Manny Saxena, welcome to Acquiring Minds. Thank you, Will. Uh, good to be here. Manny, we are going to hear about the wonderful world of street sweeping today. And I say that without sarcasm. Street sweeping business is the type that many in the Acquiring Minds audience uh, will love to learn about. It is a boring business, quote unquote. It's recurring. It's enduring. It's essential. And in your case, it was life-changing. So, let's get into it, Manny. Can you start us off with some background on you, please? Sure. Uh, for those of you who uh, who can see me, it won't come as a surprise that uh, I was born and brought up in India. Uh, and uh, my dad was an army officer back in the day and uh, we we traveled a lot. I changed schools 12 times growing up, um, which was really the building blocks of uh, you know, my personality going forward. Um, but then uh, went and did engineering like most Indians did back in the day uh, without really thinking about what I wanted to do long term. And uh, uh, realized pretty early on that I was going to be an average engineer. Um, my mind worked more at the system level versus product level. I was more interested in business. Um, so really started to gravitate towards um, uh, just business topics and figured uh, I needed to learn more, like dig deep. And where else to come but the Mecca of business to for my business school education, uh, the US. Uh, came here in 2012. Uh, went to Kellogg Northwestern and uh, really um, for the first time kind of felt um, uh, that I was work at least on the professional front doing the right thing with and what I wanted to do with it. Um, and uh, really got lucky while I was at Kellogg. I wanted to escape the Chicago winters. So, decided to do uh, a study abroad session at in IESE Barcelona Uh, I got uh, I I didn't know I got into this class called search funds. And this was probably the only class outside of HBS and Stanford in the back in the day which taught about search funds and it was taught by none other than Peter Kelly from from Stanford and really fell in love with the concept there. And I just thought it was fascinating. I always knew I wanted to be an entrepreneur but I figured this was another way to go about entrepreneurship which for me um catalyzed everything I loved about entrepreneurship, right? And but really I also also had a realization that I was not prepared to do it right after business school because I was an engineer before this. I'd never lived in the US period to try and pitch it to you know a US citizen to sell his business to me without the business background without any background in the US felt hard at that point. So thought thought I'd give it some time and get some more um I got the business education but more kind of practical business education. So ended up joining ended up looking for general management roles out of Kellogg. And the one that seemed the best fit for me to prepare myself for entrepreneurship or search fund in the future was the turnaround team at Sears which was a fascinating place for somebody like me to go in because I was more of a internal consultant at Sears jumping from one function to the other. And I wanted business education. I got baptized by fire really and learned a ton there and and you know really got my confidence there in terms of that hey I could contribute to this the society and then I could be I could stand on my own two legs and really be a force of change. Um And I started to feel comfortable and then you know as I was thinking about search funds after spending about three years at Sears, I randomly got an offer from one of our vendors at Sears the Series C hot startup AI startup based out of New York and they said, "Manny, would you come do sales for us?" And I was like, I'd never done sales and I had a very different idea of who sales people were in the US and I was like, "Are you sure that you you didn't want me for another role?" And he was like, "No, you've you've been a user of the product. This is a really you know, consultative sales approach. You do you know, uh sit and talk with CMOs and CEOs of you know, Fortune 1000 companies. So, we want somebody who can talk the language. So, I ended up taking that as an on as a challenge and I really felt like whatever I did in life, I would be better off if I had a sales experience. I went in a little bit cocky, you know, with with all my successes at Sears and really got humbled really fast. Understood that how difficult sales could be. And you know, how even getting one call was a game-changer. You know, somebody to answer your call, I guess. But again, a great experience. We started from you know, but started from zero sales people and then we we grew up to about 15 sales people and again, gave me great building block for what what what was to come in the future. Manny, why did they tap you to come do sales? I mean, you you you said yourself you were surprised that you were tapped. You mentioned something about being able to converse, you know, at the executive level. Was was that it? What did they see in you that you didn't even necessarily see in yourself? Yeah, no, good question. So, I think one was I was just a heavy user of that product at Sears. So, they were a vendor of ours and and and and there were a lot of through the partnership we had had with them, there were a lot of back and forth with them where I had actually tried to improve their products based off of my experience using that product. So, I had developed a to relationship with them. It was really, you know, it was really um a product which was really hard to explain. So, they basically did uh used AI to write marketing language for your brand. Right? And what would resonate with the customer. So, it was a concept which was really difficult to explain in layman's language, right? It was not A plus B, you'll save C, right? Uh it was more that, hey, if you did this, we you know, we would run 16 experiments to understand what worked best for your customer. And then what emotions were triggered when what people read some some statements and whatnot. Uh so, it was very um I I felt like it was much more consultative than any other product where you could just say, hey, this is our product, this is what it does, and go. And then it was also a higher value, higher ticket size item. I remember it was at least between 500,000 to a million-dollar product, right? So, it was a lot of a big ticket size item where you really need the sales cycle were long and you really had to understand the problems of the customer and then really suggest what part of the product can help them. Uh and so, you you go there, you build the sales team up to I think you said 15 people? Yeah. No, I was part of the sales team and we went up from you know, I was an individual contributor there, but we went up from zero sales people to 15 sales people. Um and um and then really felt like uh I wanted to take the next step of either entrepreneurship or search funds. Uh and really started look deep into search funds because I knew uh it get something me in me when when I was at when I was at Kellogg. And as I explored uh different avenues of search, realized that there weren't an easy path for an immigrant. And I was and I'm still am on an H-1B visa uh back in the day and um and to as part of the H-1B visa, you got to have employer-employee relationship. So, you could not have your own search fund, employ yourself. Um so, there were a lot of challenges like that. So ended up working with a uh uh a search fund accelerator called Broadtree Partners. And they were I don't know if they were uh uh if they if they underestimated the risk or they liked me uh enough or uh more than other candidates, but they decided to give me a shot um in 2018. Manny, what tell tell us a little bit about what Broadtree Partners looks like. So is it's an accelerator? Is it cohort-based or do they just tap individuals and then they work with you as an individual? What it what is what Give us a picture. Yeah, so Broadtree Partners uh at least back in the day they were a cohort model. So they hired four to six people every year from uh mostly uh you know uh one to five years out of business school. Um and uh they brought all of these uh um searchers or operating partners um together and they helped you train and be better at search and they helped you with a lot of uh um uh relationships. They obviously they paid you a small salary. Uh they sponsored your visa. Um and then um and then when it came time they had LPs who we went back to on a deal-by-deal basis to go raise money for a deal. So that's how it worked. And the economic model is similar to a traditional search fund? I would say so. It's pretty close to a a similar uh traditional search fund. And uh we also had small equity in everyone else's like every other member of the cohorts uh like deal so that it gave us the incentives. Not that we needed that. Uh we already had a great personal relationship, but it gave us that financial incentive to root for the success of uh our cohort mates as well. Oh, interesting. So each of you share had a a little bit of equity in in the others' deal. Yes. do you think that you would have done this model if you hadn't had the visa hurdle? Or do you think you would have opted for self-funded? Or you never even got that far to consider it cuz you basically already knew that you were going to need somebody to sponsor your visa. I think it was yeah, it was the latter. Um I think it's really hard for me to go back and like and put myself in those shoes right now because I know a lot more about search and deals and whatnot. But I, you know, I would say this, I would prefer the search accelerator model over a traditional model. Because for a very few points that you give away give away, you get a lot more um uh you know, in the long term. The way I kind of think about that is really it's not just about the deal and what how much equity you get at start, right? It's about if you think about Manny as an asset, right? If you wanted to maximize the lifetime value of Manny, the most important thing is finding the deal, finding deal fast, finding a good deal, being able to run and grow that business, being able to exit from that business, and then the world is your oyster, right? And then you could basically uh you know, basically trajectory-wise could be very different if you had a great first deal versus like you end up buying a shitty business or average business, went on for 7-8 years, and then, you know, didn't get a great exit for you or your investors, you kind of, you know, in the same place in my opinion, right? So, I figured that each of those things that I said has a probability, right? And if there's being with an accelerator increased that probability only fractionally, I would still take that bet, right? Because again, uh you know, it's it's all about the lifetime value. And what do you think the value that was provided was specifically um that enabled you to that was worth the you know, an extra couple of points and it set you up to have, you know, a just a much stronger first search experience. Yeah, there there are a few. So, one was you just get five people who are you have a different relationship with, right? It's a you know this and your audience knows this that search is a can be a lonely journey and and it has its own ups and downs. Having five people go through the same experience exactly at the same start date as you. Um, there's just some something magical in that, right? It's almost like you went to the war zone together and the bond you have, um, uh, you know, that that that that is really hard to replicate in like a loosely formed friendship people like two friends who are doing search, I think. Um, and then you have a relationship with these people for the rest of your life and other CEOs, right? That's a good thing to have as well. Speaking of relationship, right? Like in my case, a lot of um, we were raising money deal by deal, right? So, I was speaking with a lot of LPs myself, going out pitching with with Battery