Eric Bower welcome to acquiring minds thank you thank you for having me Eric you worked at Amazon in Seattle for years but at the beginning of this year you left Seattle and moved to Auburn Alabama to take over a hat brand Turner hat so this is going to be fun start us off with some background on you please Eric yes so I uh was born and raised um just outside Seattle uh in in kind of my high school time I I knew I wanted to do something entrepreneurial but started thinking about things and really couldn't figure out exactly what that would be um I went to the University of Washington after uh High School um like a lot of my classmates um and still at the time was kind of rumbling around trying to figure out like where my spot in the entrepreneurial ecosystem was and um did startup competitions did some Pitch things and all that and really could never find something that I was so excited about that I would I would kind of risk it all and and take a career leap there um so I did some other things I uh I interviewed um and then uh got a internship at a friend's um business his his dad ran a a a business that did software for studies um so I got a little bit of a sense of like a small business feel and then was really just gonna go and try my luck on something more entrepreneural I didn't really know what um and uh but want some backup options so I applied for a job at Amazon um which at the time was was pretty small and it didn't have a very big recruiting outfit um relative to where it is today I happened to know someone who um got a job there in their um their it was a retail leadership development program uh and she recommended it to me and so um I reached out I applied um I got the job and then when I told my parents that I wanted to go do something entrepreneurial in another country they looked at me like I had three heads and con me that I should go and take the Amazon job um wait Eric sorry you're you were talking to them about doing something entrepreneurial outside of the US did you say that did I hear that was that was kind of like the the like romanticized version I would go to uh a a Spanish speaking country I took Spanish in in high school and some in college um and try to like start something from scratch and and really kind of prove myself um in that kind of way um and figure out what it was like but do like build a business there or live in a more inexpensive country so that you could digital Nomad build something sassy for the US audience build something there was was the plan was the and a lot of it was like the lower cost of uh of starting up things lower cost of Labor all that and I I was thinking through it and how I would do that and the the whole digital landscape wasn't really on my radar that wasn't like my skill set that I was going to go after so I want to do something uh kind of more bluecollar Grassroots that I I could really like get my hands around um it was the vision and and and thinking back on it it wasn't the greatest and most wellth thought out Vision um and so my parents had some some good advice and tell me to go to Amazon um I I still well ER that that would have been boy that would have been starting a business on hard mode oh your first one in another country in another language even though you spoke some Spanish uh uh so I I you know I tend to celebrate entrepreneurial risks but maybe your parents were uh were you were right to take parents advice in that one what year was this by the way so give us a sense of how big or not Amazon was it was 2013 so it was it was right before they kind of went into their like hypergrowth mode so when I joined um I think they had I'm gonna guess around 10,000 employees um and then by the time I left 10 years later um I was in the they have like an they call an old fart tool that um measures your your tenure at Amazon and I was in the 90 99.7 percentile of tenure there just and that's just because of the exponential curve they they grew on post me joining that is crazy so at about 10,000 employees those folks were still in the you know point3 first employees of the business yeah yeah it's CRA it is it's insane um and that SED you can see what the color badges around the like the Amazon has our colored badges um and you'll see um by the time I left I had a red one which is a 10y year one and you'll see at first when I started there were very few yellows and and only a couple Reds and then more and more yellows which is a five-year badge would kind of just proliferate all around and then it was only a couple people still that had the the Reds so um it was it was it was kind of a visual reminder of of how long you had been there which was um by the time I was ready to leave was kind of like a a nice kind of like badge of honor but also like I have really been here for quite a while so no totally I I could you could totally see that going both ways like you know whoever designed that system was probably like oh it's status you know the people with the red of the status but it also is constantly reminding the person with the red badge like boy I've been here a long time should I go somewhere else exactly which it sounds like that which is exactly the psychology that eventually took you over it sounds but I'm jumping ahead oh no no um yeah so I I I had this idea I was like okay I'll be there for two years and then do the kind of like get my experience put in my resume and then go and do something more startup e um and then I was I ended up being there for 10 years uh which was which was fine um which is actually it was great in hindsight uh I got to scratch that itch um much uh more directly than I thought I would there uh when I started I started in retail I was selling computer parts um online um directly with uh the vendor so I worked on behalf of vendors like s dust or sandis and Microsoft um they would sell their products to Amazon we would buy them and then we' resell them so we're a first party platform um I managed all kind of the the financial of that I managed the inventory of it um I managed the marketing to the extent that we did a lot of marketing on Amazon um and and ran that p&l end to end at a with with fairly loose guard rails I mean they had they had some things in place but um we had a lot of say over uh how much inventory brought in we had a lot of say over like our deal pricing and all that um Amazon has a lot of its own policies on on some of the other pieces but uh we were responsible for the the end uh net profit margin at the end of the day so we really had accountability for the business um which was was really interesting and I learned a ton about like kind of the big three um areas of business in terms of supply chain marketing and in the p&l um and wait sorry the big three areas of business I've never heard this oh I just I that's just the way that we segmented it in like the retail department so I um I did that uh the vendor role for a couple years I moved into supply chain um in baby products and that was one of the I'd say the best parts about Amazon is you could go into an area where you have next to no experience and then pick it up and learn it because of the way that they um structure their metrics and structure the different um uh guard rails in place and so uh I picked up supply chain with baby products I had no familiarity with baby products but all of a sudden I was responsible for inbounding out bounding products like from a a virtual perspective as small as a pacifier and as big as a crib and then figuring out what the best solution for each of those um products was so uh I I learned a lot about how Amazon operates their supply chain I learned a lot about how C or uh vendors get their products into the United States and then into our supply chains um way too much about labeling and making sure products are identifiable in the warehouse uh did a ton of that work which um at the time seemed seemed pretty uh wrote and boring but um came to be more and more important uh the more I did um I did that uh for a bit and then I moved on to uh my first kind of like startup e project at Amazon so I went over to Amazon go uh which is a set of I'm not sure how many they have now but at the time it was one um All Digital uh convenience store concept so you'd walk in you'd scan your badge um or you scaned your phone and then you uh have the the store track your purchases you'd walk out um with what they call just walk out technology and you you get charged later for it and um we thought it was the greatest things in sliced bread the store at the base of the Amazon campus was doing super well and our plan was to roll out to uh many many more of these sites and then we ran into um you know classic scale issues where customers didn't understand the technology we did it was a lot more education than we expected when we went from a demographic that was um really techsavvy at the base of an Amazon building too um other parts where where folks weren't as familiar and and didn't necessarily see the value so they they played around with that concept a ton um I was responsible for the merchandising program there so where we put things um how to determine visibility on the shelf and that had everything to do with um helping customers make a decision quickly because the whole concept was being able to um get in get out fast then the pandemic hit um so this was 2020 uh things in the grocery business got really intense uh as they did for everybody um but we were we were scrambling a ton um we Resh shifted folks around within Amazon so I was on a CO Response Team um I was picked to go uh work on that team for a couple months where we figured out how to roll out uh Mass Co testing to our FC's um which was a crazy experience it was the same kind of idea where you're figuring out how to develop a process and like nail the important parts of it and then leave everything else up to to figure out later um I did that for a couple months while we we kind of put that process in motion um and then I went back to the grocery space uh to work with um the the online grocery Channel which uh delivers groceries directly to customers so ton of kind of like rolling around in in that Co era um at that point I I I started to to get burnt out as a lot of people did um I took a sabatical uh in Eric let me let me pause you there I have to say um pretty exciting experience being on the front lines of that Amazon concept the fully automated store I mean that was what was that called again just go uh just just walk out was the technology and then there were three format around it well it was I mean that was a very high-profile experiment uh at the time I mean I remember people living in San Francisco and also you know my year to the ground here in the DC area um people getting pretty excited to have a one of those stores come to come to town um so uh but yeah but then maybe it not being a s a big success like even yeah I remember the confusion around how to use it or whatever but anyway being on on the core it sounds like you were on the core team kind of rolling this out sounds pretty prettyy cool it was it was a in a really good experience in terms of that was my first product experience so uh in it was more software related um in terms of we were building new tools for the merchandisers to to do that aspect more quickly uh eventually we were building new fixtures to support produce because we weren't able to do that before and so coming up with those um those specs and then identifying okay what's the P Zer like most important priorities of what's the P1 P2 and learning that skill set was all really done kind of through osmosis like there was no like training where someone sat you down and they're like here's how you be a product manager um it was more the folks building the actual Tech tools in the the fixtures would ask you what you need and then they'd say hey here's a better way to think about like sending over these requirements and then you'd kind of learn as you went and that actually played pretty closely to to the search process um when I when got to it great well speaking of which so you take a sabatical yep I took a sabatical um I did the very classic Went to went around uh visited a bunch of friends in on the East Coast that I hadn't seen in a while um went to uh France um and spent time in Paris and did the reflection um at a cafe with the pen in the notebook and did that whole kind of thing and I actually as as a like kind of stereotypical as it sounds like found that that worked really well when I kind of went back and thought about like okay why did I do this in the like I was so over the stress of of delivering these things so quickly and constantly changing um Direction I had a really big project that was um at I my kind of claim to fame on it was that it got a um a footnote in a document that we sent to Jeff Bezos that I got to write the little paragraph four so I that was like the level profile that this this project had um and uh uh but then we