keith leinbach thank you for joining me today on acquiring minds hey willa more grateful than you can know to be here in august 2019 you acquired a consumer product business for six figures under a million dollars it was a two sku business so it was a business built around just two products you acquire it you grow it quickly and you sell it for eight figures closing just this past december so just just over two years of ownership a remarkable enviable story of acquisition entrepreneurship now we're not going to be able to say what the product is due to confidentiality around your own exit and industry sensitivities but there is a lot you're willing to share that the acquiring minds audience is really going to benefit from and separately you also built laundromats during this time span i believe and you acquired smash my trash franchise territories both of which will touch on toward the end but suffice it to say you've pursued lots of entrepreneurial projects in the last few years and have seen the fruits of those projects so keith start us off with your background if you would give me a couple minutes on your bio your corporate background and just take me right up to your decision to go out and buy a business yeah uh i'll do that man so um i graduated college in uh in the late 80s i'm 56 in the late 80s with the degree in mechanical engineering and um sorry my kids are stirring around the back anyway i went to work for what you know what's now accenture it was arthur anderson at the time then anderson consulting and and followed that uh career you know when i was in college even high school on junior high man i i was always very very interested in having my own business i i look back now i was very entrepreneurial um yeah i did all the usual crap it painted houses and mowed lawns and had a little hat business you know back in the college days and and i i knew i want to be an entrepreneur and i even wrote myself a note when i graduated college that i was supposed to open on my 30th birthday and i did and i said hey you better you better have your own business by now and that's how kind of focused i was on being an entrepreneur what's what's interesting though um i i did what we all do man we come out of come out of school and i had a you know a good degree and um from a good school with a decent gpa and it got picked up you know by by a big big company and went to work there and i i confused uh being a ceo with being an entrepreneur and so when i was working for you know at our school i was working for arthur anderson i thought oh yeah be the ceo of arthur anderson that's just 100 percent the way i was oriented i just that's the only way i thought and then i i left that business and i went to a company called insweb which is an online insurance marketplace that we we started i was i didn't start it i was one of early guys but i didn't start it we took that public in 99 um and then i went to work for a company called bea systems uh out of san francisco we sold that to oracle for 17 billion in 2008 i think and then i went to a company called service source and my whole mentality throughout this whole thing was i want to be the guy running the show like i i wasn't but that's you got to climb the ladder and that's that's what i wanted to do but i also found that my brain i was just always distracted around around being an entrepreneur like i always thought man i sure would like to start that business or i should like to own that business or or whatever and um i i in the last two positions that i had i was a ceo and the last one is the ceo of a pretty big company and i got fired i got a disagreement with the board over a vendor-related deal that got conflated into some other stuff uh and it was a it was a pretty nasty exit and um i left the corporate world i knew i wasn't going back and that turned out to be just this fabulous blessing because um it made me stop for a minute and think okay what am i really what am i really trying to do i don't have enough money to retire uh you know i was i don't know 54 or something at the time and i thought i don't have money to retire what what am i going to do and i thought maybe i just you know maybe i'd start building some some businesses and that's why i built these laundromats and we're on a trajectory to build some car washes and some salon suites and i opened an amazon fba business and blah blah blah and then the same the same process i ended up buying this company and it was a couple years before i got to the point where i bought that company um but i tell you that whole story man because i think a lot of us go through this we go through a career that we think uh we think we'll find fulfillment when we finally get to whatever it is that we're looking for in that career and for me it was to be a ceo and when i became a ceo i was like i don't man i mean i still got a boss it's called the board and uh there are parts of it that i'm probably good at there's other parts that i totally suck at and it what it wasn't fulfilling oh that 28 years of career holy crap what what now and so um building business is really really hard super hard man that's why i like your show because it's about acquiring businesses and and there's so much to be learned about acquiring businesses that is super cool i mean when you build a business you go from zero to whatever in whatever time it is and like if you're going to build a retail business like laundromats you have to you got to find the right space then you've got to get architects involved you got to get you know engineers and you got to get city planning and in my case you know that whole process took almost two years and then you got to get them built that might take you know six to nine months and you're you're three years before you get the freaking doors open and you're burning cash the whole time and it's so that's you know starting something and then buying a business on why in the world am i why in the world am i building business i could be buying something and it comes with a revenue and earning stream and if i could grow it like it was a business that i'm passionate about um and that's what man that's what i i'm really turned on about and why i'm really super fortunate and grateful that you're giving me a chance to talk about acquiring businesses um and i know i've talked for a long time here man but let me the punch line for me is if let's say you're a corporate guy and you make just pick your number man i don't care 300 grand a year and that's the number that you feel like oh if i can make 300 grand with my own business i'll do it well go buy a business that does 300 grand a year and that size business you're probably going to buy for you know maybe maybe it's a 3x multiple of earnings so 300 grand you can spend 900 000 and maybe you don't have 900 000 but maybe you could you know put 20 down if you've got 180 grand you're gonna finance the 700 that's left and then you've got a business that that makes 300 grand a year and and now you got something you can grow and you can put all these mad skills you got as a corporate warrior to work that might be worth something and you know i'm kind of the case study of of of that happening medic it really can it's could be life-changing and keith did you did you discover this this this acquisition the power of acquisition on your own for many of my guests they're exposed to it either maybe through a college class i mean more and more mba programs are talking about eta entrepreneurship through acquisition uh or they somebody recommended buy them build the book to them or you know they it's it's not usually their own uh their own um discovery and and i'm like that as well you know i kind of i kind of didn't didn't figure this out on my own but once you figure it out it's it's incredibly compelling like you just said did you figure it out on your own or were you exposed to somebody who'd done it or a friend or a book or another pod or what um well i'll tell you i i discovered it on my own and i don't tell you that to make it sound like i'm smart it took me for freaking ever i went out and built three laundromats and failed at building four car washes uh spent a year trying to find property uh and probably a couple hundred thousand bucks um on um lease negotiations for salon suites and all this was ground up you know new launch and then i had a business broker call me like you know just put it in front of me dude i'm so lucky i discovered it because he called me chuck called me and said dude i got this business um are you interested in it and i looked at i'm like yeah that i mean that sounds pretty cool it's an industry that i like and um and you know it's a i was kind of passionate around this industry area for some other unrelated things and um anyway i ended up buying it thinking yeah if it doesn't work out it's it's only a few hundred thousand bucks and and um i don't think it's ever gonna be worth less maybe i can grow it to be worth more and i should it's a little bit of a tangent man but i showed the business plan i put together i was