uh, uh, GPs, uh, which made helped me form a bond with all these investors. In the future, if I needed more money, I was able to bank on those relationships to go back to them and pitch them because they knew me. Uh, the other thing was just like basic like, you know, I'd never done done a deal before, uh, for Battery, right? So, it just gives you the confidence of working with somebody who has done that before, um, you know, being able like bring you or pull you away from pitfalls, you know, basic structuring things like there's a lot of things you can waste a lot of time on, um, that they could help you sway away from, um, So, there's a handful things like that and then obviously you get a small salary that's, you know, uh, that's, you know, at least sustains you. Although I lived in San Francisco, so I would not call that sustaining, but uh, besides the point, uh, um, and uh, yeah, and then then obviously, um, it's the uh, post acquisition, you know, support system is already there. You have that relationship with that GP who's going to be on your board. So, there's a friend in the board at all times, right? Which there's a lot of uncomfortable conversations that you don't want to have with the board, but there's always that GP. And there's just somebody, you know, interests are aligned for the most part. And and you are always you know, you can always confide in people who you've had this relationship with for the past 2 years. So, I figured that was definitely worth the few points, you know, that you would shave. Self-funded or not, I think is a different conversation. And you know, you need to start with how much money you have in the first place. I do not have a ton. I had student debt back in the day. So, that was a little bit, you know, outside of the visa situation. It was a little bit of a hard thing to think about at that point. Yeah, sure. Yeah, well, a lot of people do choose the the traditional search fund route. Aside from all these pros and cons that people discuss, simply because they have to they don't have the money to self-fund their search. So, they the the kind of stipend or salary that a traditional search fund provides. And Manny, just curious, so your your cohort, your comrades, did they all go on to buy businesses? What what did what did your cohort in the aggregate look like in terms of success? Yeah, out of the six people, five of us bought businesses. So, it was a good percentage there. The sixth person got really unlucky with one deal. You know, it just took a lot of a lot of his time, but he like after subsequent to leaving Broadtree, he was able to find his own business as well. You know, so technically all six six of us, you know, got businesses and ran them. And before we get into a little bit about your search in the business that you did find and acquire, going back to the beginning, you mentioned how ETA, entrepreneurship through acquisition, back in that business school class in Barcelona, just really resonated with you. Um I can't remember how you put it, but it was pretty strong. Like it just um really lit you up. What can you elaborate on that? We could we meaning me and the audience could probably guess cuz since we're all similarly drawn to it, but articulate it for us. Yeah. So I think So I was always like I need to do a startup because I love the accountability, I love the independence, I love the impact you could make. But when I was doing that class, what I realized was what I loved about entrepreneurship was really working with people, getting a team, getting them excited about a vision, working with them on a day in and day out basis to work towards that vision. More so than like building a product or you know, product market fit or raising money. Those were kind of like for me it was like I'd have to do that. I'll do that if I have to do that, but I don't really love doing that, right? And this one basically gave you a jumpstart like search fund gave you a jumpstart to really get to that stage directly and then go on from there on out. So that was like a for me it was like, wait, you don't have to pay any money and you can be a CEO of a business you have ownership with and and you can get to lead people and you know, without that risk of ever needing to start a business or raise money and all that. How's that even possible? So for my mind was like like what's the catch, right? And and then as as you watched more as I talked to more searchers, I was like there was no catch except you just have to bust your ass to to get through all those stages which I was totally fine with. Okay Manny, so tell take us to take us to your search and anything you think is relevant to the search piece of your story before you find your street sweeping businesses. Yeah. So I I went in you know, and I had to kiss a lot of toads to find my princess if I might say that. So I I got I got like six or seven LOIs through my two-year period, but every time something happened, right? And I was like, maybe I'm just cursed, you know, and you know, one of these deals where, you know, you would go up like I went to like two deals I went after Q of E legal it started and just fell apart at the altar. But then, you know, in the hindsight 20/20 and I've I'm happy those deals failed because I ended up you know, I think buying a really cool business which we can get into in a minute. One advice I have always given searchers which is I also got that advice but it's really hard to take and you kind of, you know, just you just most searchers slip on that is once you get a deal, you kind of stop your pipeline, right? You start to like romanticize the idea of working that company being a CEO, you know, all that. And in the and you kind of also get into zone of like, hey, I don't want to do other deals because it feels like cheating or you know, I it doesn't feel right to be pitching to somebody else. Um, the as you're like talking to this one person. It's kind of like, you know, you kind of correlate that with like almost dating in some ways, right? But I I thought I thought that was that's the that's a rookie mistake that people people make and, you know, it's it's it's it's about a process. It's about being committed to the process where you are going to be aggressive, you're going to be disciplined, you're going to be, you know, rinse rinse repeat um until you find a deal, right? So, you got to you got to go at it with from that mindset look at your funnel every day, right? Even though you might have two LOIs, you still don't have the most important step which is to buy that company, close that company. So, until you have that, you have to keep the whole funnel kind of going, you know, for lack of better word. So, that's a that's a rookie mistake and I did it like multiple times because I had multiple LOIs and I and I wish I wouldn't have done that. Um, but um, and also like I came from the sales world. So, that was shame on me to do that because, you know, I understood the process. Uh, so that's one advice I would give to give to searchers. It's really hard and you know, a lot of people listening to this would be like, "Yeah, I wouldn't do that when I search." But trust me, you'll be if you don't do it, you'll be really compelled to do it like at least think so. Uh, but that's one advice I would definitely give new searchers. So, even though you you did six or seven LOIs and once you got under LOI, you you weren't great at continuing to fill your pipeline. I'm surprised that you're you know, you're doing things so sequentially. You're doing so many LOIs and you still are able to complete your search in less than two year the less than two years that Broadtree gives you because, you know, one deal under LOI can suck up months. Um, so were you toward kind of the end of your two-year mark when you finally found the street sweeping businesses? I I was. So, just to clarify on that. So, the first three LOIs I wasted about two three months in each of those, three four months in each of those deals. And then I remember early part of 2020, I was like I had a oh moment where I was like, oh you know, I all these LOIs have got away. I have no pipeline and COVID is kind of coming coming in. It's my I've been with the company with Broadtree for a year and a half. What am I going to do? And then I was just like I I I I I don't care about anything else. I'm just going to make the most of these six to eight months that they have and just go after it like there's no tomorrow, right? And I just, you know, I I increased the volume the number of calls I did. I did like remember five, six calls every day for the next four, five months. You know, pushed every deal that I thought had a chance of us closing. And within three months and it was also like I got lucky and it was also the COVID times so people were kind of nervous about what was going to happen. I got three LOIs. So at at at in like June May or June of like 2020, I had three LOIs. And I was just like with Broadtree, I was like, we got to do QVE in all three because I'm not leaving here without without a deal. And they were like, we can't spend money on three QVEs. Um so, you know, getting to that point and eventually it became really clear the business that I bought would be the most sustainable business through COVID and I had the biggest interest amongst uh you know, the preliminary conversations I had with the investors. So it was easy for me to shed that. But I I remember until the close of the deal, I was still pushing um for those two other two deals in my pipeline. And I was able to pass those two deals to, you know, other searchers in my cohort, one to another cohort in Broadtree. Uh it didn't those deals didn't close because of a variety of reasons, but I was able to do that, right? Um so that's the other thing, right? Like um you know, you don't have it until you have it and you can't be complacent complacent. Uh and there's some luck involved. But there's a lot of process, there's a lot of repetition, there's a lot of work hard work uh that goes into it as many people who have gone through the process know. Well, I guess nothing like panic to to make you start really motivated and and start working harder, huh? Um okay. Hitting that It's got I mean, going back to sales, it's kind of like you you you weren't hitting your quota, you see it looming there in front of you getting ever closer and uh and then you get scared and you start doing everything you can to hit that quota. So. Yeah. Very cool. Okay, Manny. Well, then so you're you're doing you've got these three businesses under LOI within 2 months or 3 months of COVID hitting. You must be the only person on the planet um still trying to close a big deal uh that soon in the wake of COVID um because there was still so much uncertainty. Uh that probably that probably helped you. Less competition, maybe maybe got a stronger multiple, I don't know. Um so tell us tell us about the business that you that you did close on. Yeah, so uh I was clear that it was not going to be a normal quote unquote normal fundraising uh deal uh environment, right? Uh banks were kind of nervous. This was before the I think this was around the time or before I don't recall 100% but uh maybe before the stimulus went in. Um And people were nervous what the world would look like in a couple months, right? There was panic everywhere. Right. Uh so uh the the business that was best suited to kind of withstand all of that was the business that I bought which was a street sweeping business. So um um you know, it was uh an essential service. It didn't The street sweeping is not only required for you to for you for you to for your city streets to look pretty. They have literally have a uh health benefit like if you don't sweep your streets regularly, the storm water runoffs can go into the the drainage and can actually impact the water table. So cities had uh uh uh uh responsibility to sweep the streets on a regular basis. In fact, uh they had to mandatorily they had to sweep the streets to keep their NPDES permit which is a permit they need to have to keep