Damon Clarkson, thank you for joining me today on Acquiring Minds. Yeah, thanks for having me. You are the very new owner of Pacific Insulation Supply and insulation supply business in Salt Lake City. So, it was November 19th November 20th that you acquired the business. So, just just over a month in the seat, but by all accounts numbers are going in the right direction. So, seems like you got a good deal in a good business. So, we're going to hear that story today and um as well as kind of what you got planned for the future. It seems like Pacific Insulation Supply could go in a lot of different directions. So, we'll we'll touch on that a little bit as well. But, start us off Damon with you couple minutes on your your personal and professional background and what it was that led you to want to go out and buy a business. Um yeah, so kind of some brief background. I was in tech sales for the last like five plus years. Started originally working for we had a family business that sold tech to school districts and left that joined a couple different startups here in the Salt Lake area one called Weave which recently IPO'd and one called Bolt. You know, bounced around a little bit ended up back at the family business earlier this year and that's kind of the professional side. But, I really started searching about a year and a half ago. I got laid off from a job. And uh it kind of was an idea that I'd had for a long time. I've been looking at you know, financials and businesses for four plus years, but really got serious about it about a year and a half ago. Um and so, I yeah, started looking at businesses and uh ever since then it's kind of been on my mind. What happened a year and a half ago that made you get serious about the search? Um yeah, just losing employment. So, I was let go from a job during the pandemic. Um you know, was looking for work, but also was you know, mostly just looking at businesses to buy and even things to franchise just something to do on my own. Kind of realizing that the way to really build wealth was through equity. Um, but yes, that was when things really took off for me in terms of looking at businesses and figuring out the um, the process of you know, dealing with brokers, looking at financials, getting your own financials in order, all that stuff uh, really started happening about a year and a half ago for me. So, you had you had said that actually four years ago the idea of buying a business kind of first was on your radar. And then you got serious about it a year and a half ago when you were laid off from the tech company during during the height of COVID. Um, so you you got obviously kind of entrepreneurial leanings. Did you ever consider starting something from scratch rather than buying? Like why buy versus and and you're in tech, you know, where people are probably, you know, kicking around ideas all the time, new ideas and and ideas businesses you could start from scratch all the time. Why buy a business rather than um, start one from scratch? Yeah, so like when it comes to tech, I'm not really smart enough to do that. I mean, I don't really know code. Um, I didn't have that uh, that side for me. And also like my background, my family was all in small business uh, both of my wife's side and my own side. My my dad's a beekeeper, so he runs like a bee farm and so um, I'm from a small town where a lot of people are small business owners and so that kind of just made sense to me more than like, hey, let's build a tech idea and raise capital and that just didn't really fit um, you know, what I'd known. Um, and then I I did I did try to start uh, actually a garage flooring business. Um, but ultimately I just hated doing garage floors. And so, you know, really what it came down to was like, you know, when you buy a business, you buy a ringing phone. And I figured um, I think I would do better that yet. That's a great That's a great way to put it. That's a new one for me. Stole from someone on Twitter. It was a tweet I saw. I don't know who it was. I'm sorry. But um basically I knew like I had a better I had a better chance of optimizing a business that ran than to start from scratch. So um that kind of is how that decision was made. And you had talked to me a little bit about the type of business that you wanted. Um kind of you know, we all hear about the plumbing business and and none of us probably considering buying a plumbing business are plumbers. And there's always the question of like how can I buy a business where I really don't know you know, what my my team is doing. I I I I couldn't you know, I can barely swing a hammer. Um and that was it and some people get over it and some people are really uncomfortable with that. So talk to me about that psychology for you cuz I know it was a big factor in your decision. Yeah, so you know, when it come when I came I guess looking at all these different businesses, um the first thing I would do is I would try to put myself in it every day. So like Yeah. what does that actually that picture actually look like? You know, I'm helping my kids get ready for school and then I'm going to a store. Am I going to a storefront? Am I working from home? Like what does that look like? So um there were a few that I looked at that I just couldn't quite um really wrap my head around. One was a fire alarm install business where you know, they were doing fire alarm and sprinklers and was a really solid business, but I just couldn't imagine myself being there. And so um essentially what it came down to is like where do I want to work every single day and how do I want my life to look? And so this business eventually fell into my lap and fit that perfectly. Um but I knew based on my own lack of technical knowledge in a lot of different areas, I probably wasn't fit to manage people who had been doing plumbing for the last 20 30 years. So okay, so you you were able to rule out a bunch of different businesses. What what was ruled in? What was the what were your criteria? Yeah, so um I would say like the