we shut it off super quickly just we we made a decision one day that it wasn't the right way to go and we shut it off um which was was very normal and happened all the time but um it was it got to a point where I was starting to take those things kind of personally where I put all this time and effort in and then you just you go and turn this off um and so I went back and started thinking through like why why I done this in the first place and what kind of made me happy and what didn't and um it was like a I was really fortunate to be able to do that uh at Amazon and for them to give me the time to do that um and so uh I realized that I I want to go back and and do my own thing um and this had gone back i' had mentioned some of the things I was engaged with uh while I was at um university I had read in 2018 I forgot I had heard about it but um I believe it was 2018 when they released the hbr guide to buying a business um that I I read it kind of put it on shelf thought it was an interesting idea um but then read it again in 2022 um and and it really the kind of main reason for getting into entrepreneurship through acquisition really resonated of I want to do my own thing but I don't have an idea that I'm so passionate that I'm going to throw everything away to go and and start from scratch um and so I I started the search and started putting things together decided it was what I was going to do um and then uh kind of went about building up that search process and this is what had you identified that you liked uh you've told us kind of what you didn't like about your then position and experience at Amazon but what what was the stuff that was that was to those the sticks what were the carrots what was drawing you what were you looking for it yeah I part of it was the um the ability to build something that I felt was really mine and I kind of alluded to that a little bit with the like crazy idea I had to go um somewhere in South America but like I wanted something that I could really claim as like I came up with this idea I researched the customer need um I built something that addressed that need and then I delivered it to Market it to Market marketed it and sold it to customers and I had pieces of that uh at Amazon in all kind of different ways but I never put the whole thread together and so it was something that I had wanted to do for a while um the other kind of like driving factor I think from a young age just my mom had always worked for really small businesses and my uh my dad had worked for uh a big consulting firm and still does for his like most of his life and seeing and like talking to my my mom in particular about the like day-to-day interactions and the decisions that they make and some of which were were very silly and the kind of uh focus on the wrong things that um she and my dad would talk about and then eventually she and I would talk about it gave me some confidence that it was something that I could do and was in some ways perhaps lower risk than way I was doing at Amazon this was also around the time when they started um letting people go and this and I was never really that concerned about um being being laid off but the it wasn't really in my kind of department but the thought that this was a stable independable like always their job that I had a clear career ladder on um started to to kind of vanish and I wondered like is the risk of going and doing something up for myself um really that much higher than uh the risk of staying in a in a kind of of a corporate role and then how does the reward ratio uh fill out there too so I had kind of designs on you know acquire one company then acquire another um we'll see if that that kind of like plays on um but but that was was one of the ideas uh do kind of a Rollin um acquisition uh I I like that I could go choose how I wanted this thing to get I like that I could choose to hire a general manager later and and find something else to do um and so just the number of options and the ability to explore was the The key thing that always led me to entrepreneurship um and uh but but I finally found something that I could not like with all the opportunity cost I built up while I was Amazon not just kind of just that away and and start from scratch well your point your your risk analysis there I is a a great um a great one and one that people Overlook but that you'll see kind of floating around this this this idea that we think of the W2 job as the safest option when in fact if you think of yourself as a a business uh a oneperson business when you have a job you have 100% customer concentration you've got all of your eggs in the single basket of your employer um and so if we again thinking about ourselves as as as one person businesses that is a very weak not very strong business not a business you'd buy with 100% customer um customer concentration so um it's it's a I think a great framework to realize to kind of wake up to the fact that uh a job is not always such a safe safe option the other thing I I I I am feeling here Eric is just like you know some of the what you were learning or what you did learn at Amazon just seemed to be incredibly valuable skills for the future I mean running a hundred million e-commerce concern um and then and then getting all this product development experience and go to market stuff with new Concepts um it seems like those are just very very valuable um a very very valuable skill set now maybe running a hundred million do e-commerce business unit isn't that valuable because there are very few places you can actually do that and one of them was your existing employer so it's maybe it's not like a place that you can there's not that many places you can really take that skill um but I guess what I'm just observing is when when I'm talking to somebody who's kind of mid-career how old are you by the way or how old were you in this time period 33 um 33 yep so in Silicon Valley terms 33 your midcareer yeah still very still very young but with 10 years of experience at Amazon it's a lot uh for a 33-year-old um you you were you were walking away from this incredibly valuable skill set uh and so that I have to I mean there there's there's opportunity cost in that because presumably whatever you whatever business you went on to buy was not going to leverage your skill set as much as staying in Amazon or some or some you know some business like Amazon yeah so I you know you I feel like there was a lot of risk in um leaving some of these skills that you developed do you do you agree yeah I I agree I think I was hardened by uh some of the like more senior level folks that started to leave around the 2019 through 2023 like we'll call an era at Amazon um when things I felt and the folks that I had spent a lot of time there with felt like perceptibly changed in terms of the way that the company was run and this uh he was a I think it was a VP by the time he left he went to go to GameStop um and his his kind of takeaway was it of it was that was when Gamestop was was going nuts with all the pandemic stuff going on um and his takeaway from it was you know one I can always go back to Amazon if I need to and that's that's I think actually even harder at his his kind of level of seniority like there a pretty rarified air for me I I did kind of develop this Niche skill set that really can be like the the square peg that it fits into is Amazon and so if they need someone to come back and fill a square peg like I can do that um so I didn't feel that worried um about like my prospects just drying up forever uh but I I liked his kind of calculus of there there's a way back and and you've got kind of the the stamp on your resume that would get you in the door at another couple of places and so I felt I felt okay about that that helped kind of lessen the the anxiety totally totally yep makes sense great okay Eric well tell us uh about your search your criteria the type of search you attempted give us those bullet points yeah so I started out with kind of the traditional model so I was looking for something in the realm of uh uh 750,000 I think I started higher I think I wanted $1 million in eida um up to3 million doll in eida um I wanted a 4 to 6X um multiplier on the the eida value and then I wanted to um have something with super high reoccurring revenue and I wanted something that was on the coast and those were kind of my my set criteria I wanted like low customer concentration some of those other qualitative factors as well um I started uh looking and I can get into the the process started looking but I like immediately found out that those were pretty unrealistic um criteria um that I that I was looking for um specifically at the time interest rates were going up and um valuations of companies were still pretty high and so any company that I came across with um really high reoccurring Revenue so something like a subscription model anything in software was still going for I'd say easily 8 to 10 um at Tia and I was going to debt Finance this and that totally blew up any kind of model I had to be able to debt Finance something with with that um high of a multiple and so I started looking um in in some of the more traditional kind of roles or companies I looked at um plumbing and HVAC and all that um my experience obviously wasn't in um any of those kind of Trades and so there was a keyman risk for for those Industries where typically you need somebody to hold um I believe it's a bond but you need to have some experience um there uh in order to hold that and if you don't you're gonna put in the name of one of your employees and then hope that employee doesn't leave uh because then you can't do any business without them so um I kind of scratched off that industry and and all this kind of comes back to things that I found out overtime searching I didn't find a lot of this stuff in my preliminary research on how to do a search fund and what to look for um and so I I did kind of the basic due diligence of I I read a bunch of books I was on search funer all the time um trying to find information about how people did this I would say I um I use the hbr guide for buying a small business like almost like like a Bible like I would read the chapter put it in my notes build the model that they had in there and and just structured everything around that and well I don't know if it was I think it's different for everybody and I made changes along the way just getting started and this is kind of the whole like thing that I've I've told folks that have asked me about the search just getting started was the important part and then figuring out kind of the the other pieces as you go um comes with with uh with the experience of doing it um so I which is to say Eric that the the book was a good starting point but but but but having it be having it using it to prescribe every little thing you do is maybe over leaning absolutely yeah Y and it won't tell you the nuances of some of these things like it'll tell you you need 90% reoccurring Revenue but it won't tell you how to trade off 80% reoccurring Revenue versus the the multiplier and that's all done at the market like you're you're not going to find any prescription around that and you kind of have to get familiar with what people are willing to do before and what the market situations are before um you can come to your own conclusion on that and so I that was I started to get to the point where I had read all these things and then I didn't know I didn't know how to start and then the the solution was just kind of starting so I um I put together my LLC I had that running for a little while um to to uh and and I would say this too for folks that have asked me that having the LLC and having the website just lended some credibility to the sech um that I found really useful um I did all of my searching through Brokers I was still working full-time at Amazon and doing this on nights and weekends and so um I didn't have time to do the like go through a hundred lists of business owners call each one of them or send them a personalized mail and then um hear back and do some negotiating so I wanted business owners who were willing to sell um were familiar with the process uh I want to minimize the risk of having it fall apart Midway through and so um the broker search was the right process for me um and I started ER Eric your your million to $3 million eitaa 4 to 6X yep so quick math let's let's say you found a $2 million EIT business at 5x that's $10 million 5 million more than the SBA offers yep um so so can you give us a sense of how much of your own Capital you had to bring to this project and how you were thinking about Investors if at all yeah I was um willing to bring up up to a million dollars of my own Capital there and that was mostly from Amazon stock appreciation like it was just right place right time kind of thing um and then I had uh a group of of uh High net worth individuals that could contribute um mostly from Amazon again