Yen grudo welcome to acquiring minds thank you happy to be here Yen you've got an unusual story and you bought a fascinating business a 117-year-old manufacturer of straight razors so this is an old school business with an old school product let's get into it Yen start us off with some background on you please so I I didn't start in the Shaving business or I didn't even work there before not at Wilkinson or something the way I got into it is maybe just to go back a bit to to my my childhood I I read the intelligent investor by Ben Graham when I was 16 15 and that was my life goal to be just as benen Graham and then his disciple warn Buffett to find proper companies that most people don't like they don't see the value that have a certain mode that are special in that way and then for other people invest their money and my money and then become wealthy and own lovely businesses and um then sail away to next life and tried that for 10 years so from when I was 16 then studied Finance in Munich with engineering uh founded investment Club in University and wanted to Prime people in the investment Club to follow the the ideology of value investing to think long term to to be a investor that that really understands the business and thinks like a business owner and did all that did my CFA started at Pimco after University in Munich they have a trading office there then went to another company that does portfolio management for Goldman Sachs and others and there had my portfolio and had the role exactly that I wanted so basically had my dream job 10 11 years later then um then when I had the idea and found out that I found it pretty uh not boring but not challenging enough right it was like you're an investigative journalist that's better paid but you're not building something you're still watching from the outside judging investing and then it turns out well most of the time hopefully or more than 50% of the time but there was no building there was no no creativity involved and after let me let me stop you there so because you had from such an early age decided you wanted to be an investor uh I'm surprised that that this that what investing lacked the kind of the building the creativity wasn't something that you realized before I guess it was only once you really became a practitioner that you that it really that you really realized that you weren't going to be building anything you were just going to be kind of reading and moving money yeah the idea was amazing the vision was really great and I got exactly what I wanted with with below 30 which was amazing and I felt quite proud when I signed the contract to actually started working there but then uh very early midlife crisis hit where I realized everything I was working for and suffering for and working on weekends and Summers to do my CFA while working quite quite uh hard and doing my own investing that just went went away right and then have had to figure out okay what what do I do now right once you realize those 10 years we're working to a direction that that that's not what you want to do that's not going to be your passion not even for more than one year what are you gonna do so not really knowing what I wanted to do I went to a friend asked him because he was in Berlin and Germany is compared to United States not really a a venture Hub right there there's Munich where I was living back then and working and then there's Berlin and Berlin is the big Hub where all the money is the larger corporations the investors were all in Berlin so the whole Community is there I tell him look you know rocket internets that's the the copycats large company that copied multiple companies quite successfully and they built one new Venture I knew and then I was able to join quite in the beginning so as employee number five and so employee number five of uh rocket internet's newest correct one of their one of their their their ventures in the hospital ality region it was a a more specific version of Airbnb basically for students right so short medium-term housing three months six months for people that are only in in Germany or in Europe for for a semester or something or two semesters right and was able to join early we built the company to 150 employees within five months which was quite intense and crazy to to take part of and then got scaled down just as fast and I said look this is this was fun now let's build something that's more sustainable so joined another venture uh through a recommendation and a friends who with an investor team that built multiple businesses before and sold it one to Rocket internet actually one to a CH Japanese investor back then for 180 million so they had cash they were building multiple business at the same time and one was in the in the luxury good space so was basically buying and selling luxury watches right and there were some other marketplaces at that time already but they say look why don't we do it we build other businesses let's try this now right so there before foundation I was able to join which was also fun um they were quite intense and quick and efficient Builders so that was fun to to actually join to set up multiple divisions from buying selling uh the whole AdWords infrastructure and everything like that and then after half year I said look um this still doesn't feel like myself because the the ownership I had was minus skill and I said I'm gonna try something on my own I started two businesses on my own after reading 4H hour work week so I got brainwashed right when it came out basically and said look let's try to do everything with Freelancers and uh me and the freelancer Army uh that turn didn't turn out at all I did that one year I'm burned out completely and said look Al loone is not the best um with no investors is not the best you need someone to exchange ideas right you need someone to bounce to actually tell you let's not do this because I'm someone that dreams big that wants to do everything at the same time so I need someone that structures my thoughts that says we're going to run here then I say yes sir and then I run there with and then have my new ideas again right but actually to stay focused I need someone else so I founded a company to with the The Venture Builder also in Berlin in the in the metch space basically something completely different again it was a intelligent adult incontinence pants so adult diapers for smart diapers a smart diaper yeah to basically say keep people especially in in care homes in Germany and in around the world from staying in their in their excrements for for long than they should be right to basically tell the nurses look you have to do something and then they can still decide if it's at night to wake them or not right but to to provide better care right also with movement sensors to say like if someone Falls if someone has debitus or something or skin that is prone to debitus to then move them if they can move themselves all those funny things um after three and a half years roughly and building the team there and building the tech there um which took a lot longer took a lot more money lot lot more resources I went out of that business or I knew I'm going to go out there after a couple of months and during the time at the luxury watch Marketplace I got to know the employee the first employee I hired he became a friend he built an agency an ad agency and he worked for the company that I then bought afterwards dovo and he told me look if lovely company love it so much they're bankrupts and this friend of yours from the from the the rocket internet is it sorry from business uh from the luxury watch right platform from the the luxury watch uh Marketplace correct had an ad agency he's working with a one of his clients is a business that he res is a business or brand that he respects but he sees that management is running things into the ground or the business isn't doing well no it it was already bankrupt basically tell me look they're not paying my invoices they declar bankruptcy and it's a huge shame because it's the largest manufacturer of straight risers that's a tiny tiny Niche business it's not a huge business it's it's a niche in a niche in a niche basically but they're the largest ones they have a extremely loyal Community not many companies exist but there's basically three big ones it was Doo there is one in France and another one here in zing in Germany and we got to talk we talked for hours and hours and he basically said look they did so many mistakes if you just don't do those mistakes it should be okay to actually run the business and grow the business and and make it viable again and grow the business right and invest in new products and new new markets and stuff like that so from there to actually acquiring the business was quite intense because let me let me stop you again there J were you receptive or did you need to be convinced because this is obvious this is a very different entrepreneurial path and what you've been doing which was very kind of traditional start upy stuff buying a struggling manufacturer uh that's a century old business is a is is quite a pivot so did your friend have to sell you on this concept what was your give us kind of the evolution of your thinking about actually opening your mind to doing this he didn't really need to sell me because he he talked about the business and the the products before already so I knew roughly what the business is and the products I never shaped with the straight R before in my life right the things I bought few of us have I mean it's it's as you said a n within an with quite scary yeah yeah yeah it does I've tried it uh and it is quite scary yeah and it's it's it's a shrinking market right so when the company was founded it blew up to 50 employees back in 1906 but now like I said it's it's very very few people probably one in a thousand people guys actually shave with the raade Razer yeah so I knew it was a niche but what I had was pattern recognition a bit right because from from priming myself over years and years uh in value investing the number one thing I wanted is an a good free cash flow margin plus no one can disrupt the business right so there's no innovation that can disrupt us no New Market entrance can really come in because it's so hard to actually manufacture those pieces that you need years and years of experience even in one position so even in one part of the production process that you can't just for example if you know want to build a new one how do you get the people how do you get the knowledge that's super specific the machines are not even manufactured anymore that we're using here right they're 67 years old now so I I understood that what what I was searching in companies in my prior life all those things made check check check right hard to disrupt Innovation can't disrupt it no New Market entrance release so there was a huge Mo around the business very loyal customers the B2B customers so the dealers plus the end customers even though the production quality went down over the years before buying it even though maybe the customer service wasn't the best before and the the the sales effort wasn't the best and stuff like that they still stuck with the brand because the brand was so powerful and the products were still really really good right so everything that I was primed or I primed myself for more than 10 years before I found Ino right and it just it lit up in my in my head so I tried to convince myself not to do it and it it was hard to not do it right it was just a quite easy sell the only problem was I never bought a business before I had no idea how to finance it I didn't have the money to finance it I didn't know what how much to pay for it um I didn't know how to buy going concern because once you buy it right the next day you have to pay invoices after the first months there's a team they have to be paid right I don't know nothing about the industry I actually moved to Munich two months before buying the business and that's 600 kilometers away H so I didn't know the city I didn't know the industry I didn't know anything about production about sourcing about product design so it was quite intense but I said look let's try it it's worth because everything else was so good from the Strategic point where the company was settled that I couldn't say no a couple follow-ups y so so you knew not you knew nothing about nothing uh when it came to buying a business and or or manufacturing uh or transitioning a business but I will ask given your years in in finance in Germany you never encountered people in your professional circles that were in private Equity there was one one friend I I actually knew from University so from the investment Club he was a he was an officer there or a director there in the in the investment club and he was then a director already quite Young