big three things I was looking for was um a business that dealt B2B. I really was uncomfortable with the concept of selling to consumers. Um I've sold B2B for the last 5 plus years, so it made sense to me. And I feel like I know the sales motion a little bit better. Um I wanted something that allowed me to live flexibly. I like to travel. Um I like to you know, go be with my kids and stuff. And so I didn't want something that you know, was open till 10:00 p.m. at night. You know, I wanted something that was going to work regular business hours, which maybe that sounds like kind of picky criteria. But um another thing that I wanted was something that I could scale to an unlimited degree. So um wasn't bound by geographical constraints. Yeah. So we're So pretty obviously we're we're zeroing in on e-commerce here. Virtual, flexible hours, and you know, unlimited scalability or world or worldwide market. Yep. So So was it e-commerce? Did you go out looking for e-commerce business? Or were you more just like anything that fits this bill um I'm open to. It was more anything that fits this bill and also like whatever came around. I wasn't doing any proprietary outreach. You know, I didn't have any way of I didn't even know that was an idea or a thing. You know, I I didn't even know that the SMB Twitter world existed that was doing this. Um and so I was mainly just talking to brokers and whatever came across my desk. Um one business that was really interesting to me was a was a high-end audio business where they sold like really nice speakers and um receivers and and stuff. Because they they weren't selling online. They were only selling storefront. So I thought, well, if I could sell online, that would be cool. And then you know, within the first phone call to the owner I learned that the brands he deals with, they weren't allowed to sell them online. So okay, well, that kind of ended that. So it kind of started to make sense to do e-commerce a little bit um while I wasn't necessarily focused on it. Yeah. Yeah. And just so, you know, what I'm hearing is that you're completely self-taught. You're not You're on Twitter now, which is how I found you, but you weren't on Twitter then. You weren't reading SMB Twitter. Did you read any of the the books that come up again and again, Buy Then Build or the Harvard Business Review Buy a Small Business book? Yeah, actually that's how I was introduced to SMB Twitter and entirely was um I started getting really serious about it and I was like, man, I should probably like read something about this. And so I looked up I probably just Googled like best business books about buying a business and Buy Then Build came up by Walker Deibel and so read that pretty much in about a day and then um looked up some podcasts that he was on and found a couple different podcasts and found those podcasts on Twitter and realized there was this huge community of people that were trying to acquire businesses and people that had successfully done it and that it was actually a really good way of building wealth and so it felt good to have my thesis confirmed a little bit but then also, you know, I can't say enough about like the people you can gain access to by being on um business Twitter. It's It's pretty amazing. Yeah. So, the idea of buying a business, you know, that you had kicking around for some number of years, did anybody give you that idea? Because it's not It's not the most obvious idea in the world. Typically like how I came to it, I always say is it my my before I learned the path that you're on, I just thought I would have thought that buying a business was something that basically already wealthy people do or one company does to another or private equity people. But the idea of like buying a business as a as a lone entrepreneur seemed far-fetched to me. And in the very brief Googling I'd done on like Reddit and stuff was people are like, oh, don't do that. That's buying a job. So, I I remember doing some early Googling and then and it cuz it seemed like people on Reddit, you know, good great credibility there. But the people on Reddit were saying it it was a bad idea. So, you know, I I I um it just didn't seem like a very uh solid or obvious path to me for a long time. What about you? Uh you know, I really don't know. One thing I can I can think back to was in college I had a friend who uh and I'm I'm 29, so I graduated like 2016. Um but uh I had a friend who um franchised a business right out of college instead of doing anything else. He franchised something and um he was looking at buying businesses. And so I'm I'm I'm thinking that was probably my first introduction to like a normal regular Joe trying to buy a business. Um and then I've just got some friends that, you know, we kick around business ideas all the time and so I found BizBuySell and, you know, Yeah. that entire world. So I guess it and like I had seen family members buy businesses from like their like yeah, I saw my brother-in-law buy my his business from my uncle. And so I knew that like it happened. Um and but I didn't really like know how it truly worked until probably a year and a half ago. Like, okay, I got to get an SBA loan. Didn't know what the SBA even was probably. Cool. Okay. Well, you have made this decision to do it. You've got your credit criteria. What What about your financial criteria? What are What What size businesses were you looking at? Honestly, I wanted to buy something that was less than 700,000 at first. Um just like anything over a million just seemed outlandish to me. Uh and so I was looking at, you know, a lot of businesses like that. But the tricky thing about that size is like they barely cover debt service and maybe paying yourself a little bit. And so um I was looking at a bunch of businesses thing about them, for sure. Yeah, and also they're a lot more unstable. And so I actually was um I was never really sure what my size wasn't uh until you know, I started really looking at it and I was like, okay, anything under sub five I probably don't