the uh keep keep the city kind of uh uh disease free. Uh Mhm. the the money that came for street sweeping also came from special funds within municipalities and cities. So it's like people are like, "Oh, what if like municipalities cities start going bankrupt?" Right? But the money is actually there part of the enterprise fund or a special revenue fund which is not part of the general fund wherein you know, you they're always have money for that, right? It's like part of the In many cities it's part of the um you know, the refuse fund uh where uh you know, where you pay money uh for your garbage collection. It's part of that that goes into street sweeping. So, it's almost like a business center for the city and municipality. So, they would never like they would never run they would not they would never always have the money and they're mandated by law to spend it on these specific activities. And every municipality has has this I'm sorry, what was it called? The restricted fund? They all have this is a typical structure you see across all municipalities? Yeah, there's like they call it differently, but there are two three types of funds, right? There's a general fund, which is like, you know, they invest in everything they want to invest in the libraries, and what not. There is there is an enterprise fund, which is basically almost like a business unit. They make money from the residents on collection of garbage and what not. They use that part of and that money can be only used for like street sweeping, garbage, or like face collection, those kinds of efforts. So, there's that's that's the business, you know, that they're always have money for that because they're getting paid for the customers. And if they don't have the money, they'll just raise the rates for that, right? Um and then there's a special revenue fund, wherein they're earmarked for special activities that you can only it's called like a refuse fund, it's like a disposal fund. They call it differently in different cities. You can only use that for certain like if you wanted to build a new library, you could not use those funds, right? For example, right? So, um so, that was really good to know and like in fact went back and saw that in 2012, city of Stockton went bankrupt. And city of Stockton was a customer of ours. Um and but the sweeping went on went on regularly. Uh it didn't miss beat because that was not part of the fund that had gone bankrupt. Um so, it was essential service. It was very um like from a funding source, it was stable funding source, right? As stable as it gets, you know, in that in those times. Um it was a recurring revenue because you had these three, five, 10-year contracts with with city with with cities. And it was literally running trucks on time was the only thing you had to do, right? You know, you I could tell you what my revenue was going to be 4 years from today or let's say you know, 2 years from today on random October like today because I knew I was charging them exactly the same thing. These were the right three hours for this city, these were the two hours for that city. So there was a lot of things to things to like in that business. The owners were great. You know, and I had a good relationship with them. The industry in general was very fragmented, right? At least back in the day and now not so much, but back in the day it was you know, 80% of the industry was probably less than 10 pieces of equipment and we had 100 trucks, right? So we were one of the larger companies when we bought it bought the company. And uh And yeah, and and I felt like it was it was kind of like a you know, as I said earlier, it was kind of like that boring industry where people are not you know, gone in and uh done done a lot of value add and improvements, you know, tech and whatnot and which I felt I could go in and do a lot of those things to get meaningful um meaningful value add pretty quickly. And then acquisition was always always on the cards because you know, you're buying contracts really when you're buying companies more than anything else. So that was and that was one of the two companies we bought by the way. We bought two companies right at the right at the end of the gate. Both from the same owners. This was the municipality sweeping company and then then there was a construction street sweeping company which had a little bit different dynamics. It was hourly to general contractors, but mostly to general contractors that build roads and highways. So again, federal funding coming in, you know, and it was regularly mandated for you to have a sweeper on site while you did the road construction because again they didn't want the runoff to go into the gutter and drainage. So the entire production can the entire road construction could shut down if you don't have a sweeper on site, right? So and then it was a very small share of wallet for the general contractor, right? $250 to $200 an hour versus tens of thousands of dollars they're paying for, you know, everything else their crew and whatnot. They didn't care about like they just wanted good service. They don't really care about price as much. They're less price conscious like sensitive because again they're spending tens of thousands of dollars an hour. So that was also very nichey, very nice business even though they were in the sweeping space. You know, there were some similarities there with the essential nature of the service but they were different in many regards because that was hourly. Somebody called you a week in advance. You booked the trucks. It's almost like a taxi calling service. Whereas disparity sweeping was a lot more like steady Eddie, you know, you had these 5 10 year contracts. Another thing that was pretty interesting might be interesting to your viewers could be the construction sweeping company was a union company. So we had two unions there. Well, teamsters and operating engineers. Manny, let me pause you cuz I do want to spend a little bit time on union. So we'll we'll get there but let me jump in with some questions. Yeah. So it's interesting to it's interesting that I mean we hear about this this dichotomy between construction revenue versus kind of maintenance revenue. You hear about that in landscaping among many other industries or project revenue versus contract recurring revenue. And so interesting that even at street sweeping that that turns out to be a thing. So that all sounds wonderful like a very appealing business particularly the the business the the municipal side of the business more than the construction since it's recurring revenue. But let's talk about two of the quote weaknesses perhaps to this to this business. Let's Let's nitpick a little bit. These machines, uh the these the streets street sweepers I know from our pre-call cost half a million bucks. So, heavy CapEx. Um and that the answer may simply be well, yeah, you but you just factor you just factor that into the cost structure and then that's that. Uh but but answer that for us. But then also customer concentration. So, I imagine I would imagine that, you know, one or two municipalities could represent a size I mean, how many customers did you have is the question and what was your largest customer as a percentage of revenue? So, So, CapEx and customer concentration, please. Yeah, the second one I'll tackle first because it's a quick answer. So, we do not have customer concentration. In fact, we were the largest player in the municipality player in um sec- second largest in California, largest in Northern California. So, we did have really high concentration of customers. We had about 45 to 50 customers. And none of the customer were over 10% of our revenue. So, there was very less customer concentration. Which is which is really good. Um On the first piece, so I I the CapEx piece um you know Uh I I don't want to say I have a bone to pick with people who say, you know, these are the parameters, these are the parameters you want to go after when you're doing search. Uh I do want to say that uh you should look everything with some context. Sure, it's a high mint- high CapEx business. It is does that mean I automatically reject that or I dig a little bit deeper? So, if you dig a little bit deeper uh what you find out is there is what they call a maintenance CapEx. Right? Which is like you just need to buy the X number of machines to keep the same number of uh trucks, right? Uh which is the maintenance CapEx. So, the way I looked at this was not on a EBITDA basis, which was you know, depreciation is a real expense uh right in these high CapEx business. So, what I I was EBITDA minus maintenance CapEx as my free cash flow metric. And it still made sense from a multiple standpoint in terms of what um uh what we were paying for that company. That's one. Second one was uh CapEx is a bad thing, but can also be a friend. Uh the friend part is like not everyone in a really fragmented industry can afford Back in the day the trucks were $300,000, could afford that type those type of trucks. And many cities because of Calif- California being in California mandated use of new new equipment. So there were very few people who were able to bid for those uh for those municipalities, hence you could uh there was less like competition because of that those those very equipment uh that you had, right? There was also regulations coming in called CARB, uh California Air Resources Board, where you could not have trucks older than a certain period. Which drove away a lot of people who didn't want to invest more in the business, right? So then you're again, you know, you the only I remember uh you know, we um we were the dominant player uh in Northern California. Like we always bid for cities and they were like two two or three other com- competition, like local regional competition in Northern California. But uh we were able to use that to our um to a quote unquote advantage because uh not everyone had that uh you know, not just not just from what I inherited from the business, but also I went in anticipating that CapEx, so I had an equipment line of credit. I was able to explain to the banks what I was looking for in the next 6, 12, 18 months in terms of CapEx investment. Um also it was smart CapEx in that you didn't have to buy the trucks until you won the contract in many ways, right? So uh you're able to If you win a contract of five $500,000 uh for five years, you can invest in one truck, right? You can take it to the bank. Uh and then the other thing was the CapEx was very the truck market was very liquid. So almost like, you know, if you didn't want the truck, you bought a second-hand truck, let's say, you didn't want the truck, you sold it a week later, you'd probably get the same price. Right? It's not like you're stuck with this like, you know, there's cap there different types of capex, right? If you buy a capex, if you put capex in a building a manufacturing plant, yeah, you're stuck because you built that manufacturing plant, you can't undo that. But if you bought a truck and you're like, "Oh I don't have ways to use this truck." You can hypothetically sell that truck the next day. So there's all kinds of like That's why I feel like when people have those guardrails around what they should buy and not buy, they kind of tend to forget and a lot of times that's why it becomes like an opportunity for you because people like small private equity funds or, you know, the other investors were just looking at it at a surface level tend to disregard some of those businesses, but sometimes it could be like a diamond in the rough, which is what I found street sweeping capex to be in my mind. Yeah. Well, that that's a great point that it it probably makes it a less competitive business to acquire, but also a great point that you made that assuming you're not a tiny little guy, you're you're a you're a business of some size, that capex can be a moat or a competitive advantage against against other your competitors and it once you're in the business. So very very interesting. Okay. So all right, so here we