going to grow this thing 30 a year um and and um i grew it 100 in three months but when i before i bought it i showed the business plan to my buddy who was the president of sprint at the time and he's like come on man i mean we've both looked at a billion performers and business plans what are you going to grow this thing 30 a year like doing what what are you gonna do man i gotta scratch my head i'm like that's a really good question like what am i gonna do and you know the answer is i'm gonna grow a product i'm gonna i'm gonna create awareness uh and i'm gonna expand my geographies those are really the three things um i didn't know those tipped my tongue at that time uh anyway but anyway that that so i thought you know cheese was a you know it doesn't really make very much money i'm gonna make 30 more that's still not interesting to do it i would i was about to close he said dude i just back out of it you shouldn't be wasting your time on this stinky little thing and i thought yeah this is the president of sprint telling you to back out of it yeah it's not really the way you know i wasn't really comfortable backing out of deal leaving someone hanging at the last second i did like the business and i like the industry and so um i you know i ended up completing the sale and taking the business over and um and then it the first month uh was about the same volume of business as what i had acquired it at and the next month it grew pretty significantly and uh within you know within a uh by the end of that year i was i had doubled the business and i thought i think i got a i think i got a live one here well let's get it before we get into how you did that let me just hear a little bit more about the the acquisition in the search so you bought there really wasn't a search this friend of yours or this acquaintance chuck business broker brings it to you to your attention is this chuck from quiet light yeah yeah chuck mullis chuck mullen so so many people in the audience may uh know quiet light it's a well-known business broker that specializes in online businesses this business was had an online component you could you could buy the products via e-commerce but it wasn't a pure play e-commerce thing it was a manu the business also manufactured uh the product right to tell us in abstract terms whatever you can about the nature of the business itself yeah we we manufacture uh the stuff that we sell uh or we contract manufacture it and um we we sell it uh wholesale uh to companies that use those parts for for different stuff they're doing and and retail as well we just happen to do that you know online because everybody's got an online distribution mechanism at the time we didn't take any orders over the phone uh mostly because i was afraid i was going to mess it up like someone ordered a particular configuration of something i'm trying to write it down when i'm in the car or whatever so we just tell everybody go back on online you can buy it all right there and business got you know quite a bit bigger than we added uh some phone support so that you could dial the main number and hit you know the the sales extension and buy things right online but this is a this is a physical parts business it's a it's a you know physical product business and um and you know we just happen to we just happen to sell it one of the you know the primary distribution mechanism every sales channel is through the internet and can you tell us the industry yeah it's automotive parts and the what's the average order value like what are we you know what what is this part of these two parts what do they cost um you know if you if you bought them together which at the time that i took over the business you typically didn't even though they kind of go together um and so uh retail that that that part you buy it by yourself or average sales i think 1600 bucks okay so so pretty high for a consumer you know a significant significant spend significant lead price price i would take a phone call from somebody they'd call uh and i was the only one i had a contractor that helped me with you know shipping and order fulfillment and stuff like that but i took all the phone calls and so i would you know talk to to john doe and then i'd see an order come through from from john doe and so i knew there you know for that price point you're right it's you're gonna answer questions for folks to understand and get comfortable with uh with the things that they want to know and those typically turn out to be the same things and they created an opportunity for us to just create much more video content and and much more copy on the website so that people weren't just calling me uh to for for those same things and the and why did chuck reach out to you with this particular business like had he ever had he had he ever sent you listings directly like that before yeah this is this is really great man because it sounds like uh you know chuck called me so i got some you know secret deal for you that i didn't even know chuck chuck's a friend now okay you know what yeah i was i i i probably portrayed that wrong i signed up for the quiet light um listings yeah and i'd also signed up for empire flippers and website closers and and uh trans world and you know i i kind of had this i did have this idea that you know maybe i should buy a business i was looking at that as well i was never really turned on by by buying a business because i wanted to this is what i always told myself i wanted to monetize my own idea and so i just turned that that whole channel off of buying a business and you know that in retrospect i think that was totally wrong i was monetizing my own idea with the laundromats and i was like freak this is hard and it's long and it takes a lot of cash and the burn rate's significant and so then i thought maybe i'll sign up for some of these these listings and quite light was one of them because i think i found them through a podcast or something and this happened to be chuck's listing and so when i first called him he's like yeah this one's really hot man there's um i think we were in a signed loi within within a couple of days and there were four or five offers on the business and so it was it was pretty popular and uh we we closed two months later and that's how i found it man i didn't know chuck anybody's going to start in the same spot i was man just sign up for for the listings you're going to get all kinds of stuff sent to you and something that you think is interesting it's worth signing the nda and learn a little more about it sure and was that the first listing that you'd reached out for more information on either from quietlight or any of the other broker listing emails that you'd signed up for i don't think it was man i remember i remember calling uh empire about something i don't remember what what it was but here's the you know the i think kind of the interesting process is you're not going to find the right thing the first listing you call on right maybe you're enthusiastic about it and you should be but you're going to go through these iterations and every time you're going to learn of something a little bit more and then you'll be like oh yeah i don't i don't want to you know picture myself after closing when the honeymoon you know quote unquote is over and now you're with this business and if it's not something that you like in an industry that's interesting to you with a product that you you know are kind of behind you end up you know all of a sudden now you're in the freaking laundromat business you know i want to be in the laundry mat business and you know quite frankly i don't you know i i don't i don't get any energy from running laundry mats and that's why i have a manager i had to build three of them to have enough scale to go have a manager run it but i was like holy crap i gotta i gotta kind of work my way out of this problem and so you'll go through these evolutions and those are fine man that's a normal part of it and you're gonna learn things and be like that's i'm that much smarter about it and when i condense that down for myself i realize number one i don't want to i don't want a retail business like a storefront a retail business fund but i don't want a storefront i don't want to have to own property where or lease property we have to go through a planning process to get something built i don't like that um i don't think i'm very good i don't i don't gain a lot of energy from from having big teams uh i ran a company with 20 000 people i i've kind of checked that box and so um i so i've taken that you know off the list and then i think uh you know then you got just the financials like what kind of return on capital uh do you want to see um what's the overall investment to get into it some things might sound really cool but maybe they're eight million dollars to enter it you know maybe or whatever the number is like that's you just can't get there and lit started you know started rashing through this i didn't know any of these when i first get started listings getting listings right i got