really want to do. Um and maybe I would now that I have kind of an anchor business, but at the time, you know, I couldn't think of of uh you know, doing something smart in that. So the way this kind of came together um was uh I fell into this business and um I was actually looking at a business that was around 750,000 um Purchase enterprise value. Yeah. Okay. So you're and this is from a broker, right? So tell So you're you're reaching out to local brokers or did you I mean, given that you wanted something ideally virtual, were you reaching out to brokers across the country or just in Utah? You know, I never occurred to me that there were brokers across the country that I could like that I could talk to. Um I was mainly just chatting with this one guy. Um There were a couple I mean, some of the big ones that are are nationwide Transworld and stuff, but there's one in Utah that I was talking to a lot and uh he had shown me probably like 10 or 20 deals. I don't know. I was a little bit nervous when I reached out because I for the one deal that I didn't end up getting because I'm like, man, I've looked at so many deals. He probably just thinks I'm, you know, just kicking the tires on anything and everything and I was really nervous about it. Um but we had chatted quite a bit and so he knew me and so um Yeah, I kind of through through a broker is where I found this deal. So sorry, the So this one business that you keep talking about that you didn't get, what what's the quick quick story on that one and then how did that lead to the one that fell in your lap? Uh yeah, it was a commercial cleaning business that had a bunch of uh a bunch of um contracts with like local ski resorts here in Utah, which I thought was a unique niche. And so um yeah, I was looking into that and uh uh when I called the broker about it, um he was like on vacation and then I finally got a hold of him on like a Tuesday and I was like, "Hey, I'm really interested in this business." And he was like, "Well, hey man, I'm sorry, but that's going to be under contract in probably like an hour. So, uh maybe we should look at something else." I was like, "Oh, dang it. Um I can't get my stuff together in an hour, you know?" So, uh he he was like, "But I have this uh this wholesale construction material business you could look at. Uh it does, you know, better numbers than this and it's probably a lot more easy I got a lot easier to run." And I was like, "Oh, sure, okay, whatever. You're just trying to sell me something." Um but I was like, "All right, sounds good." He's like, "Yeah, I'm going to list it tomorrow, but I'll send you the the financials tonight." And uh lo and behold, it was the wholesale insulation supply business that uh I have today. So, So, tell us about it. What what What were the What was it doing? What's the business model? Yeah, so at first when he told me, he's like, "They want 1.1 million for it." I was like, "Okay, that's way more than I want to spend on a business." Um but he's like, "You know, 1.1 million, but it's on pace to do, you know, 600,000 this year in net." And so, I I was like, "Okay, well, now I'm kind of interested." 600,000 in uh in EBITDA this year, but being for sale for 1.1. Yep. Yeah, so the you know, he sent me the financials and on the financials it had 2020's revenue listed, which was 2.2 million in sales and 380,000 in uh EBITDA. And I thought, "Okay, well, even those numbers are pretty good. What's going on with 2021?" And so, I looked at 2021 and um it was already at past those numbers. And so, I was like, "Okay, this is much more interesting." Um and so, I didn't really know what, you know, what multiple to look for. I had a read that like around three or four is probably where you want to be. And so, you know, this one was priced at three x of 2020's revenue. And so I thought, okay, yeah, that's that's probably good. Maybe we can you know, look a little bit closer in that. And so then also like the debt service was pretty easy to cover. Okay, I'm 380 in that service is going to be around 120 on that. Um I can live very comfortably on that. So, um and there's a lot of money left to reinvest in the business. And so the numbers started to fall into place for me even though it was a little bit more than I was anticipating in terms of cost. So, Well, and and as you now know, it's not even though, it's precisely because the numbers were bigger that it all started to to falling into place. Yeah. the right? I mean, the temptation is to for the first timer is to buy small cuz these 1.1 million seems like an outlandish amount of money, but you run the numbers and you quickly realize that it needs to be like that to pencil out. Right. It needs to be like that and also it gives you a less I guess less chances of failing. Right. If you're going to get a business that's 3 years old and has only, you know, netted $100,000, you could probably start something similar from scratch and be there in a couple years with a lot less debt. And obviously that's not the case for every business, but that's kind of the way I started to to look at it was, okay, I'm buying something that's been in business for 7 years. Um that has done at least 2 million over the last 4 years per year in sales. Um it's got a big name in terms of I got it has a good name, good SEO, good good bones. Uh and so it became less scary for me. And then I just kind of had to figure out um how I was going to make the numbers work and uh what we're going to do from there. So, um Yeah, I've got some opinions now on on what size of business I think I think 1 million is the smallest I probably even ever go now. But Yeah. Yeah, sure. I've heard that before. Cool. So, and and so it's a 7-year-old business and so is it essentially an e-commerce business? Tell us a little bit about the business of the business model and what it sells and how it and to whom it sells. Yeah, you know, sometimes it feels like it's uh all put together through paper clips and rubber bands, but but basically what it is is uh Welcome to the