are and you're doing all this out of the Bay Area. You're living in the Bay Area at this point? Yep. Yep. I lived in Fremont and our offices at were in Milpitas, Fremont, and Stockton. Three offices and a couple of satellite yards. And they So you bought two businesses from the same owners and the one business was municipal revenue, the other business was construction. Um pick us up from there. Yeah, so bought that business. obviously, you know, it was a it was not your typical business that you would expect as you kind of glorify being a CEO like before you start search. Street sweeping is not that like I didn't board that flight from India thinking one day I'll be a street sweeping company owner or or or or whatnot or even similar remotely similar. No. Um, but but you find yourself in a blue collar environment, right? Where which is very different from what you've done and especially in the US because, you know, I'd only worked in like professional services, you know, big large companies, business school before that. So, I had a very different like exposure to a very different type of you know, persona or people and uh So, I was a little bit nervous going in, but actually when I went in I just I felt I felt like you know, I had a breath of fresh air. Uh for whatever reason. One, I felt like the role that I had uh like I I could sense from day one that I was doing the right thing with my life. And I don't know how else to describe that. 80% of my time was spent on doing things that I love to do, which was to work with people, get them excited about a vision, you know, work towards analytically solving for for for for issues that people typically don't spend a lot of time on. You know, those kinds of things. Um, I obviously had a credibility. You know, I had to establish credibility really soon. Uh because again, people like me don't run street sweeping businesses in the Bay Area especially. Uh and so we I had to do establish that really really quickly and and I did find that it was hard in the beginning, but I felt like people you know, gave me space and then I was able to learn and develop a personal relationship with each of the people that I met Um, and you know, just the by virtue of me being side by side with them in the trenches, I I I over time I I I sensed that I could gain their respect as well. Uh, but there was a lot of a lot of like lower hanging fruits that I could attack right day one, right? Well, they're not day one, but you know, quarter one. let let me let me stop you. I want to get to the low hanging fruit, but I have a bunch of questions about this transition period. You said a number of fascinating things there. Uh, so a lot of the a lot of the caution that we hear about in our space is going buying a blue collar business because first of all, there can be a culture gap like you experienced where your you know, people who buy businesses often come from white collar backgrounds, sometimes very great some of the world's best business schools. So, very high kind of highfalutin highfalutin environments to blue collar environments. So, there's a culture gap there. Also, just the nature of the work uh, is something that I hear repeatedly like the you know, the MBAs underestimate or don't fully understand what it means to to parachute into a blue collar business and what your day-to-day looks like and how you can get in there on day one or day eight and be like oh dear, this is actually not for me and then and then you're stuck. So, um you for I think you just said from day one you felt like it was just right. So, contrast your feeling of rightness to some of the people who will be listening to this and wondering if they should buy a blue collar business and and and and those who already have and think that they made a mistake. What's different about Manny Manny's experience and those experiences? Yeah, part of it is my background also, right? So, I grew up in India, you know, and my dad was in the army. So, we've kept moving around a lot. So, I was I was like really comfortable with change and like like I was pretty flexible with like what I needed to sustain myself. Um, you know, and uh I was able to quickly make friends because I changed every year, like school every year, so I kind of had a lot of practice around that. But also like when I was an engineer, I actually worked uh at in India at a power equipment manufacturing company. Uh where I was on the shop floor of manufacturing um like uh day one right out of undergrad for for a couple years, right? And I didn't know then, but it definitely set uh it it it set the stage for uh honing in on my uh interpersonal skills, right? With people, especially blue-collar people. That was also union labor, by the way. And I just I just, you know, I just, you know, I don't, you know, I don't know how to say this, but I'll I'll say it. The way it's kind of coming in my head is uh I just felt like those were real people. Uh when you talk to them, you know, and uh it's, you know, I feel like as MBA folks, you tend just to get start to get entitled a little bit, you know, oh, I'm only, you know, doing this much or my salary should be that much. Uh just having that real nature, somebody you can, you know, for a 80 grand salary, you can work their heart out and uh still want to uh still love their job and love the company as if it's their own, uh going above and beyond, not uh you know, not really asking like having the service attitude of giving versus trying to take. Was just a breath of fresh air for me. I just felt like that's, you know, I felt independent. I just felt like this is this is like the real America, this is the uh you know, these are the people that, not saying that anything specific specifically wrong with what uh highly motivated ambitious people uh think through, but it was just great to just be with like um uh folks who were just like love their job and, you know, love coming in every day and saving money for the company and so I just felt I just have had a personal connection with them that you know, that I that I loved from from from day one. I also feel like the the good thing about and again, this is a learning for anyone who's who's hearing this a lot of times you're focused on EBITDA of the business, right? Hey, X million dollar EBITDA I'm going to go buy that business. But they're not focused as heavily on the team. Right? And what kind of like middle management you have as a team? And this business and I didn't really appreciate it when I bought the business because again, I was also looking at EBITDA, but they had general managers, they had supervisors, they had they had you know, foreman, they had all those middle management layer that didn't make me feel like I needed to like get a hold of everything right at day one and I had the flexibility or timing to take it at my own pace. That helped me a lot because I knew the business was getting taken care of on a day in day out basis. I literally just met and met you know, personally with every employee of the company. You know, from right from the driver to you know, general managers. And really was able to strike a personal relationship at least to some extent with all of them which helped me tremendously you know, as I understood their business, understood their lives, understood what their ambitions are, understood what their incentives could be, understood what their challenges were, all that you know, upfront time that was spent with them was I think well spent and helped me a lot throughout the the time we held the business. And how many people were at the business? How many employees were there? So across both businesses there were over 100 people, about 100 125 people. And again, as I said, there were two unions putting part of the business, and there was a whole non-union arm as well. So, two different companies completely separate from each other. I want to ask two more questions on buying a a blue-collar business. I I I don't want to beat this to death, but uh I know people wonder about it. First, being an immigrant yourself, you've already touched on a little bit about how that how that informed your experience. But, I I know because I I've gotten emails to this effect that um people uh who are not from the real America, maybe they're people of color, maybe they're immigrants, maybe they're sons and daughters of immigrants, wonder if there could if it could be difficult for them to buy a business from maybe a retiring blue-collar owner, and then to preside over a blue-collar business. It's just something that enters their mind naturally. Uh what would you say to them? I would say there's some truth to that, right? Like it's it's and it's not I'm I'm not going to jump to the R-word uh directly, but they just about Yeah. exploring commonalities between, you know, whoever you're talking to and being able to establish a relationship, right? You're you're more likely to establish a relationship with someone who you have some common grounds with. Right? And especially when when it's the question of selling, you know, selling your company, which is, you know, your proverbial baby, and give it away to somebody who you can trust, you know, with the employees you you know, had a relationship with the for all your life. Um, so I there is some of that, but I I I and I I sensed in many and there were some owners who I could just sense that right away when I was talking to them through my search process. There were other owners who were skeptical as they got into it um and the conversation. But, for the most part, I felt like these people were street-smart people, right? These people not stupid people. They've built businesses from ground up by hustle, brute force, and um and they uh and and they they know uh what to look for look for in people. They've interviewed people. They've had teams before, right? So, these are like intelligent folks in my in my opinion. So, it it didn't take them long to understand that you were also a person like you were a smart person. You had done your research. You know, you were asking good questions. You were giving them suggestions, uh you know, in the early on in the process free of cost as you you know, discussed more about the business. Sometimes you were sending them like I remember through COVID I sent them every good like legal article that I got to to owners of the business uh in terms of what they should do and what policies they could have. So, you're just adding them adding value to what they were doing. You were taking that extra You were doing the putting to putting that extra effort to go and see them. A lot of times people like, "Okay, I should just call somebody or get another Zoom call." More so now than then then, but I just felt like uh for both you and them it's a thousand times better to be in front of those people and talking to them one-on-one both from a standpoint of for you to learn the business and love the business, but also find ways where find reasons where you like, "Ah, this is not a good fit for me." Right? So, I I again there's a whole like balance between, you know, how much time you got to spend, you know, driving out there, flying out there. But, I've been a big proponent of doing that. Uh like just going out there physically and that helped me a lot as well. So, I think you know, the short answer to your question is yes, initially it is tough and hard and you know, you have an accent and people like, "What are you doing?" And in the Bay Area especially have people have a very different connotation of who like what brown people do uh in the Bay Area. But, I think it takes them takes takes an hour or two of like good research, you know, questions and you know, relationship building that you could do with them and there's all this common grounds uh with regards to what you want to do in life. A lot of times it's might not might not be about the past, but it could be about the future what you could do with their company to grow their company. How they can make them more money, right? Through like cash or clothes or old equity or