you got to really take some time to to think about where you get energy and where it sucks it away from you man and um one of the stories that that um really i know resonates with me and i've talked a lot of folks about it i i went through the franchise process seven times before i ended up buying a franchise that smashed my trash that you referenced and in that process um was a lot of this realization um i had bought into not really a trampoline park but that kind of thing and um i i actually entered that franchise and then i realized how many people were involved and the amount of lease and the capital spend on the front end for what it really does return and i was able to get out of the lease and then back out of the whole thing and that was a huge realization for me around you know really what what gives me energy and another one of those processes um the franchisee was really the franchisor was really adamant about the fact that i need to be there to operate the business and and they were really adamant that i i manage all the financials and i'm like i'm not i get i mean this sucks the life out of me think i'm going to go to quickbooks and like be the the bookkeeper like you want me out selling so you don't want me out you know doing the bookkeeping and they're like no we we want you in the bookkeeping and so that wasn't a good fit there's all these kind of steps that kind of led me to this process where i landed with this company that that made me realize okay i mean i can hire a bookkeeper i hate social media i can hire somebody to do all that um there are a lot of things that suck the life out of me and if i can if i have the freedom to go be able to port that stuff away and do the things that i like um and then you gotta be comfortable with it right you gotta you gotta be comfortable outsourcing things and and comfortable someone else you know doing the work you can't give it away and then go take all the work away from them um that's what was super important to me as i evaluated this thing and then in acquiring the right company and so the two things that turned you on about this business were the fact where the industry and the product kind of category and the fact that to the extent you would be working in the business you'd be selling you'd be talking to prospects on the phone and you like selling do i have that right yeah you know i like i like talking to customers and prospective customers to understand what what they like and what else they might need and i get lots energy from that man i have phone rings and i you know i light up i'm like oh man i i get to talk to somebody and maybe they're going to buy something from it's great like they might buy the thing that i'm selling that's crazy yeah so and it's retail it's not you know it's not like uh i'm entering an 18 month sales cycle right i probably make a decision in the next day or week and um and so there's a lot of gratification that works well for me and i knew that i could outsource the pieces that i would need to have in the business um order fulfillment bookkeeping marketing um i ultimately had a fractional cfo is a fantastic and super super value-added resource to help me just take the financials and on a monthly basis i'm fully capable of doing an analysis on you know did my cost go up or what shipping as a percentage of the overall cost structure blah blah blah i just i don't get any energy from it man and so i just it sucked the life out of me and and so my fractional cfo would do all that and it led to very material different ways of of running the business and um um so you're right but you gotta be you have to be comfortable because i tell you really short story man i talked to a guy uh last week he's an entrepreneur has a really fast growing uh business that does it does millions and millions of dollars of revenue and he's like dude this thing sucks the life out of me i just had to cancel our family ski trip to utah and like what why and he said because this job owns me man i said well who does who does all the product design it's me i said who does all the engineering behind it and he said me i said well who does sales and he said me i said do i need to keep going like who who does the bookkeeping and he's like me and i said do you like all those you know and then seven expletives later he's no are you kidding me i freaking hate the only one i like is the is the product design man that's why i'm great why don't you outsource the rest of the stuff business makes zillions of dollars and he said i don't know how man i don't know how and if i can't scale anymore beyond where i am and the reason i tell you this man is because even though he knew that those are sucking the life out of him he either didn't know or more likely just didn't trust that he could put someone in that position that would do a job that he was comfortable giving away and if if that's your if that's your orientation you're probably not going to be a very good entrepreneur ma'am but if you're oriented around i'm i'm gonna i'm gonna find really great people and i'm gonna outsource the stuff that sucks the life out of me and i'm gonna spend my time doing the things that i'm great at that can really grow the business you're gonna have a big impact man and that's you know when i look back at this story we grew this thing 20x in in two years man i mean and it's not because of my mad you know marketing skills i'm freaking terrible at marketing but i hired a really really great digital marketing dude um you know first the firm and then and then the guy liked the business so much he ended up joining the business um you know the story keeps going like i i don't get any energy out of the day-to-day operations of product fulfillment and so i found a guy who's my first hire as a full-time employee and he came and ran opps take that one off the list i don't do it anymore yeah well keith two things on this point this is this is great first is i the fact that you were a ceo and in corporate america for you know successfully rising through the ranks and then ultimately ending with with ceo you were really you had a lot of experience at delegating and and and basically managing people and and kind of the resource allocation of like you know where putting butts in seats to get to to get the job done and i i feel like that experience really informs your comfort with doing it now in your own businesses uh versus you know start from scratch ceos like you're like your friend that you just talked about that person you know didn't havocs presume doesn't have experience as a ceo um and he's just not as inclined to delegate so do you do you think that your corporate experience has made you more um more open to delegating than some of these other scrappy or less corporate experienced entrepreneurs uh well i know for myself um i don't know about the the scrappier dudes but i know for myself for for sure that's a skill i learned along with a bunch of others right the corporate experience is super valuable and um listen i've never had a problem in my career finding if somebody wants to do you know work for me or with me or something that i'm responsible for have at it man and if you're good at it i'll give you more of it and then as you build your first team you realize yeah it's people that do really great stuff and and i can give them more and then as you grow teams that have teams uh it's the same thing and you see the power of leverage of of being able to do that for sure it becomes your whole orientation like it um as a as a relatively young manager um i had a a guy that i worked with is like dude you i mean you're kind of brute force you can get a lot of stuff done man but because you go run it all over and get it done and you're not going to be able to to grow in your career unless you're able to effectively um get other people to go do that along with you and that's that's going to be you know important for you as you grow and take on more responsibility and he knew what my aspirations were and so you know that was an important lesson for me for sure yeah you know i needed to know that and and the other thing keith is like when you buy a business and you we were talking at the top about the economics of buying a business you buy something with profit and then and then that profit if there's enough profit you know you buy a business that you can pay that both pay down the the debt on it and compensate yourself and have money left over to reinvest in the business that's the kind of the trifecta that you look for in a business that you acquire now when you start talking about um hiring all these people to help you grow this business are you shoveling more of your own money of your own capital into the business to be able to afford that or or is the business actually even in its current state in which you bought it able to afford that and another way of just asking this more abstractly is yeah it's great to be able to outsource as much as you can but that that costs money um yeah and so you know you got to find that balance so talk to