Christiana Lagan welcome to acquiring minds thank you for having me excited to be here Christiana you're a veteran of the tech world you actually worked at a tech company whose Focus was home services yep then you went out and bought an actual Home Services business a pool maintenance and repair business Yep this is recent your three months is so we're eager to hear how it's going and the full story please start us off Cristiano with background on you yeah so uh after college I like many you know undergrads didn't know exactly what I wanted to do with my with my life so I did what many before me had done and went into General management consulting at a firm based out of New York I think it was a fantastic first job to have learned a lot of great skills got a lot of mentorship got to see a lot of different businesses and and their inner workings uh but kind of quickly decided that it it wasn't for me I wanted to be a bit closer to the impact of my work uh feel a bit more connected to it uh like I mentioned I was based out of New York at the time so I left Consulting and joined uh an early stage startup well at that time an early stage startup called uh Zach do uh so if you're not familiar it's a platform for patients to book online doctor's appointments I was on the strategy and operations team there and it was everything I it was everything I wanted when I was leaving Consulting I did feel a lot more connected to the impact of my work I loved the mission of the company I loved the team I got to work on a lot of different interesting projects uh so not particularly looking to to make a move but kind of as these things go through some friends of friends I got connected to some entrepreneurs based out of Berlin um and they had something very exciting going on which is they had a startup that was growing like wildfire in the German Market it was a home services startup focused on large ticket services so think Roofing flooring painting were kind of the the big ones that they were doing or customers could call in get a fix price quote for one of those services and home Bell would fulfill it and so like I mentioned was growing a lot in the German market and they were very keen to open a US market so we're looking for somebody to to lead that effort found me uh we had some great conversations and it just seemed like such an exciting opportunity for where I was at in my career thought phase that I packed my bags moved off to Berlin started getting onboarding there uh and then repacked my bags moved back to the US and opened the home Bell Phoenix office where I started to get things off the ground going in scenix Arizona for the home bell model so we I got things going there started growing the team copying the The Playbook that that they had established in the German market and uh after nine months you know after hiring a team of of 20 people and and getting the business off the ground and growing quite a bit I ended up firing a team of 20 people and F filing the company for bankruptsy once we had kind of ripped through a lot of our not just the home Bell us office but a lot of the home Bell offices had kind of went through our our funding quickly and and didn't have a great Pathway to to unit economic profitability so that was a pretty crazy experience it was very much a whirlwind and certainly you know got the the side of the startups that that you don't carear about as often which is you know when when they failed and so after that kind of took a step back started thinking critically about what I wanted to do next decided I love building things I love uh you know this sort of entrepreneurial feeling but for my next move I wanted to go somewhere that had found its product Market fit so at this point I felt like I had some knowledge in home services and and certainly some knowledge and building and so I found a home at a kind of more mid-stage startup based out of New York called uh handy Technologies so what they were doing was fixed price small ticket home services so at the time I joined they were known mostly for uh their subscription cleaning service but they also did furniture assembly a AC installation you know a longtailed small ticket uh services and when I joined there I joined what was then called the growth team at the time tasked with overseeing a number of different growth initiatives one of them uh was a early stage partnership we had with a a large uh Fortune 500 retailer that sold product and was looking for somebody to do the service component of their product so uh and this grew to be quite large so handy started partnering with companies like Wayfair and Walmart and Costco and Katon barrel and what they were doing what we were doing at the time essentially was the assembly or installation component of products so uh was overseeing some uh various Partnerships on on the handy side uh for a number of years growing them from nothing to you know very large uh multi-million dollar Partnerships and it was sort of a blend of p&l management growth and also partner management yep handy got acquired by uh Angie uh which is or Angie's List which is now just all one Angie which can covers a number of different brands uh so I got to stay on for the acquisition continuing the Partnerships role eventually pivoted over to more of a marketing role where I was overseeing one of the online marketing channels for Angie and did that for for some time and then you know how these things go you you kind of blink your eyes and you're like wait I've I've been at this company you know handy plus Angie for for coming on seven years and at that point I I kind of took a moment and decided all right is is this still what what I want to do uh and the answer was uh I don't think so I wanted to again be closer to something a bit more entrepreneurial so I decided to take some time off think about what I wanted to do next and heard about this concept you know now very familiar with of ETA buying a small business uh and it just really let me let me stop you there before we pivot into your Discovery and uh and falling in love with ETA some quick back um follow-up questions so uh the So when you say Performance Marketing you were doing Performance Marketing in Angie that was for that that's basically um marketing that is tied to C directly to customer Acquisitions so affiliate stuff and PPC Google AdWords so you're controlling budget and really and it's not it's not branding in other words it's like corre very quantitative marketing it was very I what we called it at Angie was Performance Marketing right very that trick focused very you know cost per click and conversion and and also the the quality of the leads they were we were getting you know how how are they performing for our for our network of providers so yes it wasn't what you would think of as more as branding and uh creative it was very uh Performance Marketing heavy yeah and so were you bidding on terms that were some Home Services category and trying to capture those leads and then distribute those leads to the providers at Angie that were part of family Network that's the Crux yeah and so are does that did you envision I'm maybe now I'm jumping ahead a little bit but U applying that skill in your own home services business so if you know how to drive leads for home services are you is that a skill you're going to lean on in the pool business you know yes uh absolutely but I actually think uh some of the previous work I was doing with before for the marketing rule with the p&l management uh applies even more so in the sense that there there was a particular partnership that I was working on that uh grew incredibly fast we just had so much demand to capture and the profitability kind of got away from us in the process of that and so one of the big projects that I worked on one year was with the team was really get really rightsizing that partnership going over every single part of the the business all the way from when customers enter to uh you know when we complete a job and really understanding every single lever we had in that p&l and optimizing it so do I think the the marketing skills that that I acquired is something I want to apply to the pool business absolutely but I I also think a lot of the holistic p&l understanding are we pricing correctly are we paying correctly are we operationally efficient all of these things I I think