in a in a restructuring consultancy so with him and quite a bit of time investment of him for shares after acquiring it uh we we managed to do it right so from Financial modeling of course I did that many many times so that's that's something I I didn't need to get any help with but dealing with the whole process of contracts of the employees right um contracts with the lawyer that does the bankruptcy proceed meetings I had no clue right how to strategically somehow find out are there other biders what would they bid right what do we have to bid in order to get the deal without knowing are there for sure other other biders and stuff like that the whole process he was he was a big key in that right and now he's almost not involved in all anymore but in that transition phase so leading up to it to the buy and then the months after even half a year after he was very much involved right and he had experience a lot with with production businesses in way way worse St so well but yens I still need to I still need to press you because sure you are somebody who has studied for 10 years value investing and this seems to check boxes I also actually want to press you on that I'll come back to it but still just in terms of a life path of buying a business where you basically you have this one contact who kind of has done restructuring kind of vaguely tangential to private Equity um but it's not like you know other people in your Professional Network who've bought a business so so just aside from the intellectual exercise of value investing and then this feels like that it's still a a big decision to take your whole career down this direction so I'm just kind of pressing you on that I mean there there's there's kind of personal and emotional uh uh features to this decision as well um and and frankly maybe this would be a good time to to bring up something that I asked you in the preall too um so so indulge me the reputation I've always heard of German culture with respect to business is that it's very risk averse that it does not it does not uh accommodate failure very well so the the thing that at least Americans tell themselves it seems pretty true especially in Silicon Valley you try something it doesn't work you fail no big deal in fact everybody Pats you on the back for at least having tried and that in Germany it's definitely that's definitely not the case there there it is still uh it is you looked at is crazy to take big risks and then if you do fail people are going to say rather than patting you on the back they're gonna say I Told You So sort of thing now that's a stereotype I have no idea please uh tell us if that is in fact the culture uh of Germany and the business culture of Germany and then if so tying it back into my previous question like how did you what was the emotional content of your decision here this is a crazy decision let's be honest the very short answer for the the German versus United States part of of looking at failure and at risk that is 100% true I think right I lived in the United States when I was a kid for for two years and then one year in in Canada when I was older a bit and that that's 100% correct so there was not one person that told me this is a good idea not one and I think that also is something that that's my character right so for for 10 years I was doing one thing and people said basically why are you doing this why are you doing the CF and stuff like that it's uh you're gonna fail and stuff like that so once I get told too many times that something doesn't work I want to do it but that's all my life it's something if someone tells me something at school or something do this and that um not so good because I won't do it I will do the the enough to be good but not the excellent as soon as someone tells me this is this is almost impossible I actually want to do it right so also in in Berlin those were things that were Industries and and areas and products I had no clue about and that's what what excites me right because it's uh I don't know how to how to explain it but once something is hard enough that most people don't do it it it becomes easier in my mind because if I'm the one that is willing to suffer uh don't sleep much have pain have high UPS but also very high Downs I assume that more people don't want to do it and that gives me a heads up because then if you do those things they become a lot easier and I think if you do this the the things where most people think they're not really risky that's where everyone is right so those things become quite risky because every you you're fighting against everyone if you go in areas where people think it's too small it's a dying business who shits with a straight Razer yeah Zing is bit in Decline so what the business actually is the Erp system the whole it infrastructure doesn't exist right there is no sales organization here and stuff like that right that means if no one is bidding the price is Tiny that that that means the risk is Tiny and there's only three companies in the world still doing this those other companies you can easily look at what they're doing for me something that seems to the outside as quite risky actually reduces the risk and brings up my excitement because I think there's no competition there because other people are not willing to to even look in there because but from parents to friends to colleagues everyone was saying you're completely nuts don't do it and that's why I said okay um everything else checks and if so many people tell me not to do it there has to be something um that's worth the risk at the at the very least there's no competition you know it's interesting because I thought I actually thought when we talked on the preall that your thing about if people say it can't be done then you go you run directly toward it was more of this like you know this kind of rebellious defiant personality which maybe it is also that but now I now as I hear you describe it it almost sounds like more of a strategic calculation when people are saying this can't be done it means you run towards it because in fact there's going to be less competition and if you can figure out those hard problems then the whole Market is yours sort of thing the whole opportunity is yours both is true I I'm a rebel through and through from kids right if someone tells me don't do it I'll I I'll do it which uh if if you go on the wrong path that's not a good thing because if the law tells you not to do something and then you do it right that can lead down a dark path if you Channel it into business or other fun things that are legal and that are really good for society then that's good thing and because you're willing to risk things maybe that others aren't right and and the the second part that you mentioned actually going Direction where um where where other people are not going because it seems risky and that is a drisking in my mind that came the last month actually right because you're trying to figure out um every time there's a down downturn or something in business you or I at least try to figure out am I doing everything wrong all my life because I'm always going in situations that are super hard right am I just self manipulating and going somewhere where I'm destined to fail and and that came in the last months actually because there was again a quite hard time and I'm like why am I doing this why am I always going directions that are super hard and so that that came actually with Now 37 years old and a couple of months ago and because that that I'm a rebel and if people tell me that's too hards that was quite obvious a long time ago yeah okay okay well I'm glad we got you on the other end of a of a personal revelation and I'm sure we'll return to this when we hear some of these War Stories which we will I I will say too though when you think about investing particularly value investing Benjamin Graham was also very influential to Warren Buffett and Warren Buffett is known for his invest when there's blood in the streets concept be greedy when people are fearful be fearful when people are greedy something like that to win big in investing in fact one of the Cardinal rules is that you do have to take counter you have to go counter to the crowds so to to make big wins in in in investing in value of investing there's a similar Dynamic there um if too many people are are in a position it sort of by definition means that you're not going to have a big win there yeah that that's what I was I trained myself before right so I was also looking mostly when I had the fund for one years for for one year looking into special situations right where not blood in the streets but there had to be something wrong with the with the perception or something wrong with the structure of the company or something wrong with the situation um that people either didn't understand it correctly but you have to have an ego and um have to be humble to say look I'm betting against 97% yeah and in more than half of the time I'm going to be correct that that that's not not easy right we're about to hear whether or not this particular going to the right when everyone else was going to the left uh how how it's panned out um let's return now to the business itself to dovo and for the audience that's d oov o I do love the brand does that is that have some German language meaning or something or is it just an invented or is it a last name or something it's actually the the the first letters of the second names of the family names of the of the founders okay so it's do d o RP that's the do o and for V oos that's the V and they just put it together it's ni nice to have that short name because people recognize it and the URL is quite short so you can spell it out easily but it's the it's the founders names put together yeah it's great and it's Universal so people from different languages can pronounce it all easily okay well let me push back a little bit on on the opportunity that you saw so um you've kind of already addressed some of these but let's let's have you address it directly why did you not feel why is this not an an industry that's in terminal decline so getting smaller every year it's already a niche of a niche of a niche um why why did you feel that that Trend wasn't going to continue or at least that demand for straight risers was going to stabilize or even grow I had no clue if it would that if it would do that so from from what I saw and and you experience especially in Berlin right so if you're in the in the hip in the hippest city in a country in the The Venture Hub where all foreigners want to be xats and stuff like that that is Berlin it's the most vibrant City by far and the the largest city by far in in Germany then you get a Vibe for certain Trends and I know during that time when I bought the business the trend was going into being in touch more with your local stores right because you had the cheap fashion the fast fashion from Zara to I don't know what right so everything is outsourced to China to Bangladesh and to um to India and Pakistan so people wanted to spend more to have a higher quality or perceived quality um just for if it says made in Germany made in Portugal made in Spain and made in United States right so that Trend was still quite strong and growing the other thing was the everything rro right we have new phones now everything is going into uh an accelerated techn technological development and then there's always counter pull to stay close to your roots and all things are nice from fly fishing to everything else that doesn't involve technology right and you you have certain things that I I saw in luxury watches for example right again P pattern recognition so luxury watches I I dug quite deep into and it's also something you don't need you don't need a watch that cost anything because you have your phone you have a watch there uh you can get a watch for 10 years basically so it's something you don't need but people invest huge amounts of time they invest huge amounts of funds into acquiring collections into even if they right if you have one watch that's fine right and you can give it to your your son or daughter and stuff like that that's cool but people have 10 20 30 and some people invest millions in their watch collection and not any new technology so really something that is mechanically and that is that is put together by hand right and that was on a on a huge increase same for Fine Wines for whiskey and stuff like that so I saw everything going up as um as as people started also to want to have something where they actually are not in a techn technological space where there is no innovation right fine wine that's 20 years old that becomes more valuable um there is no big of course the production and stuff like that there is techn technology involved but but not in the product itself um and same with