me about how you think about that well this is a really great topic because i hear it all the time people are on this divider line of business does okay but it's wearing me out and i could really use some help but i don't think i can afford it and that's a very real thing man but if you really believe and this is tough man i asked this question you know you got to ask it of yourself in this situation like do you really believe that someone is going to allow you to free up to go do things that will grow the business so that this expense becomes you know in a very affordable instead of maybe just barely affordable uh part of business and that's why i say um you have to trust that people are like i've told this other guy like listen man why don't you go hire somebody else to do it seems so obvious and his answer kind of boiled down to i just i don't want i don't know how and two i don't trust them to do it i mean well how do you how do you know you don't trust them man like you haven't even hired them yet you don't know what it is it's like that's just my orientation i don't i don't trust that somebody else can do it like well your business is never gonna grow and so i mean you got to be able to take the leap on some of that stuff and listen you put a plan behind it and it either works or it doesn't and if it doesn't you know go you do do something else and if it does then you know great you can go outsource the next one as well and in this particular case you know a little bit of a i did have the same scenario but um like when my um what one of the resources approached me and wanted wanted to join the business and it's even happening now like i've got people that are like dude i'd love to work in this business so cool because i still run it but i i think i'm not sure the business can really afford it and i have to have the same conversation with myself so it's super real it's super real and so you have to convince yourself still at times to outsource yeah i i do like i'm like that has that role if i'm going to add someone you know just make up a number right if if someone's going to cost you 200 grand a year and you run your business at a 20 net margin that means that resource through the addition of that resource has to be able to to grow a million dollars to to pay for the resource right and if you don't think there's a million dollars of growth associated with adding that position to free up other people or yourself or whatever you know that then it's tough trade but you also have to be like as an entrepreneur you that's that's what it's all about man you're making bets all the time and you're either going to make the right ones or you make the right the wrong ones and um you know you'll never make them all right and you're probably not all going to make them all wrong so um so in one particular instance i said all right listen i can't i can't afford to pay you what i know you're worth and what you need so let's put a revenue plan behind it and in your particular role if we grow the revenue i'll keep ratcheting up your pay in fact i'll i'll ratchet up well above above market because i believe in in what you can add uh but i you got to work with me because i'm gonna start by paying you way below market and um and that approach worked out pretty well too and i think it's something that that people can use um you know in hiring the right the right type of person right so you you acquire the business and you said you almost doubled the business by that so you buy it in august and you you almost have doubled the business three or four months later at the beginning of the new year so so tell me about those first few months of ownership what you did what you discovered why growth was so quick well the owner kind of gave me the answer key which um now reflecting on um it becomes part of my playbook if i were to go acquire another company which i i don't really want to um so this owner told me and this was the founder told me i hate social media i'm a great engineer i'm a great product designer i literally don't even have a facebook account and that's meaningful to me because i still don't have a facebook account i've never i've never been in it um and i don't have instagram and i don't have snap jiggle and twitter bert and all these other things that are out there i literally don't know what they are my kids make fun of me all the time but because of that um i realized that this is awareness problem that the product was super well engineered so i was not going to inherit something that i needed to go fix that's point number one the second is um i knew that when this this solution this product is put in front of somebody their propensity to buy is pretty high and so it's an awareness game and so that can be solved through through good digital marketing uh and the effectiveness of social media really is super powerful um and so i went out and found a a great digital marketing firm and um and and started to you know exploit the fact that it just hadn't been it just had not been um it had not been marketed and so that's what gave me a first launch into growth and then as i'm talking to customers i realize gee whiz you know and this is a slow learning process this is funny funny to me anyway i would have customers say hey i love your product does it fit if i use it with this other product and i used to tell gee whiz man like i don't have a laboratory i'm not i'm not very you know we're not quite that big i don't i don't know if it works with it and i probably took this phone call 200 times over the course of a few months and i'm like oh i should make that product and then i could have this that does work with that and i could just tell everybody oh yeah you don't have to think about that anymore i made these things are totally compatible and that's what i did and so and i had those two things and people would say oh that's really cool man but does it work with the blah and then i like now i know this play and i would go out and create those products and now we have lots of skus and those skus really weren't because you know first it was because i was kind of daydreaming stuff and i'm like you know i gotta sell blow and i had this contractor that worked for me i was you know just me and his contractors really fabulous lady and i said hey i think we should add this product and she's like you're not that business why why would you that's a stupid product keith you're awesome man i'm glad you told me that instead of like let me go do it but then i started to understand like like the foundation of a product development has to start in what customers really want and if you're going to go invent that yourself you need to go vet it but lots of times your customers already telling you man if you just open up your ears and realize ah the reason they're asking about it is because it's not available today and in this particular industry there was a lot that wasn't available at the time and so i was able to create these things or couple them up and um and and really change the offering so which used to be 1600 bucks you know the average ticket price now you know might be 3 200 bucks and just i have more things that we can bundle together that genuinely solve a problem um that i feel really good about providing to people it's not like i just came up with some other widget i'm super stoked you're buying it because it's revenue i know that having those things together is going to solve a meaningful problem and that became part of our brand as well be it you know different industry events and people go oh man i love your products they solve they really solve this problem and um you know that that combined with changing the way i was listening to customers and recognizing opportunity faster uh was the second wave of really the second wave of growth so so when the customers are telling you hey keith does your product fit with x uh and so eventually so this x was already there there were already products out there and what you did is basically just introduce your own version of x that would that was you know 100 compatible with your existing product yeah so you didn't invent a new product you just started competing in existing category with one with your own version that was perfectly compatible with the original core product yeah so the original product did that again and again and again um and i ended up patenting that product and uh it allowed it to remove allows it to remain unique except for folks that are you know just out there blatantly violating patents which does happen um but you're right that then there are there's all sorts of other solutions that people were buying you know these other things that they wanted to know did it work with with the core thing and the answer was that i don't know man and then i realized oh if i just made that i could make it work and then i could create a whole bunch of other things that are compatible downstream from that and so that was um yeah that that i think really made uh it made a huge difference right it was a really big deal all of a sudden