lower middle market, man. Yeah, so basically we've got this we got a website pacificinstallationsupply.com. You go on there. The difficult part about fulfilling insulation in bulk is uh you know, getting it to people, right? It's not like I can just send it to a distribution warehouse and then they just fulfill it by Amazon. It's you know, insulation comes and it's in these big warehouses across the nation. And so it kind of has to operate like a local business but with an e-commerce front end. So people call us up or text us or email us and say, "Hey, I'm looking for 2,000 square feet of this type of insulation." And then we have partners that house the material and deliver the material. And so then I have a team of sales people who then call around to warehouses, see which warehouse near them near the customer has the supply, and then we organize delivery. But are you is that your inventory or is it only your No, so you're not really keeping any of this Do you have any inventory? We carry zero inventory. We don't carry any inventory. The inventory is all carried by our our distributors and our partners. So that was another really attractive thing for me was it was a relatively low CAPEX business. Yeah. Yeah. And and so why are people coming to you rather than going directly to one of the distributors? That's a great question and this is something that I had to figure out on the fly. It was like, "Okay, who is my ideal customer profile?" And basically the way these distributors work is if you're buying a lot of construction materials or insulation, you can get an account with them and buy directly uh, get contractor pricing and it kind of eliminates the need for me. Uh, but if you're a small contractor and you're a small or you're a homeowner even, and you want to get better pricing than say Home Depot or Lowe's, um, but you don't you know, you're not doing quantity, um, Yeah. we're kind of filling that niche. And so, I get a lot of, uh, contractors who do everything rather than just like insulation, um, contractors who only do insulation because they're doing so much volume they can go directly to the distributor. Yeah. Um, but yeah, so we kind of fit that like middleman niche, but at the same time, uh, during the supply shortage there have been a lot of big companies who their normal supplier is out, but they don't have a relationship outside of that one supplier. Where we have four or five supplier relationships. And so, they can reach out to us and then we kind of work as a middleman for them as well. So, um, that's kind of the niche we fill we fill and that's why people would end up going to us as opposed to just the distributors directly. Um, but sometimes the distributor directly makes the best the best choice for for some companies. So, your customer is kind of like a general contractor with like a crew or two, like kind of a small mom-and-pop general contractor who's not big enough to buy insulation in bulk. Yeah. Yeah, you know, they don't have a big warehouse where they're shipping materials and holding materials. They need it this week. They need it delivered to a job site. And they need, you know, a certain quantity. Now, that's not always the case. I've had some big customers already, um, you know, where they're working on huge projects and I'm shipping to their warehouses, but that's a little bit more rare. And And that And sorry, that's because of the supply chain issue with the larger guys who haven't been able to fill orders? Yeah. getting some of their some of their disappointed clients? Yeah, not to kind of diverge a little bit, but there was one really big issue in due diligence that I found, um, that I had to overcome. And uh, it was customer concentration in this year, 2021. There was one customer who has done who had done you know, about a third of the revenue. And that really worried me. And I was like, "Hey, what's the deal with this customer? Should like after we close, should I go meet this person and try and get to know them? What's the deal?" And he was like, "Oh, yeah, they kind of came to us cuz their normal supplier was out. But right now it sounds like they're they're kind of all set." So I'm like, "Okay, this huge revenue source now isn't buying from us. This is kind of troubling." Um And so that was one of the hurdles I had to overcome was um understanding how to use the supply shortage to my advantage, but at the same time um I had to get comfortable with this concept of like, "Okay, a big chunk of 2021's revenue probably won't be there or will be limited. Um how are we going to deal with that? So um Luckily I I uncovered it before I closed, obviously. But um Yeah. Yeah, that was one of the issues that that the business did have was customer concentration this year. This year. Well, it sounds like to your seller's credit that he understood that and that's why he didn't price in he he he he priced based on previous year's numbers and and was basically treating this this customer concentration that that was kind of a windfall but kind of a one-off this year as just that as as as a windfall and not something that you could rely on necessarily going forward. Totally. Yeah, and he was like, you know, it kind of just fell into my lap. Obviously, we can keep selling to them, but you just never really know what they're going to do. And so um I I kind of pivoted it in my mind as the okay, if one customer made this big of a deal to the business, what can I do to gain more customers like this? You know, there's got to be more customers out there. Maybe not at the scale. This is kind of a household name when it comes to building homes. Um if you're in the construction, I guess. But Yeah. How do I How do I find more customers like that? I kind of view it as an opportunity. So Yeah. Yeah. Well, and that's you putting your sales hat back on, which is which is your professional background, at least tech tech sales. And I want to ask about that, but but quick digression. So, you know, I I haven't seen this in the business press. I'm just