whatnot. So, there's always those kinds of discussions that you can have with people and those things fall away. And to be honest, that was a lot of that I attribute to going to Kellogg, which is the business school I went to where I was able to practice those skills, right? Like in the first year it was pretty hard for me to come in. A lot of times I didn't even remember I didn't even understand uh if people were talking about music, sports, or you know, something else. Like it was I literally would be sitting in standing in those circles and I'm like, I don't know what they're talking about. Like even the topic, I don't understand. Um and then like spending enough time with people, you know, forced Kellogg as a school forces you to uh be in teams a lot more. Uh so, you I just developing deep relationships or the skill sets to develop those deep relationships was was again I had the training ground at at at Kellogg, which was which was super helpful. Um and then just the yeah, I think one of the things that a lot of um immigrants unfortunately have is inhibitions or lack of confidence, right? I did too and I I still do to some extent, right? Uh but it's it's about like, you know, jumping with both feet in um and and and uh you know, uh and and and realizing that what's like what's the worst that can happen. Uh you could look stupid, you know, and and a lot of times you do look stupid when you're stammering or you know, you're uh you wanted to say something you can't think of a word because you're still thinking in a different language, you know? Uh and a lot of times I did look stupid, but the frequency of me looking stupid I think went down over the years. And uh and that's been super helpful, right? Because a lot of times it's easier for immigrants to be like, okay, I'm going to stick with the Indian population or if I'm a you know, Asian, I'm going to stick with the Asian population, right?" And it just robs you of the chance to uh to, you know, have a global mindset or uh have like a the you know, learning opportunity, which all the the biggest in my opinion is the biggest thing why you pay $200,000 to go to a business school is to be able to do that. Um So, I think, you know, I've I've said a lot of disparate point, but hopefully hopefully that, you know, uh it question, but that's that was my experience. Yeah, that that was awesome, Manny. Thank you for that. Um and my last question on the on the blue-collar businesses, one thing I've heard you say now a couple times is that you really um really get charged up by motivating a team and getting them uh signed on to your your vision and and marching forward to a glorious future. Now, um I I I I this is delicate cuz I don't So, I'll just say it. Um I have heard from a number of people who buy blue-collar businesses that that folks in blue-collar businesses don't have the same kind of motivations. They're differently motivated. It's not that they're unmotivated, but they're differently motivated than your average Kellogg grad, you know, who who's who's kind of frankly often defined by their personal ambitions. Um and and blue-collar people just are often just oriented a a little a little bit differently. Um not necessarily better or worse, but different. And so so they'll get into a blue-collar business, this you know, this enterprising MBA or or somebody coming out of corporate who wants to now own their own business with all these ideas and all these plans and all this energy and find that it just goes over like a lead balloon to the to the staff that they've inherited um who doesn't necessarily want a lot of disruption or racing or energy in their existing lives. They just, yeah, they just find it kind of disruptive. Um, and they're not similarly motivated because they didn't buy the business, you know, they're still maybe they're get a little raise from you, but it's not like they they're there's some gold at the end of the the rainbow for them. So, all of that said, how how do you respond to all of that? It sounds like you were able to to motivate folks in an environment like that. How how do So, how do you respond to all that? Yeah, no, I think there's definite truth in that. Uh, first of all, you know, when you buy a business, you rarely have a team that you would otherwise have put together yourself if you had started that business. You rarely have that. And I you know, I'd be if if if that they had that team, they probably wouldn't sell it to you and they definitely wouldn't sell it to you at a multiple you want to buy the business at in a in a search fund world, right? So, there's those challenges for sure, right? Uh, but I think what I've realized over the years of running multiple companies, teams, and whatnot, uh, two things. One is uh, it's all about the attitude, I think, right? It's it's less about the potential uh, not it's less about the um, caliber of that person at at day one. It's all about the attitude and give you an example like a lot of times we would uh, had have some issues street sweeping on a street in a street and then when you found the you could have somebody out there for years and the you would have complaints and then you would send somebody in who's less experienced than person and zip, no complaints. It's all about I figured at least in that job and many other jobs, it's about how do you how do you even if even if you you know, you're doing an hourly job and you know, supposedly you're doing a street sweeping job, uh, which might not be looked on like uh, from the society a certain way, you take pride in your work, right? And those are skills that soft skill sets that I felt like I was always looking out for. Who's somebody who went above and beyond, right? Somebody who didn't just do like my 9:00 to 5:00, get my OT, and out, right? So, we heavily rewarded people who were just like we got you know, one example was somebody you know, had dropped their wallet and the sweeper had sucked the wallet up and you know, gone away drove away and they had called that driver through the city and the driver went with that resident to the place they dumped the debris and looked for it for the wallet and found it, right? And that's just like blowed me away. You know, it just it it just you know, it's just hard to find and I and and the other thing that I said two things in the beginning. So, the the other thing I found was even though they might not be incentivized by the same thing as you which could be like oh, I want to build this empire as a Kellogg grad or you know, revenue EBITDA, but there's they always have they have a lot of you know, aspirations like let's say their families, right? Or what their business work life should look like and you know, so if you put the right people in right place, you know, you were able to draw out you know, performance from people who were you know, who were able to not give their best in the roles they were assigned to. And the third time was like yeah, of course there were people who you were like these people this is this is a destroying my culture and this is not the right fit and you got to move on those people fast because you know, it's you know, it's it's they do more harm than good in the culture form form and they they bring more people down. It's just a dark cloud hanging over you could sense that. A lot of times that's a first thing that instinct you is is is right and then you test that, you ask people around and you know that that's the right thing to do. And you just got to act on that fast. And you know, and then you got to look for structural things too, right? And in our case we looked at people who had two jobs weren't doing a as good a job with street sweeping as people who just use this as as as as their sole job. And And it's, you know, it's bare, it's expensive. So people sometimes needed two jobs to sustain their sustain their families, which is, you know, which is uh which was obviously sad to hear uh even though we were paying really well. But then what I said was like, let's just give Let's just reduce the workforce, give people full 8 hours, and give them overtime if need be instead of hiring that one person for 4 hours, you know, every every other day. Right? So then they know that all that money like they're getting a good salary from the company, you know, they're getting a good OT, they don't have to look outside, they're getting a fixed schedule of work, they know the same day every day they sweep the same city, you know, that improved their work-life balance or quality of life significantly because they knew their schedule for the entire year. I could give them their their schedule today for the entire year, and they just had to do a good job. That was their sole purpose. They had the same truck. Uh they had They didn't uh you know, the two people didn't use that same truck. They were responsible for that truck. Those kinds of small adjustments that you do on operational front um resulted in huge uh increases in in my opinion the morale and motivation to do well. And uh you know, and that was the reason why we were able to sustain a 90% plus like um uh you know, resign or rebid rate uh even sometimes when we were not the lowest bid, we were able to win because of our quality of service um you know, and uh so yeah. So that that those were kind of, you know, my again, my disparate thoughts on your question. Hopefully that answers that. It does. Thank you. Let's now turn to since we're talking about the people so much, let's turn to the fact that the union, which you've touched on already. So, assume uh a low level of knowledge about unions here because I have a low level of knowledge about unions. Maybe other I'm sure a lot of listeners will know more than I. And just kind of tell us what we should know and understand about buying a business that has a big union presence. Yeah, I mean unions and it's a very polarizing topic, right? As as I'm sure you know. I think it's has its pluses and minuses. You know, it's like anything if it works well, it works really well. If it doesn't, it can get really ugly like those kinds of scenarios. In our case, it worked pretty well in that uh for a lot of our customers who were general contractors, they were all union too. So, they had to they had to go out to the market looking for union companies only. So, there was already at least in the construction street sweeping So, there was a lot of competition that went away because they were not union. Right? The other thing that was really great was it it was level playing field for every competition. All the competition they were paying exactly collective bargaining agreement defined union wages. So, it was to the penny you're paying the drivers the same as your competition. So, then at that point it was it all boiled down to how efficient you were, how tech-savvy you were, how customer service oriented you were. And you can win on those things versus like just hey, I'll father and a son duo, you know, I'll just pay whatever to myself or my son and then start competing with you. That was not the case, right? You had to be paying the workers the same as the rest of the competition. The other thing was they were pretty well compensated, right? So, sometimes drivers would make like, you know, 70-80 bucks an hour, right? Which was a good compensation. You know, couple drivers made like 800 grand as well in in you know, driving trucks, which is which is good money. So, there was less retention issues. So, everyone wanted that that job that paid you so well, right? So, we didn't have like that much that much churn in our labor, which saved on like various hassles of training people and less liability, more dependability, most customer service orientation. So, that was again a win win for me because that that's a huge problem in the blue-collar world is to attract the right kind of talent, right? Um The negative downsides are obviously like you know, kind of obvious. It's pretty expensive to run the business. You know, there's all these fringe benefits that you got to you got to you got to spend on, which