shaving right the the the barbering The Grooming Trend was in an increase you saw more and more Brands like Wilkinson Dove and I don't know what ji liver all those Brands having more store space in retail for male grooming male um creams and all and whatnot right so hygiene hygiene products so it went from there's one product for Beard care if at all to there's a huge a of it right yeah so men invested more in their appearance in products for their appearance and stuff like that so all those Trends were in the back of our mind somehow consciously unconsciously and I thought the perception of the product of wet shaving there were small ventures in the United States in Germany that had double-edged razors at least that blew up quite a bit right you had Harry's Razors they bought a company I don't know for 80 or 100 180 million uh Euros or dollars in Germany very old company that did quite nice um blades so haris razors is producing in Germany so the the the trend was clear that the direction at least could go up right it's not completely declining and I thought okay it's probably declining because the companies that are involved have no clue about how to actually sell the product to a younger generation right so if everything I learned before is true from value investing and everything that I acquired somehow in Berlin so the the more innov ways to get to customers if you put that together I thought okay is worth a try especially knowing that the old management lacked a lot in exactly the areas where I thought I could accelerate it and build those up and yeah of course it's always a risk but the it was more like an optionality right the amount to pay to buy the business was quite small as I didn't have my own money I took money from everyone that you and that wanted to join the the the the ride as investors and Consultants therefore also so for me the personal risk was quite low I I was able to learn it could be a learning experience if not Financial profitable I didn't invest money because I didn't have money really and the price to pay at that point because it was already bankrupt was extremely small so very little downside with a potential very high upside it's basically buying an option with in in my opinion a very skewed risk reward ratio into um into reward regions well I feel like that's really the headline I mean because that that calculation is supersedes all the other ones about the trend the you know the demand for straight razors or you know ultimately if you can distill a decision into low upside High upside low downside that Crystal izes a lot of the other variables um but but speaking of other variables let me just press you on one more so this idea that these things these straight risers are actually hard to manufacture is counterintuitive to me who knows nothing about manufacturing because and I'm gonna I'm going to sound insulting here I don't mean to but it's basically you know a piece of a Sharp piece of metal it seems uh deceptively simple um and I would just think that I could go on Alibaba and private label some straight razors tomorrow sort of thing recognizing that they're not going to be the same quality but um so anyway just address how you thought about thought about that and disabuse me of the notion that these things are actually not that hard to produce I I can compare to to anything else right of course you can go to Alibaba and you actually find not the exchangeable blade straight razors the the chevet that we have also in our portfolio but really straight razors for $3 $ landed cost here in Germany but it's it's like with watches right you can buy a watch for exactly the same price or you can buy a watch for 1.5 million from UTA PK or something right it's if you want a proper quality then that actually lasts for Generations right because we have razors here from 17 something I just got shaved in a webinar that we did with a barber from from G from Belgium with a razor from 1720 they still work if you if you you properly if you treat them properly that's just beautiful that is so you can always get cheaper stuff with everything also with wine you can get a wine for one Euro in Germany right if you if you buy it you can also get a wine for a couple thousand dollars and there is a difference right yeah if it reaches a level you won't feel the difference but uh we cannot manufacture below a certain cost here right we have 10 people involved in the production some people need three to five years to actually be in what they're doing really really that they know and they have a production quality with a certain amount they can produce every day that it it becomes very viable for the company and almost no one in the world can still manufacture certain steps in a razor right that's why only three companies are still left and I think in the next years there could be only us and another company right so there's 120 work steps um if you buy one on Al because the first thing I did when I bought the company was buy everything there is just to have a comparison a baseline of where are we at at the moment because the feedback I got from talking to to end customers but also to dealers was that the quality declined over the years because it wasn't a focus anymore of The Old Company because it was only a part of the company they had shaving they had scissors and they had Nippers and manicure items and I only bought the Shaving Parts because the other parts were super super bad from financial position and the Shaving business was something where I said look it's it's a it's a round business it's it's one topic and we can really focus on on male grooming male shaving right so it's easier to to have a brand that is more nichy from the consumer so that's what we did and we have 10 people now involved so 10 people we took over from that business that are now involved in the production process we hired two more that are involved now because we have to start early to train the people right because if you want to increase production it takes sometimes one or two years to actually have them trained and replicating that process is not that easy so the first thing was really buying everything that's on the market also from Alibaba right about 10 10 of the the the cheapest ones and mid priced ones from Alibaba just to compare them compare the steel compare how their hones compare the materials and it is like buying a watch for $ three4 doll or buying a watch that is actually,500 or $5,000 from from Switzerland you feel the difference yeah well the other thing is is like your target market are going to be people men who appreciate that they're going to be people who are drawn to Quality anyway part of the reason they're they're buying this product a straight razor versus just a Gillette or an electronic razor is precisely because they have a taste for Quality so it actually helps you in this category because the the very type of person who would choose to to shave themselves with a straight razor is going to be the very type of person who's really attuned to Quality to begin with um so anyway it's the same like with with watches right there there's a certain amount of people that for a product they want certain things right some want watches that are self- winding and are handmade in Switzerland others want the technological stuff right the everything everything new most people want nothing of both they're in the middle they just want something functional it's same with with the straight risers right so the the Shaving Market is huge you have the people that always buy the the the newest thing from Gillette that is vibrating and has five blades and stuff like that then there's the midm market that buys the I don't know um that's one4 of the price of the of the top products and then in that market you have the traditional wet Shavers which is also these double-edged wazers right that have these two edges that you put in that's a a bigger Market definitely than straight rers and then of that submarket you have the straight Razer in through the S right because that's the most work and you have to actually learn it about right it's not that hard as people think it's actually quite easy to get into and I never cut myself with the razor so far but you have to invest time you have to hone it sometimes right you have to get the leather stop and you have to get informed and actually try it out right so that's going to be a super tiny subset of that category great yens well let let's return to the plot here so you start looking at the business and and what do you see like how are you going to assemble the deal to buy this business what do I see the first time I went actually to the company I I wanted to run out again because I I was never in a in a in an really old business that especially never moved right so now we're in a in a new setting here so we moved into an Old Forge in the same city in Zing but the old business was still in the old facilities from 1906 and they built more and more building parts and you went in there and it was complete chaos right so I was in in the financial markets I was in in Consulting before I went to Berlin and everything's hip and all those co-working spaces and everything's new and everyone's with their MacBook airon Pro that was my my life so far and then I go in there with the guy the the friend that is in restructuring and first we were in the in the business area or the the old offices which was already quite interesting because everything smelled like cigars and stuff like that not because people were still smoking there but in the sales room and stuff like that they had carpets that were Brown I'm pretty sure they weren't Brown when they were put in there all the walls were Brown because everyone was smoking over years and years and right that's how you DET s everyone was drinking and smoking and after discussing everything also with the lawyers we went into the production facilities and that's where I basically said okay I'm doing a huge mistake here and we have to leave right I'm not going to go right away but once we're out here we're gone for good because if you move yourself right if when I move from Berlin to Munich you always throw stuff away right you you you see stuff for the first time after some years and you throw it away or you give it away or you sell it or something it's the same with businesses right once you move you kick out two-thirds of whatever you have from machines to stuff that is still in in stock that you never will ever sell again it just takes up mind space and that was never done right and they bought businesses and businesses over the years in the 50s and 60s they bought so many businesses that they never threw stuff away they never had to right they had huge rooms that 7 8,000 square meters and they never threw stuff away so everywhere you went everything was full of raw material of finished material of stuff no one knew what it was even used for everything was old everything was from um everything was black on the floor and stuff like that it it didn't look like Mordor but it it felt like it for me because I had the contrast to the everything shiny Financial world and startup world yeah so for me it was a shock and I said I'm never going to turn this around it's complete chaos like I'm never going to ever be able to do that we went out I I said exactly what I felt to my friend in restructuring he said I knew you were going to say that and believe me I saw so many businesses this is one of the better ones right so he actually brought me in again to to say okay let's have a look but what did he see that you didn't or was it basically just he also thought it was bad he had just seen worse and knew that in the scheme of businesses that needed to be turned around this actually isn't that bad what what did he see just bad it's above average right it's nothing nothing shocking or something for him he he saw a lot worse and it was actually above average right so if I wouldn't have him again as someone that says okay this is the Baseline this is actually quite good I wouldn't have done it because it was it was really a shock for me right and after we moved now if you walk around here you sound traumatized yeah this is a therapy session here yeah the first time I'm talking about this again but now that we moved we we built everything new here and we still have the old machines and stuff like that so that's why it actually quite quite interesting right it's this contrast from we we went into an Old Forge um you can't really see it but next to me you have still these real big Steel Con constructs from from the Old Forge and around that we built the offices um so you still have the contrast between old and new but back then it was it was a shock for me completely culture shock right well what convinced you that you should do this same