hearing it through my Acquiring Minds network and and interviews, but I feel like a lot of I've heard this a lot with smaller distributors, people who have acquired distri- distribution companies like you that they're the big large distributors that are the typical source of supplies in whatever industry are being really pinched because of the supply chain crisis. And and so smaller ones like you, I saw this in in a medical distribution practice and in ice distribution business are benefiting from that. So, these kind of it's this great moment for where you sit in the market, kind of a a smaller player that those distribution companies are just receiving a lot of business because your much larger competitors are kind of dropping the ball or the supply chain crisis has caused it forcing them to drop the ball a little bit. So, I don't know if you've seen that elsewhere or just in your own business, but I it seems like a pattern that keeps coming up. You know, I I kind of have seen it a little bit in like um you know, in my day job with our family the family business just you know, education technology. A lot of customers who weren't working with the business when I was first there a few years ago and now I have come back after all the supply chain cuz tech is highly constrained, too. Um they've gained a lot of customers because of that um that were prior customers of you know, bigger competitors. Uh so, I yeah, I guess I could see that a little bit. Um and the supply chain, you know, crisis, whatever you want to call it, is stressful, but right now I'm trying to just lean into it a little bit. Okay, how can I gain more customers, build a little bit of loyalty, and then once this is over, keep some customers. Absolutely. Absolutely. Be opportunistic about any crisis. So, you just mentioned a day job. Can you care to elaborate on that? Yeah. Yeah, so this is kind of awkward, but yes, I was working for our family's uh you know, tech business, basically. Um I am now no longer with it. I've I've put in my my notice and I'm done working, but um And you revealed your last name on Twitter. Revealed my last name on Twitter. Um the big thing was, you know, I at first I thought, well, maybe I can do both. You know, maybe I can find a way to automate a lot of this and do both. And then after I took over, it became pretty obvious to me, you can't do both. Um or you're going to do neither of them very well. And so, uh you know, family business wanted to kind of uh resign It was like kind of a secret within the family. I wanted to resign and talk about it openly in person. So, um yeah, did that over the the holiday break, and everyone was pretty excited for us, but uh yeah, that was the that was one of those uncomfortable things at first. It was like, man, I'm really excited about this, but I kind of have to keep it secret. But And this family business is your in-laws' family, right? Yeah, my wife's family. Um it's a like a the supplier of technology to school districts. They do services, um networking services, sell a lot of Chromebooks, just whatever, you know, tech is needed in a school is, you know, what we what we sold. Mhm. Mhm. So, you have you gave notice, you told them that you'd acquired a business, and now you're you're full-time in this. And you know, when you said you thought you might be able to do both, were you thinking about Pacific Insulation Supply as buying a job, or were you thinking about it as an investment like you put hours in the weekend to it but you were thinking you kind of more of investor posture than entrepreneur operator posture. Um I don't know if I was smart enough to really think about that. I think I thought, okay, if I can make some tweaks here from a tech perspective, if I can make it easier for customers to get quotes, um maybe my employees can handle more of the burden um and less of, you know, less on me. Um but then after I took over I realized that was really wasn't possible. Um obviously I can there there are some ways we're going to make quoting easier so we're taking less phone calls and fielding less texts and that's more automated but um in the short term, no, it is definitely a job. You know, when you buy anything that doesn't have a full-time manager in place, you're essentially buying a job and so now the the question for me over the next 6 months is, okay, can we keep revenue to a place where I feel comfortable bringing on a manager so that I can do other things like, you know, growing the business um and less day-to-day operations details work cuz I I don't like being in the details. I've I've learned overwhelms me. Yeah, but right now you very much are. Yeah, you're in every detail, every single detail. Yeah. And how many employees are there? Uh so there are four. Um they're all overseas. Uh well, there were three. I've added one. Um but uh yeah, so they're all overseas. And so you receive an order and you send it to one of your employees and they call around or email around the US. You I guess you kind of have a a working list of distributors. Um uh well, and you're you're probably call the the the the warehouses or the locations that are closest to the the client that that made the purchase. Uh and then identify where the insulation is and they submit the order and have it sent to the customer. So, you're um managing them mostly or you also receiving and processing some orders yourself. Um yeah, so the way it kind of works is two of them are well have been with the business for a while and so they are they're feeling phone calls, they are um working front end with customers as well and I really like it every time I see an order come in that I had no idea it was happening. That's like my Yeah. You know, I love that. So, that's the the goal. when the magic starts, yeah. Yeah. Um and so that's kind of the the way it's been working out for them and then what I kind of the recent change I did was I was calling around like the first couple weeks I was calling around all these distributors and just on the phone constantly