i'm creating awareness i'm getting more people uh to our website and understanding the product and more phone calls and then i'm not just converting them to a 1600 sale now i've got something that i could add and it became a 2300 sale and then we added some other stuff and all of a sudden it becomes a twenty eight hundred dollar sale and then there's a few other things we we you know we picked up and it's a you know it's a plus three thousand dollar sale and now you know sometimes people will check out they've got twelve thousand dollars worth of product uh that they're that they're buying from us and if if you're solving this food chain of of of problems for people and they know they're compatible and your brand is about quality and your service is about i will fix your problem man like anything breaks i tell my people i i i'm sure the person that called last is the last person that's ever going to call us man because i don't think anybody's ever going to buy another product from us so treat that person i mean with with just such gratitude and if if they call back and the thing doesn't work or it's got a blemish or whatever fix it solve it whatever man you will never ever ever have a problem in this company if you tell me oh my god keith you'll be so mad i spent two grand by shipping new stuff to somebody because the other thing was broken and they're super happy like then so am i right i'll make up two grand but i can't make up one time we had a part um and we mucked up the shipping on it and it needed to get to someone these are great big some of the stuff is really big and really heavy and uh uh my person who did order fulfillment at the time said i just you know i overnighted it and the bill was too grand that's a real story and he's probably gonna freaking kill me and you can take it out of my check man i it didn't get picked up because i goofed it up man it wasn't fedex i'm like you know man you don't ever have to do that always do the thing for the customer and there'll be no there's no foul here at all for that and so you know we kind of followed that philosophy and you connect all these dots like i've got a really high quality product that's that's highly compatible that's always solving a problem with exceptional customer service behind it and and um you know that was a obvious recipe worked out pretty well for us and keith it's also a part of the success i mean these average order values the 13 uh 3 000 to you say 12 000. some people check out 12 000 worth of product from you guys i mean that is a very rarefied for consumer products to be selling stuff like that do you would you recommend other people out there looking at buying businesses that they go for um high order values i mean is that um would that be kind of one of your one of your on your checklist if you're out there evaluating other businesses or is that not not necessarily it just that happened to be what this business was i wouldn't lead with that as a blind strategy like i'm gonna buy this thing and then introduce a really expensive product um i think increasing average order size maybe that's 60 bucks and you want to take it to 90. right that's by adding compatible interesting related products for for sure you hear lots of people talk about niching down and and i think there's lots of power you get distracted with all kinds of stuff you have to be really good um in what you're doing as a core business and you can't lose focus of that right um if you have the opportunity this is what i was telling you earlier man like if you can create if you can increase awareness increase the product range that people can buy and then increase your geography where you're selling it those those are you know three big multipliers that that if you get all three working we didn't sell very much stuff in europe when i when i bought the business and we we sell a lot of stuff in europe and asia now and so that's a big multiplier i didn't have to add any more product to be able to do that and um we sell a lot more product domestically than that and that's an awareness game right and so that was step two and then and then the third by having more product to sell as long as people are there and it's solving a problem you know they're gonna have answering the question that they asked me hundreds of times you know i i feel really confident saying i know what you're gonna run into when you start doing the thing that you're going to do with it with our products um i can probably save you a whole bunch of time right now and i used to tell people i don't want to save you a whole bunch of swearing in your driveway when you try to install all this stuff on your car or whatever like you buy this thing now it's just gonna save a lot of time man i know it seems like it's a it's a lot more money it is you know but uh without it you're gonna spend all that money plus a whole bunch of time so you know you're going to need it let me save you the time yeah yeah keith i want to get uh back to the this awareness point and marketing you so curious how did the the seller the to the extent that there had been sales if she was doing no marketing how had she made sales just at all like word of mouth um relationships distribute distributorships yeah um this this founder came from the industry and so had some connections um and also had a friend that um understood social media and and did some work uh on the like on the side and um not to the extent that it was showing so much return that the answer was like blazingly obvious because if it was you know you just go do more of it right and one of the business side of i'd looked at it's kind of in parallel man and this deal just didn't work out but it was an online furniture deal online patio furniture and they had shared the story with me about you know if you're going to buy patio furniture right it's a potentially pretty big lineup you might send you easily spend you know six ten fifteen thousand bucks right it's a big online retail purchase and typically you wanna go sit in the stuff and see in the store and whatever so they were able to package the whole experience that you would get like in a store obviously not sit on it in a e-commerce site but you know so many great reviews and so on and they're like dude this is just awareness if you don't have to go drive an hour to your retail store to sit with some salesman this is going to tell you whatever you want to hear until you buy it and then pay the markup because there's someone in the middle like i think we can solve that and they did and they did it through social media and they shared the numbers of the returns on there and i i was just i mean i was just dumbfounded but as i was telling you before man every step in the process is learning something else that is going to help you know make make your ultimate outcome hopefully successful and that just stuck with me and so i'm like i don't know anything about social media and i don't want to and if it was going to rely on me to do it i'm not going to buy this business but i knew i could i mean there's a zillion digital media companies out there i go find one and um in fact they used one for the laundromat i mean i know that it works and anyway so that that's how i you know that's that's how i approached uh that social media part and the awareness piece that you're asking about because i i knew if we spent the money in the quote-unquote right way you know which has got a lot a lot of latitude to it man you can almost not spend it the wrong way if you've got a digital firm behind you and you're tracking the metrics it's not like how many people looked at my billboard or how many people saw my you know bus bench with my ad on it you'd never freaking know man but you know exactly how many people saw your ad you know how many people you know online and how many people clicked on it and then how many people you know did whatever action down stream uh it to the point where you can even track when they come back and you know if they've purchased and you know now the technology's so sophisticated i can see those people back on the website i know what page they're on and we can reach out to them via chat and say hey you're back good to see you like uh right what can i answer for you or whatever we know they're hung up on man and that's the power of you take that awareness thing and and it's not just about like someone needs to know about my product but once they know about it awareness is being aware of what they do when they're interacting with your with your site now you've got them there man like how do you how do you get them to actually pull the trigger and buy what you needed to buy that all that technology is available today you know keith one of the things that that i hear a lot is that you got to be careful of business brokers who in their listings they say just add marketing you know this business all it needs is marketing it's been under marketed the founder wasn't into marketing really just exactly like what you're what you're describing with your business and it's become