Dustin Kion welcome to acquiring mines thanks will very happy to be here excited Dustin you're a onean holdco your first acquisition was 2017 today you've done four total Acquisitions actually you just told me before we we hit record that you've done a little bolt-on so maybe four should be five you already had one business so COI Holdings is a portfolio of five ish businesses doing Revenue that'll easily hit $20 million this year 2024 and you are the sole owner so 100% of the equity is it is Dustin's let's get into it Dustin start us off with some background on you please yeah thanks again for having me will yeah we were talking earlier in the in the pre-interview um yeah my my story is probably a little bit different not too unique but a little bit different from other guests um yeah I I grew up in humble beginnings lower middle class in um Los Angeles you know Southern California area um my father was in a scrap metal business so I grew up um exposed to an industry where there was a lot of junk so it's funny I I'd wake up or or come home from school and there would be like a barber chair or or a fireman you know fireman uh you know axe or old bathtub from the 1920s so I I think that kind of got me started with this adventure and Entrepreneurship right like my parents were going to swat meets and doing those types of things and that really kind of intrigued me and as I got older you know you and I talked about this like I was a really troubled teen I I got in a lot of trouble and I went away to like quote unquote boys camp for a while so um wait what does that mean what am I what lines are we reading between here is that we'll call it like cam Snoopy for boys uh you know basically basically it's juvenile hall right so I I went I went away for a while and it was the best thing that happened to me I got help and as a result my life started at a young age started to come together and I I became you know pretty much I think what happens is that that those kind of experiences early on they talk about failing early on and sometimes it's better it it I grew up really fast right so by the time I didn't gra I graduated from high school but I I had to do a lot of night school and stuff like that so my my opportunity for college was I'm not going to say it wasn't there but I'm going to say that because of the circumstances I didn't go to college and I really had no clue what I was going to do as far as a career um however I asked my dad to work with this company but at that time it was you know my dad was freelancing a lot so he had like basically this oneperson operation that he was running from our our two-bedroom apartment right so he literally had scrap metal in in the bedroom and so forth so I started working with him and then he brought in my uncle and and and from that business is where I really kind of started to fall in love with the hunt of the deal right like finding junk for like 5 cents and selling it for five bucks that kind of thing and I was very arant and I told my dad how to scale his business at the at the whopping age of 19 or 20 right I told him what what what I thought he should do and he just laughed at me um what happened was was that by accident or just by kind of chance we started coming across um a lot of recycle electronic components so now nowadays it's all about e-w right so we we started to come across a lot of electronics um that had gold and Palladium and so forth and in these e-w right and we would buy these giant lots of of material there would be semiconductors there were chips right so you know now and day everybody talks about chips it was popular then but kind of unknown so that's when you know I got this um you know idea of and it wasn't necessarily something that I came up with but there was other companies that were doing it that were separating the scrap business and the chip business so I told my dad what why don't we know learn the chip business I'll learn it and you know we we were just buying a ton of it like new stuff it was just being liquidated like crazy in the 90s so um I with a $2,000 loan for my dad or not a loan but a $2,000 investment I put a down payment on a you know I think it was like a 3,000 squ foot building um took my brother with me at a young age and one of the workers and we started buying and selling new electronic components so we became a distributor of electronic part so we had two companies the scrap business the electronic business and it was at that point that and I think I explained this to you too um my dad got real sick in in in 99 and at that point his scrap business was kind of changing and it was a different type of business at that time so I ended up buying his shares out right before he passed away so I became 100% of owner of freelance electronics and then from there um you know started trying to grow the business we we we grew from like three employees to you know 10 or 15 and and it just kind of evolved to something completely different from the the scrap metal business let let me stop you there Dustin a couple follow-ups so when he passes and you have this chip business and you you've become an Electronics distributor so the chips business was not about uh extracting the value from chips as junk or as scrap or as Salvage Salvage is the word yeah so was it that or was it just distribution or both or or what yeah good question it started off as the Salvage part of it right and then eventually we realize that the money was really in the new parts so so if companies if you go to it's it's no different like if you go to you know a a