is you know, makes your you know, labor costs high. If you don't have a good relationship with the unions, that can get pretty ugly. I heard horror stories, you know. We thankfully had good relationship with the union. We did everything by the book. You know, made sure that the unions got their check on time. We had a good relationship with the union rep. You know, got if if he had some personal issues, we were able to collaboratively solve solve for those. And you know, to be honest, we were small like we were part of the two unions, which are massive unions. So, we were like small like we were not the We were not the Tesla plant in Fremont that they were like like you know, trying to whatever unionize and you know, fight for. We were like you know, 40-50 drivers. That was in the grander scheme of things. As long as we kept our head down and did the right thing, we were you know, we were kind of left alone, so to say. So, I think for us it was a net positive and you know, that's why I think the owners in the previous like previous owners had had actually created this union company to go after that market. Um and I think it was a Yeah. I I would say though from about selling point, when you sell your business, uh like when you buy the business, there's a lot more questions with the union than uh than a regular company. So it does become a little bit harder to convince buyer to buy a company which is union. Uh so that's there's some you know, uh there's some downside to that uh because there's a lot of like pension liability, how the union's doing, can you withdraw away from withdrawal liability? There's all kinds of liabilities that uh unions come with. Um but you know, it's all about communication. If you explain it properly and if you've been on the right side of the books, um you can do it. The a recent guest, James Bloom, uh mechanical HVAC, uh worked uh with his local union here in the DC area or Baltimore area and had a it was great for his business and he had a great relationship with the union. And one of the benefits he said was that it was a great source of of labor. So so in a world where hiring plumbers is is really difficult, he could I said, you know, more or less pick up the phone and and be kind of have a great plumber recommended to him and um and come work for him thanks to his union contacts. Is that Did that play the same way for you? Yeah, it did. I mean, it kind of boils down to if you're getting paid significantly more than the non-union shop somewhere else, you attract more people and you attract better people, right? So it just I think it's a function of that. And uh having a somebody like an infrastructure of the union that has a scalable way to bring those pool of labor in and then send it to you, that is obviously a benefit. But we are are In our case, we had very little churn because I think we were we were just good with um our employees and the retention was high. Uh so, we had very little churn. So, we didn't have that problem too much. Uh and every time we did, we always were able to find somebody on our own accord without even going to the union. Um so So, yes, but we didn't have that uh issue or we didn't have that uh uh you know, uh even that positive impact directly from the unions. We just had it because we were paying a lot more. Okay, good um distinction. Manny, we're we're bumping up on time, but we still got a few topics to hit here. Um so, let's let's keep going and go quickly. The The We talked about long-term contracts, uh you know, that you could you know, you could see into your revenue years ahead, so you could tell me what your revenue would be in June 2025 sort of thing, 2026. From our pre-call, you you did also acknowledge though that one of the bad things about recurring contracts in an inflationary environment is that you know, now now what you're getting paid every month is is anchored to what you agreed to when things were a lot cheaper. And now prices are are going up on you and you have to do what? How do you manage um in an inflationary environment? How do you manage these long-term contracts? Yeah, first you panic and you have a oh moment and you start looking at the P&L and your fuel fuel's gone. Yeah, fuel is uh almost double of what you paid, you know, fuel is a big uh chunk of our expenses and you know, parts were 150% more, you know, trucks were harder to get by, labor wanted more, otherwise they were moving away from California. And this is like the peak of If If If you're been talking about inflation, the period of like 2021-22 is probably the worst uh time to, you know, have a fixed price contract with the municipalities. So, we had that moment and we were just like, oh, what what what do we do? On the union side, it was good because we were able to raise prices every year, right? So, it it didn't matter or I guess it mattered less in the on the union sides, which is good because that was half our business. So, half of our business didn't get impacted too much. On the on the municipality side, we were like, "Oh, Like, what do we do?" And I was like, "We should just go back to the municipalities and see if they would do an amendment, an ad hoc amendment because guess what? They lived in the same world as we did. And uh they also had employees. They were facing the same issues like we did. And I when I went in, I thought between the 50 contracts, yeah, let's say if I went to uh 50 of them, I would get like five people or 10 people to give me something. I was actually surprised we were able to get like an increase, some sort of increase out of turn increase from like 25 30 contracts out of the 50. Which was, you know, when we were diligent about it, we went to the list, we told we wrote a big letter about what's going on, gave them like actual price specs of different parts in 2020 2022 or 2021. Um and then fuel prices, everyone knew about the fuel fuel fuel prices. It's like seven six and a half dollars a gallon from like a year before it was three dollars a gallon. Uh so, a lot most most municipalities because they looked at us as partners. Again, they didn't have a street sweeping most part they were outsourced street sweeping service, right? So, they didn't have a street sweeper. So, if we went out of business, then they would be stranded, too, and they would have to like magically get a $400,000 street sweeper uh and then train somebody and a mechanic to work uh the streets. And a street sweeping is one of those things which um is uh you know, nobody notices until everyone notices, right? So, uh so, you get calls to the mayor, calls to the council, you know, there's all kinds of like political like city county relationships that get entangled in the street sweeping world if it's not happening well. So, I So, we banked on that a little bit and you know, a lot of it took a lot of like going to the cities, explaining to them, pitching to them. And for the most part they were like appreciative of the things we were going through and they they you know, we were not asking for the world. We were not, you know, trying to take advantage of the situation. We just wanted to get back to our quote-unquote normal margin dollars that we were making. And showing them that Excel population being transparent, being upfront with them helped. And we were able to keep by and large you know, there was a dip in margin but then we were able to get back to our usual margin within like 6 months or so. So that was but you know, it's just one of those things which is like you know, you you wouldn't know until you try and you know, there's you would you would miss, you know, what what was that Michael Jordan saying? You miss 100% of the shots you don't take and that was my philosophy kind of going in. And it worked out. In so doing you uncovered another kind of strength of your business which Yeah, yes you you realized going into street sweeping that it was a quote essential service. But like I think you uncovered just how essential it was or just how badly your your customers want to see you survive and prosper. Reminds me of my interview with Caroline Chaptelaine, very different business manufacturing a widget for for in the defense industry but this was a very strategic important widget and and her customers were desperate for that widget to keep coming off the production line and so if her business hit hard times, it was almost like her customers were going to help her survive. So if you can perceive that when you're when you're evaluating businesses that you are just like that your customers are desperate for you to continue to survive, that's a that's just a a mark of real strategic value in in the business. So um Manny, let's now we've kind of gotten into the weeds of the business you as operator. Let's step back out now to you as deal guy. You were you looked at the landscaping the landscape the landscape of street sweeping across the country, saw a very fragmented industry which we all know what that means what the opportunity there is, but you also saw that there was starting to be some PE activity as I recall and take it from there. I would start with walking you walking you through another oh moment. So we bought this business in October of 2020 and and we had modeled this business called Sweeping Corporation of America out on the East Coast that had done a mini roll up and my goal if you went went back to my sim two pages of why one day as Sweeping Corporation of America would acquire us when they start looking out on the West Coast. And until then I would be ever so efficient and pick up a bunch of companies and then put a pretty bow on them and give it to them at a at a pretty significant value appreciation. So that was the whole strategy, right? Uh the you know, it's what what's the Mike Tyson saying is like everyone has a plan until you get hit hit a punch in the face. That's what kind of happened with me. So we bought the business in October 2020. Warburg Pincus, the small dingy 90 billion dollar private equity fund, bought SCA in December. So two months after we bought our business and then in January or like early part of the year, I don't recall the exact month, but they announced buying our biggest competitor in California. So they were like we were suddenly in three months we were competing with a Warburg Pincus backed national company. And and then we I also had that oh moment then. They came to us to sell our business, also, and we could have sold at that point, also, pretty early in the process. But, I felt like we we we had a lot of strengths that uh was hard not from a uh financial scale perspective, but we had such high concentration of business in Northern California. It was hard even for a bigger comp- competition bigger competitor to come in and break that, right? Because one, you have contracts, so you have contracts. Second is it's such high concentration that the efficiency you derive from one truck was than any competition would. So, there were some inherent reasons why I felt like we could compete with them. So, we started we were kind of went on the offensive and actually went down opened up an office in their area. Well, they were big in SoCal. So, we opened up an office in SoCal. We actually won a few contracts from them. And uh you know, not their I presume not their favorite like discussion. I was wasn't a favorite person in in in you know, in the board meetings or you know, in their uh leadership meetings uh during those days. Um and then they wanted to buy a business in NorCal to start competing with us. Uh but uh we were able to convince that person that company to sell to us. And this was another, you know, big player in Sacramento. So, they we were going head to head and then we were able to convince them to come with us. Uh so, then we further strengthened our Northern California presence. We literally have the three largest companies in Northern California. And it would take them like 10 years to you know, organically like etch away at that business um without spending a ton of money, right? Uh so, we bought that business and that's