kind of like a joke or like a cliche because you know it's kind of like if it were that easy you know i mean maybe the founder if the original seller founder even if they didn't like marketing they would have figured it out if it was just as simple as just ad marketing um but in your case that turned out to be true and that that turned out to be one one of the key things it just needed some marketing and not some kind of sloppy side you know a friend doing a couple social media ads for you but a real professional digital media firm coming in and looking at things and tracking them and doing it and and it worked and so um i'm just trying to reconcile you know my wariness of seeing that just ad marketing phrase and so many listings and being skeptical of it and stories like yours where in fact it turned out to be true well just added marketing still you know and three in three months you blew up the business by just adding marketing just facebook marketing if i recall uh uh facebook and out of these other things uh you know it wasn't it wasn't just facebook but we did you know we poured money into it for sure but listen that that got us to some it took the low hanging fruit right off the tree sure anyone that tells you that um it's just add marketing to get the business to the state where you want it to be i think is is full of you know that's crap right this is that's not really very likely um the the marketing thing you know has its own limits and then you know and then it's you know just add product development and then it's just add more geographies and then it's you know it's it it there's a there's a heck of a lot more to it and then when you think about the operational and and behind this um you know we're seeing we were single threaded through a single production facility and you know i didn't take a rocket scientist to realize hey if there's an earthquake or some geopolitical event or a fire or like something that's not production overnight is over i don't care how many people are aware of it i can't make it it's not going out the door and so uh we we sped through efforts that took a year and a half to duplicate production so that i was you know we were never single threaded on as soon as we got through that process right we were no longer single threaded but that was a huge risk to the business and um one of the reasons the sellers or the seller that was me the buyer was willing to pay um you know maybe a bit of a premium is because we took some of these things out out of out of the risk profile right so maybe they weren't going to pay what they paid if it was all single threaded they had to go solve for production risks right and and that list is you know it's as long as you want to talk about and so it's it's never just ad marketing man it's ad marketing if it doesn't and you're gonna you know you just should see some growth and um and then you got a whole bunch of other things to do because with growth then you got to decide well geez um is that the best way to spend those marketing dollars and maybe i should bring that person in-house now what if the business isn't sustainable in growth well welcome to entrepreneurship but that's you know that's the process not it's never just just that marketing i think someone that says hey got a great product it's high quality and you're going to be able to um improve the awareness and therefore probably sales through marketing i think that's probably accurate you can you can vet that to make sure that it's it's accurate you know you're going to go look at the products and you're going to talk to people who use them you know in all vetting a business and i did in this one uh is it is that accurate and if it turns out to be accurate then you're like okay well i do have a product that that that is a good high quality product that does what we say it's going to do and it does it reliably and i don't like all kinds of returns and repairs and i'm not consumed with engineering then maybe it is just ad marketing for some short period of time until you've got to go do all the other things that you need either to support your growth or to continue to drive growth when you bought the business keith did you did you have an exit strategy in mind or did you think you would just buy it grow it hold it indefinitely you know this furniture company that i was looking at um they wanted a couple million bucks for it and i thought you know as a fairly young couple that owned it and i thought wouldn't that be freaking cool man if i was on the other end of this and someone wanted to pay me a couple million dollars for a business and i knew you know i knew where they they started that thing i knew the growth rate and and all the factors related to it and i thought yeah eventually i i i don't want to run this thing until i'm 100 right so uh i thought i would keep it longer than i did but then i um this past summer i got a little spooked by um potential potential tax changes in uh in the current administration i thought if those tax changes uh really really come to fruition i'm gonna have to grow the business a heck of a lot more just to be worth what it's worth today and it started me seriously thinking about maybe i should sell it and then um and then i ended up hiring a boutique uh investment bank uh to help me get it sold and and i told myself we're going to do this i need i need to be out of it by the end of the year and i was and and so part of the reason you thought it was saleable too is is because you've grown it so much i mean it was this incredible story i mean you didn't this was well beyond the the aggressive 30 percent your 30 growth pro pro forma which which you thought was really aggressive and ambitious and unrealistic well beyond that so you also like you wouldn't probably have even with the you know the um tax changes that you could see coming down the pike if it if the growth had been less spectacular you may have you may have held on to it but there was just this opportunity to you've done you've been so productive in two years to really cash out in a beautiful way in a short after a much shorter amount of time holding it than you expected yeah i mean when um just doing the math and what i thought it might be worth um that's a big number and um let's i've i've helped take two companies public and uh i helped sell one to oracle for 17 billion dollars and i've seen on paper uh being worth lots of money and then markets change and factors are different and and now i got i i don't need to learn the lesson a fourth time man i i if if it's worth um what i think it is and ended up being worth more um then i'm gonna take the money off the table now and and just diversify and so i did and it worked out i actually get to be on the other side of this discussion now uh and a really successful exit that uh um it is very very meaningful and life-changing and i i think that um people that are thinking about how do i here's what i tell folks man um whatever your income stream is today whatever that is it's going to end let me just full stop it it's going to end you're either going to get fired or you're going to quit or you're going to go look for a different job or you're going to get acquired or you pick the long list of stuff but at some point not very many people end with you know the wristwatch ceremony and the in the cupcakes right and so if you're not prepared for that end what are you going to do and that's why i think and i'm a huge advocate of buying a business advocate of starting a business right find a way to diversify your income some people do it through stock market lots of people do it through real estate and having fairly passive holdings i think those are great man but you got to do something and i'm not here to tell you what it is for you but i'm just here to tell you you really need to do something and then listen you can you can also end up with you know an absolutely brilliant and an exceptional outcome maybe and it was for me and so i i just i just encourage folks to be thinking from that perspective and if acquiring business then lines up where their skills are and where their interests lie they should they should look at that long and hard for sure man it costs you nothing to subscribe to all these listings right and it sends you stuff all the time i still get you know i get emails all week long of stuff that's for sale and i look at them and if it says amazon fba i hit the delete button and if it says something else i might look at it every once in a while i you know i i do um i do i do uh sign the nda and look at the detailed information god i'm just so curious about it but anyway that's you know that's where your interest lie you should be looking at it we we are really pressing on on time here keith but we've still got a couple more topics to hit so can you give me just a couple minutes on your these other business interests you've talked about your laundromats maybe give us give us the 60 second history on those why you did them and how bad it's been but in fact how probably good it will be eventually