as before it it met every criteria that I was looking for in a business it's almost undestructible right if something survives for 116 years there is a reason right after six years that's luck after three years it's luck after 20 years maybe because there was no economic downt big one or something in that industry but if you survive 116 years they have to do something right right there has to be um some knowledge in production there has to be a brand that is so strong that people still buy their product for 118 for 116 years and the the product itself once you have them in your hands once you see how they're produced it's very easy to become a super fan of the whole process and the company and the brand and what it represents um especially if you know that only two handful of people are actually still able to do certain production steps in the whole world and all those things just told me this this is something worth Saving right so you have at least have to try but even if it's not financially um viable in the in the medium term or something it's worth saving and trying well let's get a little bit more about the business so you've 116 17 years old what about the size of the business Revenue can you give us any numbers to give us a sense of the financial size of the business uh before I go into the size roughly yeah from how it developed it's it Doo had I think Ma maximum amount of employees 34 years ago of 150 people right so it's a medium-sized business it was very very profitable and they became quiet they grew quite a bit of an ego so they thought okay the brand is so powerful the products are so amazing everyone loves us we don't have to have sales marketing and stuff like that because everyone's coming to us which was true at that time right so they every every smaller customer they just turned down and said now you're not worth it uh then Pakistan especially for for cutlery managed to actually produce products that are getting better better better better better right and then once they actually do the same designs and you cannot almost tell the difference from from the pictures when you buy something it becomes harder and harder and unless you really buildt the brand that people want to buy that right because you're going to be 10 times more expensive sometimes or five times more expensive right so you have to have a certain aura that you build about the about the brand that people are actually attracted to it and that wasn't really done and that wasn't done I think in all of Zing with really powerful brands that just went bust right even in the last three and a half years while I wasn't Zing many really strong traditional brands from 1700 something 1800 something they went out of business or got B because they were about to go out of business right from 150 people they went down to 100 people to 80 people they went up again a bit after James Bond in Skyfall got H shaved by Miss money Penny in one scene and actually the the demand for straight risers quadrupled during that time and as DOA was the largest manufacturer of course DOA profited immensely so before the management actually wanted to shut down the razor business because it was declining declining right it's not worth it we're going to focus on scissors and because of that movie it it catapulted them up again right so they hired people again and that Eed out after two to three years or something it went down because everyone had a raight Razer and tried it and many people didn't like it maybe um so it went to a steady state again and everything else declined and then when they declared bankruptcy there were 45 people so we took over nine people and and now we're 17 people again and from from revenue they were at I think 10 million maybe seven years ago at the high time where the cutlery was still in Decline but they had this this bump after that it went down to six quite fast 4 million 3 million so when we took it over it was roughly 3 million but the three million was with all other parts right so it was already small that we only took over the saving business and that was only onethird of the normal business right so while we sold the old stock still in the beginning after turning over we still had full full Warehouse we sold that off that gave us revenue of course which was super nice in the beginning right just to get the the free cash flow for something we didn't even build but that was that that was a natural end right because once the warehouse is empty then there's no cash coming in so during that time you have to really fast build the business that's still remaining and that's the Shaving business right so we grew this shaving business roughly by 20% every year or the last three and a half years while the other parts went down quite fast um and the Shaving business the razor business how big was it without the other two without the scissors and the manicuring back then blades back then maybe 1.4 million or something so that you basically bought a 1.4 million tiny Euro manufacturer yeah uh the the the portfolio that was that was shaving at that time right now we're going to try to reach above 3 million again this year which is quite nice uh if we're lucky we're going to reach four or five because we're launching new products that are quite unique and no one has in the world right we're developing for three years and I can't announce yet what it is but there is a personal designer knife Meer that we worked with that in the exchangeable blade razor Parts worked for two and a half years to build something that's just truly amazing so every barber that has it uh gets Goosebumps and and teary eyes and we actually developed this with a with a Barber House chain that's called Barber House in in Munich they also have one in in in Hamburg so we developed it with with their Barbers together and got their feedback did some work workshops and now after two and a half years actually we're launching production very soon hopefully in in eight weeks right so that could be something that actually doubles or triples the revenue in one to two years because it's so you nobody else has it I want to I want to hear about what the plans are for the future but before we get there we need to hear about all the pain that you've endured to to get where you are now um but just one one quick follow-up question on the power of the brand so like if I go to my hipster Barber you know in kind of a retro barber shop that are popular will he know the doo brand is this something that like everybody around the world who's in the business of giving men uh straight razor shaves will recognize the the better one will know the brand but they most likely won't use it because almost no one is still shaving people or their clients with straight razors in the 80s with AIDS coming up and the people being scared of everything of a blade and syringes and stuff like that they many of them stop doing it right and okay then after a certain time if almost no one does it anymore in a barber shop then getting into it again because you need a lot of experience not on yourself right because if I do it myself I I feel the pressure and I can really control what I'm doing if I'm about to shave you that takes a lot of experience because I have to be completely sure I don't cut you right because if you're before work during work right at lunch break you come in and you have a nice white suit and you have an appointment afterwards you cannot cut your clients at at all costs right so getting and not to mention the pain yeah the pain the client's not gonna come back for pretty sure right so okay most Barbers are not using those right they're using these exchangeable blade razors they throw the blade away afterwards it cost five to 10 cents to use one and that's it so what we sell into is largely or almost exclusively the the private person I through dealers most of our Revenue but also through our websites but it's the End customer that either has one knife or two knife or gets into it and then actually we have some people that have 200 300 knives that are collectors so that's our our customer at the moment and now the new product that we're bringing out that's not exclusively for Barbers but the barber is going to is going to want those pretty sure right it has functionality that then no one else has um from design perspective from how you can actually use it that that's quite unique so that's opening a completely new market for us okay there's kind of an interesting uh how you approach strategic strategically your offer price let's let's get through that the actual transaction and then I want to hear us I want to hear you really share some some more stories and what the what at least what the transition was like as you took over this business so talk to us about the transaction transaction so I had no clue what we can actually actually bid for it so if there's other biders and at that time where it's actually okay how much do we bid for this how much do we say we're we're going to be able to pay for this or want to pay for this while figuring out how to pay for it because Banks didn't didn't want to give money for a bankruptcy like that right especially declining business it's too small there's no security because all machines are already written written off there there's no hard hard assets right so it was completely impossible to talk to Banks we talked to them but they basically said it's uninvestable for us right there there's no collateral behind it and personal guarantee how much money you have in the bank well that's that's that's not enough sorry so I got money from private investors and they said I'm going to invest this I'm going to invest that so I had a sum in mind that I was able to raise and then the friend was very helpful in figuring out how much we we should bid because during the process of discussing the price and everything we got a hunch at least weren't 100% sure but we got a hunch that we're the only biders and once you know that and you have someone at your side that does transactions day and night he's able to figure out how much the the lawyer that is trying to sell the business or wind it down how much he would have to invest right from the asset still in the business to wind down the whole company and then you calculate that you say look it's X and then we said we're going to bid 10% above that number and then he actually doesn't have any work or less work than winding it down and he has to say yes because he has to go to court and say I maximized the amount for the um for the people that are owed money right it it was a gamble could have just been in the case that they said no because there there is another bidder but we had a hunch from discussions that were actually the only ones and that turned out to be true in retrospect right so we were able to to to to aim quite low we had something in mind we figured out okay there's probably no other biders so we're a able to go to half that amount and so so just to repeat what you said you figured out what kind of the liquidation value of the business would be correct if this if this if this fiduciary basically couldn't find a seller excuse me couldn't find a buyer what they would what liquidating the assets would yield and as long as there weren't other biders and you could provide a premium over that liquidation value in your case you just kind of chose 10% then it's an e easy decision they get 10% more money they kind of have to accept the offer because as the fiduciary you're providing more financial uh compensation than the alternative and oh by the way it's also easier because there's no wind down you just they just give you the keys and it's your problem correct now it's your problem have fun right okay well that's that's that was an interesting uh very logical calculation see makes sense and and obviously it worked um can you give us a sense of what you pay so as you know now in our world we typically value profitable businesses uh multiple of earnings I assume this was the business wasn't profitable that's why it was in bankruptcy the the whole business wasn't profitable but the the Shaving part was profitable ah actually so the one that we took over was profitable and there was there were many people in in sales at least they had the name sales on their desk but they weren't doing sales right I understand sales is you have a very large part of your your salary that is based on what you actually do right are you successful you earn a lot or not then not and they weren't doing sales basically the old management said look we're we're so powerful as a brand we're not going to go out from ourselves and ask if you want to buy our products because that's beneath us we're not going to do that right so they actually didn't do sales they were flying around but they were doing customer service or chatting