when like I got a call, you know, from you know, Warburg Pincus. And then we kind of discussed something and then they kept coming back with a better uh price and it just came to a point where I went back to the board. I was like, "Look, this is literally a 90% a close to 90% off what our upside case in 5 years was." And we were like year one into the business, right? Year one. Wow. 13 months into the business. So, I was like, we can be stubborn and keep competing with them. I think, you know, we'll survive. But, I think just mathematically speaking, this I did the whole math, it'd be better to sell this company at this crazy multiple because no one else would give you that multiple. Uh and then give that money back to investors, and you would be better off as an investor to put it in S&P 500 and still make the same money. You know, versus us holding for 5 years. Um So, it was it was, you know, we sat at that board meeting and even though I it was never my plan to sell this business these businesses so fast. Um we we sold that business, you know, in February of 2022 to Warburg Pincus-backed SCS Weeping Corporation of America. So, that's an 18-month run or actually less. It's October 2020. Yeah, 16 months. Yeah. 16 months. And just just to recap, you acquired two businesses at once but from the same owners. So, two different businesses but kind of a single business really, sort of. And then you bought another large player in Sacramento during this arms race with the Warburg Pincus acquired business. Um and so then you have three businesses, and then they then then then then they came to you and made an offer and you negotiated back and forth, got that offer up, and sold. Amazing. And just a one detail, so did I hear you correctly, Manny, that that they had come to you earlier? They'd come to you earlier interested in buying you when they when they bought one of your competitors, and you didn't want to sell then. So, cuz you would have been what? Five five seven months in the business at that point? Well, well, actually 4 months into the business, yeah. Uh and you Yeah. I mean, and it was one, we were going to pay uh short-term gain taxes. So, I was like, you should at least run the business for a year. But more importantly, I just, you know, I just felt like I just felt like we were, you know, one, you know, that like we had it in us to compete with them at least for the short term. And there were some things we were doing, like, you know, outside of the inorganic play, right? We were bidding at a lot of stuff outside of geography. We were talking to a couple competitors. We used We brought on We didn't talk about much today, but we brought on a lot of tech to the company, which was improving our margins significantly. We bought a fleet management system. We bought a AR collect software where where our, you know, AR went from like, I don't know, like 3 4 million to like 1 million. You know, so there was a lot of value being added like pretty early on in the process. I was like, you know, I got I I owe it to the company, to myself, to like see some of these initiatives through, which is going to greatly improve the value. If nothing, it's going to like even if I stick on for a year, it's going to greatly improve the value of the business because margins would be much better. And we were we'd be much more kind of integratable for this company that would one day buy us. I knew Um, so I just, yeah, I figured that was not the right time to sell. Plus like, I thought they were like not giving us the value that we could have gotten, which ended up being the right thing because of our dominant space in in Northern California. Some of these these these improvements to the business that you make, these are the low-hanging fruit that you had started to to talk about a little while ago. Okay. Yeah. And just in in quickly cuz cuz we got to watch the clock here, Manny. Just run through three or four of those again. So so So we got we got tech involved, right? So, we got like fleet management software, wherein you put in this fleet management software the widget uh, this widget in every truck. So, you would know at all times where all these trucks are. So, give you example, minus some old lady, you You obviously, uh you know, there were a lot of old ladies calling municipalities saying that the street sweeper uh never showed up on time and or didn't show up at all or was growing at going at a very fast pace. Earlier, they used to just call us and say, "Hey, you got to go back because you didn't sweep." And we were like, "No, the driver is driver promises that he went there. You know, what are you talking about?" And then there would be like you said, I said kind of conversation. Then we had a GPS. So, then they would be like, "Oh, the driver didn't show up." You just send them a screenshot of the GPS. "Oh, uh driver was at your in your yard at 10:48 a.m. He was driving at 5 miles an hour and his you could already track whether his brooms were running or not, whether the water was going or not." You just then send them that snapshot and the municipality or city would send that snapshot over to the customer, right? So, it eliminated a lot of customer service issues. Uh second thing we were not doing well was maintenance, like we were doing maintenance more ad hoc. Uh which was um you know, they were not preventive maintenance schedules. They were just, "Hey, something broke, we would do it." Uh so, what we do use the software uh for was creating that preventive maintenance schedule wherein I think over the course of 6 months or so, we just did oil change checks at like certain number of miles. We changed, you know, like we just had a whole schedule uh on that software which would ping the driver and the mechanic that you got to do this at certain period of time versus in their head or um you know, or writing it on a piece of paper or some place. You know, uh customer service improved because we had like you could just have uh them sign on a digital paper on like, "Hey, this truck was here from this time to this time." On the construction sweeping side. Um uh billing issues reduced because everything was digital, right? And this truck went from this place this hour to this hour. Payroll improved uh because you could tell how much um uh you know, how many hours the driver spent on a certain site. Um so, there was a lot of like improvements like that on the fleet management software side. We got that what I said software called ER Collect where they would automatically ping customers to pay invoices. And construction industry is notorious for paying late. So, you would just set those automatic reminders going and then you'd start collecting a lot faster and then suddenly our working capital was which was huge went down significantly. Um another thing we did was we changed our CapEx strategy. So, owners being owners were worried more about how much cash goes in their pocket. They would look at running the trucks longer and just like duct taping the trucks and making sure as ran as long as possible. We changed that to um we would buy newer trucks faster and just get rid of the older trucks. Um so, what ended up happening was the maintenance and parts expense would go down. Right? And but yet the depreciation uh but the when you bought the trucks, your depreciation would go up. But if whoever bought your company were looking at EBITDA bases which a lot of buyers were still doing, your EBITDA was would be much higher because maintenance and parts expense have gone down. Depreciation has gone up but that's an add back, right? So, EBITDA would go up, right? Uh and then not to say the you know, the quality of like the driver would love that because he didn't have to like call the mechanic every time his truck broke down. The customer would love it because you know, you're just sweeping you're doing a good job better job at sweeping. Um so, that piece also changed the morale of the mechanics and and whatnot and uh so, that also changed that was a big change in how we approached business was like we'd find spending more money uh because it was better in the long term. And we had the equipment line of credit and all that uh kind of squared away at the beginning. Uh so, that helped out that helped out a lot. Uh We did a lot of leadership changes, you know, just you know, thinking thinking of what I need right now, what I need in the future, who's the right fit for what person. We kind of alluded to some of that um early on in our discussion. Spent a lot of time with my team. Um, you know, opened up an office in SoCal, which was a big competition that the owners always stayed away from because it was a CNG. In In SoCal, you use a CNG truck, uh, versus a diesel truck, and they were not like really comfortable with that. They're more expensive, but we didn't We felt like, you know, that wasn't a big differentiation and we had to be in SoCal. Um, did that. Um, obviously acquired a big business. That helped a lot. So, those were some of the things that we did. Obviously didn't have a lot of time to do all those things in the 16 months or so that we had the business for, but I thought they were packed with like, uh, packed with like stuff that we just kept doing every day, every week, every month. It felt like I was running the business for 5 years. And Manny, so it's going to circling back to the to the PE acquisition, so ultimately you kind of called your shot in the the the slide or two in your deck saying this is who's going to acquire us. And ultimately it was them who And now, that business had had been purchased in the in the intervening year by another larger giant private equity fund, but still it was the same business that you thought would acquire you acquired you. Yeah, yeah, I would have hoped they would have given me at least couple years to buy more businesses in California, but you can't you can't always pick your battles and, you know, I'm still thankful for what we got. Uh, but yeah, that was the I knew they were going to come because that West was the only place they could go to because they were doing all kinds of activity on the East Coast. And I didn't ask you at the be at the outset, Manny, um, for any of the deal, uh, terms. I I know you can't say a lot, but maybe can you give a picture of some kind of high-level picture of what your initial acquisition was for and then what your exit was for? Uh, yeah, uh, I mean, so I I have to be vague because of confidentiality reasons. You know, we bought the business at sub five times EBITDA. And you know, we are you know, we were I I think we got I I if you looked at it from an IRR perspective, um you know, in 16 months, uh we were like top 5% higher than all search funds uh from an IRR perspective, partly because it was less time. But partly because it was yeah, good result. And then I'd say top 80 70% in like MOIC ratio in terms of like search fund as far as like search funds are concerned. Uh so it was a pretty good, you know, pretty good outcome. I don't know if I can say more. I had characterized it as life-changing for you. Is that accurate? Yes. Yes. Uh in many ways, right? Not just financially, but I felt like it it does give you a lot more when it happens so quickly. So, you know, I still feel like even though I have all these gray hair, I still feel young to do what I'm what you know, something else with the money I have and with the learnings I've had, uh the connections I have and the background I have. But obviously, uh you know, um life-changing in so many different ways. Yeah. And now the, you know, boarding the boarding the plane to America and not envisioning yourself not envisioning that you get into the street sweeping business, obviously. Uh younger Manny would be happy with this outcome. I think so. Uh I think so. But although younger Manny was pretty ambitious, so I don't know. Uh but yeah, no. But but no, I think he would be. Great. Okay, Manny, I want to leave just the last couple minutes cuz you are now you've subsequent to your sale uh and getting out of the street sweeping