uh like older older employee like it was a good Network to have Amazon Mafia exactly yeah um and so so a lot of a lot of those folks um family friends from where I grew up with the the father of the um the my friend that I mentioned whose company we want to work for he sold his business um and that we interned at and so um there were there were PE I had a list of folks um I was super nervous about asking for money like there was there i' had never done anything like that before my entire life um I talked to a couple people who um were in kind of the PE space uh and they I had most of them hadn't heard about entrepreneurship through acquisition and weren't familiar with the model and they like just kind of frankly said like yeah right we're going to give a 33 34 year old um a bunch of money to go run his own business with and so which which I which in hindsight could have been more disheartening than it was but I I had done so much due diligence I think on the model itself and in the success stories around it that I felt really comfortable like kind of just brushing that side um whereas like I think had I not done that much and I had encountered that kind of resistance early on I might have just given up on it uh yeah so well and I also think that it it just goes to show kind of reinforces uh that this is pretty amazing because just like somebody who who hasn't read the book or been exposed to ET or whatever just kind of hears about it even a PE you know a PE person somebody who understands leverage buyouts that their first reaction would be like yeah right that's possible yeah uh should just remind us all that how amazing that indeed it is possible yeah yeah it is and and that I think the other thing too that that reminded me that that reminds me of is this Sation that my my mom would have with with my dad and then me about the the the first com that she was at she was at for like 20ish years the the father was the owner the son took it over and and I think frankly was like pretty incompetent like from I never had firstand experience but the perspective I got which was obviously filtered um was that he was he was quite incompetent and my thought for for 10 15 years was if this guy can run this thing and not run to the ground like this is not an impossible skill set that that nobody can do um and so I that gave me a lot of confidence um and then she went to another company that was kind of a similar deal um although the the managers there were much more competent but they just started it because it was something that they they were into and then they built a business around it so the the one Cho's in now um they do uh metal fabrication um and he started that as a metal fabricator and then built the company around it and it's not like he had a PhD or a master's program or worked at Bane he was just a guy who knew how to like balance his checkbook and make sure that he wasn't spending more than he was earning and built the business slowly and even after hearing like kind of that that push back those two things gave me a lot of Heart of I I've heard other people have done this it's been successful and then I know people around me that do it and they're they're not like they're not like a very special set of person comes along once in a while um well that that's a great Counterpoint Eric because one of the things that we hear about this path is that how hard it is how difficult it is and it's something that I'm always banging the drum about because I don't want um people to underestimate how difficult it is a and b I've heard time and again from guest after guest that in indeed it is really difficult but so this is a great Counterpoint that yes it's difficult but I I've also heard people say something similar to what you just said which is look these businesses are basically many of these are simple businesses um there this let's not let's also not overstate how difficult this is this is not running a hundred million do p&l business with huge amounts of data coming in that you have to sift through and all these V I mean you know the business that you had at Amazon was probably complexity wise way way way more complex oh so anyway I I just think that you know maybe the truth lies somewhere in the middle maybe probably more just depends on the business that you that you buy um uh and and and I also think that when people talk about it being hard actually this is a key point when people talk about it being hard they're not talking about the complexity of the business they're talking about managing people yeah um and that probably is hard and does not relate to you know how good your grades are or whether or not you worked at Bane that has more to do with EQ and tolerance for human foibles we're we're we're going to get into that go ahead but go ahead I've got I've got a lot on that yeah that um but uh so I I met with more people people said yes they gave kind of soft commits um and I had I was fully prepared to go and do that if I if I needed to my preference was to not um I would prefer um something in the the $1 million EA range and own the entire thing out right not have to answer to any investors and I did kind of balance this it would be nice to have quote unquote adults in the room to help me kind of move things along but I also want to to Really the whole point of this was to do my own thing um and I could have advisors but I didn't want people necessarily pushing me in Direction I didn't want to go so 1 million was kind of my target uh as as I'll mention I I did not get to 1 million um so I I was looking um for about a year um I was my kind of process evolved as I went but I had mentioned this um kind of a passing around the the Amazon work where I didn't know what I needed to know or what I needed to tell people until I started talking to Brokers so um I started up on axial it was a really good way I don't necessarily recommend it for all folks it's a platform um that sources deals based on like your criteria and then it charges a finders fee if you go forward with those deals um but I it was a really good way for me to understand what was out there get quick access to um confidential information memorandums or Sims and then read through what was available how those were prevented presented um understand like when I was communicating with Brokers what kind of things they wanted to see from me to test my bonafides and um and I I notic that some of them were checking my website and asking questions about it so I knew that was kind of an important piece of my own marketing um but as I started to run through those I started to put together the process um and at first it was a Google sheet then it was an Excel spreadsheet then it was eventually um I used uh bigin which is a a CRM product from Zoho um which is really low cost and super easy to put together but I was I was getting my pipeline in place understanding what I need to look at and then really figuring out I the key thing that I think most people have to figure out in the process is like how to quickly say no to things that might look shiny but you you figure out the the flags and the keywords and you just you just move away um the one example can you give us yeah great the example that kept coming up was um for for retailers and people selling to other companies it was like works with Fortune 500 companies and many times that means they have one massive Fortune 500 um customer and they're 30 to 40% of their business is what I found in the the types of businesses I was looking at and so any mention of like works with it a like Fortune 500 Fortune 100 company um I was pretty leery about and then would just skim this when I if I requested more information and got the Sim I just skim it immediately to customer concentration and make sure that it was or wasn't what I what I thought so there were there there shortcuts that you learn um I I quickly was doing some math and I'm I went through at least 1,400 uh teasers um so those were those are quick and it got to a point where I could really easily chalk through those and then went through 237 I had the like list pulled up 237 Sims um that that I evaluated um with a team of interns that I I brought on um once I had my process in place and and was able to instruct them directly on on what to look for from a quantitative and qualitative perspective and then um how to put them into a a database so that we could track them better um so went through 200 of those and then I only wrote IIs for four companies and then a couple of them had those unrealistic expectations around multiples uh or they were looking for a strategic buyer that happened a ton of times um even before I got to the II stage and uh so I I I moved away from those um but really I like honed in on spending time on the companies that I thought I had a good shot of moving forward with and again this was because I was time constrained with my full-time job yeah ER this great Eric let me let me follow up real quick so so your funnel looked like how many teasers did you look at 1400 1400 yep 1400 became two what did you say 250 to 300 Sims which means you reached out to the broker saying sign the NDA can I get more information y right I occasionally would would shoot a note on a on a teaser to to like same kind of idea I'd say like hey this mentions Fortune 500 companies tell me the customer concentration like you don't send me the whole Sim and kind of in that that was kind of a a halfway point I felt like that saved me some time as well yeah because you skipped the NDA probably there at that um and then from those 250 3 300 kind of taking a closer look at down to four IIs yep okay H and down to the one business that you bought now um why did you choose to use IIs by the way rather than you know there you hear people yeah just Loi versus do II is an intermediate step then Loi um I I'd say it was probably because of the the hbrr uh uh book like it was the process that I knew and I didn't have enough experience generating those IIs to know when I needed them or when I didn't so I I kind of stuck with the co and that was the way I treated the entire search process was I stuck with the rules quote unquote until I found where I could B to break them it's well I like that and but do you find reflecting back that the II method served you it did I think it it helped me from like having to spend the time on the LOI which which wasn't all that timec consuming like looking back in it I assumed it would be a lot more timeconsuming I assumed all these steps would be a lot bigger than they they were um but the uh I I thought I had a couple more criteria that I wanted to look at before I felt comfortable moving ahead within I and Loi I also like discussed price range pretty narrowly in the II and so I could get a sense whether or not we were in play for the business or not um and that helped with at least two of them where they just were looking the one two of them actually were they were uh Food Distributors which I was like oh that's a great dubil with with the grocery experience um but they they were looking because they're so stable um and they tended to have customers like hospitals and schools uh they were looking for what I thought was unreason reble multiples of I think like six to eight and I just couldn't justify it for the growth in the um the the business itself so well and here we have a great example of why the ioi can be helpful the indic and ioi stands for indication of interest because you draw out the seller on price a little bit so rather than investing time in doing an Loi you uh do a quick kind of like are we in the ballpark here Mr Mrs seller and if not you move on and you haven't invested in time in developing an Loi for a deal that was never going to happen anyway absolutely yep and that was that was we got pretty sharp on that like I I use comparables or comparables uh I from I use a search funer database for those of other produce Distributors and food distributors and the the seller and the seller's broker just weren't having any of those kind of other data points and at some point you you're also you're buying from the seller and you gotta like take into account do you want to work with this person for five six seven months plus the time afterwards and if they're be in reasonable and stick before you even get started like is it worth worth going forward so didn't right your decision to have your own website as opposed to so you had a what was the name of your kind of search vehicle brand it was Mercer Street Capital which for those and I thankfully didn't have many people in Seattle because merer street is a terrible street with a lot of traffic um but it was where I started at Amazon so it was kind of a cool like call back to that um but I only had one guy uh who was like why did you pick that street but it was it was mer Street cap and the website was Merc strec cap.com and so you'll hear often Searchers ask well should I put myself out there as kind of