with people and stuff like that right so I didn't take over that part either right from the office perspective I only took over the really skilled people in that area that were that were working um so and but but still even though it was profitable or the what you took over was profitable you still didn't value the business based on the earnings of the business you you valued it based on basically completely of course internally we said this is the value that we think this business will bring us over the next couple of years right what the potential is discounted cash flow model and just saying okay what do we think this can be if we expand the portfolio especially in certain topics in certain regions and acquire new customers and and shift from B2B because it was 100% B2B where you give 50% of the revenue is basically going to your dealers right if you have more people coming to your own platform to your own website right you you earn double basically right so if we shift that through marketing into that direction even just doing that without growing the amount of of products that we sell that should be quite nice right so just from what we pay that was purely he has to accept this offer if there is no other bidder that was the only Logic for us at that time and and then but then also I assume your analysis showed that this offer price that you gave the difference between that and what you your internal valuation of the business that there was a nice differential there that H so so you were kind of you were doing that beautiful that beautiful conclusion where it's like I'm buying it for less than the asset so if I flipped the business uh almost I could probably I could probably earn a profit tomorrow yeah in a in an ideal life and very optimistically that would have been the case and then then life happened then reality hit right so but but also part of your calculation of what the business was worth was also not just based on the inherent value or the profits or the earnings but you were also really thinking you were going to try to build this business back up so you were also thinking what this what this can become you were dreaming about what it can be year three and year 10 from now yeah so value is a lot higher than what we pay for it it's again optionality right if we pay a bit for this option and if it turns out that the going concern is where we expected in that range there's a huge upside if it doesn't turn out that way then we almost risk nothing right compared to buying it when it's still going concerning not in bankruptcy well Yen this analysis sure feels like I mean we've said it explicitly very little downside no downside and yet it's been brutal and yet that was a lie yeah okay so you buy this business what tell us I'm just watching the clock here yens we we don't have we we have to convence condense three and a half years of pain into a few minutes but um start wherever you want maybe the transition or what whatever it is what what is so much worse than you thought going in the biggest hurdles were implementing new Erp system new website backends moving the whole company the whole production um among many many other things and one partner that was onethird of the revenue so it was dovo and meua um they were in dovo in the company was the same owner right so meu does double edge razors Doo did straight razors the administrative work was done by Doo but makua was separated by the owner before the bankruptcy years before because he actually thought meur is going to go bankrupt and it shouldn't pull down Doo that was exactly the up the opposite right Mako was profitable and doo went bankrupt still for him it was of course good right so we were the largest dealer for Meco products and actually all our dealers that we sold to thought that it's one company right so what we did is basically buy from meu Finish products ship it out with our products we make a profit margin not as big as our products but still quite okay and that was onethird of our revenue and and one and a half years ago they stopped delivering us without any notice the notice was weeks after if not months after saying we don't have capacity anymore to deliver to you right and they found someone else to do that in Zing didn't tell us uh poached our clients and so on and so on that was quite dirty um but but that felt quite harsh right because if onethird of your Revenue breaks away that's tough to handle in a time where many dealers that are stationary because of lockdown they're not able to open the shop and many old school uh retailers they don't have online presences yet right they they can sell online they can't shift the whole demand online right so you had Co lockdowns huge bump to the to to to less quantity Souls less demand from from from us then onethird of the revenue breaking away while we're preparing to move the company to the new location which cost roughly half a million euros right so for a large company that's nothing for us because I'm trying to invest everything in new product development and everything else that was quite quite a bit right so it was five times more than I expected I had a reference from another company here in Zing moving company and then moving the machinery the whole Electronics in here had to be redone we didn't had I didn't have that on my radar right that was 180,000 200,000 alone right so everything came at the same time you had to move the company because we had to get out the old old factory onethird of the revenue breaks away covid lockdowns weren't really in our favor um plus the selling the old products so scissors and stuff like that that went almost to zero um and at the same time there were still some bookkeeping issues with the with the old company that quite a large amount of our funds were still locked with the with the bankruptcy lawyers um yeah you know a fun time I'm I'm I'm hyperventilating just listening to this however I will say none of those actually challenge your thesis they're all sort of in ental things that would each be a big challenge in its own right and then together are possibly fatal and probably aged You by 10 years but but happily none of them made you feel that oh my God I was wrong about something structural here structurally all of your your analysis was still pretty firm right correct um the external Market perception was correct that more and more people are investing more and more into their um into their products in their hygiene products and and expensive hygiene products what was quite nice was of course the retailers went down in what they bought from us because they couldn't sell but at the same time people that are at home more they are searching for new hobbies right so what can you do of course I can invest in watches but what if I don't have money um I can do more gardening I can buy new plates and Cutlery and stuff like that but I can also say if I straight risers are are fun to do right so it wasn't as harsh as for others I think because more people got into that as a hobby and still the thesis like you said still big mode the brand is quite strong those were still completely completely there especially when the dealers didn't buy more people bought from our website so that went up during that time yens I want to ask about one other vulnerability I I I meant to ask or risk in the business that I meant to ask earlier but now that you're actually have bought and are in the business you can um maybe give some anecdotes about this given the amount of time it takes to train people uh to produce your blades and the very few people in the world literally who exist with this skill and how nine of them or whatever 11 of them work for you it would see that there's a lot of a lot of um key man risk there maybe not not an an individual but um each each and every one of those technicians or manu or skilled Craftsman is very very valuable now I guess on the other hand because their skill is so particular they're probably it's not like they have a lot of options of where to go so there's kind of a a mutual codependence there but still it would it seems like um something that you need to protect yourself against losing your people even a single person talk to us about that in the beginning that's that that was correct so there were some work parts that only one person could do right so when they were on vacation or they were sick that was an issue right because it's it's not a process that um can go around or something but it actually it's first du to this then this then this then this right so if one link is missing in that production chain then things build up they're gone for one or two two weeks it takes months sometimes to actually bring those um those parts down again now we have trained four people that weren't in the business before so we hired them and trained them so now I'm relaxed but in the beginning that was an issue right from other businesses in finance and in Berlin I know that but so sometimes if you're one year in a company that's Al almost too long right and you need something new and flashy and shiny now the new Ventures there and they got more funding now I'm going to move there here I think the average age at the company is 13.5 years some people are here for 33 years they did their training here and they're still here so there's no big fluctuation right so one person in a key position left now I hired two for that position now we have three right so there's redundancy so that's that's fine now but for me it's also positive right so if it's so hard to actually train the people and have the people it's also tough for others that would want to go into this area so for me it's not impossible but it's going to be super super hard right to to build something in that area but not impossible you can do whatever um if you really want to well but well it's it's it's your it's your favorite theme again if you can if you can solve this problem then yeah the opportunity is just yours nobody else is going to be there and and you can really just further expand your moat because you have you figured out how to skill people up in this very very scarce skill uh and you they all work for you yeah yeah that's good they should stay here uh yens the so to be clear we're calling this a turnaround but in fact there it was profitable so so what I I wanted to one of my questions was going to be what does the triage exercise look like when you get into a business that's basically slowly dying how do you arrest how do you arrest that process the the death um but it sounds like it and then and then on top of it you had these whatever four or six crises that all happened as you became new owner just looking at there more okay okay there was more to you afterwards yeah so so I'm I'm going to put this back on you then what I guess where should we spend our our our last few minutes at least on the War Stories what can people learn from your experience what story is most illustrative or most educational for the audience I did a short video I actually started a Tik Tok Channel funly enough and posted one video so far this week just for myself even if no one watches I don't care because I start forgetting certain things because you're so involved and after three years you forget the learnings that you had and and in the beginning I was actually writing a diary once a week also to the investors right so I can go back there what I thought and stuff like that and what changed but still the big learnings you normally forget quite fast if you don't write them down or if you have them as a video even if it's super super short right so do many video and I basically said look the the seven things you shouldn't do when buying a business because those things I did and there were all something that that the next time I'm 100% avoiding because they're quite they're avoidable and they're quite bad if you do it if you do it right so the the first thing was don't buy a business out of bankruptcy especially the first time if you're used to that if you're into that business of buying businesses out of bankruptcy good right if you have experience if you learn the experience at a private Equity company and then you do your own thing that's completely fine doing it for the first time I would highly avoid it's insane it's just complete Mayhem and the likelihood of of succeeding are quiet low right it was completely dumb luck from myself and the investors that were still here um there's one thing why it worked and that's that what what the brand was so powerful that even when the clients knew Doo is in bankruptcy they still wanted the products right because sometimes or most of the times one company goes bankrupt the next I'm not going to with them because they might have my money and I don't get my my stuff right the products I move to the next one but the brand was