between the customer and these distributors trying to figure out where stock is and when we can get it there. And one of my sales people was I wouldn't say just struggling but just sales weren't happening for her as fast. And uh her region was a little bit more constrained so um anyways, I asked her if she would want to just do fulfillment for me. And so decided to kind of break up the job the job duties and I plan on doing this even further but um I kind of shared this on Twitter but basically like Yeah. You know, in software sales there's the predictable revenue model which is essentially there's an SDR or a sales development rep who is cold calling, setting appointments to an account executive who then works the deal, closes it, passes it on to a customer success manager or integrations team who then manages that and then the account executive goes back to square one with someone else. And so it's kind of broken up like this because you can specialize and it's easier for an SDR to just you know, make a ton of dials, set appointments and then just forget them and then an AE to just close deals. Close. And so I kind of decided, all right, right now this we're doing way too much of everything. Our sales people are receiving phone calls trying to send quotes, calling distributors, doing order fulfillment, making sure that things are, you know, being communicated to the customer on time. And so, it was just leading to like kind of a bad customer experience and honestly a bad employee experience. Like this is not fun to do all this calling and coordination. And so, the first step in that was I asked the sales person, "Hey, do you want to do order fulfillment for me?" And so, whenever I get a text or I'm actually working with the customer, I figure out what they need and then I just ask her to go find it. She finds it, she puts the order in, and then she communicates the details. And so, if there's negotiation, I can still handle that negotiation, but the things that I don't want to do, I don't have to do. And I don't like doing logistics. That's not my thing. And so, eventually I want to break it up to where all our sales people have order fulfillment in the back end that are making sure orders are processed, fulfilled, paid, delivered on time, and the sales people are only making sure that they get a yes on the order. Yeah. And so, in her case, her strength was not in the sales, but in fulfillment. So, every new employee will be, you know, their strength will either be sales, in closing, or fulfillment. And you'll just separate the teams that way. Yeah. Yeah, so I realized okay, she's pretty organized and she's good at that sort of thing. So, let's let her do what she's good at and let me do what I'm good at. And um I I figured out a good bonus structure for her that works. So, she's still getting some, you know, incentive to fill orders and not just "Oh, well, we're out of stock. Sorry." You know, she's still kind of incentivized to try and pick and pull things from different different warehouses to make things work. But yeah, so it's working out so far. It's made my life a lot easier. I feel like I'm working a lot less Just over the last like 2 3 weeks, but And so now you know, your specialty being sales and you basically doing sales and she's doing fulfillment for you. Are you are you out there proactively trying to close new business? And for example, the the big customer concentration that big new home builder that represents whatever a third of revenue in 2022 2021. Yeah. Have you communicated with the client there and are you out there just pounding the pavement or what what what is it what does it look like? How are you applying your tech sales to your job now? Yeah, to be completely honest, I don't really want to pound the pavement ever again. I've pounded enough pavement in my day. So instead, I'm trying to figure out a process that I can hire people to do that. So my top sales guy, he asked me to buy him a list. He said, "Buy me a list of you know, construction companies that I can call and um I haven't done it yet, but that was like last week we had this conversation. But I plan to do that and I want to basically create a separate arm that is only outbound calling. And so that would probably bring on me bringing on other people to do that because um we really are kind of at capacity in terms of what we can handle just on inbound inquiries right now. And so I feel like if we added you know, a new section of people that are only cold calling and then passing those on to our season sales people to continually manage. Um I think we could we could find some success doing that. But we have we just haven't done it yet. I'm still buried. So hopefully I can get unburied and then start um start doing some of the things I want to do. And that's kind of what I've noticed is when you buy a job, all the ideas that you have of fixing the business are just ideas because you actually just have to run the business. and then once it's running, you know, you can maybe start up to think about changing things, but you know, the thought of change at this point feels almost kind of scary cuz I'm like, man, I just feel like I got the I'm figuring out what I'm doing here, you know. Yeah. Well, you're only what, uh a month and 8 days into it. So, um And I you know, all of the wisdom that I I hear from more experienced acquirers and acquiring minds is that is that even even if you had the capacity to start making changes right now, Damon, like you you probably shouldn't. You should probably just hold fast for 3 or 6 months and just observe, observe, observe, observe. And then, um when you're really wise and you really have your arms around the business, really understand everything, um in 6 months, um and have the capacity to do so, then start making changes. My unsolicited advice, never having done it myself, just regurgitating what I hear from my guests. No, I think that's I think that's exactly right. That's what people have told me too. It's like, as an entrepreneur, and I