also very much play into to how I think about the business great and and then maybe related to that home Bell the German company was basically trying I assume trying to generate demand for these Big Ticket Home Services Roofing painting and then subing those out or selling those leads to an actual to teams and technicians and contractors it was like a contractor correct right and why do you think that model ultimately didn't work in the handy model which was the same I assume the same model you just said just lower ticket items IKEA Assembly and what was the what were some of the uh home cleaning why did it work in the U what were the what made one work and one not or did it work in handy or was it a money losing startup that just happened happily got acquired yeah no it definitely worked handy and and it's not just handy I mean you see other models out there you mentioned Ikea which is Task rapit is owned by Ikea and so you know so so we know that that model works I think the there's a couple key differences I think one of them for these smaller ticket services and I do think a lot of the work we do in in the pool business but I might be jumping ahead uh fits fits this model is you can scope them very tightly right you can say exactly what's involved in the service versus what's not involved in the service and then have a pretty high level of confidence in how you're pricing them so I think just the sheer scope I mean once you start talking about a roof or you know ripping up someone's floors the sheer scope of what can what can happen uh and and just the scope of the work can really creep up so I think that's that's one large thing is just the ability to price them with confidence and and in your margin um and then I think two I'm not quite sure the the right words to to use here but the and it might be related to scope but the variation in quality it's easier to say if you have successfully installed an AC unit right whereas if you're painting an entire house uh as an example um the variation and the quality of that can be quite high right like are you kind of getting the paint everywhere and whereas I think with these small ticket Services it's more binary yes or no yeah you know it was done so I think it's it's and um just the Simplicity of the Services overall makes some better candidates for uh pricing scoping uh all all these things not to say that the large ticket Services there's not a way to make it work there probably is I just think you prob you have a a longer Road uh ahead of you so you are looking around for something new and you discover ETA how do you discover ETA totally yeah so like I say I was in a very exploratory phase and by a quick side notee here anyone who's UNC what they want to do if you can take time off right like you don't have to jump straight to the next thing because I think the time off was absolutely critical for for exploring um so I was going to a lot of different talks and um just just kind of networking see seeing what was out there and um I went to gosh I can't there was a co-working space that was having an event a speaker came and she mentioned and I came up and chatted with her Oscar and said oh I really liked your your talk and she asked me what I was up to and what I'd been doing and I told her I was kind of looking in the Home Services space then she said oh like a boring business um and I yeah I didn't know what what she was talking about and so she she brought up Cody Sanchez and this concept of oh a boring business that these are actually very lucrative opportunities because uh they're they're cash flowing and uh many of them might not be optimized right for for profitability or might you know might have a lot of growth potential so she kind of gave me this word you know Cody Sanchez boring business uh went online started uh watching some of the videos uh listening to some of the content you know uh and then of course heard about all the the books like the buy then build and I started reading them and then really became more and more aware of this world out there and the more I learned about it the more it really started appealing to me and um yeah started looking for a business full-time in January full-time in January great about to hear about the search but what of the change in identity this was going to require you were kind of this in hard charging startup environments doing well even the startups may or may not have been doing well but you're you're certainly progressing in your career uh sounds like it was actually a pretty great role you had at Angie which is a public company um what of going from that glamour that might be a little generous but to to uh into the sweaty quote boring world of small business was that going to require did it was it going to require an identity uh tweak you know it's funny a few people have asked me that because it is true the way my career kind of progressed um and in my more recent roles that a you know large publicly traded company sort of this this more strategic role but to be honest it didn't feel like an identity switch to me because especially when I hearken back to the home Bell days I mean we were a startup it was Scrappy like Beyond I mean Scrappy like hopping on the phone with customers H me hopping on the phone with Pros like this was this was something I was doing all the time and then similar when handy was still a startup and you know I was working on launching these these Partnerships it's not as if when these Partnerships started out that it was a huge team of hundreds of people like it was again we were we were just throwing stuff at the wall to see what what stock right so again I mean these were these startups I was in these sort of more like Scrappy roles and so for me I didn't feel like I I was getting out of some I have been out of my Ivory Tower right before and so it didn't imagine very clearly in my mind what it would be like to be in these it or I thought right I could imagine very clearly what it would feel like to be in this more small business and home services because I felt like I'd lived that before it's true I hadn't been in that role in a few years but I had before so it didn't really feel like an identity shift more of sort of stepping back into somewhere I had been before but but not for a while but but but Cristian let me press on that because what I feel what I hear you describing is the nature of the work felt familiar but what about the this this sounds so shallow but when you introduce yourself the the cocktail party introduction hey I run Performance Marketing at a public company versus hey I run a I own a pool business it's it lands differently that piece it does land differently um but you know I feel like a lot of if you were to say if you were to categorize some points in my career successes which I do I would actually attribute a lot of those successes to in many cases taking the role or the project that didn't sound appealing on the surface it was so funny and this is maybe a bit of a Side Story here but I remember there was a partnership I was on at Angie or at Handy rather that was so challenging in the early days nobody wanted to be on it everybody wanted to get off of it it was very hard I raised my hand and said I want to do it it was really hard and when I would tell people it handy that I was working on this particular partnership everyone was like oo that's you know interesting interesting decision but then after about a year or so working on it it was doing phenomenally well and I was at a you know a team or a company event where somebody was like man how did you um uh like you really rode that wave of this partnership and it was so funny hearing them because it wasn't a wave I had ridden it was a a project nobody wanted that I raised my hand and said I wanted and then I made it you know made it that that wave and so this kind of feels similar in the sense like yeah I'm going from this cool maybe sounding um role to owner of a pool business which kind of maybe to some they're gonna be like all right interesting interesting choice but in my mind it's this calculated kind of risk where you know knock on wood and a few years or however long it takes when I think it'll be a wild success then I think that's a reframe in in in someone's mind so yeah I mean it might come off a bit odd but I just have a lot of confidence in myself and