an entity like that a branded entity which kind of positions you as a bit of a private Equity type Vibe versus you know just just sending an email from your Gmail or just a very personal human Outreach um and so obviously you chose mercial Street Capital you chose the Branded way any Reflections on I think you already said that that served you well yeah I thought it worked well for me especially when you're working with brokers who the what I also like they span the whole gamut of professionalism from very buttoned up and very process driven to um like I've literally had pictures of uh Sims sent to me in like almost handwritten and uh it for the especially those more buttoned up Brokers it was helpful for me to get my foot in the door um and I had kind of my pitch of what I was looking for and and had that all all ready to go and just um I never encountered anyone who I I got responses on almost every Outreach I did um folks could early on say were not interested in a a private Equity um or at least a small like kind of private Equity like acquisition we're looking for strateg strategics um H but I got I got responses from almost everybody and nobody kind of questioned the how I was going to go um and acquire the business after I I kind of set that out so I didn't have to spend time explaining how I was going to do this what my background was send like a novel over to them um most folks looked at the website and were were were really comfortable with that so I think it saved me a ton of time but that was again a very broker specific search H okay great well that's um because you will hear detractors to that argument which say like if you're not private Equity you know don't pretend to be private Equity um you know sometimes if you if you encounter a seller who doesn't want to sell private Equity of course there are lot lots of those they'd rather be dealing with you know the individual entrepreneurial Searcher who in in whom they see themselves their young younger version of themselves and so sometimes uh that type of seller might uh might like less a kind of private Equity Vibe and more the individual entrepreneur Vibe so that's why I wanted to ask your opinion there but great to know so clearly that it's that it was um you would Advocate or at least in your case it worked well yeah um Eric I mean we haven't even gotten into your business yet here so I'm watching the clock closely but a lot of good meat here tell people a little bit more about axal and you know almost everybody goes to bis by cell first and I'm sure you did use by bis by cell here and there especially if you got to 1,400 teasers that you at but but uh but but tell people a little bit more about axial how it works why you why you called it out as your primary source of of of deals as opposed to BS byell yeah and it it was my primary search until I found the list of brokers needed to to get more comfortable but axial lets you um put in your criteria so an ebit range for example of what you're looking for it lets you select Industries um that that you are not or are not interested in um and it lets you do some other filtering as well but from there it's basically a matchmaking service where it it takes those criteria it looks at companies are listed and then it puts them in kind of your feed um so that you can go and review those teasers and then request a Sim and behaves like a CRM um that's already purpose built for this and so the the drawback of it and I forgot what the specifics are but if you do acquire a business um that you heard about first through axial which is a a kind of complicated process in itself um you do pay them a finders fee and I found as I got more familiar with who the brokerage I was looking at the areas I was looking in and and who they represented um I got I started signing up for their their email list yeah um I would get those in the the in my email and then I would find I was also getting those in axal and so then there was a a a requirement for me to go and inform axiel that if I went forward with this company I had already found it out through this email list and and that just got really timeconsuming the overlap got so high um that I I stopped using axial um but for the right person for the right Searcher um and and for just starting out I thought it was a really really good tool and I I met a lot of great Brokers um that I I still keep in contact with uh through axial so it's a But Eric when you describe like how you used it put in your criteria hit search and then it populates your feed why is that any different than going to bis by cell putting I mean bis by cell of course has filed a searchable feature with filters putting those in and then getting the search results back on bis byell and bookmarking the ones you like yeah and that any different I did that as well the the businesses I found on Axel tended to be more professionally represented is is the kind of the gam between it so the um it Biz by sell sometimes feels like a Craigslist for uh for businesses um and there there is a Craigslist for businesses too which if you want to take a look at is is pretty odd um but bis by cell um there there separating the wheat from the chaff there was really tough for me there was a lot of good um good businesses that would work well my filters and a lot of those showed up on axial and then axial didn't have all of the kind of noise of your small mom and pop that's not really looking to sell but wants to see they can get a price on there um and and that kind of thing so I I found it a lot more streamlined than than bis but I did use both totally yeah and I that that's kind of what I in my understanding I would call out is the is the core value prop for axal it's a more professionalized more curated uh marketplace where bis byell is uh the Beloved grab bag that we we know it to be yeah it's it is I spent a lot of nights browsing it and it it can get wild so getting weird with fiz by itself yeah uh all right and and by the way geography you mentioned the coasts earlier but again with the volume of deals that you looked at I suspect you had loosened that criteria at this point yeah I I was starting to find that deals uh on the coast were typically expensive um the ones I was looking for uh in terms of the ebo that they wanted um and also the industry so a lot of the what I found and this was kind of where I was looking but manufacturing I was looking at manufacturing I was looking at industry um I was looking at uh Services all of those um tended to uh like cluster around kind of California in the coast um but they were all uh you usually the way like this my hypothesis is the way that those companies survive is because they're tied really closely to a big customer so almost every big um or like large enough uh company that's surviving there that's still small that's not like an Enterprise is usually tied to one um big defense contractor one big uh commercial development one something like that and I Think It's just tough my my thought is It's just tough for a company in the one to five or 1 to3 million EA range to to survive as a standalone business um in those those kind of high like highly expensive areas so I I Brad in my geography um I uh started kind of looking Inland and then I just kind of scrapped the whole geography criteria and I I was able to do that because um I I wasn't married um I I'm not married I don't have any kids uh and so it was easy for me to kind of pack up and find whatever um was uh was there for me and I think as we'll get to uh and the Brokers mentioned this the fact that the company was in Alabama was a like a a a value point for it in terms of it would have attracted a lot more attention had it been in Dallas or Tennessee um than than kind of uh Way South of of Atlanta sure sure and just to to state the obvious here that that's also just a big life decision too that you're willing to move anywhere yeah uh so I assume that took some took some coming to that decision am I really going to leave Seattle where I've been forever all my friends are my network my family Etc to going and and going not just to you know one of the cool coastal cities but anywhere anywhere that this that this path might lead you yeah and I was I would say that's something in hindsight that I I underestimated how difficult that would be um I really like I was so focused on doing this and so ready to to find something that I kind of shrug that away and said like yeah I'll do with it like that's totally fine I am a social person but I also spend a lot of time alone um I travel alone a lot uh and so I I thought I'd be uh pretty comfortable going somewhere by myself without a strong community and maintaining those connections back home um digitally and and coming back pretty frequently um and then I I got here um and the the the first day was pretty tough um and and I I the the realization set in once I bought the business that like this isn't a this isn't something you can walk away from like you've got a big debt obligation um you've got a lot of people depending on you uh selling the business is I assume a three to five year kind of ordeal in terms of getting anything ready to go um and finding the right buyer and all that um and so it's not something you can just turn away from and say like oops I made a mistake and and move back and into something else you do on the other hand have a ton of options of how you operate the business um and so uh over time I I got more comfortable with um working remotely I can I can go back and and work from Seattle and all that but um it it was a much bigger uh shock than I anticipated uh moving down here and then just not having the community um also like the huge change in what I was doing on a day-to-day basis and who I was doing it with um all that hit pretty hard um and I think I had some blinders on in terms of how difficult that would be well I want to spend some time on that Eric because I it's it's kind of to me it's really one of the central aspects of your story uh but let's return to it and um again in the interest of time let's quickly hear about the business turn let's hear about Turner hat how did you find it and then give us all the bullet points about the business why you liked it Etc yeah so Turner hat um was represented by a broker uh called Viking um m&a they the the managing director was out of Tennessee I think um and a friend of mine who was also at Amazon and then started doing his own uh search um but only in the Nashville area uh he and I were talking he recommended this outfit and I started I signed up to their list and was looking their deals and and found a scalable um headwear Distribution Company is how they pitched it um and I was really against apparel uh because of the the seasonal functionalities and the style um aspect of it and how kind of a key that can be um I I I wasn't interested in in the south in particular when I started as I mentioned um but I I kind of clicked in anyways and um their bread and butter are uh like hats that protect you from the sun when you're doing yard work and so their price point is between or our price point is between um $16 and and $50 um these $6 hats are things that you'd wear out in the yard uh and they're they're as I tested um really stable like high quality products um at a at a fair price um and because of that they don't fluctuate too much when it comes to uh economic downturns I looked at some of the data um from the 2009 recession they did they did just fine uh they um they're sold mostly through hardware stores Travel Centers and um uh like gardening centers and so they stay pretty consistent uh no matter what the economic Trends are importantly for me because I saw a lot of these they did not have a huge um pandemic bump that they wanted to be priced into their their overall value so they did not increase 40% year-over-year in 2023 and want to use that eida result as their primary basis for for the valuation uh the more I talked to the owners the more they discussed being really um careful about how they grew they didn't want to go into accounts that would be able to squeeze them so they have really low C customer concentration they sell mostly to individual store owners um rather than going through a big corporate chain um and they have a a distributed Salesforce um of contracted agents that sell other lines as well so they sell things like gloves and knives um and so really low customer concentration very low volatility um it was smaller than I wanted to be uh their eida for 2023 was 350k um which was I I had also loosened that that guardrail I was willing to go down to um uh 750k um in iida but uh I saw potential in the brand they they didn't really have one um they they mostly operate as a distributor right now they are called we are called Turner hat um but today that doesn't stand for very much um out there and then um they weren't doing any kind of e-commerce uh they uh they had tried that in the past um and they