ago is very different than a $300,000 pool cleaning Business that started 40 years ago. These are not, these are not the same animal. So you got to, so to your point, you know, look beyond the ste number and in your case, get comfortable. You got comfortable because there was so much history there. There was, there was, yeah.

Guest: Great.

Host: Super. And when you, I hear you say this is a long term thing for you, that that phrase means different things to different people. What does long term mean in your case? Is this. Yeah. And maybe grander vision. When you talk, when we talk at the very outset about, you know, how you've started on in your corporate life, you took projects that were unglamorous and made them something really impressive and you want to kind of do the same thing here. What is that? You know, the rosiest, the rosiest outcome. What would it be?

Guest: Okay, so you're going to feel like I'm kind of giving you a non answer, but I do really like the framework clear, fuzzy, clear, which is like the immediate path in front of you. And what you're doing has to be clear. And I know what I'm doing. I'm going to try to online presence, operate all the things we talked about, the hiring funnel. Great. Then there's sort of like this middle section that's a little bit fuzzy, but then the kind of long term play should be clear as well. What I'm trying to do is build this business to be as large and as profitable as possible. And in a way That I have control over my life. Right. And so that could look a lot of different ways. Could that just be taking this business standalone, growing it as big as possible through my own market? Sure. Could it be a roll up? Yeah, sure. Maybe that's in the cards for, for me as, as well. I think there's that kind of middle section to getting it as big as possible in a way that I feel like I've been control over my, my life and destiny. That could take a lot of different forms. So I'm open to what that sort of middle part looks like. But I know what I need to do now and I know what I'm trying to get to if that answers it.

[1:18:08] Host: Well, it does close. Come close to answering it. But where you want to get to the, the clear fuzzy clear. The second clear on the far side means freedom. Freedom means control of your time control. You're basically the, the owner of this business, but you don't have a, it's not necessarily 5 or 50 million. Like that doesn't. That's, that's in the fuzzy bucket. What exactly like the numbers. You know, you're talking to an audience here, Cristiana, many of whom are like, I want to build $100 million holdco a very, you know, clear threshold of what they're running toward. Not so necessarily in your case.

Guest: Not so necessarily in my case. If, if you know, $100 million plus hold co. You know, it checks my, my boxes of, you know, then, then great. But that's not necessarily what I'm running to. I'm open to the idea that this business could be, you know, like a, it could be a 5 million revenue a year business. It could be a 10 million year. I think the, the gradients of the size I'm open to, as long as I feel like I'm being well compensated. I definitely would want it at some point for it to surpass the salary I was, I was at Angie or you know, other places. So for sure, I definitely have, you know, an income level in mind for sure. But the, the size of the business could take on, on many, many forms. Yeah.

Host: And, and it is basically an indefinite project. This isn't something you do for five or seven years and then you go back and become the operating partner for private equity funds or something. This is, this is it.

Guest: This is, that's not my, my vision. You know, who knows what.

Host: Who knows? Right.

Guest: But, but that's not the vision right now. Yeah.

Host: Right.

Guest: Great. Great.

Host: And I keep jumping around a little bit, but I just don't want to let you go on it. Before I ask you some of this, this question. The hiring funnel that you built. We heard so much about how hiring trades in tradesy and blue collar businesses is difficult. What is it? What has been your experience building a hiring funnel 90 days in? Have you cracked that nut? What does it look like out there?

Guest: Yeah, what does it look like out there? Look, I think I'm in a, in a, a good position with this business in the sense that not all pool businesses are commercial businesses that serve commercial customers. I, I can afford to pay a slightly more competitive hourly rate than like a residential pool cleaner could. So I do think it's, it's been easier than I thought to get candidates in the door simply because I'm able to pay slightly more competitive rates. That being said, for the repair work on the business. So the actual, not just the cleanings, the heaters, the filters, you know, repair work, that has been much more challenging to find good people. There's not a secret. I mean, look, it's like a numbers thing. You just gotta, you gotta talk to a lot of people, you know, spend a lot on. Indeed. And Craigslist and all the things. There's not a, there's not a trick here. But it's hard. I would say I have an easier time finding the cleaning technicians than I do the actual repair work, which is more traditional. Kind of what we call. Yeah. Specialized. Right?

[1:21:30] Host: Yeah.

Guest: Great. Great.

Host: Christiana, we've covered a lot of territory. Is there anything that you wanted to say that I didn't give you a chance to.

Guest: I don't think so. I don't think so.

Host: Okay. Well, if people have questions about the pool business or about buying small or about just self funded search broadly or tech veterans or people who would be tech veterans or trying to escape tech and get into SMB land, how can people reach out? How do you like them to do that?

Guest: Guess they could try emailing me.

Host: Okay.

Guest: The best way.

Host: Okay, we'll, we'll put that in the notes. Are you at all active on LinkedIn or responsive on LinkedIn? I actually, I noticed before we got on the call today that my, my invitation to you has been pending for two months, so I guess not.

Guest: I, I, before I took over this business, I was quite active on LinkedIn. I have just been so crazy busy. I think I've kind of like fallen off a bit. But historically LinkedIn would actually be a good place to reach me and you know, so I would say I'm responsive on LinkedIn in general. I'm just particularly busy right now, so. Sure. Yeah. Great.

Host: Okay. Christiana Laugen, congratulations. Really great interview and fun story. We'll be eager to hear how things go and your first full year.

Guest: Yeah, hopefully very different time. All right. Thank you much. So, so much. Will appreciate it.