retail like Walmart or something and they're going to be liquidating all their stuff a lot of their stuff is is junk it's scrap but some of it is still good and it's in brand new packaging and it could be resold and that's basically what we were doing is we were going to these companies and saying hey do you have any excess inventory right do do you have any do you have any junk and instead of scrapping it we would we would remarket it and we would put it in the stock because what happens in electronic components and and that happens more than ever is that a lot of times um especially with government right some of these parts become obsolete but the the designs don't change for for decades so if a company stops manufacturing that part like a Texas instrument then they're they're going to they're going to probably need it someday so we would put it in stock and just buy and hold basically just wait for us to get that call and usually the person that we bought it from for two cents same person who was throwing it away yeah and and then they'll come back and buy it eventually so yeah uh okay so you buy out your father as he falls ill and at that point it sounds like his business is still just him your uncle and maybe another person really it really you know as we might call in our world kind of a glorified job um and you had said earlier that as an arrogant 19-year-old you you you instructed him on how you could scale his business well you find yourself as owner of his business it like you do scale it so was it did you scale it according to your own prescriptions or was there some other way how'd you go from 3 to 15 people and over what time frame so I guess pick back up the story there yeah absolutely will I I think what I was trying to get my dad to scale and again I I I I sound so it sounds terrible saying that but it was the scrap metal end of the business and the scrap metal business is a commodity business it's it's a very tough business you need a big yard big containers a lot of trucks and a lot of volume and that was a commitment that my dad wasn't willing to take but chips semiconductors are small right they're small and they're more you know they you they take up a quarter you know 1/4 of the space and they're 100,000 times more expensive per piece so that was something that I believe we can scale my dad totally got it right like he totally stepped out of the way and just said okay just you know I I don't really know what you're doing but I like the money and keep and keep doing that and and and I'll tell you a little something too and and this is something that I hope it helps other people and it was key for me like I came across somebody that was kind of a mentor in that industry it was it was this old guy that looked like Santa Claus right he lit literally looked like Santa Claus and he would he would like have a truck and he would go around to all these little scrapyards and just buy stuff right you we buy something for 50 cents a pound he would come and give you five bucks a piece for these and I'm like holy smoke that's great and I was wondering what this guy looked like he was homeless and then I I follow him one day and he has this giant Warehouse in Long Beach and he's selling military Aerospace stuff and this was the guy that kind of gave me the idea of like wow that's what I want to do because I I can do that right I I think I can do that so I had to I and I think this is important for any entrepreneur I I didn't know exact what was going to happen but I knew where I was going and it was trying to get that Envision so I envisioned like okay here's here's my dad's scrap company I'm going to partition one part of this small little building one side will be for electronics one side will be for scrap and then once Electronics started out growing the scrap I Envision this Warehouse you know so I'm going to have all these shelving and all the parts are going to be organized and and that was my goal and that was my vision and I think from there is when the pieces fell into place and it was timing too will wasn't anything that I think I I sought out to do or I take credit it was things started going crazy in the electronic component industry in the 90s mid 90s or so so we just kind of erode that wave I started hiring I still didn't know what I was doing um I I just made so many mistakes I I I knew at a very young age from being around my parents and watching my dad deal Buy Low sell High I knew how to allocate capital I didn't even know what that word meant but I knew how to do it it was the business side of it the people side of it that I had a lot to learn so that's that was kind of the early days of freelance electronics and just to be clear this so following this guy this unassuming Santa Claus looking homeless homeless Santa Claus and to his giant Factory excuse me his giant Warehouse basically what what it was was oh this could be big this could be sophisticated so it gave you a North star in terms of just ambition and how how how big this thing this project this business could could maybe one day become and did you get to know him by the way did he actually Mentor you uhuh I I did you know he was like b Bruce to me like I maybe maybe dating myself a little bit but he was literally like a rockar to me I just I idolized this guy and he had to he just kind of had this uncular type of personality but yeah he was very kind of odd very intelligent you know back East guy from from from Brooklyn New York or from the Bronx and he just had this this thing but yeah he allowed me to go inside of his