had said it was too expensive they were getting a bunch of returns I knew all the signs that that kind of pointed to and and felt confident that I could um turn that back on and then they were really geographically concentrated uh in the South um and the southeast and so I thought there was opportunity to move out west um move north with the new product lines and so even though it was smaller than I was uh looking for there felt to me like a lot of untapped upside that that made me really like the deal um the more I dove into to the due diligence um they were really well presented um very fairly presented um in their financials and so uh found no hiccups there and um yeah it it was not at all what I was expecting um to acquire um but but turned out to um to be almost exactly what I expected which is which is really rare from the other folks that I've talked to well I got to say it's really interesting Eric I mean you were you were you were willing to go look at anywhere in the country go anywhere in the country and uh and you looked at a lot of lot of businesses uh and this one which yeah violated your your criteria in a number of ways uh still really spoke to you um let me let me poke at it a little bit so so I feel like hats are hard to differentiate around so so these are so get these are hats you'd like Garden hats cowboy hats and kind of what what other type of or those that just sports hats so things like field hats fishing Boonies uh those types of things so I I feel like that would be something where basically without a strong brand which you said it does not yet have it'd be hard to differentiate it would be a low margin product commoditized high volume um how did you think about that yeah so the the niche that they serve the the way that I looked at it was customer concentration and um and customer acquisition and the niche that they serve is kind of twofold one the product Niche it's surprisingly hard to pack and distribute uh these hats um to to different customers around the country it's expensive um you really have to know what you're doing um in terms of getting the right volume in there without damaging them but also making sure that your your shipping a box is profitable and then um we we offer a level of customization that the bigger players weren't offering so um the biggest I I believe uh kind of customer or manufacturer our spaces um Dorfman Pacific they do really big accounts um but for example they're only going to ship you one size in a set of 12 hats and if you're a small store you can't take on that inventory um even if it's a little bit less expensive because you'll have no room for this full assortment um whereas we'll do everything custom for you so we'll do whatever kind of set of hats that you want as long as you meet our $250 shipping threshold um we will ship them to you for free and the owners had built a process around that Niche that was um fairly profitable it's uh 10 to 15% um net margins depending on the customer um and and really efficient um they had taken a lot of the cost out uh already because they had to and I really like those aspects of it where they had the the process in place they had really good terms with their suppliers um they had good terms with their vendors and and they kept a lot of our customers and they kept a lot of their customers year-over-year and so I um I felt like we could live on the distribution and um uh that aspect of the business for a while while we built a brand that I think took advantage of of the strengths of the product that were already in there like they were they are good quality hats and I don't think they're they're represented um well in that sense because the the two owners purchased the company um as a a late stage career change they were in their 50s when they they bought it um and were really focused on the distribution side of the business and never I think took the time um because of the investment required to uh focus on The Branding side of the business so I I saw upsite there in addition to the kind of gr work that was already working really well well that's a phenomenal point because that if you have something that maybe isn't super differentiated and so so basically what I've heard you say is you had something that actually is differentiated it's a high quality product but the brand has no value as yet but you have this incredible distribution Network and that that that that's that that's such an asset that's one of the reasons that you know you buy a business like this rather than starting a business like this from scratch I mean recreating that distribution network uh would just take forever oh yeah so that's really valuable um yeah that that makes a lot of sense so now you've got yeah you I like how you put it you can live off the existing kind of distribution relationships and and just kind of sell through that you're already seeing and now you can just build a brand on top of that um as opposed to kind of doing the reverse which is probably what a startup Hat Company would do you try to like brand your brand brand brand brand brand and then try to go out and distribute this this product um and did you also see an opportunity with these this this great distribution Network to eventually sell more into it sell more product into it or more types of hats or maybe not even hats but something else gloves whatever yeah and there there's some um overlap there with a lot of our reps are selling gloves and and there there's similar Niche products and this was one of the I think the best parts about searching of all these industries that you had no idea existed but somebody's got to give the products that sell in Travel Centers and and small Ace Hardwares um to those those uh owners and uh there's a ton of small distribution companies that do this a ton of small brands that that fill this niche and um those are like potential acquisition Targets in the future of layering on those types of companies we are as I said really focused on the Southeast and so there has been no push to do anything in the the winter hat category um I have spent like all of the time since the acquisition to develop a winter line um that we think is going to do really well um even in the the Midwest where we already sell a lot of hats during the summertime but don't penetrate it all during the winter and then also move coastally um up to the Northeast um I think we have a lot of opportunity in Oregon Washington and so there there's a ton of selling in to um both the existing customer base with new products we are not very um well penetrated even with um our I think our last count was 2 200 active customers even with that number of customers we're nowhere near um our fair share penetration in terms of the number of of stores that could be carrying um any sort of hat that that does um and that's because there's a lot of education thereof um and I still find this like kind of hard to believe but you you put these things in a hardware store and they do sell um even cowboy hats uh like will sell them in places you would not expect uh Oregon like the Oregon coast um up in Idaho um obviously they they do pretty well in in kind of the southeast but you can put them in in different places and and folks love it as imples buy um and and all that kind of lends to this idea that we just need to go find the customers and and educate them on it so I think there's a ton of upside there as well when we think about um distribution you know one the kind of the classic thing that people will have heard about is like trying to Elbow your way onto the Walmart shelf uh or to the Target shelf some you know some giant distribution win that you get uh and and that shelf space and being on those shelves is incredibly precious and Incredibly competitive uh and you as the you know small um manufacturer supplier of the good take you know Walmart and Target have so much buying power they can push all this risk onto you and it can kind of make or break your company so that's one narrative many of us have heard in your case you're working with these small Distributors to go out to the you know onesie TWY stores across the land is it competitive to find more stores to work with or to increase product that is being sold through these distribution relationships you have is it is it like that or is it pretty easy you can just give them more to sell and they'll do it for you it's more of a uh uh I'd say the the hardest part right now is finding sales folks and Reps to do it it's more of a number of doors that we can knock on kind of opportunity not we have to come up with a better price um to out compete the the Hat distributor that's already in there um there's a ton of white space to go around of just underserved areas that don't have anybody calling on them um people don't think that they might be like a niche that's worthwhile to um to sell to and again that's where our like lowcost uh infrastructure is really helpful because we can get those markets we just need to get somebody out there to to let them know um about the program and how it works whereas a ton of your your higher branded products that spend a lot of money on Advertising those kind of things it's never going to be profitable for them to to set up shop in those um kind of stores and so it's not particularly competitive in the areas that we're looking at I think we're planning to get a little bit more head-to-head um as we go into places like California where there already are um uh folks selling hats in some of those stores that we'd like to be in and then the the question will be um where can we compete on price where can we compete on convenience uh that's been a really big point of feedback we've gotten um is how uh we distribute the hats kind of ready to go on on the store floor so no one needs to touch them um our low order minimums mean you don't have to carry back stock and so there's there's some key selling points that I didn't really I didn't understand at all um until I I bought the company and then really figured out what differentiated the product for customers all I knew was that customers kept com back and there was there was gonna be a reason behind it so it took a while to figure out what that was you know this is really and I guess the sim said as much this is a Distribution Company you know you might somebody might at first glance call this kind of a hat manufacturer but in fact you guys don't manufacture the hats you these are these are contract manufactured yep yeah we get them um primarily from China in Mexico great and then brand them and then you you distribute them um you know interestingly that there there are kind of um uh FBA Alibaba Vibes there now I'm sure that that wasn't that concept wasn't invented by Al Alibaba or FBA but that's where we've heard about it a lot in recent years where you entrepreneur find some product that's being manufactured in China in the Alibaba catalog and then you import it brand it and sell it on on Amazon and you know you've you're you're in business um now obviously that model also has maybe not doesn't work as well as it did 10 years five 10 years ago um but uh I guess it's an old and tried and true model that basically you contract the manufacturing and then you put your brand on it that's prob that's frankly as I'm talking myself through this that's probably how most manufacturing really is these days and and folks will ask us and and there's a there's a point of Pride to it I'd say of like having things manufactured in the United States and I I would love to get there the fact is when I look at our competitors they can only do it in limited quanties because there just aren't people here that do that anymore like we've lost the skill set to be able to manufacture these things um in the US which may not have been like our competitive advantage in the first place and so there are still some high-end Artisans that will do this um a lot of but a lot of the raw materials are are imported from China and then just kind of fashioned and decorated um once they're in the United States and finding somebody to do that especially in Alabama is is almost impossible and so while like I've had ideas about going to a higher end line where we do some more um Nearshore product uh but that's not the the primary focus for now it's it's figuring how we do the best product in what we're doing um today but it is like something that I always kind of like like the idea of and then the reality there's a reason that you don't see a ton of those out there is the reality is just really hard to do and there's not a huge market for hats over $200 that are handmade in the US yeah yeah and what amount of interaction do you have with your manufacturers are you are they basically kind of you get their offering this kind of white label offering and then you pick which ones you like and put your buy them and put your name on them or do you actually work with them to make design have have input on the design