and you know in the business and and where I can take it so I think it'll sound it'll hit a lot different in in a few years uh if that sense it makes perfect sense and and and so to be clear what you're saying is the you have big Ambitions for this business business so it is not it is not and and that doesn't that doesn't differentiate you from many of my guests many of my guests also want want to grow not everybody some some people want the life so to kind of grow incrementally or whatever they're not NE but but um but you this is this is not the end game this is the raw material raw material from which you are going to build something big that's how I feel yes excellent okay fantastic now uh January we're here we are January of this year I should say that Sam Kramer introduced us and one of the things that he was that he wanted to highlight about your story was how quick how short your search was you um made it happen quickly so we're we're about to hear that um but context giving people the context that you moved quickly does that feed into your criteria what were your criteria what were you looking for yeah so my criteria was I wanted a home services business because I felt like was where my background was um I wanted something unoptimized I guess where I wanted something where the value ads were very clear right where I could very clearly articulate in layman's terms like this is this is a value I could add via you know the the profitability is not optimized the growth's not optimized whatever it is but the value ads were very clear uh because I wanted confidence I could grow it quickly um let me can I stop you there Christian do do you feel like in this world of people buying boring businesses that that's something people don't do very well that they assume there are levers to pull but they they don't actually answer for themselves ahead of time what levers they will pull pull because you're really emphasizing this point where where whereas I we all feel like there's the Assumption here that when you buy a boring business with perhaps a boomer owner that there's just going to be a lot of stuff there you don't have to identify what it is at the outset yeah I feel mixed on this because when I listen to you know your pod or or I'm talking with others in the space sometimes there does seem to be this just underlying assumption oh yeah this can be optimized right but I don't always feel as if I'm hearing people articulate what exactly can can be optimized so sometimes I do for sure right where people are saying like oh they're not capturing all the demand that they're getting or oh they're not using technology and that could you know I sometimes you hear it but I feel like I don't hear it as often as I would um would expect when you're vetting any kind of you know investment opportunity um yeah people just seem to assume that there will be and there probably is they're probably not wrong but I think very clearly articulating that was and being able to put my finger on it from the onset was was very important to me so as you evaluated Sims as you evaluated the teasers and the businesses that you looked at you would you would you would need to to use your word articulate okay this is what I would do to this business make the one but I wanted to have three things I would do where it was like if I would do these three things this would be a better business yeah great well we'll be eager to hear what you identified in the pool business carry on with your criteria yep so Home Services very clear value ads um uh Geographic constraints I mean my my husband and I moved from New York to Los Angeles and we we love it here and and are really trying to build a life and so as soon as you put a geoc constraint on it I mean that's really going to to make the universe of of businesses smaller so I was looking you know within a few hours of of La um although that that that does represent you know the GDP of many small countries a few hours of LA but yeah but no no it's it's a constraint fair enough K but it's that's a big that's a big that's a lot of population but go ahead correct there's a lot of businesses and then I wanted uh the size of the business to be such that I could um even if I took investment uh I could have the vast majority of it um so own you know I really the number I had in my mind was I wanted to maintain you know 70% ownership uh of it um so those were those were those were the the big ones I have in my notes Here a quote from our preall I I want I want to eat what I kill and I and and I feel like we're getting away from the moment for that quote so how do I te how do I tee you up for that Christian were you just referring to kind of want doing your wanting to do your own true business being become an owner in other words become an owner and so look I mean I like we covered kind of in my background a lot of my background is in startups I think I've had a great career so far um I do think one thing I observed with with startups is that it's uh when there's an exit right it's often the owners the the founders if you will who who see the most out of that and I and I think that makes sense right um and so from somebody who said that they want to own 70% of their business it should make sense right make sense and so look I don't really do New Year's resolutions uh what I do is more of a a mantra right for for the year so I'm not going to say oh this year I'll stop biting my nails or you know whatever it might be I'm more like what's sort of the mantra for the year and uh you know some of my friends and I do this together um and so in January when I had kind of committed to I'm G to buy a business that that's what I'm going to do and my my group of friends and I were sitting around kind of saying hey what's our matcha for the year what popped into my mind was I want to eat what I kill right like I want to be what whatever I kill which maybe maybe it's not going to be very good stuff but I hope I hope it is that I want to to kind of be master of my my destiny have a bit more control of of my life but then again really eat what I what I'm killing so if I'm doing fantastically well I want to be able to have that if I'm not you know that that's the flip side of it it is well but I think that that has really been The Guiding Mantra of of this year and and a lot of how I was thinking about about my search well I I I love the expression you know you you hear that expression I don't know in maybe kind of sales jobs or whatever but but um I I do think it kind of captures one of the core reasons people become or are attracted to becoming an an entrepreneur it's not necessarily some of the fluffier things that you might hear in the Press it's just that sense of self um of uh self-direction and and um actualization and I love how just sort of cavem Manny Primal it is great all right um one other thing going back now to your criteria jumping around the 70% but um how did that play or how did that plus whatever was on your your balance sheet um how did that play into size that you were targeting yeah so I would say the the size I was targeting um was I would I put kind of a a maximum on it which I a acquisition price of I don't know somewhere around like 5 million or something like that felt like the absolute Max I wanted to go um and then I guess there was no specific minimum if you will but I in my search I was in General trying to look at businesses that had an sde higher than two 200,000 so quite small I mean we're talking about a really a really big range here yeah and interesting that you capped it you capped the upside usually people C the downside not not no smaller than although I guess you did too but 200 SD let's push on that number a little bit Cristiana so I'm going to assume you were making 150 easily at Angie 150 North of 150 um just being conservative the 200 SD if assuming you use an SBA loan half of that plus goes immediately to the SBA loan leaving 100 left over uh for you to live on a big step down in terms of income and doesn't even take into account the J curve and the reinvestment into the business so um this 200 SE is is really when you when especially for somebody coming from a great salary is really small how did you get comfortable such a small number or business yeah I and I mean you hear some you hear a lot of different schools of thoughts right in this space and