your smash my trash territories and this amazon fba business so you have an amazon fba business but it sounds like you don't want to you don't want to touch another one with a 10 foot pole so yeah tell us about these other these other projects you got oh yeah quickly so the amazon fba business um you know the fastest way to lose 100 000 bucks is for me to run an amazon fba business for you and the connect the dots here for me is um i can't you can't talk to those customers amazon puts a filter between you and some people freaking love that they're like customer service is all done for me and and i do get energy from that and i can't find out what else they want and what they need and what they don't like about the product and someone wants to return something that they don't have to reply to my you know to my inquiry of can you tell me what you don't like so i never learn anything and i can't make the product better and as a result um you know i don't like for me like i just don't like that and so i i lost 100 grand on my amazon fba business i learned some super fascinating things man i got to go to china i went to the canton fair in guangzhou and and i got to experience that i source stuff through china which are skills that i use today in lots of parts of life the laundromats i was really interested in because um i just remember like growing up and watching people put quarters and machines out like who gets to collect all those quarters man that's awesome right and so you know i left the corporate world and uh i opened a laundromat and listen launder bats do great i mean they're a super cool business just replaying the tape man i'm not sure that i would go back and do it again now that i'm on the other side of it those laundromats do thirty thousand dollars a month in revenue um and uh accelerating the debt pay off because i financed the equipment is the laundromats are open they're expensive to open and i bought one of the buildings so i own one of those and um uh once the debt is paid off you know they'll do 32 to 35 percent net you know that that's that's a pretty good that's a pretty good gig that's 45 000 a month 50 grand a month um that's pretty good be it a pretty good gig um smash my trash is uh like i said i went through the franchise process seven times to figure this thing out and the the financials of that business are published right i'm not sharing anything out of school here um a truck ought to be able to do ten thousand dollars a week that's fifty you know five hundred thousand dollars a year keith tell us what smashed my trash smash my trash uh smashes the contents of open top containers a dumpster and you know if you think about a dumpster sitting in uh in an industrial you know out in front of a uh out in front of a business it's probably full of pallets and boxes and it gets hauled off even though it's got a capacity of maybe 10 tons it gets hauled off with 600 pounds because it's full of cardboard and pallets just stacked in there like tiddlywinks and so uh the founder of of this business uh smashed my trash developed a machine that has a three ton rotating drum on the back of a truck that you lower down into a dumpster and it it just it smashes the condo does it this doesn't compact it it literally you know it turns pallets into pencils it you know just literally obliterates stuff and i put a whole bunch more stuff into a container and when something's supposed to be hauled out you know whenever you need it hauled out maybe it's got six tons in there now instead of half a ton and so you reduce the number of hauls it re you know that's how you typically pay for a dumpsters when it gets hauled off and so now you're reducing the number of hauls and um it saves saves our customers money and so pretty compelling value proposition it takes a truck and a driver and a sales guy and um and you know that that business ought to do five hundred thousand dollars a year when it's fully ramped up you know should that's what the performance says it should do mine's been a little slower to ramp people are way ahead of me in that category i don't spend any time on it and i should um but you know i bought 10 territories so that's ought to do it would be a 5 million business and it ought to run at it you know pick your number like 20 30 plus percent margin uh that's a you know a million two million and a half dollars net a year and if i can get it up to where you know it should be running without a whole lot of brain damage or effort on my part when i say effort i don't you know i'm not i'm not validating um i'm not discounting the amount of work that's required right and one of the reasons it's not grown is quite as fast as it probably should have is i'm just not spending the amount of time that i should have and that's only because there's so many hours in a day but i think it's a you know it's been an interesting business uh it's been an interesting business and then um well keith fur no i you know um if anything becomes too much brain damage you know you can always sell it and you know if let's say this thing's doing a million and a half dollars in earnings and it trades at a 10 times multiple you know it's a 15 million exit so you know we keep it for a few years and see how it works out i don't like it i'll sell it keith at the top of the call you talked about your trajectory of of kind of of of kind of understanding what an entrepreneur is and uh for many of your corporate years you kind of thought that being the ceo within a corporate environment was kind of was kind of the the fulfilling your your young man dream of being an entrepreneur uh and but now that you're truly out on your own doing these entrepreneurial things your definition is kind of right at itself in the direction of what a you know true traditional pure entrepreneur is um but you you know you're you're doing all of these you you've now dabbled and more than dabbled you're a franchise operator you've bought an existing business taken that all the way through to exit um and you've started one from scratch the laundromats started in the fba business i assume you started that one from scratch so do you have any opinions on these different types of entrepreneurship either start from scratch versus buy which you know you clearly an advocate of that it's worked out so well for you versus franchising you know they they all have their strengths and weaknesses franchising in particular has sometimes has a stigma obviously it's it's a it's a giant industry and there's tons of opportunities and people very active in it but in certain circles it's got it's got a stigma um well one thing i just tie in here it sounds like your own pride was something that blocked you from getting into acquisition entrepreneurship before you did because you wanted to you wanted to start a business around your own invention your own product and once you let that go it really cleared the path for for you um and so maybe the same should be that should be said of franchising for a lot of people who maybe turn their nose up at it that they shouldn't that's an amazing opportunity so i'm just trying to you know yeah do with all of that what you will listen man one of the primary reasons um people are getting into a business is freedom and it's financial freedom it's personal freedom you know whatever kind of freedom you want right that's i think one of the biggest drivers and you you want to be a victim of your own decisions you know to the to you know to the upside in the downside and the great news is you got at least three paths to go do man you can start your own thing you can leverage what someone else has already figured out in a franchise you still have to start it uh or you can buy an existing business and and you could buy an existing franchise right you could buy you know just buy an existing business it they all have their pros and cons man um i think building a business from scratch like starting something um i i'm not sure this is accurate man but for me it's a young man's game like when i was 30 35 i'd sprint to that stuff man and now i think about the amount of work having launched laundromats from scratch it's a lot of work man and the runway to profitability is long and then the runway beyond profitability to the run rate of what you want the businesses to produce for you that's long man and um what you might end up out of it is your your cost to get into it is probably way less than buying someone else's success because that's why you pay a multiple of earnings right um that's but what you get when you buy someone else's success is you know that it works man and you now now this business just pick the number that you need to be at okay if i had a business that i could make a hundred grand a year i would leave my corporate job or if i had a business that did nine hundred thousand dollars just pick your number right and one of the things that i was concerned about up front was gosh if i go buy a business i'm competing with every venture capital guy that i know out there and the reality is no you're