Warehouse what I so he started buying for me and then the day came that he let me buy from him and and I was trying for years to be able to go to his warehouse and just kind of pick a basket around and just grab these things and he and and he kept saying no he kept saying no and he kept say no and I go Bob you you got to let me come in he says come in on a Saturday and don't tell anybody cuz I never do this you know and and it was at that point that yeah I just he he was my mentor by Watching Me by by myself watching him and and just pretty much telling me in his own way that you know you're on the right right track you keep keep doing what you're doing you'll keep getting what you're getting what a neat story Bob what was his last name his last name was aach Bob aach Bob aach great well let's fast forward a little bit uh your so take us as far into your story as you need to to kind of the launching point where the idea of acquisition and what you're you're doing now started to be a glimmer in your eye yeah well I I think what I'll start off with there is is going into the in into kind of the the Crux or the foundation of of what I was really doing at freelance Electronics because I think It All Leads up to Acquisitions right and and I think that you know some people go to Business Schools you know nowadays I mean all this stuff was happening before buy and build and before all this other stuff was being taught and I think where I'm very lucky and grateful is that I I I got to experience some of this stuff in a different way you know early on as far as the business aspect as far as allocation of capital and the way I saw it was was that I was going out and I would go to companies that would call some of them were defense contractors and they would call me up and they would go you know we have 50 pallets of inventory we want you to take this off your hands right well the value of this inventory acquisition cost may have been you know five or10 million so what do I pay for it right how do I figure that out so what I had to do is I I had to almost do like what Warren Buffett calls you know account cash flowing right like I have to go in there and figure out how much money am I going to make out of this over years I'm not going to sell it for $5 million so I had this process that I developed as far as buying deals and looking at those deals as little tiny companies so if I buy this $5 million deal that I'm only going to pay 20,000 for that $20,000 could turn into $2 to $300,000 over a couple years so so if I get five of those going then I have this kind of this Ferris will type of event happening and and and what happened was during that time was that I didn't know how to how to scale that well like I came to a point where like this is great we're making you know our margins are are on some of this stuff gross margins is like 95% almost nothing but I don't know how to scale it and the way I can scale it is going to it is going to um cause me to put more more Capital into the business and more expertise and I'm not really too sure I figure I had to do something so one of the things that I learned by um reading about Buffett and Berkshire haway is that what Berkshire hathway was was like a a a a failing textile company and he talks about taking money from a bad asset that's generating cash flow and putting it into a good asset so I started doing that concept early on whether it was buying stocks whether it was buying property whether it was investing in something else so I go to Hawaii one day and and literally will I I I buy a book called buying a business for dummies or idiots buying a business for idiots and and and I just read it and I go I could do this you know I kind of understand this concept and what I learned from that book was was wasn't so much like you know talked about due diligence it talked about sourcing a business all the things that we were taught now but this was you know 10 15 years ago whatever but it really talked about you know Capital allocation or or or trying to figure out how much you're going to really make right what what how to value a business and and how to value a business is going to be based on your risk tolerance you know and and those types of things really made sense for me because that's all I was doing was trying to reduce risk so I thought about the Berkshire hathway Concept in this book and said I I think I'm going to do this let me let me get started so just to make sure I have the analogy when you were in freelance Electronics buying big uh quantities of junk or inventory that that the company didn't want anymore might be might have a book value of5 to10 million um but you weren't going to buy it for that price you were the way that that's like a business is that you're basically not going to flip that inventory you're going to sell it gradually over years so what you're really buying is a stream of income over it's going to take you five years maybe to unload all that inventory that your supplier is dumping on you um so might it will take you five years to unload all of that and so you're calculating okay if I buy if I if I you know buy this big lump with one big lump this inventory um H how do I calculate what it's going to generate in year 1 two 3 four five and what's that Worth to me and in some ways that's not unlike when we think about businesses as assets we we are we also know that we shouldn't think about them just as that because they are fundamentally groups of people um but when we think about an a business as an asset similar thing you're paying money