business, you have uh acquired another business and you're doing something of a roll up. So, give us just a couple minutes on that. We We got Don't have time for a story. Uh And maybe we'll have you back on to hear it in in fuller detail in the months ahead. But, just tell tell people what you're working on now. Yeah, I kind of goes back to our discussion on you know, what you should look beyond the metrics like what's a good search fund acquisition and I've continued to believe that. So, I ended up buying a buying a platform business which inherently is not the favorite industry for the search fund world. So, we bought a business in the solar industry. So, it's part of my private equity that we created called Mars Energy Partners. Mars Equity Partners and within that I've created a holding company called Mars Energy wherein we are doing a roll up of renewable companies in the space. Renewable companies in in in in primarily starting with solar. We bought this company called NewGen Energy and that's a company that does end-to-end solar services for the agricultural community. So, what's what's happening in the California market, electricity prices have gone up significantly due to the drought. Farmers need more and more bigger and bigger pumps, so need more electricity. And you know, solar is gotten cheaper and cheaper with this especially with the whole you know, inflation reduction act. Um So, it become suddenly solar has become really really attractive. It was always attractive, but it's become like I see the next 10 years is just going to be even more lucrative in solar than it has been in the last years. So, about that first company um and that's gone great and you know, got a great team. I'm not the CEO of that business. I'm the executive chairman. So, I spend I spend all of my time with that business 80-90% of my time with that business. I'm working more on the business versus in the business. We have a great CEO. We ended up adding having our first add-on acquisition also you know, a a weeks ago in the solar space in California, they've also mandated every new construction, so residential or commercial, needs to have solar going forward. Um, so we bought a company that does serve that community, the general contractor for new construction community. Um, and then we have another LOI that we hope to, knock on wood, close in the next month or so. And and then we have a lot of conversations going. Uh, so the goal is to be in mostly in the commercial space, that's the goal, and uh, serve the 50 kW to 20 MW uh, market. And uh, hopefully one day we're the largest small commercial uh, player in the country. And the reason that this is not doesn't check the boxes for a traditional search um, acquisition target is because it's high kind of project construction revenue. Uh, and because solar solar is maybe not considered growthy enough or what? Even though it sounds like it is. No, growth solar is definitely considered growth, so and that's why I feel like you got to look at it with all like different parameters. So it has high growth, that's not a problem. It's it's it's high regulatory risk, right? It's stroke of the pen risk, right? What if subsidies go down, right, significantly? Mhm. Or and the and the project nature of this of this business. Even though my entire strategy is to convert some of this project-based nature into recurring revenue, and we can talk more about that in the next podcast if if you invite me again. Uh, but the goal is to convert this project-based nature uh, revenue into recurring revenue uh, through various means by owning these plants versus selling these plants. We can talk more about that also. Uh, that's the that's why people don't want to buy that business. And it takes some effort to convert the revenue uh, quality of that business, but I'm willing to make that effort because I feel like that's easier to do than to find wait two three years to find the next street sweeping business and then only grow by acquisitions. Whereas this company is growing at 40 50% CAGR organically, let alone adding acquisitions. Right? So Wow. And Manny, would you characterize what you're doing here your role is as independent sponsor or are you kind of a searcher again or you just don't really fit any of the buckets? You're you've just got this kind of plan and you raise money and you're going out and you're doing it. Yeah, so when I started to think about what I wanted to do after sweeping, I knew I didn't want to be a pure play investor. So it was something either the operator role again or somewhere in between. I feel like I'm somewhere in between between an operator like a CEO and an investor. So for if if I wanted to put it in a box, I'd call this is a holding company in the solar space right now. So we're we're growing both organically and in organically in the solar space. Uh, you know, and this holding company would, you know, uh buy multiple companies in different states and yet have certain things in common like a, you know, almost like a blueprint or a playbook in common. Whereas all the other things could be brand could be different, you know, all those things could be like employees leadership could be different but the blueprint remains the same. And that's what I'd call that for lack of a better word and, you know, I'll leave you with one last line on this is I I realized that the biggest value add that I had at Sweeping was when I was working more on the business versus in the business, right? Not to say in the business, you know, I'm not looking at operations, not that that value, but the biggest value add was making those strategic moves. And after the deal got done, I thought about that hard and I felt like I just had to maximize the number of times that I would do those I'm able to do those strategic moves and minimize the time where I'm spending time on like stuff that's not going to add a ton of value to the overall organization. And the way I figured I would be able to do that would be my at be as an executive chairman role, which is what I am these companies. So, I spend all my time with the company. I spend I'm in all the leadership meetings every week. Uh but I'm not I'm not at the at the ground level, you know, blocking and tackling because we have an amazing CEO. But I am talking to other companies we want to buy. I'm talking to a vendor in Vietnam to get the panels cheaper. I'm talking to all the key hires we're having, so interviewing them. Um and I'm talking about the tech solution that can change uh the the whole landscape of solar in my opinion. Uh so, we're we're having I'm having those conversations. And you know, um and I feel like if I spend enough time doing that and somebody is able to take care of the business, which the CEO does, I think our growth could be much faster. Um so, that's that's kind of again, broad strokes to your question. Well, I the way I find myself reacting to that is that it that it echoes a model that I'm hearing more and more just cuz I'm maybe I'm asking about it more where where certain So, not at necessarily the level you're playing at now, but even first-time searchers uh buy a business and immediately put in an operator. Um and of course, you know, that that is often people are often dissuaded from doing that because you need to understand the business because don't think that a small business is passive and all these quite valid reasons. But but the model isn't put in an operator and don't think about the business anymore and it's just going to you know, mail you checks. The idea is put in an operator so as you put it, so the blocking and tackling on a day-to-day basis is handled and you can go immediately be working on the business on in the business and working in partnership with your operator, with your CEO, your president, your general manager. First of all, it probably prevents you from doing the work you're maybe not that good at with the operations of street sweeping business um or not as good as somebody from the industry is and and it frees you to immediately just always be thinking strategically and that all sure sounds fun you know just just buying a business and moving the chess pieces around I don't know how realistic it is but there are increasingly there are more and more stories that I hear on this very podcast from my guest of that model seeming to work and and here you are um doing something like it again you're probably you probably got a little bit more money to play with and then a lot of the folks listening but but still I it's worth noting. I would say so yes but I would say that with one caveat a lot of people when they're doing that they're buying different businesses in different industries which is very difficult I feel like you need to be really deep into a business to be making right choices or decisions right so I have immersed myself into solar. Right so I don't need to go to the CEO to ask him whether this is a good business fit for us or not at least I'm at that level I'm asking the right questions Yeah. and I've been to the like I've went on like ride alongs with like solar installation teams so I'm deep into that one domain right so it's easier for me to play that role strategic role versus like hey I've been running an e-commerce business on the side I'm running a you know logistics business on this side I'm trying to move make these strategic moves but strategy doesn't work unless you have you know the business or an understanding of the you know of of the day-to-day you need that understanding to be making efficient strategy moves otherwise you make a lot more mistakes so I feel like that's a huge difference in what I'm seeing where people like oh I'm buying I bought this other business and I'm just a got a CEO in there but I'm like well you better find that hopefully you found an amazing person CEO who can keep doing what you want him to do or her to do and mailing you the check but often times I agree is not the case because there's just so many things that can go wrong with the business especially at the size we we play at. Mhm. Manny, I'd be remiss if I didn't mention the case study. So so going back to your street sweeping success, there Northwestern or Kellogg did a whole case study around your story there. So that will be linked in the notes. It's a great read for not only the drama, but also for if you if you're hungry for even more of a a deep dive into the street sweeping industry. Um Manny, if people want to get in touch with you, how do you prefer they do that? Um uh LinkedIn is probably the best to reach out. Uh but also um you know, uh my website Mars Equity Partners. Uh you can get get a hold of me from there on out. Uh but also uh you know, uh my email is not hard to find. I'm pretty sure I'm usually uh in a lot of these conferences at some conferences. Um so yeah, I look forward to you know, uh interacting with as many people as I can. I got a lot of help when I was coming up. And I want to give back uh give back some of that to uh folks who are coming up. And that selfishly get get a chance to be connected to ambitious, motivated, you know, uh highly talented people who would love I would love to have a relationship for the rest of my life. And also get opportunities to invest alongside which I'm also doing on the side on search. Um so yeah, those will be the best way to reach me and uh you know, always looking for for like a uh you know, really uh you know, good conversation and meeting uh talented folks. Great. Well, uh I think the audience here um are meet the smart, ambitious, uh interesting um characteristics that you're looking for. So uh audience, take take Manny up on his invitation to connect. Manny, thanks so much for sharing your story. What what a fun and interesting story. And uh yeah, let let's let's connect again about how how your solar adventures are going and maybe uh and maybe get you back in the seat here next year. Thank you so much, Will. This was a blast. Thanks for having me. I hope you enjoyed that interview. 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