so powerful that the the demand didn't go down right so it was just luck right of course I knew the brand was powerful but it was more powerful than we actually anticipated right so out of bankruptcy buying big noo right and just to be clear end when you say don't buy out of bankruptcy do you mean also don't buy a turnaround or do you specifically mean a company that is officially in Bank the bankruptcy process don't buy one of those or both in bankruptcy in bankruptcy okay there's a couple of months where your suppliers are scared that they don't get their money where the employees are scared and traumatized sometimes where the customers say what's going on so if you write them an email if you call them and say look everything's fine again who says they actually will deliver to you again or who says they don't want cash upfront instead of 60 days payment ter and stuff like that right so what you're buying and what you're getting afterwards the Mayhem afterwards you it's hard to assess I think from an outside perspective if you don't know what questions to ask who to speak to and stuff like that right um so I think it's a lot harder to assess than then for example transition where someone is I don't know 70 years old 60 years old they don't have anyone taken over the business then they have a seller financing for example one year where they teach you everything but the customers are still there everything's a going concern and there's no traumatizing from from the suppliers from the customers and from the employees right so in retrospect it was completely stupid right and funnily enough I actually bought a book um buy then build it's a really good book and the key takeaways are don't buy for out of bankruptcy second key takeaway is don't take money from friends and family because if it goes bust you won't have some family members maybe that are still close enough with you or will you will you lose friends that's what I did right only money from friends and a bit from family so I did that what was said don't do it in an industry I didn't know third thing that you shouldn't do according to that really good book um in a city that you have no clue about that is especially six hours away from your actually town where you're living and you have to go back and forth the whole time twice a we yes let's L let's Linger on that one yeah yeah six hours away so the difficulty of that speaks for itself so we don't have to hear about the difficulty what I guess I'd like to hear about is how how you rationalize that to to yourself my wife and my kids and my dog oh my gosh my friends was this just one one more of Yen's hey if it's hard I'm doing it sort of sort of rationalizations no it was miscalculation and I'm very optimistic so I need someone that actually kicks me in the butt and tells me you're too optimistic right this is this is more real IC so okay the the Assumption was the first year we restructure internally right so production process we move the company and everything like that then second year is investing in growth you market so sales going to uh Saudi Arabia to qat to um South Korea South America where we're not that powerful yet in the markets and third year growing more maybe getting more investors and then thinking about okay buying similar business under Doo as then a brand Hub basically and repeating what we did before right now we're three and a half years in and from the onee restructuring internally it became basically three years and this year we're able to to invest in marketing and sales so you're finally you're finally getting on the plane to go to South Korea three years later so it was that okay I don't have a kid yet so back then I didn't have a kid yet I didn't have a dog yet my wife was working quite hard in Munich so she was also okay with me being in Zing because after work she didn't want to do anything but sleep and watch TV and I was here okay because I didn't have any friends here I was completely focused on restructuring because that's what I needed to do didn't sleep much and worked 100 120 hours a week and I could do that so first second year that then we want to get a baby that was planned already um now he's one and one year and four months and now it becomes quite hard to actually put that time in right so if I would have a kid back then I'm 100% sure the business would have failed so the dumb luck would have actually be only dumb and no luck because I I couldn't put the time in right you you have sleepless night the the kid is sick or something you have to take care of the kids and you want to take care of the kid of course you want to see the kid that wouldn't be possible so I wouldn't have bought the business with a kid 100% sure well yens I I mean I think a lot of people who are having a kid wouldn't want to buy even a healthy business I mean there's just there's just to it's it's too much at once um let alone a turn around let alone a turn around that's 6 hours away now with this sixh hour away thing are you were you did you take an apartment in small one okay so you had okay yeah yeah so you had a a place to crash so you'd go down you'd take the train six hours away or whatever and stay there for a week or stay there for Monday through Friday and not sleep and just work work work work work work work and then go see your girlfriend on the weekend yeah in the beginning was actually Monday to Friday or Sunday even to Friday or Thursday and then it went down to Sunday to Thursday Sunday to Wednesday and now I'm going at 4: or5 in the morning with a train on Monday and then going back on on Wednesday so tomorrow again at roughly five right the good part is those train rides that's 12 hours where I'm completely offline and I can actually work in in the zone I don't have to transition so it's actually going straight from from Zing to Munich and that that's where I can do deep work right because when I'm here there's always questions there always problems I'm going to suppliers because all products that we actually have in one of these razors um are manufactured in Zing even the packaging and stuff like that so that that's pretty cool because once I'm here I completely focus on work no distraction once I'm home I'm I'm home I also work in a in a home office in the basement but I can always go up if the if I want to see my son see my wife and stuff like that so that that's that's a good thing so I scaled it down to two nights away now so so what does that mean Monday to Wednesday morning Wednesday evening yeah okay I think that was number four of what not to do uh don't the worst economic downturn imaginable even though you're in the downturn already so that was clear right the first like it was completely the lockdown we moved to Munich in the lockdown and we bought the the business basically knowing that it's complete Mayhem what what when did you buy did you say end of 2020 October 1st 2020 was when we when we took over oh by the way yeah yeah um if you live in Germany and you have polticians that destroy the complete energy infrastructure with funny policies because they're playing Sim City or something then of course you have the highest energy price in the world world and if you have machines to run that eat a lot of energy plus you have to heat the whole place then your energy build triples during the same time so that was not too too too nice right so in an econom in an economic downturn to buy business also not too easy because you don't know how long it lasts and how the market reacts right because we had no clue what were the other points good question well I know one of them because you you surfaced it in our in our preall which was how small the business was buying oh yeah sorry I forgot that tiny tin business tell tell us about that that that that's a very um common theme on the podcast this question of size and um and and it can be argued both ways and often it depends on one's experience but you come out emphatically where I at the current time I wouldn't buy a business that's manufacturing that has a high fixed cost basis that is below five million preferably 10 million in Revenue right 10 million is going to be tough because you have other biders for the company 5 million is a sweet spot I think if you want to buy a a smaller business bring it to 10 million or 15 million or 20 million but I didn't have the funds to hire someone similar to me with a more structured attitude because again you have keyman risk right um You have the people involved inside that are here sometimes for 33 years but you need new minds coming in to somehow slowly push the people into a certain direction and if you're the only person inside it's tougher than if you have someone that bounces and supports and you can cry about certain things with them easier than to other people so I didn't have a someone in the company that is also quite senior and more of a generalist that can work on certain things right where you can split up you do marketing and sales and focus on that and then I focus more on the internal restructuring production process sourcing and all that stuff right so it's basically all on me somehow and that's that's healthy right because you're pulled in every direction if you're working on 10 topics you're you basically working on nothing if you're split in two you become not double as efficient but I think three four times as efficient right so you should at least have the the the free cash flow in the business at that time to hire someone that is of course higher priced maybe gets a share of the of the revenue or gets a share of the company or something or options or something like that but is incentivized also and is senior enough to take over roles and big projects by them by by themselves right and DOA was was not big enough for that I couldn't hire someone that um cost six digits and then gets a bonus and stuff like that was I was talking to people that I wanted to hire and the the compensations they expected was was just too high we couldn't Finance it right so if you buy something for two three million it's gonna give you a salary that's not too large though right but you you cannot hire a second person that's tough well it sounds like when I hear what you described you need it it sounds like a partner or short of a partner at least a president somebody who's both operationally can help you with operations but also can be a strategic thought partner and also somebody who you can give strategic projects too yeah so um honestly if you even if you'd had the money finding that you know finding that perfect person can be challenging it sounds like or I know from the preall that you're actually now out of place with your Revenue in earnings that you can afford such a person have you found that person yet or are you looking end of the year probably it's someone starting that has a experience in marketing especially um this year hopefully again um in not too distant future if everything turns out correctly and end of the year I'm trying to find someone that also takes a a role here and and manages production and sourcing and stuff like that all those things okay okay yens I want to ask you we're going to kind of leave the plot now um and I want to although we'll return to it at the very end and hear what you got planned now for years three and a half through 10 um but I want to ask some some theme questions you read B and build L late in your journey for many of my my all of my audience will will know the book um after I bought the company okay all those mistakes that are here T right right but of course and and of course one of the the the book's the biggest takeaway of the book is is in the name it's it's an an encouragement for entrepreneurs to buy existing businesses and build them rather than start from scratch but I I think it'd be interesting for you to give a minute on how you think about ETA entrepreneurship through acquisition versus startup 0o to1 startup so you did like the the smart diaper that was pure zero to one creating a market Etc creating a product creating a market Etc and and then and then also you have this interesting uh window into the rocket internet guys who whose business model unapologetically is copying businesses that work you know online businesses that work often from the US but I'm sure from markets around the world in importing them or tweaking them into Germany and maybe other markets or maybe europe-wide but the point is they copy they look at what's working and then they copy it put it into markets where it doesn't already exist and that I think that that is an interesting model and relevant for us here because one of the big value propositions of ETA is that you don't have to worry about product Market fit you're buying something that already has customers already has Revenue already has demonstrated demand um so I