upfront you're buying cash flow future cash flows with a big lump sum payment upfront maybe it's financed but fundamentally the seller gets all you know gets a big big chunk of money did I get it you absolutely got it 100% good really interesting though Dustin that's that that really is a really um it does feel very analogous so so it felt natural for you to think about buying businesses um and and so to be clear too you you also thought The thing about Buffett taking money from a bad asset and putting it into a better asset you were at a point in freelance Electronics where to get to the next level was not something really that interested you so it was at this point a cash cow you needed to figure out a better way to allocate this money than just trying to grow the business which you weren't interested in so that's where you say okay maybe it's time to look around and you do and then you find the buying a business for idiots um which opens your opens your eye the the bin build of 2007 or whatever what year is this by the way uh I think it was like yeah 2012 13 something like that not too not too long ago okay yeah yeah okay great um and how big is freelance electronics at that point I I think at at that point we were probably you know somewhere between $ 1.52 million so you know not I mean to me it was like oh why my gosh we're hug company right because of where I came from and and I really you know took out most of the cash flows and tried to reinvest it but it was it was really kind of small and and it's really it those that kind of business really fluctuates will like it it's not a normal to have a three million year and then have a $1 million year the following year I mean it's just is you're like any kind of project business you're just as good as your last trade sort of thing absolutely okay so but how much I guess give us a sense of the cash flow you kind of feel like you're playing with what are you going about to go into the market to buy a business with what's your balance sheet look like yeah so at that time you know again freelances is is still a really profitable business and at that time look at when when I decided for myself that I was going to start buying businesses right and and and and I want to back up for a second like I I and I may have told you this before like I actually wanted to like start managing money right I have no idea I don't know if I'm going to get my cfa's license or what and I'm like what don't I just be like buffed and start a fun and do all these things and I'm like oh my God I can't you know there's no way I can look somebody in the eye and say hey I lost some some some of your money I would feel terrible so I was still trying to figure out what to do and and and I think it was at that point where the business buying the business thing just made sense and as far as capital that I was going to use for that like I had no problem you know I I was I I knew about SBA Loans I looked at so many ways of financing I I read about you know seller financing and all these other things but I had Capital right I had enough Capital to to to do a deal probably underneath a million or so I mean I if I wanted to I could pay cash because it wasn't like I was just you know super super full of money but like remember at this point in my life I'm I'm in my um you know mid-30s or late 30s or so so I'm already established right I started freelance Electronics in you know in in my early 20s so I was able to invest I was able to save a lot of money and and I really put that you know it compounded right everything was compounding so so at that time I don't know if that answer your question I I I had I had some Capital to play with and then I was I was somewhat bankable um because I I had some some some assets and so forth so and and as far as the SBA loan aspect of it was like you know the personal guarantee thing when I started looking at it it's like oh my God I got to guarantee all this stuff well I I've been doing that my whole life like I don't really mind doing that because when you start off kind of young um you get that you know why should I trust you why why should I why should I invest in you you know can you do this you don't have any experience so I it to me none of that was scary for me as far as personal guarantee okay well I appreciate the transparency there Dustin because um as always where where the audience is going to be hearing your story wondering you know if they can do what you've done okay so acquisition number one is B&B socket products right BNB socket products yes so it's it's a company that was that's a family that's a family-owned business um you know second generation it's it's been around the the there was two companies so there's B&B socket products and then B&B specialties and these two companies kind of broke off even though they're kind of under the same ownership and BMB socket products the smaller part of the company was for sale and I I would say I I would say that when I started looking for businesses and decided okay I'm G I'm going to be on the hunt that business I came across within months like it was at first he was like wow this is going to be easy I mean this this business is in my wheelhouse you you know and and and and it wasn't that it was something that I that I really kind of um understood it's it's it's a company that sells nuts and bolts and a lot of the hardware right it it goes into um Aerospace um defense and and I think I was telling you like what really intrigued me about this business was that even though it was it was a small business I