I think one school of thought is get the biggest possible business that you can responsibly handle and I think there's a lot of logic to that but for the small businesses which is more what I ended up getting the really small ones close to that 200 SD I think the amount of growth upside is probably in general larger right it's going to be really hard or a lot harder a business that's let's say like a $10 million ticket size it's probably going to be a long road to grow that 20 30% year you know I I just don't it's maybe it's possible but I think once you start talking about the smaller businesses I think these types of numbers of you know 10% growth 20% growth like they don't sound as crazy if if that sense and so I think the way I got comfortable with it was you know each business that I was seriously considering I would do my little Financial modeling and all right and I did feel like it was possible to grow this business you know D double digits maybe not right away but um I think at a much faster clip than you would be able to a very large business and I saw this firsthand it you know the contrast between handy and Angie when handy was a small startup we're more lean I mean we could we could achieve really big gross numbers because if you're starting from zero like you know whereas it at Angie certainly we had some high growth business lines but it's a bigger company you know it's going to be more incremental more more measured and so I got comfortable with the small smaller end of that just because I I felt uh for this business anyway that the growth numbers potential was was higher it it's such a good point and just to put some numbers behind it it's it's easier or it's if you can successfully grow your business it is faster to grow a subm million dollar call it 300,000 SD Million Dollar business to a million dollars in SD then a million dollar SD SD business to $3 million of SD that's yes yeah and I think that that's a fair generalization now on the flip side let's just spend some time here the $300,000 which does happen to be your SD number the $300,000 SD number um business is more fragile and more risky so one crew member quits and there goes 25% of your SD sort of thing 100% yeah how did you get comfortable with that uh those those risks yeah so I feel comfortable and and I'm going to talk like specifics here because you know I got comfortable with specifically with this business for a couple reasons one this business is old I mean it is 40 years over 40 years old and not to say you know 40-year-old businesses don't just disappear overnight but I think it really had that like track record of longevity um that made me more comfortable that and you know it's it's seen different turn over the years and people come and go and and all of that and had periods of turmoil and stability and recessions and it had just weathered a lot of storms um incredibly well I will add so one just the business itself felt quite stable established two um and we haven't touched on this yet uh when I met the owner of this business and because and this is California we're talking about here we do repair this is a licensed business the owner has a Contracting license so he he would have to stay on yeah I don't I don't have a pool uh Contracting license um so the owner and I really clicked in a way I didn't expect to to click with with owners but I mean I he's he's my business partner right essentially because he does still hold a percentage of the business but I also feel like I gained like a mentor in some ways a family member so just he the O and this owner he this business put his kid through college I mean he bought his house off the back of this business and he uh had many other offers for for this business and I know and think because he told me the reason he he picked me is is just because uh we clicked and I also think he saw um the ability for me to do similarly what what he had did with the business and grow it over time and and make it my own little you know Nest EG and so T this is a long-winded way of answering your question but I really felt like I had the backing of the seller and the support of the seller in this business which over the past 40 years a lot of its success is you know Pro probably a lot attributable to to him and so I felt like all right I have the Sal in my corner here he's still going to be involved in the business he's invested in me he genuinely really wants myself and the business to succeed so that made me comfortable um and then there were kind of some more quantitative factors about the business I mean so a lot of the revenues recurring uh you know W which is which is a nice uh component to have the margins are are very solid on this business so there there were a few things that and just conceptually like taking macro steps back do I think pool cleaning as a service is going to get displaced you know in the next 5 to 10 year like no not really I don't think AI is coming for po cleaning like so there were some micro macro personal there were a lot of different factors that that got me comfortable with this specific business despite its size fantastic and the go but going back to SD and you know kind of what you might have been used to in previous salaries um were you going to need to pay yourself immediately out of the business what was the program there were you gonna just reinvest everything or what did that look like yeah so you have to keep in mind I went into this buying a business mindset saying all right this is going to be at least two years right and so when I found myself uh uh very quickly oh I I very well might own this this pool business you know the question um came to my mind every right how how much am I going to pay myself what I ultimately decided to do with with this business and again cont very specific to to this situation is I decided you know what the SD on this is small um I sounded it quite quickly I was already emotionally committed to not taking the salary for two years as I as I surged so I decided won't pay myself for this business for at least a year um and then re-evaluate from from there so I decided the the money would be better spent reinvesting into the business drisking it doing all the things so so that was the calculus had I you know had a different business or had I been made further in my process maybe I would have made a different calculus but but that's what I decided for this one I I love that because the cliche that we all know time is money we we understand this but but let's apply it to search which you basically just did implicitly if you decide to do a full-time search and you tell yourself okay you look at your balance sheet you say okay I can do this for two years based on how much money I have saved Andor my partner Sal or whatever my needs are I can do this for two years if you find a business uh after six months versus the full two years you have the to let's call the let's call it the total cost purchase price is basically less because you have you have saved 18 months of no salary correct um I I've never really had it quite distilled like that but every month that you shave off your search assume now we're again we're assuming you have kind of allocated your two years of your savings to do this every month you don't do it is is money in your pocket um and um so so so and and then if you kind of like all bundle it all together in the way you think about it finding a business after 3 months versus 24 uh is a cheaper business it's effectively you've PID paid less for that business very interesting working for a search fund or whatever you might not be thinking of the same calculus but I mean a self-funded search it's it's very real expense you know to be living living off your savings so I yeah yeah and so when did you first see this business so let's see I think I first saw it in um maybe February uh so I started in January first saw it in February um liked it um but I was early in my search and so I wasn't you know quite ready to start throwing out Lois but I did like it and I did um think there was something there and so I was kind of like all right I'll I'll keep exploring this this business and then the broker because this was a I found it through a broker called me and was like Hey not trying to pressure you probably is trying to pre seller really likes you he just got his first offer it's a