you know, you're you're you want to be active, right? You want to like Yeah. you know, get your hands around it, put your fingerprint on the business, but um you have to like take a step back and just kind of let things run the way they've been running. And sometimes I tell myself that, too, when I'm frustrated about something is I say, you know, just remember this isn't your process. You know, you're still doing someone else's process. Eventually, you know, this will be your process, the way you do you want to do things. Um But yeah, that's kind of the way that it's kind of crazy. It's only been 38 days. Uh feels like it's been a lot longer than that, but yeah. It's like a time warp. You have mentioned on Twitter, uh just meant your mental health and how that's played a factor in this whole process. Um talk to me a little bit about that. What what is your what is your um kind of mental health history? Yeah, so um I'm super open about it because for years I was very secretive about it and I felt like it built up um made it worse a little bit, but yeah, when I was 17 I was diagnosed with with bipolar disorder or kind of a mild form of bipolar disorder and that basically means swings of you know excitement or hypomania mania whatever you want to call it and then periods of depression and mine are kind of more longer and more pronounced than like on a daily or weekly basis. Mine happen in months. Mhm. And so you know I've been taking medication for the last almost 13 years now for this condition. And but it still kind of affects your life and so I still struggle a lot even daily with anxiety um you know even being medicated, but basically I went through a I went through these phases where I would get really excited about something. In college it was whatever I was studying or some career path I wanted to do. In my career it was working for a certain company or doing working on a project and then I would sometimes bottom out. I would get really really excited really high on an idea and then I would crash and I would bottom out. I would discard the idea and I would move on. And so I actually had this happen you know with a couple different business ideas and um you know once I decided to make the acquisition some of the internal dialogue that I had to work through was okay what part of me wants to do this? Is it all of me? Is it truly me or is it the you know is am I having an an episode here? Am I just really excited about something? Yeah. Yeah, I'm having a manic episode where I think I'm going to take over a business and go and make all these changes or um or you know or is it really me? And so it's a conversation I had a lot with with friends and my wife and therapist trying to work that out. um How do you work that out? How how do you how do you find out if it's the real you or the hypomanic you that's whispering in your ear? Uh I think the biggest test is time. Yeah. If it sticks. You know, if the if the idea sticks with time and if you can if it can endure the ups and downs. And so I started to realize like okay, I'm not like blind to some of the flaws here. I'm not blind to how hard this is going to be. You know, I'm not creating a sensationalized version of this in my mind. Um it's very realistic to me. It's like, okay, I know this is going to be hard. Uh I know this is going to be a big life change. Even though I wasn't necessarily like sure what that would entail. Um but it wasn't just this like sensationalized idea. So, I started to realize that it was different than times past, but also I was in a different state mentally. I wasn't having um swings really. Uh I spent a good portion of 2021 just trying to get mentally healthy. Mhm. Um In preparation for this acquisition or just cuz you needed it anyway? Just cuz I needed it, honestly. 2020 was a a bit of a year for people, I've heard. Uh yeah, some things happened. So, uh yeah, it's kind of to not to you know, digress too much, but basically um early in the year it became apparent to me that I was not doing well uh mentally. I was kind of holding things together, but I wasn't uh doing I wasn't excelling. Mhm. And so I kind of had I had uh spent some time away from work even uh this spring. Um just kind of trying to get mentally right and kind of had just recently gotten to a place where I felt that I had three or four solid months and then okay, I'm I found this this great acquisition, so I've got to make sure I'm ready and and healthy and prepared to take it. And so um yeah, I can't say that uh it's been all roses ever since taking over. I've had a lot of uh really strong anxiety or um you know, extreme lows, but also extreme highs. Um, not necessarily in a manic way, but in a "Wow, this is self-fulfilling. This is amazing." Um, but at the same time, it's those depressing moments can be really depressing when you're you're overwhelmed or um, you know, just really bummed out about something that happens. So, uh, it's a constant dance and something that I I hope I can continue to share more about uh, with people because I think a lot of people struggle with it and don't know they do or maybe they do and they're scared to admit it. Well, especially entrepreneurship, entrepreneurship itself is a bit bipolar. Even even for the most steady person, it can make them feel bipolar because you have a good day and you're on top of the world and you have a bad day and you think everything's crumbling. So, it just kind of yeah, it it kind of it kind of makes somebody feel uh, it imposes these swings upon all all of us who who have done entrepreneurial things. Um, well, well, Damon, you know, if you do have a rough month or or whatever, revenue doesn't hit what you want it to do what you want it to, um, just this is being recorded. So, play back uh, yourself your your your yourself on December 28th, uh, 2021 saying that you like you recognize that there are going to be really hard moments and the revenue's not always going to do what you want it to do. Uh, but that that you you were prepared for that. You you went