mean it was doing at that time you know 7 to $800,000 so it it wasn't something that I felt like was was too much of a risk um I felt like I could understand it but there was these little things in that business that were like Moes to me things that I that I kind of felt like I understood and things that I liked and one of the things that you and I talked about previously was that you know a lot of this Hardware was specked in with the manufacturer so it was parts that basically you kind of create for your customer and you give it your own part number so they pretty much are indebted to come back to you because you kind of done the work for them you may even they even the B&B socket products went to the manufacturers and said hey look I have this client and I need to get this part made and there was maybe some specifications for it maybe it needed a different type of plating on it or a different type of shave or cut and one of their biggest customers still to day is a company that makes they're one of the largest makers in the world of prosthetic legs right and arms and those those actually use a lot of Hardware so I was like really intrigued with that I was like wow that's that's awesome um and so anyway so I I looked at the business and there were some things that I liked it wasn't profitable at that time um but I I thought I could make it profitable and um is as far as the financing is concerned um it was we went back and forth and this is one thing I see a lot like um you know a lot of times in this type of business you have to have a lot of inventory and they thought their inventory was worth more than at the actual business right so we went back and forth with the inventory the inventory is worth 400,000 500,000 whatever we went back and forth and actually looked at the inventory and I was like you know what the inventory is actually really undervalued here like I I look because a lot of times these companies don't know how to you know they probably zero their cost right at at one point or another and then it becomes Surplus and then all of a sudden it's trying to figure out what it's worth so I saw a lot of value in that inventory um that I believe we can sell and we could continue to sell so I I worked out a deal where I believe the the the the price the sell the the asking price or what we agreed on the business was right about um I'm going to say right about 400 75,000 is right around there and um and and I think we probably paid another 40 or 50,000 for for the inventory so it was it was it was upwards around 500 520 535,000 in there for the entire business well how did you arrive at that number you you've said that the inventory first of all you said something counterintuitive that they were actually under valuing inventory typically what we hear from SE that sellers are over valuing their inventory and you as buyer have to be super careful go in and audit the inventory to the best of your abilities um because a lot of that is going to be unsalable and essentially worthless but in fact in this case it was the reverse they were pushing you for an inventory number and when you looked at the inventory you said sure because you thought the inventory was it was worth even more than they were pushing for yes yeah but so so that's but that's priced in you just said you paid 40 or 50 for that you and you thought maybe the inventory is worth 150 but you still if it's not if it's a business that's not profitable how do you come up with the remaining whatever that is 400 and you said you paid 475 for the business where was that what was that valuation based on well it obviously there was SD in the business right so once I once I figured out that what the true SDA was so they they had a general manager at that time that that that was making a decent salary so they let this person go um somebody else quit like the the day that I bought the business so basically you had two employees in this business that that were basically running the company and um both employees it is you know I am grateful that this acquisition has been my hardest acquisition I'm glad that it didn't it wasn't easy because I learned so much from it right and and I think I kind of knew that going into it so I I got a lot of kind of rebuttal from the employees it it was a very kind of um cancerous culture I guess you could call it a culture of of of mistrust right so uh they came in when I came in they saw me as like some type of corporate Raider or something like I was going to go in there and shut the business down or something so there were there was a lot of stuff to kind of navigate so what I what I did was we this deal pretty much fell through because um I got a sense and look at I'm I'm going to I'm going to tell you something right now and I I think this is kind of funny so what happened was was that this business one of the one of their vendors was like a friend of mine he's almost like a surrogate Uncle to me so his machine shop supplies products to the company that I'm trying to buy now i' I've never bought a business bu before I sign an NDA so I go over to this gentleman and I and I talk to you know I talk to one of his employees and I said hey do you know who B&B socket products are you know and he goes um yeah we we we we deal business with them we compete with them you know they're a good company and all that and that's I didn't feel like I needed to say anything like hey keep this on the low well sure enough will a week later the word gets around that they're selling the business it gets back to the owner the the sellers