good one it's asking price so if you are interested you know there's a there's a limited window so I was like you know what I do like it putting on an offer does not mean I am the the buyer right so no 10 like the present right so I put out my offer he got six offers in in total and I I knew two of them were were other pool companies um and so I was like all right well at least this is a good exercise and and putting out an an Loi and you know I I had to go through everything with with the bank as well to make sure that I actually could get a loan against it so it was I was like this was a great exercise and at least KN what it will be like to put out in Loi but it seems like he's pretty well poised here I don't know why why he would you know necessarily go with me um but then as we continued the conversations it seemed increasingly clear that that he would uh go with me and so I was like all right well I think I I like this business let's go deep on it during diligence and make sure that everything I believe is is actually there and if I can't think of a real reason not to get it other than oh that was quite fast that I found it you know this this question of what else might be out there that's my only hesitation that's not a great hesitation um because there's always something else out there right like didn't want to be one of the Searchers for five years just you know and so as I went through the diligence you know I kept to come back to the does this meet the criteria that I outlined and the answer kept being yes so it you know I I went forward with it despite the the quick uh Pace at which I found it great I I love it um it it reminds me of a story or two I've heard where it's like the the Searcher was like I kept waiting for there to be a deal breaker I kept waiting for there to be a red flag no red flag ever emerged so I had no excuse but to buy it correct kind of like and not to say that it's a perfect business you know no business is as I was going through it there were things not perfect but they were they were the things I I knew or expected or want deal breakers or all of that so yeah well let let's hear more about the business I've already said that it's 300,000 of SE what is revenue how many employees Revenue mix please some ball points um so 675 in Revenue so as you can do the math there that's incredible you know margins but I kind of almost did no I don't want to say discarded that but I was going to run the business in a very different way you know so I I kind of took that as um because the the owner was very involved he was working in the business right which which I knew I wasn't going to do so I kind of had to rejigger the the p&l a bit more for for how I would do it to make sure the math worked um so which by the way that effectively lowered your SD because you're going to have one less technician wait was he was he a technician he was doing uh he was in a sense he was doing some of the more High ticket repair work um not all of it but some of it and so I had to factor that in to to you know taking that out of the SD yeah so you so the SD so remove lowering SD if basically yeah okay okay just confirming um and so at the time I took over the business he had four technicians um uh for the business so four plus himself uh and yeah that that was sort of the the makeup of it the revenue all technicians no no back office craps no he was he was wearing many he was doing a lot of the admin work the scheduling but um to be honest you know the he had the business pretty stable there wasn't a lot of um uh back office work he he had an external accountant that he worked with so that wasn't an employee but he had an accountant who would do a lot of the bookkeeping and you know managing managing that so so so that was good and sending the invoices and and everything like that but then in terms of what we would consider more back office work like Fielding customer calls and complaints and scheduling I mean he was it doing that but he not a lot of that was it it was very simple kind of stuff like hey my my heater's out you know okay we'll come fix your heater it wasn't a business that was getting you know 50 inbounds a day that he's constantly fielding and I think he he had really gotten it to a place where it was quite um easy for him to to manage a lot of that that odd men type um again because it's small and those and technicians plus him so a pool business is very Rowdy so these each of these four technicians are do have a and him have a route and then when they do a repair is it still one man to one repair or do they ever D have to double up to do a repair or one one there might be some repairs where you need a helper if you will because the equipment's really heavy or something like that but uh it's more common it can be done with one person yeah yeah so you got basically five kind of five routes sort of thing four routes because the owner wasn't doing his own route he would step in for the high ticket repair work so you more had like four routes and revenue mix and recurring versus project what did all that look like yeah so I I taking a step back here this pool business is uh a bit different than a regular pool business in the sense that uh the majority of the revenue comes from commercial work so think homeowners association condos you know things like that yeah and so what sets these kinds of customers apart is one they are getting cleanings much more frequently than your average once a week a lot of the customers are getting three times a week cleanings because these pools are getting used so much by you know residents um so and then two because these pools are so high use people are always in them equipment's always on equipment breaks down much more often than what you're going to see in a residential pool because it's getting a lot more use so because of that half of the revenue is recurring um and the other half is let's call it onetime you know revenue from repair work work that comes up which I don't think is representative of a like residential pool business where I think you're going to I think the vast majority of the revenue you're going to see is that recurring cleaning Revenue and maybe some ad hoc repair work and and when we think repair work this is not even though a repair is kind of like a project it's much higher quality Revenue than pool construct than like than than than construction or project because it's reoccurring it's gonna stuff is gonna break right how do you think how do you think about the quality of the revenue of the repair work I think of it as very um I it's not the same as the in cleaning Revenue but but it it what I'm starting to see 90 days into business it's always going to happen once you reach a critical mass of accounts there's always going to be a heater that gives out a filter that's old and leaking um you know uh a pool that needs an an acid wash uh what I think once you hit a certain number of accounts something's always going to be breaking so I don't it's not recurring you still have to you still have to work for it and and be quick to to address it but it does feel like I I would be very surprised if there was ever a month where we didn't have some critical amount of repair work so yeah yeah no exactly so so it it it feels to me like higher quality Revenue than you might think um oh for sure yeah for sure I was pretty nervous the first month when it really hit me like wait a minute half of half of this Revenue I can count on but the other half like am I just sitting around waiting for a filter to to leak and it felt a little bit stressful like because you can't really it felt like I couldn't really control that right like if if the equipment breaks I have no I have no impact over that but um but now I feel much more comfortable like it it it's it is the phone rings yeah yeah yeah um well also to your point about commercial um we love that b versus B Toc yeah right okay making clear that we do have a lot of residential clients as well um but they they are close to our commercial customers like physically located to be on the route and again I mean the vast majority of the revenue is going to come from these commercial clients yeah yeah fantastic can you tell us what you bought the business for and what how you structured that yeah a little around uh 9 900,000 a little north of that I think we ended up getting up to