and manufacture itself we work with them to have design on the input so um some I'd say 30% of the catalog of of the products that we just need an example of so like our our boony hats for fishing that just need to be a booty hat like you don't really need a whole bunch of uh specifications around it those are white labeled we'll bring them in and put our brand on the ones where the fit is really important the ones where the quality of the material are a differentiator those are the ones where we put um unique specifications in for the supplier and then have them develop those specs okay Eric and then so the other Giant uh opportunity here or so it would seem which you which you touched on is the e-commerce play so the previous seller the sellers the previous owners had attempted e-commerce it didn't go well they shut it down um but you being having worked in the belly of the Beast for 10 years maybe you you thought that you could do better than they did well how did you think about the e-commerce opportunity here is your said the done or No in fact it's an enormous opportunity it's both um and i i as as it typically is um I it is an enormous opportunity the thing that we need to fix is fit primarily and that's hard with all apparel but it's really hard with a like wide brim stiff hat where it can cost you 30 bucks to ship it across the country and so if you get that wrong like you're you're washed out on that customer you're not going to make a profit on it so we um have to be really careful about how we list and describe and fit and size all of our hats and we're in the process of redoing that because it hasn't been a an area of focus I think what the previous owners I know what the previous owners did was put their hats um online they sized them according to the manufacturer specs and then they sold them and then they got returns when they didn't match what the the customer um had had expected which is is really typical it's just harder and more expensive with a expensive product to ship that's not super high revenue and so um we're focusing a lot on how to make it easier to buy them um size them properly uh there's a couple um other brands that are doing that at the higher end space we're going to be the first ones doing at the the kind of um value priced product and then um and then go from there but the the the simple example is um our standard uh uh paper they're made of a a kind of a paper material cowboy hats are sized to the eighth of an inch and if you're off by an eighth of an inch like you mismeasure or the hat is is different configuration than you expected it does not fit like there is no kind of wiggle room in terms of that uh that measurement and so we're adding um different sizers and uh different ways to adjust the brim so that it fits you even if you're off by a little bit or you fit between sizes um and that's that's been um one of the more creative aspects of of doing this and uh but also feels really familiar when we had to figure out how to ship a crib to somebody and still make a profit on it so so it does call back a little bit Yeah well and and so overall how are you feeling like your 10 years at Amazon and all of that that that skill set that you built is being um is being leveraged in your project here is it is how useful is it are you basically are you basically having to learn a new business all over again it's I'd say it's it's probably 40% of it is applied on the daily basis or or 40% of my work is directly related to what I was doing before and 60% is is net new and that 60% is is what you had mentioned up at the top it's managing your Workforce um that is very different than the workforce that I used to work with and manage um it's it's dealing with uh kind of EQ issues and making sure everybody's motivated and and um feels like they have a place at the company and uh it's in really really small um fires that have to be put out all day rather than one like massive document that you're working on for your VP that's stressing you out for three weeks it's it's 19 of those tiny little things that you got to do that day and if you don't then like you'll get a fine or whatever will happen so um or your product will show up late or any of that so um those those small things and managing those kind of tasks um I had the task part of it I kind of lost like I definitely did a lot of that when I when I first started but managing like a to-do list and task was something I had to get better at and and get back to and then understanding my employees and what makes them tick and what they they how they prefer to work um what motivates them is is all net new and and yeah like I managed people at Amazon but as I mentioned it's it's a very very different um type of employee that I'm working with now and so what have you learned tell tell us for the for the person who's you know sitting in a very uh whatever tech company or some you know big corporate environment with a lot of type A's running around uh thinking about doing this project a project like what you've done um working with a very different type of employee what how could you know help them help them uh accelerate their path to to doing it right yeah I think that the thing that I've taken away is you you kind of have to show them a lot of times the the value in meaning in what they're doing um and and I don't think the previous owners had done a good job of that like I I think they had kind of treated it as a it's a it's a nice place to work relative to some of the other um warehouse jobs and and some of the other kind of backend office administration jobs but it was never um something you aspired to work at I don't think um it was kind of a job that you held and where I'm trying to with the the folks that I I see have potential and that I want to bring forward um I'm trying to get them to understand like that this is going to be more than just uh the job that you you punch in and punch out of and you go home and and don't think about and not in a way that should stress them out but that they are excited about uh making bigger and um developing new skills and even if they don't come from like a traditional business background and so that having them Buy in has been the single hardest challenge for me and I I had some folks that did it on um really easily I've had other folks I've had to kind of pull and and um and negotiate with along the way but um otherwise what ends up happening in in kind of a sector like this is folks get a job for another dollar an hour and they leave and you've lost some good talent that um it was probably worth it but you didn't even know that they were looking or that they had a problem with the the kind of salary so um it it building in that kind of like there's a reason to be here and and we're doing something important um is a big change from how the company used to be run is a big change for the folks working there uh but I see that as the only way of keeping um a talented Workforce in place in a in this kind of uh industry and Eric when you say getting motivating people getting them bought in what is your kpi H how how how how do you gauge if somebody is bought in versus those who still aren't bought in other than you see somebody leave for a dollar an hour I it's a feel right now um and it this comes this like irks me all the time because I I tell people that like suppliers and and our vendors that I come from a place where like we had metrics for everything and they were all real time and I have metrics for almost nothing now and none of them are real time um and so I Rely a lot on kind of the emotional component of it and like understanding how the employee is feeling about their job um understanding what it what they like about it a lot of the times it's not like the the salary or the pay um it's the people that they're working with or the conditions under which they work and um and having those conversations and they often have to be like inperson conversations um are are help for me to understand like who's really set in in buying into it and who's not and then the output of it is just is productivity and you can see that on the shop floor of who's bought in to go the extra mile who's going to stay after their break starts um to get something done um and finish it out and then maybe take their break later uh who's like coming with new ideas for how to do things and those are the types of people that you can tell are bought in and the rest of them um or actually the other one is as we change processes what we're doing rapidly and all the time who's resisting that and who's who's like moving forward with it and and um embracing the process um those are the embracing the process in a productive way there's definitely productive push back but the folks that are embracing it and trying to find ways to make it work for them and understand why we're we're making the change it's it's pretty simple to understand that they're bought in yeah and and and that one that last one is sort of the uh P the change management piece it's like you're you're you're implementing changes and those who are on the bus are bought in and those who choose to get off the bus are you escort them off the bus are not the B ones um you're making a lot of changes all at once you talked about how your frenetic life at Amazon and that's the culture of Amazon sounds vaguely like the move fast and break things uh thing from Facebook don't know if it's exactly that but basically moving fast um I want to tie so so so with that backdrop and then also what you said a number of times when you were describing your Amazon life where it was identifying the important things prioritizing the important things what did you need to master ASAP and what other stuff can you let yourself learn later and can just kind of be imperfect for a while um basically yeah just basically that's a long-winded way of saying prioritization how have you what what have you found in this business or your successful running and owning of this business to be the things you need to prioritize and what can you let slip yeah the um the I actually found this is my operations manager is going to hear this and then get annoyed but the the people aspect has been something that I've been able to um let slip from a hiring perspective and so then the reason I say that is we can manage with fewer people if those people that aren't there didn't want to be on the bus in the first place and so I've I even with in our peak season right now um we have uh chosen not to uh fill some roles that uh we feel like we can't find the right people for um and we quickly get rid of people that um don't fit what we need even if we know it's going to leave us in a situation where we're hurting for for other folks and then we choose based on that what we can and cannot do um with with the the hole that we're left and that was a a super common thing at Amazon it often took a long time to hire somebody and you'd figure out how you you'd move around um that that Gap in the meantime and so um I haven't I I prioritized hiring we've we've interviewed a ton of people the talent pool down here is is a little shallow so be hard to find someone um but I haven't just prioritized filling a seat with a a warm body um the other things that I'm not as focused on right now are are necessarily that kind of um growth of new uh accounts um our accounts right now are pretty loyal we're focused on um refreshing our brand a little bit so that it it kind of speaks to more people than it does right now we're focus on um updating our selection so that we have more things um that appeal to more customers and I think like spring summer um of next year is when we'll kind of double down on our uh our actual campaign to go out and um acquire new customers but for right now we're spending time on on building up that Pipeline and thinking about how we're going to do it we're not just jumping on it so um those are the things we've kind of chosen to wait on uh the long run like it takes a couple months to develop a product it actually takes a lot longer than they used to at Amazon um uh those are the things that we're focusing on right now so we have new things to talk about and excite the the new owners which um I kind of took for granted as well like I I kind of thought they don't really care about our products um but that in terms of they just wanted something to cover someone's head but the the customers that come by our booth at trade shows um are always asking what's new and what what they can bring on so um I prioritize that as a result we didn't get the terms of the acquisition can you tell us can you give us the bullet points there what was the purchase price and then how did the terms break down yeah so it was a 1.5 um just about purchase price 1.49 um and then it was uh 350k iida for the last year so we did about 4.2x um they were growing about 7 to 10% per year um with some uh like smoothing for the pandemic um and so uh it was a little