and the employees and all of a sudden they come back to me and they're just yelling at me you know you're you're screwing this deal I don't trust you anymore and and look I'm I'm not that kind of person I really didn't you know I I really I shouldn't have done that but I was trying to make sure that hey is this you know just like they're doing diligence on me I wanted to do diligence on them so this almost threw the deal out the window so as as a result what I wanted to make sure was once we kind of reworked out the details I went in there and I talked to them and I said hey look I I want to make sure that these two employees who are running the entire company who knew everything about the company because I made a decision that I wasn't going to go in there and run the company if if I have to I will but so I I had it I had this this thing that I did that I thought it was kind of um you know made sense at the time where we put we put a side out of the cell about 1001 $150,000 or something like that in an escrow account so if one of those employees didn't stay you know that money would come back to me because I really didn't trust that one of those employees were going to say so and and then if they did then they get some of the money um the sellers get some of the money back and then the employees will get part of that money as a bonus for staying on in a year and what happened was was that I signed an a a contract with each employee so it's not something I do now but it's something I did at the time like a like an employer employee agreement and I said you know this is your salary I really need you to stay um this is we value you however after a year if things don't work out we just go up on our way and it was one of the best things that by accident that I did because one of the employees was just was was just being very difficult you know was was pretty much taking control of the whole company where she didn't want to delegate anything else to anybody so I was in a real big risk somebody just completely just you know doing things without my knowledge so so what was good was that you got everybody contractually committed to a year without overc committing so that if somebody after a year was not long for their for the business you could let them go which is what happened with this particular woman yes okay all right and sorry and just timing here this is 2017 but you bought the book of how to buy business in like 2012 so it took you a while to actually go out and find a business to buy is there I know we're kind of I'm stepping back a little bit but is there anything to say there because it sounded like you read that book and you went after it but it wasn't until five years later that you bought BNB yeah I didn't I actually didn't start looking until until four or five years after I read that book I I went back and Revisited that book several times I think I was still trying to really figure out what I was going to do like I said I kind of pondered with you know maybe I'm just going to be a fund manager or maybe I'm just going to do this and and the more and more I thought about it the more and more just buying a business just made sense yeah gotcha okay thank you okay so back to BNB so it's a it's a 700 to 800,000 business and you like the moat the the not and bolts are specked into client products which means your clients are other manufacturers for example of pro of prosthetic legs and so in the specification of the prosthetic leg it'll be like this particular nut from this particular vendor is you know goes here and so that's what it means to be specked in it's almost like you know it's it's not just we need some standard nut that you can get from any vendor no it has to come from B&B right yes and this is a dynamic that is common in manufacturing I guess yeah I mean it's it's common in electronic components industry um certain things I mean there's like any other manufacturing industry whether it's cars or or whatever it is there's their standard products standard part numbers but in this specific case because it's in the medical industry and also there's clients that we sell to in the defense industry that it there's very there's there's very specific things and you know we we also have what's called an as9100 which is an aerospace compliance um Quality system that we're certified on every three years and you know in in order to keep that certification you have to buy from certain types of vendors um you have to have paperwork on everything you have to get special tasks so again it's not the hardest thing to do but there's a lot of companies that just don't want to deal with that so this company was very big on you know making sure that they had their certifications and and and making sure that they they kept up on those standards okay Dustin we we'll give us a little bit more about the transition because you've told us that it was I guess your hardest acquisition that the culture was toxic you've given us example of this problematic employee what what else did you learn that year you know give give maybe some more highlights um and I and I want to just get that from you because this was your first time doing this and as hard as it was it it it did make you feel like well no but this is the way as hard as this is this is the way let's do more of this so so tell us how it was hard how you dealt with it but then why you liked it so much ultimately yeah I mean the the reason why I like the business and and this is look I read Investing For Dummies a long time ago and so you know sticking to this topic