into it eyes wide open. So. Yeah. Yeah, so it's it's kind of uh, being comfortable with uh, the concept, but then you have to actually be willing to live live through it. So, um, I'm sure there will be months, right? You know, so far we've we've exceeded my expectations. Um, so, we'll we'll see what happens once we get you know, hit a couple low months, which I'm sure we will. Last question for you just about the future of the business itself. So, I think the obvious expansion here would be into different categories beyond insulation and there's of course an entire giant ecosystem of stuff related to building materials and construction. So, it seems like you could um you know, bolt on whatever. I think I think actually you mentioned to me roofing interested you. So, talk to me about um when you get some breathing room, what what that strategy might might look like for you? Yeah, so that's part of the goals for the year. Um I think uh within, you know, 6 months or so and I can hopefully bring on a manager. That will give me time to open up the second category. Um so, yeah, I'm trying to figure out who who my customers really are and get to know them. And uh right now I'm finding that I I have a lot of roofers. Um people who, you know, reinstall roofs have to do a lot of insulation work. Mhm. And so, the distributors that I work with, they carry a lot of different material. And so, I have accounts and I have the infrastructure ready already to to ship these materials. And um all I have to do is essentially spin up the products on the website. Yeah. And so, um yeah, so I'm still identifying what it's going to be. But, it seems like roofing would be an obvious fit. Um metal siding could also be or siding just in general could be another fit. Um sheetrock, drywall. Uh I'll probably just look and see at, you know, the markets that I'm in and um see which of those categories is a little bit more thin than the others and um kind of bolt it on. So, I think at first it's going to start out uh just cross-selling. So, we have a insulation person, we ask them if they need sheetrock or, you know, if we know they're roofing customer, try and just get in on the action there, too. And then, uh kind of grow from there. So, we're going to try to take it organically and then, once I find some traction, we'll actually launch something. Well, it's so great to already have, you know, you're basically kind of a a marketplace. Uh you've got the suppliers on one side and the the end customer on the other. And you already have all of those relationships in place. Um and you could just start you're basically a channel and you can just start sending more through the channel. And you don't even have to acquire the inventory cuz cuz your suppliers are doing that for you. So, you can just mention uh roofing and and start start generating revenue from roofing. It's pretty pretty uh pretty great position from which you can start kind of experimenting without much financial investment. Yeah. Yeah, and I kind of look at it like uh you know, maybe I bought three businesses. And you know, it's like if I can if I can find two more categories to really grow in, um it it it's almost like uh house money at that point, so um you know, we'll see what eventually what eventually happens, but um I definitely like being in a niche. It's nice because it's it's easy to build things out on just insulation right now. Like, you know, I kind of am becoming smarter every day in in what insulation what people are going to need or um how to best sell it or um which sounds kind of funny for just insulation, but um yeah, I I like the idea of being in a niche. I think you know, every business I start from here on out will be in a niche um rather than just general. It's kind of kind of cool. Very last question. We had talked about, you know, how your um correct your financial criteria for the size of business evolved over time. Do you think that So, you paid 1.1 for this business. 1.12, I think you said you you added 20 20 20 grand to the purchase price to make it yours. Yeah. Uh do you think that you could have handled a $2 million acquisition? Uh $3 million like if you if you could have raised the money, do you feel like um now that you've sat in the seat of a million-dollar business, oh, I could have done two or even three? Um I mean, not having ever done those other ones, I look at it like maybe they would be easier. Like, there's probably more infrastructure in place and like it's a train that can keep moving. Right now, I'm shoveling a lot of coal to keep this train moving. So I think there's a lot of places I can fail where I think like you know a bigger business that has more things in place and you know more employees that you know have a role specialized role might be easier in some some regards but at the same time probably I would have been too scared to do that so um That's an interesting question um but yeah I think like buying yourself a business where you're going to have to be the star player is kind of scary so and hard you know it's kind of hard cuz you're not like an absentee owner you're a very active okay if I don't do this it doesn't get done type of owner. Yeah. Damon what's your Twitter handle and any other way people can feel free to contact you online? Yeah so probably the best way is on Twitter at Lumberyard Damon. Yeah the ca- the the holding company I'm creating is called Lumberyard Capital which actually was created before I even knew I was going to be in construction so very interesting but yeah Lumberyard Damon always open to chat deals or or whatever so And you're you're a great follow relatively recent to the platform but you've already you've already put some really good stuff out there which of course is how I found you. Damon thanks for thanks for sharing your story and including the personal parts and we'll see each other on Twitter. All right sounds good thanks.
Damon Chlarson had 3 key criteria, and he found them in an insulation supplier doing $380k EBITDA and selling for $1.1m.