guess how do you feel about these three categories ETA 0o to one and then that kind of hybrid the hybrid uh where the copycat model where what rocket internet is basically doing is they're they're they're they're trying to minimize Risk by taking models that have demonstrated to to work new business ideas but that have demonstrated to work in other markets and then just introducing them into markets where they don't yet exist how do you think about those three today three year three and a half years into your ETA Journey if it wasn't the situation where everything went in in a direction over the last three and a half years that weren't anticipated I would again for the next whatever I would do now with that experience I would go for acquisition again but not out of bankruptcy but from someone that built a proper business put their life in it sometimes in multiple Generations or something where there's a powerful brand powerful customers customer base that are repeat buyers and stuff like that and are too small to be acquired by pees or something as a platform investment right so if you're at three or like five million you're not interested if you're a PE right you're below their radar they're too small and in that area if you have something where you you feel that could be a mode and especially even with no innovation on the marketing side sales side that it's a viable business at steady state even at no growth that's something I'm I'm quite interesting it could be something completely different could be something completely boring where you say okay I'm gonna um sell toilet paper whatever right and I do a subscription model or I don't know what right but combining something very basic that from the product has no innovation what whatever right so it cannot be disrupted you you will always go to the bathroom and need toilet paper right people will always love certain things right and beard beard will always grow so if you have something that was built by a founder or in some generations and they just one out because they're old or they just don't want to do it anymore or they're burned out or something and you can actually get seller financing that's super super interesting and I would rather go for that than startups because the the the whole fairy dust stuff in Berlin was fun to do it right to um to fail in nine out of 10 times and scaling and you feel super powerful and two weeks later everyone's fired that's that's super interesting right and then after you you did that that's also fun but I think more viable and more for something that I don't know if someone is an MBA or someone has already experience in business and knows what good good business is and bad businesses right you work in companies and you see okay this is really bad here but they're very good at HR here they're very good at sales um and you can combine those things so after a couple of couple of steps before so you work at unior and they know exactly this you work for BMW and you know exactly that you combine those things into something that's very traditional that is super super powerful I think right so you have multiple experience that you put into something that is very basic and very easy to understand from the product itself right straight razor is you you buy the raw material you gr it a bit of course it's 120 steps it's super super hard but I can explain it to my four-year-old son six-year old son they understand every step of it right and those bus are quite interesting I think because then if the the goto Market strategy you can in innovate in that especially if you worked at a company that did it before right you can apply something to Something Old could be a shoe manufacturer that's a super loyal customers clothing is always something I wouldn't go into because I don't like that I have to chase or do Trends with straight risers they don't look too much different than 100 years ago there is no Trends I don't have to chase stuff right right there is no innovation in the design or something most of the time um so I would go for acquisition but not out of bankruptcy but someone wants to go out of the business they want a fair price I don't have the money right let's let's have one year transition half year transition and then you get the money over three or four years right so that is something I would do a lot more than than completely from zero because the hardest side I think is getting product Market fit that's insane right that's most ventes go bust because they don't have product Mar they have something they have some vision and stuff like that no one needs it they don't test early enough they don't have um user research they don't go out and be embarrassed by the product they have because they're too afraid um I would go for acquisition always especially now that more people and also more sellers are willing to go for seller financing right that that's something more people hear it becomes more common you don't have to explain it you I think you find more people actually selling it and you have many many people in an age at the moment huge amount of people and it's growing even that want to go out of their business they want to sell it right they want to retire and that is just increasing I think I think it's a trend that's going to not last just half a year or two years but even in five years years and 10 years you you you have a great chance of buying extremely well-run businesses sometimes for very low compared to what they what they what they turn out on in free cash flow every year because there's no alternative right they can shut down the business but there are no buyers for certain things right there especially no pees and sometimes no other companies because they're just not interested right they basically say in their mind okay if they go out of business then I have more of the market or that's what I found here in Zing also I would rather close the business than selling to a competitor to not lose face which is completely insane in my opinion right because instead of having the people that work for me have jobs again at another company at a competitor and I get money they would rather close shop right so if someone neutral comes in and takes over the business that they would do but they don't know how to sell the business most times right they they there's no platform where you just upload your company CV and then you sold the business or something so I would go for acquisition over over Venture always because you don't have to acquire new customers that's super super tough yens the we we talked a lot at the beginning about how value investing you appli the same lens of Val value investing to this opportunity as you did in when you were buying public equities and educating yourself on the entire framework of value investing now that you've been in this for three and a half years and seen how difficult it was and um you know learned that whatever the analysis is or the spreadsheet says might not actually be what life is uh when you're the owner operator do you feel like the exercise of being a good public Equity picker and a good small business buyer is actually quite quite different or do you still feel like what works for public equities is is works for buying a good small business as well I think it's the same mentality so for public equities it's also finding things that the market under values right and it's always it's with people if I hire someone I want to find people where I see that they have more value in my company for the price that they charge right for the salary than others right they're valuable more here or they're underestimated from their CV and if you really talk to them you actually figure out okay they're insanely talented in certain aspects it's same for Market opportunities if I launch a product and I go with the flow and follow a trend everyone is most likely going to see that Trends and you're going to compete for everyone for the customer right if you if you build a market because you C you see certain things that no one thinks or um everyone says that's a stupid idea but that's a chance where you can actually launch a product that has excess returns compared to the the development cost or risk that you put into so I think it's the same thing right can you spot certain things that other people think either don't make sense there is no market for it they hate the topic uh could be a sin business that most people can't invest in it that's why it's underpriced compared to the cash flow that it actually generates but I think it's the same mentality it's for it's for projects for people for going into countries right could be a country where people say okay it's a huge risk to go in there right there's only corruption stuff like that and if you actually manage to go in there you're the only one that's in that country because you manag to somehow um build contacts and I don't know what right I think it's the same thing figuring out what most people think doesn't make sense because that's where if you are in there people have to catch up so if we launch the product within this year now hopefully in the next 8 to 12 weeks I chose a material I chose a functionality that took us two and a half years to develop and we're going to patent to do the same thing is going to be super super tough because the the amount of work we put into it and how much we failed to do a very simple looking part yeah that was insane and it took so many iteration steps by actually very very known knife makers to to to get to that part um so there's again a huge mode no one brought that to Market because also some people that we talked to said it's impossible to combine it into one product so many people thinking it's not possible many thinking there's no market for it really because people aren't willing to pay X I believe that if people pay 2,000 3,000 for a scissors and you can get scissors for 10 too it's for the for other tools too in the barber space because you use it every day x amount of times right 16 amount of times TW uh 12 times or something right so it's something people actually that that's my tool right that's my life identify with my tools also right so if I have a scissors that cost 1,600 and it cuts even just 5% better I still identify with something and I I cherish it more and that's part of me because that's the one thing I work with same for Barbers if they have something that cost 10 years you cherish it less than something that you pay maybe 200 300 for especially if it lasts for 10 years and you guarantee that because it's made of titanium and I don't know what that it does not get destroyed you have lifelong guarantee um you see when you talk to the bers and you give it in their hand they actually use it they become quite emotional and they never became emotional about the product that we going to launch ever before again when talking about them in the interviews in the workshops there was no no no sparkl I it's like you're talking about water no one cares um so that that's again an opportunity just like with business businesses just like with going into countries where PE other people underestimate the potential but but it takes time to to find those right because it's super super interesting also to follow Trends because everyone's making money over there and why don't you jump on it the investors tell you why don't you jump on it it's a trend and everyone's jumping on it why why are you so stupid and um until it it breaks down completely and you said look but then everyone's like yeah but no one thinks about the the times before right when when others are making money it's quite hard to say no just like an investing Yen let me ask you also about manufacturing and particularly old school manufacturing so you we've already touched on it that you really there's really a craft here it takes a couple of years to skill people up uh and there are very few people who who know how to do what your people do but that's very much your particular case can can you make any generalized observations about getting into the manufacturing the world of manufacturing for people who might want to buy a manufacturing business you did you had no experience what can you tell other people who have no manufacturing experience but are contemplating buying a manufacturing business I think everything's learnable no matter how hard it is I just underestimated the amount of uncertainty in projecting time something takes and cost something takes right so if you're in a service business if you're into into the investing business and stuff like that it's people doing things uh you're writing code and people say code is hard no code is quite easy I think compared to the the physical word right so for me the the calculation is it takes double the amount of time at least most of the time third three times and