one of the things that it said when you're going to be an investor you kind of have to decide early on what type of investor are you going to be are you going to be a day trader are you going to be a long-term investor you're going to be you know you're going to trade um you know currencies and so forth and I think with that Acquisitions when I decided to be an acquisition entrepreneur which wasn't a thing then like I had to decide you know what is what is my area competence what are the things that I'm willing to buy what I'm not going to willing to buy and again this whole boring business thing like I know that nuts and bolts are not going to change anytime soon you know they're they're pretty much I'm I'm looking at bolts that been made the same way for like a hundred years just about so so that fits my personality right that fits my my personality of kind of like slow incremental change so I I think knowing that like knowing that I was in the right business and doing the right thing is what made it easier for me to kind of deal with all of the things that I was dealing with at that company so I I think the you know some of the some of the challenges was really trying to understand that even though it was only two people that there was and and eventually I brought in like my own team I brought in people from my other company um my other company freelance Electronics to help out in those companies and and I think that what it was was not not really understanding the culture and not really putting down kind of that Foundation up front meaning um you know these are this is the expectations this is what we expect and um it it was a it was a real Challenge and then what happened was was that I I started bringing in consultants and I started you know delegating a lot of things and and then all of a sudden you know we just started hiring a bunch of salespeople right thought like well you know this is a good little business um it has a good little moat let's go ahead and just expand this and so we started hiring sales people and we just and and brought in um you know brought in people for that and it was it was a little disastrous right the sales people didn't work out you know there was just all these issues first off I just want to go back and say that I made a decision early on like I thought about closing the doors now this we we we made the first year like 2017 I bought the business 2018 you know they went from like a negative profit and we had like a I don't know we we had like a huge like 300 $300,000 cash flow that year right it was huge and a lot of that was the windfall from the inventory right so what happened was is that the inventory just kicked in so then we had to replenish the inventory for the pre for the next year 2 19 and then the business kind of started you know dropping a little bit so I made a decision at that point like even though it was making money I was so frustrated and and I said and and I literally thought about shutting it down right I think I told one of the employees that you know I kind of had like a moment and I think for me I had to make this work right like I felt like it was very important not that I won't um cut my losses if I have to but I felt like I had to prove this to myself you know that I can do this and and the problem was was that I was putting too much expectation on myself instead of just taking a step backwards and saying look this is a good little business it it doesn't have to sell a lot to make enough money and it has this little moat and all we have to do is serve the customers um you know try to increase business with the current customers get back to them in a in a in a in in a good amount of time and give them the service so I I literally started going out there and just kind of talking to the customers and started to really figure out what is what is the business that we're in what what is the type of business this is what are we good at and what are we not good at you know what what are the things we should stay away from and what are the the specific things we should do and once I figured out the business that we're really in and why customers buy from us then just kind of relieved this whole thing like I got to fix this I got to deal with these people and after a year will then things just kind of worked out like the the lady who was second in command she ended up stepping up she ended up basically becoming the general manager of the company the other lady that I brought over from one of my other companies she had experience they just started to work together as a unit and and the whole thing was I want everybody in these small companies and I got this this template I'm building this template good and bad the good things and the bad things of how I'm going to scale this going forward what am I going to do in my next business and the number one thing is that you're going to train the person under you to do your job I don't want one person do in one thing because one of these days if we keep buying businesses you're going to be able to go into the next company and I want somebody who's going to be able to do your job and do it even better huge learning and very powerful very powerful process to to bake into all of your your employees the so let me just make sure I got that Dustin you were you you came in hot feeling like you had to do Grand things with this kind of from a place of ego to to prove it to yourself that you could work magic and and that wasn't going well and so then you kind of had to take a step back be a little bit more circumspect and