like 920,000 or so so that's a good multiple um on on the the SD if you're doing the math there um and then how we structured that was a 95% buyout uh where the owner stays on as my my business partner and a 5% uh holder for for the license and for the 95% you used how much of your own how much was your um deposit how much was SBA uh so 10% down and the finan through SBA so 10% you 85% SBA 5% he holds on to correct that's right um great and so let's hear about you essentially you have taken advantage of a a change in the SBA regulations that happened just before you got into are you you're aware you're that's right it's so funny that I talked to and I mean this is a little tip for for Searchers out there like it some banks confidently told me oh this is this isn't what you're asking to do is is impossible it's it's not allowed you know and that that's just not true like here I am you know and what what were they saying wasn't possible Cristian the the license holder component the the buying out um uh like keeping him on is is a license holder that he that he would retain his Equity some piece of the equity indefinitely the partial buyout correct I heard a couple different flavors like oh he needs to put a personal guarantee down uh things like that um or just that the SBA doesn't allow partial buyouts which isn't true um right so yeah it and but not to defend these folks should know better but it is a recent change it is a change that happened in 2023 so people yeah um so this thing of him owning 5% retaining 5% of the business indefinitely um that's not seller note that's not Stellar note on standby that's true Equity forever as as long as you and he agree that you know that he wants to hold on to it um is a is something that uh is only been enabled by this change this 2023 change to the SBA rules um and and in fact when those rules happen this is coming up a lot of my webinars when those rules changes happened there was a lot of talk about it but it wasn't clear how much of an effect it would have well one year later a little bit over a year later in fact you're seeing it a lot in deals um this wave you know so and so the the 5 perent so tie that into the license and how that enabled frankly enabled the whole deal yeah so actually this was a bit a bit unique deal in the sense that he was offering he was operating the business is a sole proprietor business you can't buy out a percentage of a sole proprietor business that's not possible and you know we both really wanted to make this work so we came up with this with the help of you know my Council we came up with this sort of fancy structure that was a bit of a headache but I think actually ended up working really well where he created an LLC but so I haven't bought it yet uh but it was a condition of the the sale he created an LLC assigned the assets of his so proprietor business to this LLC yeah ahead of the sale and then I bought out a percentage of that LLC so it was sort of this weird roundabout like asset it it has a lot of the benefits of an asset purchase but is definitely a stock sale um or a equity sale I should say rather and and why is that important why is it not an asset sale um and it is a stock sale that this again is tied to the license I assume yeah it has to be yeah for the license you cannot buy the assets unless you yourself the The Entity that's buying it has a license which I don't um so so so it would have been impossible to to facilitate it as an asset sale which is again a quick side note as I was talking to a lot of Searchers you know there's this cannon of oh asset sales asset sales and I understand why you know they they are preferable from I guess like a risk point of view it will but you know some businesses like this one it's just not possible to to do it any other way so yeah yeah so he was a sole proprietor so he was totally exposed to Los I mean there was no corporate veil to be pierced I mean he was it was just him flapping in the for 40 years or however long he did and he didn't you know come up again and again another thing that got me comfortable with business 40 years you know steady growth year-over-year and he never had a big he was never opened up to a big legal you know liability that that ultimately ruined it yeah yeah um but okay so so he's there is no entity he has to create one into which he pours assets the Goodwill which is really you know in in a lot of these businesses what we're buying the Goodwill of the business is transferred into the asset the license is transfer excuse me into the entity the license is transferred into the entity and then you buy 95% of the entities on this just on this point about asset versus stock and the reason Searchers prefer asset sales is because you're not um you're not carrying forward any of the liabilities that might later attached to the entity if there was no entity for his 40 years if some lawsuit had come along somebody somebody from five years that he serviced whose home he serviced 5 years ago tried to sue him maybe because there was no entity at the time they couldn't you would have been protected anyway I mean yeah perhaps yeah because the entity didn't exist when yeah no if something came up from five years ago there's no way they could come after this entity because it wasn't even around yeah so right yeah right interesting okay just on the this point this this 5% that an owner this partial buyout which by the way we hear partial buyout it sounds like you know some small percentage but in fact you're you're still effectively buying the whole thing it just doesn't happen to be 100% it's 95 I always find that partial buyout kind of a little bit of a misleading term but you are uh buying 95% of this business and he retains 5% there is some risk to that that you're now co-owners with this person um you've already said how strong the Rapport was how strong the trust was but does it feel how does that feel to basically have a partner in this person even though they're only 5 per. I mean so far it honestly feels great uh you hear and I you hear a lot about like hey when you take over get the seller out yeah day-to-day operations as quickly as possible and um I am so impressed with this seller in the sense that if I had built this business over the course of the last 40 years and someone like me who doesn't have a background in pools you know comes in and like I'm G to buy your business I would be like all right sure but you know I he has been so um I think he's done a really good job of Towing that line of support when when I I I know I can call him when there's something going on and he will he will be present he will help me he will give me his his pointers and advice but he is not he he's ready to retire you know what I mean he's he's been supportive but he absolutely not been um you know trying to territorial yes correct I think and which is very impressive I think considering what the what he's how long he's had this business and and what he's done with it so so far I mean it's been 90 days you know but so far I think this partnership is off to a very um strong start and I feel like every day leaning on him less and less for sort of the just random questions and operational things that come up and uh you know we still have a nice nice Rapport we're planning a little trip soon with our respective spouses we we'll go do a little like Winery day and you know have a have a whole thing so I really do think I got fun quite lucky with the the Rapport of of the seller and I'll do a really quick you know Side Story here yeah one of the things um I uncovered in diligence is the you know there were a couple technicians that I felt you know maybe weren't the best fit for for the business going forward and I firing is is absolutely one of the worst parts of any leadership position you know it's it's hard in Corporate America it's hard in small businesses it's just hard it just really sucks and so when I did let go of of one of the the technicians and uh he took it quite poorly I was extremely upset uh after it you know and and quite emotional and uh tried call in my spouse first they were busy then I called the the seller and I mean just the like level of support like emotionally that that he was giving for it I was I hung up the phone I was like man I got really lucky with with this seller that we can have this kind of um Rapport and he was