bit pricey um I was I was kind of hoping for more of like a 3.5 um range but uh I saw like I said the like overall the um and this actually came out to I think be a blessing in disguise the small price or the relatively small price of of what it was selling for um meant that I could invest some of my like own Capital into it and actually make like an impact whereas if I bought a $10 million company and had a couple hundred thousand to throw at it like it really probably wouldn't with the need all that much whereas we can spend time not acquiring new customers and be okay with the ones that we're doing because our our infrastructure costs are low um I there's some cash to burn and we got some working capital out of the the deal as well um that we can rely on and so the small size of it has made it I mean as it does made it a lot more Nimble um but uh so I I actually didn't feel too bad at the the kind of eventual like price that we got to and how did you structure it uh 10% equity and 90% debt and then it it kind of washed out strangely because we got uh $150,000 in working capital so we got almost all of the the down payment back in working capital as well so it was kind of zero down essentially and did you have to did I hear you say though that you've now come out of pocket and and invested more of your own Capital yep to bring in more inventory so it came with $300,000 in in inventory um that was actually the thing that I I think I was the least familiar with with was the working capital Peg and all that um aspect um but it turned out to be a decent number um 300K is about like an average balance for us um and but I wanted to invest more um for e-commerce I wanted to bring on new Styles and new lines and all that takes um takes capital and that's the single biggest thing that I've learned to watch is like our our cash flow as a result of holding this inventory it's something I never had to do at Amazon um we had targets and things to hit but there it was a never ending spout of new inventory that we could buy whereas this we had to be really diligent with what we're we're holding so um i' I've invested some my own capital and bring in that new inventory well I want to hear more there but just before you give me more the the additional Capital that you invested we should effectively treat that as more purchase price should we not yeah we could yeah I so a million and a half plus how much more did you put 75 75,000 yeah so not not a huge amount more okay I thought you were say a bigger number the thing is like we we could have operated at the way that the business was running without that additional 750,000 it just it we would have focused on growing the business the traditional way which was acquiring new accounts with the existing um product line and I this kind of goes back to how the business was run previously the previous owners were doing that I think rightly because they didn't want to invest in longer term like return Horizons on new product new branding all that because they knew they were going to retire and unlikely to see the benefits of those Investments and so I wanted to pretty quickly start investing in those new product lines new branding um because I'm I'm hoping to see this over the next five to 10 years and and see the Returns on those and and and because those are a slower burn Investments the sooner you get Kracken you know you just need you need to get going on something it's going to take longer to come to fruition so say more about the difficulty of managing inventory because at the top we heard that you were managing that managing inventory at these big business units within Amazon was something that was part of your job description so so what's so different here I the timing and and the fact that we're warehousing is the biggest difference so at Amazon the way that the model works both for FBA and for um uh the the onep but more so for the onep is we're holding X tox weeks of inventory so in in the case of some computer parts it was four to 10 weeks of of sales and one those sales were easier to predict because there was it was much more distributed across like or Diversified across a huge line of products and so it was hard to be off on all of them and you could kind of substitute products for other products um and to like we were usually the second line warehousing facility from the first line which was the the vendor itself so Samsung would hold a ton of monitors for all of its customers and then we would just hold four to 10 weeks of it depending on the season and and whether we were running a deal whereas um I am getting product uh that's taking 90 days to arrive to me rather than four to 10 um when it's shipping domestically from one one Warehouse to another and then um a lot of times and paying for part of that up front um and then paying for the rest of it when it arrives and then selling through it over um depending on the style anywhere from a month to uh to to six months um so uh changing that calculation of cash on hand versus uh cash that's held in inventory versus uh uh liabilities to vendors um and what we're going to have to P in the future is is complicated and then the other thing that kind of rolls into that is um like bringing the products on Shore uh has a our tariff rate is I haven't gone too far deep into it but it's between 30 and 50% and so I don't get that bill um for usually 30 days after the product has arrived from the freight forwarder and so I I'm always like aware that okay I just paid the cost for the container but then there's going to be another 30 to 50% of that value coming back to me in another 30 days so there's a lot of planning of um cash inflows and outflows uh it was something that I like I said had never had to do before besides my own personal budgeting um it is a little bit like that but at a much much bigger scale uh and um it's been something that I have gotten good at quickly because I need to get good at quickly and I I immediately saw um how this could turn really bad and I I had read all the like books about it and all the the ways of how to do it and how it was important but until it really kind of hit me in the face I I never really thought of cash flow as like something that i' have to worry about this much yeah and and what's a good book or what was a good resource to help you bone up on it even though you just finished saying that only experience was really the best Teater but to prepare you um entrepreneurial Finance um I think was the the best one I forgot the name of the author of it but he's a professor uh it's a it's a college um like Kai College text testbook um and he talks a lot about uh the overall kind of like deal making process and I I found some value in that but like his focus on cash flow is really important and then I believe it's covered in the e- myth um which is a not an ETA book but a book about entrepreneurship um and they talk about cash flow in that as well but that's more of cash flow is important think about your cash okay okay great okay wrapping up here Eric but let let's return back now just to um you know you characterized for us when you got there that you had a little bit of a oh moment yeah uh so you got through that but but talk to us about kind of how's it going how do you feel about this this really big life decision that you've made it's always a big life decision from any of my guests but yours included um a big move uh and really a departure from a geographic departure a professional departure and as you yourself said this isn't really a business that you could get out of very easily some businesses of my guests are more liquid than others if you had bought a home services business there's probably a lot more buyers for that than than a hat business so um you know whether you like it or not you're you've signed up here for a number of years how's it going how do you feel uh some days are better than others um I there are some days where it's it's very stressful and uh we I knew this going into it but we were going to be down uh this year um about five depending on the month 5 to 10% um in revenue and so I plan for that but seeing that Trend year-over-year just hurts um and there's a lot of self-belief that I need to find in the business to to to keep myself straight and like one of the examples of that was early on I went to a trade show the previous seller told or the teller told me this one's not worth going to don't go to it and I was like it'll be great to meet some customers and I had probably 10 people over two days stop by my booth and none of them bought anything it was peak of the summer like people had already bought products for the for us and it wasn't the right market for us to be at in the first place but that cratered my confidence um for for about a month until we went to another trade show that we did a lot better at but because there's so little like background and experience small changes day-to- day like have a very big effect on on my self-confidence in the in the business going forward and I have to keep that um in check and so like that makes kind of my day-to-day like pretty variable in terms of how I'm feeling um but I am like lucky that I'm able to to stay in contact with uh my friends and family back home uh my girlfriend's been very supportive of a very strange situation for us over the past year um and uh having those connections and then having some some pretty solid Folks at the office themselves um has really kept me leveled um on on those kind of challenges and like I feel I feel really confident we're going to overcome them uh but it it everything kind of feels like a punch in the gut at this point when it goes wrong and the winds are kind of this is more me personally the winds feel really good and then you're like okay when's the next shoe going to drop and so I think getting familiar with that has been tough um I've talked to the again the the um the friend's dad who sold his company and I meet on a monthly basis and and he really validated a lot of the feelings he started his company from scratch um over many years and his kind of comment he's like how he asked same question how are you feeling and I kind of gave him the same answer and he said when you're thinking about your business you will never feel like everything is working 100% the way you want it to no matter how well things are going um and you just to get used to that feeling and figure out how to move forward with that kind of in the back of your mind um which is maybe a personality thing uh but it is it is advice that I've taken to heart and when things like are tough I'll kind of move them aside uh worry about what I can control all those kind of things so there is a huge mental aspect to it that similarly I did not anticipate um I I was used to all the stress at work of how others would perceive me and and all um uh how my reviews would go and all that but I wasn't used to like I'm really in control now for the good and the bad um and uh and kind of working through that so um it's been a it's been a journey but I think uh it's something that I've Gott a lot better at and got a lot more comfortable with over the first uh couple months well it reminds me of of something that people will will say about how hard this path is that part of the difficulty of it is in the early years simply because you're not used to your emotion your emotional muscle hasn't grown yet to to absorb these es and flows and some of the in some of the down days that you're having now in year three and four you might reflect back on those types of days still happen to you but you just roll with it it's not a big deal because you've built that muscle where and you'll look back at how you react now and you'll be like well I was just not that you were overreacting you just weren't used to it and and part of this is just acclamation um not to say that some crises that happen aren't real crises but but maybe part of it is is like you've just finished saying that it's kind of mindset and just developing a new um emotional tolerance for some of this up and down much more so than I thought yeah and what about just being an entrepreneur you you had you know going back to college you you wanted to be doing do something entrepreneurial you're now doing it it that has kind that has actually met and and exceeded my expectations in and some ways I think I built up so much wanting over time to be able to do things on my own in my own way um that finally getting to do it is is more rewarding than it might have been if I had just gotten started out doing it right after college and so and some of the confidence that I I know to some extent what I'm what I'm doing in the product space and so uh the the flexibility the of of not just where I work how I work who I work with um all those that I can control um has been like every bit as advertised is is really really exciting for me and that's kind of the thing that that keeps me rolling um and then