not man they're not looking at businesses that are doing whatever like whatever the number like if it's sub million dollars in earnings um you're going to be able to buy it at probably pretty good multiple two to maybe two to four times um earnings and and then there's not a venture capital or certainly a venture capital private equity guys there's no freaking guys out there looking at that so you're just competing with some other dude that thinks it's a good idea they can they can turn it into something else and make it a little bit bigger and and uh support their family from it or sell it or whatever they want to do and so it's not it's you're not competing with with uh these private equity guys that are pros and are going to eat your lunch that's not happening man you're competing with other guys like you that are thinking hey maybe i may like to buy that business and and for me that was also another factor like i don't want to go out and compete with all these private equity and i know lots of private equity guys and i know guys that own those firms and they're like listen we we hire interns to go make phone calls all day long to call hundreds of companies to see if we could buy them right that's how we start the process of filtering them but the filter starts at you know above a million dollars of ebitda or above two million or above three right you get above five million and now you're swimming in this in a different pool but you get below five million in ebitda you're not you're not dealing with any private equity guys you know not very seriously keith before i let you go i i really would like for you to share with the audience um your story of what happened to you the other the other week this is unrelated to business but it's an incredible story so um about your your plane crash would you would you share that yeah it's uh it's a little fresh it was less than a week ago and um less than a week ago yeah it's a little bit tough to talk about um but i was i bought an airplane and i was flying at home from tampa and uh i live in denver and i was um i was on short final final approach was 400 feet above the ground and just about to land and meet my kids at the airport and i lost my engine lost all the power and at that altitude you don't have any you know many options uh the sink rate on an airplane even though they'll glide they don't glide very far without a motor pulling them along and so um at four or five hundred feet uh and a mile from the airport was where i lost the engine um i knew i really wasn't looking for a place to land i was looking for a place to crash and there this is a busy metropolitan area right we're talking about south denver and so there's tons of tons of development going on tons of commercial properties around not a lot not a lot of fields and so i ended up crashing um in the median of e-470 which is uh the the bypass around denver and and uh by the absolute grace of god i i didn't die here i am to tell the story and uh just super fortunate that that that happened uh i think about not only the the tragedy of of uh you know if you're if you're if you're lost in a tragic accident like that um but you know in the context of what we're talking about like you go from uh building a company and selling it and uh and now having other opportunities that are available to you whether from an investment perspective or from a personal life or whatever and then it all being snuffed out in two months man that's not it's not cool and so anyway super glad to be here great great when i said at the beginning i was uh grateful for being a chance to talk to you on the show that's you know it's one of the reasons why because uh more than uh more than likely i just shouldn't be here and this this you had a co-pilot and you guys basically when you're with the engine when you lost the the engine you basically had 20 seconds to figure out what to do and um you know did your life flash before your eyes or were you mostly just scrambling just preoccupied with dealing with the problem at hand i mean what what was that like yeah so the glide slope you know that we're on for the particular runway we're landing is about 500 foot per minute descent and um when we lost the motor uh i i'm you know i'm just guessing here but i think we're probably at a thousand foot per minute descent and we're at four or five hundred feet so we did have about 20 seconds and that was a busy 20 seconds we're trying to restart the motor um and and those types of things like you don't hit the pause button and pull out the manual right every pilot knows how to restart a motor from stuff's drilled into you um it's just the finality of it all that that is um leo is my dog trying to eat the peanut butter off the counter uh it's just you know it it's just a finality of it all that is shocking um there's no leo there's nothing that there's nothing that's in um you go from hey i'm about to land my new airplane and uh and show my kids and meet him over at the hangar and they'll go to dinner to you know 20 seconds later you're on the ground and a burning heap of of of airplane and uh you managed to get out and escape and realize did that really just happen man is that and and it's just the finality of you know very quietly and uneventfully well i mean uneventfully but like in my perspective of being in the airplane like it's no fanfare it could just very easily just been over just full on over man just gone and dead and the thing that i you know i've talked to lots of people since then of course and um one of the things that strikes me is there's so many things that people want to do in their life from you know i want to learn another language or i want to go live in japan for a year or i want to get fit or uh i really hate this job and i wish i was doing something else or my aspiration is always to be an entrepreneur and i'm just married to this stupid corporate job like this list is so long i come up with a thousand examples and everybody listening has their own and and if you don't go pursue those um you you could very easily just end up being dead because you run out of time or maybe some some some tragic event takes takes it all away from you um and i i just encourage people and i have for you know since before this event but i just write down the things that you want to do like what's important to you and then write down the things that are in the way and then and then decide whether you're going to go solve those and and go do them man because the cliche is life is short and it's fragile and the reason those are cliches is because they're so freaking true man and um it can all just snuff out in a second i i was not planning on dying last tuesday and i should be i should be dead man and saturday was a yeah so the action was on tuesday saturday was tough man because saturday would have been the funeral stuff yeah yeah so if you got if you got stuff in your lineup like that you want to do like go do it man and you know what some of the you're gonna fail at and it's that's not the destination right that i think that's just the journey you know and so you're gonna you're gonna fail at all kinds of stuff so what man the journey is the ride and eventually you'll you know you'll get to where you want to go because you went out on the journey and um as long as it just doesn't get snuffed out uh for you too fast but don't you know don't don't let it get snuffed out before you go out and do it and listen you can die of old age and and not go do the things that you want because you get married to these securities that you have or these reservations that have been built into our systems uh and you know just just take them away and go do them and then get really really public about the fact that you're gonna do it like tell tell your 10 best friends or tell your family or whatever so you've got a little bit of accountability in there like hey you know whatever it is i i don't want to die of a heart attack so i'm going to lose 25 pounds and i'm going to go tell my friends and help me hold accountable to it right or whatever the things are they don't have to be it will be life changing because you're because you're doing it for yourself man but it doesn't have to be we're not talking about audacious things it can be as audacious as you want but it can just be the things that you know are going to make your life more meaningful and more fulfilling just take a you know take a little bit of time to go develop a plan to go get it done and then you know go do it i just go do it or or die trying at least you're trying yeah for sure you can all be able fast that's great keith keith let's leave it there that was a a powerful message to end on coming right out of a very powerful and i'm sure terrifying experience um so thank you for sharing that really wanted to make sure we we we heard from you on it and thanks for giving me so much of your time this interview went extra long um but it's been really entertaining uh for me and i'm sure the audience yeah of course man thank you super great stay in touch will