like you got to do things your way you know and I think the way this person reacted shows their true colors shows you're making the right decision like you've got this you know and and was very um supportive of it Cristiana we are I'm going to start wrapping wrapping us up but let's one thing before we close by hearing how things are going how it's been for these last 90 days we talked about how you whatever business you were going to buy you wanted to be able to articulate very clearly to yourself what levers you'd pull what improvements you'd make when you got in there what were they for this business yeah um I think one kind of ticking through the list is the operational efficiencies outside of you know some QuickBooks that the accountant uh was using that this is very much a pen and paper business so think about the universe of things that could be done there I mean at a minimum I wanted to bring all of the pools into like a pool route management app which I did uh to to more efficiently track all of that and really also just bring in the efficiency to track the profitability at a pool by pool level to to be able to get micro in a way we had have been able to before so I think one kind of Universe of thing is just adding some technology to to Really uh make the the business more efficient y um then I think another hiring um so you know Robert uh started this business in the 80s there was no indeed there was no you know it was just kind of word of mouth and and all of that and like any business any any business I think I I kind of think 60% of the battle is hiring right how do you get good people how do you get good people to stay you know all those things and so I wanted to introduce like a true hiring funnel to to the business to to get kind of the the best-in-class folk uh for it um and then of course growth levers again this business really has no online presence whatsoever I'm no Google or Yelp or certainly no online marketing pure Word of Mouth referral and uh you know I have have a website it does have a website but I've tracked on Google analytics nobody's going nobody's finding this this website which isn't surprising right and so um and the website's about 10 years old at this point anyway so um so when I was kind of ticking down the universe of things it was marketing online presence technology hiring funnel I the list kind of felt like almost endless for for the value ads that that that I could bring in to it um and so yeah so I've I've started executing on on a lot of those things um and that's it's it's been going it's it's I think you know some good advice I got that I didn't take uh when when I I bought the business I was talking with other pool business owners that I could find and someone said you know this is a 40-year-old business when you come in maybe just don't change that many things right away just kind of like see how it goes which is really good advice and I did not do that um and I started changing things all like week two I was like all right we're all using this app you know week three I'm starting to change Personnel uh immediately and and trying to to get different people in the funnel so I did really change a lot quite quickly which I think made some things much harder than I needed to make them for on myself the first 90 days but my logic was kind of like look I'm going to be deep in the J curve no matter what why not make it like why not get all the the pain out of the way as as soon as possible so yeah we're on an app now we have a slightly different makeup of the team we're we've changed up the routes and uh I'm hoping this month or early next we'll have a bit of an online presence that'll start fostering so we're we're we're really firing on all cylinders here and you know part of the reason that we say not too many changes too soon is so that we don't disrupt the employees and so that there isn't this kind of this this AB bracing or push back by employees how have your four technicians Plus for former owner I guess three technicians plus former owner uh responded to so many changes by the young whipper snapper yeah so I mean some of the like I did it's a we have a very different team now so i' I've turned over some of some of the technicians so I would say the how many um I've turned over all but one um wow and and the previous owner yeah the previous owner is obviously still still around I don't really consider him a technician I mean you know yes he was doing some of the repair but yes so I've turned over all but one of of the technicians um so have three and can I just ask how the how the former owner feels about that CU these are you know his guys you could imagine although maybe he also or not maybe he recognized that some of these people he should have let go and he wasn't the person to do it because the relationships were entrenched he just couldn't but New Blood could come do something he knew he needed to do or what why what was the lay of the land there yeah so the lay of the land is he he he knew that that there were some opportunities there but again he didn't have a true hiring funnel the the way I did so he was supportive and understanding of the decision and understood the logic behind it I think he was surprised I did it so quickly uh which is is fair um but I would say overall supportive and understanding of the decisions that that I made and and he would be quick to admit that you know he's he's struggled with particular around covid time I think a lot of Home Services business had trouble attracting good good talent and and he was no exception uh there so I I would say surprised by the speed but supportive of the decision overall interesting so he wasn't scared to do it because of the personal relationships he had with his people necessarily it was more he didn't know how he' replace them and you came in and built a hiring funnel quickly yeah ex exactly I mean he did have relationships with with these these folks some some more than others um and and I think whether or not you know he did have relationships with some of them and I I think it's it's nice that he he still gets to maintain those and and still um have some of those relationships because ultimately it was it was my decision and and they know that so yeah yeah well it's interesting how much how much the turnover is Christiana because you you you ask you know in these businesses which are so often asset light trades business or many of the businesses that Searchers Target they're so often aset light what are you buying you're buying the people and in a business in the brand and the history and the in the contracts and so in your case that is a ton of of the value um but you also bought the people but in fact 60% of the people you you didn't really buy because you had to let them go so only 40% of the people are still around so does it does it make you think about what you paid or not really because because because most of the value is actually in those in those on the demand side not the supply side meaning your customers and brand I really conceptualized this business the value to be on the demand side these longstanding loyal customers yeah um with predictable revenue and again over the course of 40 years I mean he had seen quite a few people come and go I think he was the big value ad in the sense that people might turn over and this and that but he was there you know the buck would stop with with him if someone's not doing a good job he would step in and you know oversee it so I think he the demand and the owner himself was a lot of the the value both of which I got to maintain and the sale so if you were talking to somebody else out there considering buying what what the the quote rules would say is a very small business very low SD business and and you know lot of uh employee risk because there's only five of them for technicians um what would you would you say what would you say I would say that this is for me this is a longterm game right this is uh I need a a long time Horizon for this to play out successfully because if you took a snapshot of what it looks like now I don't think you would call this like oh success you know um it it it's a long play so I would I would urge someone with um patience I would urge patience and to be honest I I do think maybe I made too many changes too quickly I think they were all the right things to do but I would