uh the ability to make like the flexibility around making decisions about how we go forward with the company what we choose to focus on and what we don't um has has also been uh just as like really enlightening for me it's it's kind of reinvigorated me in a way that I I hadn't felt in a in a long time um and I I'm I'm loving that aspect uh but I I think too that's it's one of the things where um you got to kind of balance those two out and make sure that you're not getting to ahead of your skes or anything like that well great to hear that Eric because often when we have very high expectations for something uh our expectations are not met uh but it sounds like in this case they were exceeded so that's that's that's Happy uh and then what about just the going from Seattle to Auburn Alabama very different cultures very different environment um do you feel like a fish out of water or do you have your people there or what what's what's tell us more about that I'm still definitely a fish out of water uh I am never not asked like where I'm from like everybody knows the second I start talking or even like kind of looking at me that I'm not from there and they ask me like what are you doing here um I uh usually in a nice way but sometimes not uh so it's like occasionally you'll get some some weird uh questions uh not an Auburn per se um but kind of the areas of outside where I think people hear where I'm from and then they assume that like I'm an ultra liberal like person and they worry that I'm coming to to ruin Alabama like that that is only happened twice um where people have had really negative interactions or or uh remarks to like where I'm from and what I'm doing here um everybody else has been so like welcoming and I found some routine and some like some things that I can do um in the area I'm lucky to be in Auburn um just because it it brings forth like a more diverse uh set of of people um because of the the college um there's a ton of different professors and people doing different things and they're from all different places where if you get outside and this is kind of from my understanding of where our warehouse is 20 minutes outside of Auburn and most folks who work for the warehous or or live in notto Soo where Warehouse is based are from there and and raised there and so um it it could be easy to get to a place where there's not a lot of churn of of folks and i' I've been lucky to find that um in Auburn um and the thing the kind of like talking point that I make on this that has been really hardening for me uh is that I expected it to be worse uh when I moved down I expected everybody to like I my my politics lean left um and and I'm I'm I I've been that way for a long time um and I expected everybody uh based on kind of the rhetoric down here to be really far right leaning um and uh what I found in like when it comes up which it it does not often um is like folks are are equally on the side of like they don't really care they're they're kind of like subtly right leing but but by no means like a radical in any way and we find a ton of common ground when we do have those types of conversations which I try not to get into but they come up when I tell people where I'm from so um that's been really like hardening for me like I said I was I was born and raised in Seattle and so I did not have exposure to um uh other other kind of cultural areas and it's been really like I think LifeWise and kind of like building me as a person it's been one of the the the better things that I've I've gotten out of this well that's beautiful and I mean that because obviously our our nation is in dire need of more people having more experiences like that red going to live in blue or blue going to live in red exactly and being reminded that uh most of us are basically directionally have similar values y um Eric I didn't ask you and um and I want to ask you point blank about your own take-home pay because if after 10 years at Amazon uh although Amazon famously doesn't pay as well as it's as the other uh the other big tech companies um but it still pays more probably pretty well and you got all that Amazon stock oh yeah a business doing $350,000 in IA your Turner hat if we just back of the envelope uh math being um half of that will go to your SBA loan so that leaves you with 175 to reinvest in the business and pay yourself um how does what what are you paying yourself and how does it compare to what you're making in Amazon how much how much salary are you having to leave on the table did you have to table I am not paying myself anything consistently right now I'm kind of paying uh like as I need to based on bills that I have come up um so the the goal for me to pay myself is $75,000 a year um that's what I'll probably eventually take home um and take out of the business at the end of the year but right now it's been kind of like what I need when I need it um the that is I'm trying to think through that is uh less than a third of what I was making at Amazon in in salary um which is fine like is is fine for me and it kind of reminds me when I like I I bought a condo in Seattle um and and the first thing that my dentist who is a lifelong friend of mine said to me was like you can't you need to think of it as like a a redistribution of where you're saving rather than like where uh than just a big sinkhole of cash and so uh I I've started I've taken that into account when I think about um how like how I'm saving for retirement and all that that type of stuff of okay the principle that's going towards a loan I'm thinking of as as savings um I'm considering and looking forward to possibly restructuring the loan in the future my interest rates 99.5% um which is not bad uh for the time period I got it um but certainly sounds worse than what it might have been five or 10 years ago uh and so um there's some opportunity there but um I uh am trying to take into account like the the the principal component going into um my my savings and then the other half of it is the cost of living down here is is much less than Seattle and why is your target number 75,000 for for when you get comfortable paying yourself a salary it's really not for a good reason um it's for the reason that we penciled out in the um the SBA loan uh like financial calculator and so it's not it's kind of what I had in my mind to set aside our financials when I go through them as as a Target point but it's not uh like rooted in any need or anything um I am well I I I bet it's rooted in your replacement perceiving yourself as stepping out of the business what would you have to pay somebody to take over yeah and they had two two owners um who were paying themselves I I forget the number but somewhere in the the range of1 to $150,000 each and so um a lot of that's going towards the SBA loan now um but it was they included that figure of 7 as the market cost for a company of this size um owner in Auburn Alabama which is was a lot less than the the uh the the payment plug for some of the companies I was looking at uh in in other parts of the country yeah yep great well thank you for sharing that and and we should note the obvious here that um when people listen to these stories and try to imagine themselves in the shoes of the guest you're in a position where you have a nice nest egg from your Amazon stock you can live you're living basically you're living off savings uh and not everybody um is going to be in that same position um they might not have the same net worth as you they may have a family etc etc etc so so just need to call that out so people um we're we understand that yep anything we didn't talk about Eric that you wanted to make sure you mentioned we've hit on a lot no I think I think it's it's a pretty good summary of it I think uh I I tried I wanted to like convey the fact that like it's it's rewarding and I may have focused Less on that than I that we we could have but um it has been uh really like a a Unreal process and like I still like it actually the thing that comes to mind is like we have UPS or FedEx come pick up our our product that we ship out and every day still to this day it's been five months now six months um I see the boxes ready to go outside and I just I cannot imagine how we're moving that many hats and it's still shocks me every day I go out there I'm like that like that's just a lot of boxes of hats that like I would expect nobody to buy like it's just not a thing that you see up up where I'm from and so I still am like feel very naive uh a lot of things are still like very new to me and and that's part of the the the benefit as well is just being refreshed and and looking at things from a different perspective well well let's do some quick math here so I I'm not even sure I got the the revenue number from you we got the ebit DOT number did we get the revenue number what what is rough Revenue roughly was 3 million last year okay so 3 million divided by what's your the average order value 30 bucks uh it's they're going to uh store so it's like 500 $500 for the average order for the average total order no but I I'm trying to back into how many hats how many hats a year you sell 30 is the average yep so that's 100,000 hats a year qu that's some easy math 100,000 hats which is how many a day two almost 300 hats a day yeah they just and it it's bizarre all go small parcel like it's it's nuts and like the where it's like I'm just surrounded by hats it's which is I have to say I I I I guess it's all the more um impactful to hear a guy who worked at Amazon say that because of all perches in the world to be at the Amazon perch you probably get a sense of like damn there's a lot of X that flows through the world or a lot of Y that is sold and so even if somebody who worked at Amazon for 10 years is impressed by the number of hats he's selling that says something yeah yeah and I think that's why I'm kind of optimistic by the upside too is like if we can sell I don't know like 400,000 Cribs of the one style in a year like how how hard can it be to sell 400,000 so there there's there's a lot to do and and it's it's really exciting great great and and well and just to your point about how actually rewarding this has been how do you now see your career going forward are you you going to be a guy who does a hold Co are you going to do Turner hat see where it goes you don't know what what how are you thinking about the future now the plan is to do a holdco eventually I want to get um I want to like use those creative muscles I've been waiting for to to use for a while so I want to build out the brand build up the um the uh the new product lines that we have coming I want to get someone in place who can do that um and make sure that we're doing it on a regular basis and not getting stale again um and really build this into a company that's that's sustainable with without me there um and then do a hold Co and and start to look at some other uh opportunities the in I I wouldn't have thought about doing another hack company but the industry is really fragmented for this type of of Niche and so there are a couple of owners um that I've talked to of of similar companies that typically operate in different Geographic areas um who are getting getting on up there and and might consider selling so um it's an it's an opportunity that I'm considering um otherwise we might be something I I I would like to do something vertical and do more retail and get back to that um or or do something horizontal and get a new line like gloves so there's a there's a ton of opportunities it's it is they were not lying when they said it was highly distributable um and and it's a it's a interesting um kind of place to start great well congratulations Eric it seems like um a really you got clearly a lot of uh energy and enthusiasm about what's to come uh even even having survive some some ups and downs to get you know over the course of what five months you said no you five months you had it six almost six six Oh I thought you moved down there in January I mov down there in January and then and then bought it in March so it's been and bought it in March six months okay six months um if people have questions Eric how can they reach you how do you prefer people reach out um they can reach me at my email so Eric um er Turner hat.com is is easy enough um that's the one I check the most often I'm also on LinkedIn um at B one uh b r and uh feel free to reach out i' I've talked to a couple folks uh post acquisition um and it it's it's as uh exciting for me to talk to people as as I I hope it's exciting for them so I I really enjoy it so please don't hesitate to reach out great well very generous offer thank you for that Eric and thank you for coming on and sharing uh your story congratulations again of course will thank you very much I hope you enjoyed that interview make sure you subscribe to the acquiring minds Channel below we are now publishing in twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business