three times the amount of money right so if if you do a realistic calculation if it still makes sense if you do both cost and time times three then you can do it otherwise not I think because I was hugely optimistic with everything right the the the new product we're going to launch that was one year production that we calculated it's two and a half years now again we had the double-edged razor that we launched it's the best razor ever like we have collectors that buy it because they buy every razor that's coming out and they're writing us really emotional messages they're calling us saying what you what you did is perfection and we we we did it all in zing and no parts from China so zing and then a neighboring City and it took two and a half years also to manufacture it and the plan was actually six month because we were working with companies that did similar products before and getting that correctly because with the razors um you have the blade Gap right so the blade comes out if you want to shave securely and fast and you still sleepy in the morning you want to cut yourself a difference of 0.01 mm you feel on the skin it feels differently wow right and then if you have a product that has tolerances in the production so zinc die casting and then you have multiple layers until you have the chrome plating and you know that if you have Chrome plated parts and they're put into the um the fluids to have the chrome plating if you have a product in the middle of that plate or on the outside how much Chrome attaches is different right so figuring out how to perfect that took two and a half years right and we think it's six months right so sometimes Perfection is really really bad but then once you launch the product that is super valuable because the people that use the product that buy the product they feel what went into it because some people have the comparison right and they actually become emotional when using the product because they think okay this is how something can feel this is how something can look even if you open it at at Parts where normally no one cares about right even if you open it it's beautiful it's polished right there's nothing there and and at a price point where we manufactured in zing and we're still competing with things that are basically drop sh from China but yeah lots more time lots more money and everything that can go wrong will go wrong Murphy's law okay yens round us out now with the what what are what are the plans for the next however long you have planned into the future is it maybe five years what is it uh the plan was a three-year plan when we bought the business right we had a financial plan stuff like that where where do we want to be how much do we want to sell to be b2c channels at what time right 30% after 3 years or something all all those things were nice predictions but nothing turned out to be to be correct right so I I am someone that hates planning because I say the amount of time that goes into planning and then it turns out completely different anyway it doesn't make sense can that I can just work on something instead of planning so I tend to plan not enough there should be a bit more planning than than me doing but that's why telling 5 10 years is is not is not really easy for me right for me it's okay we we still want to shift from B2B to b2c because we have the customer direct where we get the feedback direct we can talk to them directly the margin is higher of course um that's number one thing you want to reach 30 to 50% at the moment we're still at 15% BTC which is nice coming from zero but we want it to be double by now yeah that didn't turn out the way it would but this year is focus really going to the BTC Channel because I I need the feedback right you can book a call the 10 minute call on our website it's always me answering the people and talking to them and that's the the best feedback you can get and the feedback gets stuck in the in the in your dealers right if they get feedback then then most of them not going to pass it on to you almost never right so if you want the feedback to iterate on the product and stuff like that and develop something the market wants you have to have a certain amount of people that actually use the product and give you feedback right also for example and we have I don't know a couple thousand people on Instagram that's not a huge followship but if for example we launched this product and we had three different scales so two weeks ago I put out um a question hey which scale do you want and then we okay 40% want these 30% these and I don't know 30% this right so I you we can launch all three because they're all going to sell right so um in I I plan less than before because every time I plan it doesn't work and then I feel bad you wasted the time planning and I say look just do your best whatever you do of course you have core things you want to work on right so the next big thing is doing lots of content to educate people on certain issues with a barber now that we're working very close with and that we're also in business with now so shifting to creating content that is long lasting not paid for right not just AdWords of course a bit but mostly together with him educating and and showing the beauty of those products how they're made and how they're actually used in his barber shop because one of the best best barbers in Europe right so YouTube lasts forever of course you can put paid ads there but once people see I think that our product are just beautiful also in using them um I think that's going to attract people in the mid and long term shortterm is AdWords but I'm not a big fan of that it's just create beautiful products with beautiful packaging people will use it and try to give it to other people too and have that they have the same experience right um and the biggest thing this is going to be the launch yeah and and but for in your own the trajectory of your own personal career do you see yourself being at the helm of dovo in definitely or maybe you buy other businesses or maybe you sell dovo or or or what what do you think for your personal path here or is the answer the same I don't will I don't plan we're gonna see right I think once the business is triple the revenue which we hopefully reach in not too long distant future I think the optionality is there to do multiple things and I talked to a couple of people that bought multiple businesses in Germany and have it under one roof right so they have one holding and they have multiple other businesses that they took over um and they're doing it very very successfully because they can have one marketing person or two marketing person at the holding level instead of every company two people right so your margins just become better and they were also quite old school business right so the oldest Soap manufacturer for example we we're we're manufacturing together with them soaps and on Friday hopefully we get the samples and then the mindset is very similar and I think that could be something viable that we said look we went through hell with doo now I know what to do and what especially what not to do and now let's find some other business where we can have people in the holding structure HR and stuff like that because you don't need one person we don't have anyone in HR here it's just way too too small the business um but but be more efficient and then have multiple companies a mini mini mini mini version of lvmh for example where you have number one businesses in certain areas but the areas are just tiny and there's a huge mode because the market is almost too small for others to come in you have very loyal customers living a happy life and you grow those businesses at 20 25 30% maybe a year going forwards because the market is big enough right at that rate they're not going to stay they're not going to stay too small for too long yeah and then you have more cash flow to invest in more business hopefully yeah right and yens we haven't I don't think you've directly told us what is this new product what is special about it what what what is it we already have exchangeable blade razors but they're comparable to many many others other manufacturers right so people the The Barbers don't use these things here but they use very small ones where you can break the double-edged blades you put them in and for every new customer you have a new blade you throw them away that's five cents or something and and that's it but there is no functionality in that thing right so if you talk to Barbers you do a workshop with 20 of them one Barber doesn't like this with with everything that that's out there one's complaining about their product they're using here so we we collected everything that people don't like everything they would have in a perfect world right if you can just do this and there's magic happening and try to combine everything of those things in one product and we worked with a designer um and he managed I don't know how together with us to put it all into one product that is 10 times better than what I would even Envision and also The Barbers right so it's something specific for Barbers for for shaving it's not a straight razor right but it's these exchangeable blade razors but with functionality that that does not exist yet and that is very very nice for their Everyday Use especially all the functionality can be actually done with with one finger while looking insane looks like a a mixture from UTA if you have the design of the Royal Oak from Oda mixed with a um a Rolls-Royce Phantom it's it's a similar design language made out of um matte titanium yeah I don't want to tell too much but um I I think it's going to it's going to be quite successful and that that is one thing it's again optionality we we invested little money in the development so low low risk took some time but with a huge upset potential and those bets I want to also do do going forward right so things that aren't comparable that don't exist yet from from certain perspective and then do one or two of those launches a year well there you are back uh back in zero to1 entrepreneurship yeah recognizing it's a restart up it's a restart up we restarted the and yeah and you're not I mean this is a this is a Marketplace that you understand with customers that you already have and user research that you can do easily and so it's it's not launching a smart diaper into the world uh you're where you have sh production issu because 200 per second almost are being churned out and you have to print electronics and then you have to invent new methods of printing electronics that was in Berlin it was completely insane there was so many unknowns at once with inventing new technologies writing patents and stuff like that that was completely different game out well you probably would have thought that pumping out straight risers would have been comparatively a lot easier but it turns out actually that's really hard as well it's a lot harder yens if people if people want to get in touch with you how do you like them to do that LinkedIn I'm I'm very hard to reach because I'm never on LinkedIn I don't have time it sounds but every second I'm I'm working normally so easiest is either via WhatsApp or via yeah email and email j. gruto that's gdn doo.com right or if if people don't know that I read almost every email coming into the info@ doo.com so every email that comes in here through service at Doo or something I somehow read even if I just fly over it yeah and yens if people want to be made aware of when this new product hits the market what's the how should they do that subscribe to the newsletter on doo.com follow dovo on on Instagram dovo Instagram which is dooor zolan or newsletter on our website which is doo.com so we'll tease it in a couple of weeks and then once we launch um every one through the newsletter will get a once in a lifetime discount on the product and have it probably a couple of weeks before everyone else well your excitement for this launch is infectious so talk about show it but I can't yet Yan congratulations on Surviving these three and a half years and while it's taken longer than you planned that it would and and projected and hoped that's so often the case in all things in business and in life so you're you're not alone there um but speaking of being alone you you chose a very independent path um and I I applaud you for that and it's a really neat business and a really neat story so thanks for sharing it with us thank you for letting me share it and hopefully preventing from other people doing similar mistakes making those mistakes but buying a business you endorse yeah 100% always would do it again I think it's a lot easier than starting something from from scratch that thank you yens I hope you enjoy that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business