say maybe if you have a lot of changes maybe parse them out a bit just for your own uh the sake of your own stress and your own livelihood um so I would say a small business I mean the the really small business the size I'm operating at here and you you have to be will to get your hands dirty I mean if you're coming from a role where you don't you know you want to be very strategic and just looking at all the numbers and and not talking to customers and not you know really involved in the trenches in the day-to-day it's it's it's not the business for you um so I I think those would maybe be some things I would I would caution people as they're thinking about a business of this size but but the size itself is not you don't necessarily think is the red flag that we're often told that it is is if you're willing to get in there and get your hands dirty don't necessarily be scared off now also we should say you have the resources to forego a salary for some time so you can basically afford to buy a business that doesn't pay you an income immediately there's that correct I mean I think the reason people encourage you know buy as a big of a business as you can possibly handle is for a few reasons one you can afford to pay yourself right so that's some hopefully healthy s healthy enough salary so you're der risked in that sense right um but then also a bigger business is perceived correctly I'm sure as being more stable right um right and so I think for this particular small business I perceived it to be sufficiently stable to to kind of get over that hurdle and the salary yeah I mean I'm I a certain amount of resources so so that worked for me I understand that doesn't work for everybody so I think the big hurdles for a small business if you can overcome the stability SL you know kind of salary piece then then I don't I don't see a problem uh with it great and and let's and let's make that concrete a 200 or let's say $300,000 um pool cleaning business that started two years ago is very different than a $300,000 SD pool cleaning business that started 40 years ago these are not these are not the same animal so you gota so to to your point you know look beyond the SD number and in your case get comfortable you got comfortable because there was so much history there there was there was um yeah great super and when you I hear you say this is a long-term thing for you that that phrase means different things to different people what does long-term mean in your case is this yeah and and maybe grander Vision when you talked when we talked at the very outset about um you know how you've started on uh in your corporate life you took pride s that were unglamorous and made them something really impressive and you want to kind of do the same thing here what is that uh you know the rosiest the rosiest outcome what would it be okay so you're gonna feel like I'm kind of giving you a non- answer but I do really like the framework clear fuzzy clear which is like the immediate path in front of you and what you're doing has to be clear and I know what I'm doing I'm going to try to online presence operate all the things we talked about the hiring funnel great then there's sort of like this middle section that's a little bit fuzzy but then the kind of longterm play should be clear as well what I'm trying to do is build this business to be as large and as profitable as possible and in a way that I have control over my life right and so that could look a lot of different ways could that just be taking this business Standalone growing it as big as possible through my own Market sure could it be a rollup yeah sure maybe that's in the cards for for me as as well I think there's that kind of middle section to getting it as big as possible in a way that I feel like I have control over my my life and Destiny that could take a lot of different forms so I'm open to what that sort of middle part looks like but I know what I need to do now and I know what I'm trying to get to if if that answers it well it it does close come close to answering it but where you want to get to the the clear fuzzy clear the second clear on the far means freedom freedom means control of your time you're basically the the owner of this business but you don't have a it's not necessarily five or 50 million like that doesn't that's that's in the fuzzy bucket what exactly like the numbers you know you're talking to an audience here Cristiana many of whom were like I want to build a hundred million holdco a very you know clear threshold of what they're running toward not so necessarily in your case not so necessarily in my case if if you know a100 million plus hold Co you know checks my my boxes you know then then great but that's not necessarily what I'm running to I'm open to the idea that this business could be you know like a it could be a five million Revenue a year business it could be a 10 million year I think the the gradients of the size I'm open to As Long As I feel like I'm being well compensated I I definitely would want it at some point for it to surpass the salary I was I was making at at at Angie or or you know other places so for sure I definitely have you know an income level in mind for sure but the the size of the business could take on on many many forms yeah and and it is basically an indefinite project this isn't something you do for five or seven years and then you go back and become the operating partner for private Equity Funds or something this is that's not my my vision you know who knows what that's not the vision right now yeah right great uh great and I'm keep jumping around a little bit but I just don't want to let you go and before I ask you some this this question um the hiring funnel that you built we heard so much about how hiring um trades in tradesy in Blue Collar businesses is difficult what is it what has been your experience building a hiring funnel 90 days in have you cracked that nut what does it look like out there yeah what does it look like out there um look I think I'm in a in a a good position with this business in the sense that not all pool businesses are commercial businesses that serve commercial customers I I can afford to pay a slightly more competitive hourly rate than like a residential Pool Cleaner um could so I do think it's it's been easier than I thought to get candidates in the door simply because I'm able to pay slightly more competitive rates um that being said for the repair work on the business so the actual not just the cleanings the heaters the filters you know repair work that has been much more challenging to find good people there's not a secret I mean look it's like a numbers thing you just got to you got to talk to a lot of people you know spend a lot on indeed and Craigslist and and all the things there there's not a there's not a trick here but but it's hard I would say I have an easier time finding the cleaning technicians that I do the actual repair work which is more traditional kind of yeah specialized tra yeah great great Christiana we've covered a lot of territory is there anything that you wanted to say that I didn't give you a chance to I I don't think so I don't think so okay well if people have questions about the pool business or about buying small or about just self-funded search broadly or Tech veterans or people who would be Tech veterans or trying to escape Tech and get into SMB land how can people reach out how do you like them to do that um guess they could try emailing me okay yep the best way okay we'll we'll put that in the notes are you at all active on LinkedIn or responsive on LinkedIn I actually I noticed before we got on the call today that my uh my invitation to you has been pending for two months so I guess not I I I before I took over this business I was quite active on LinkedIn I have just been so crazy busy I think I've kind of like fallen off a bit but historically LinkedIn would actually be a good place to reach me and you know so I would say I'm responsive on LinkedIn in general I'm just particularly busy right now sure sure yeah great okay Christiana Lan congratulations really great interview and fun story uh we'll be eager to hear how things go and in your first full year yeah hopefully a very different time all right thank you so much will appreciate it I hope you enjoy that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business