really understand the core of what the business did and and once you did that and just kind of relaxed a little bit and just said let me rather than being too ambitious here let's be iterative do what we do already but better and that pivot in Attitude made it finally work it's interesting because it's almost like um you came in more entrepreneurial you know wanting to do things build create change and then that was the wrong attitude the right attitude was more of an investor attitude like let's let's do let's let's make improvements at the margins but mostly let's have this thing keep running as it was yeah I it was at that point will where you're you're spoton and that's where I like I kind of already knew this but I had to it comes down to you right as as the owner as the entrepreneur as the buyer it's not about the companies it's not about the people it's understanding what am I really doing right and and the number one job especially of a you know I you know you could call it search or whatever but when you especially when you have a holding company my job is to allocate Capital you know I am to put money to work in the best places now there's a lot of other things that come under that right leader um visionary um you know you know you know try try to empower people recruiting all that other stuff but my main job is to do that so I have to come in there it was at that point that I realized is is what my real job is is that you know yes these are small companies but in order for me to scale this model to do what I wanted to do was to become like this you know mini conglomerate of of these smaller companies where I have flexibility where I can buy a company over here and have it over there is that I also have to have trust in my people I have to have a process and it's only through autonomy and kind of cutting out you know all those layers but having expectations is how I'm going to be able to scale this thing so I could concentrate what what I'm really good at you know and that's and and again I'm so used to for all these years you know running my little free freelance company and doing everything right like doing all the stuff that I had to completely take a step back and realize that's not my role anymore and it was really tough because I'm a micromanager by nature but I had to really let go but make sure that I don't let go too much I don't know if that makes sense well sure and and we're going to return to that because you buy businesses that basically run themselves with your oversight and we there's going to be a lot of people eager to hear how you identify that because a lot of people would love you know the kind of for a lot of people listening that's the gold standard to be be able to buy a business that runs itself um and it's actually something that we are really wary of advocating too hard here because often in most businesses that are acquired by people in this audience they're going to need the active involvement of the owner um you know the owner the Searcher is going to come the Searcher buyer is going to come in as owner operator at least for a while and so your your model is the exception not the rule and and so it's intriguing the on on the other side of that first couple of years at B&B socket despite the kind of pain and the and the learnings you were convinced that buying more businesses was the career you wanted to pursue absolutely and and I continued to keep my eyes open for other businesses and it was it was really so when I really made that decision right I mean years after I read the book um I I found I found B&B Soaker products really fast right I found it really fast um and another thing I want to add like I I F I saw this company and it was like the way it was listed it's like oh my God I I I I I know I could I know I can buy this company I know this is perfect it's close by it's it's in the area I kind of know the industry a little bit and the broker never returned my phone call so I literally C kep calling and kept calling them and just told them look you you have to sell this to me I didn't exactly say it like that but I was just like you know so you you have to do a lot of convincing right and and and obviously having a background being an entrepreneur is is is really important with that is really important having that background because obviously they're going to talk to me a little bit differently than they would if somebody had never bought a business but they still want to make sure that it's the right fit but yeah going back to your point like there was a three or four year period that I just didn't find anything right I I just I didn't find any businesses like it was just I kind of hit this dry spell and I never set out to say hey look you know I'm going to buy a business every two years I'm going to buy a business every year I'm going to buy a business every 5 years it was you know I think you really put yourself in a position you limit yourself and then you feel like it's it's you know not that there's anything wrong with search funds but you know like any type of fund you have a timeline and I decided that I didn't want to do that that's not the type of person I am I am I'm used to waiting like Warren Buffett says when when there's blood on the street you know when there's blood on the street and and I know that sounds really gory when you're talk but I knew that there was opport that I'm going to jump at the right opportunities when this comes so I I was just kind of patient and I just kind of waited for more opportunities to come um you know one one thing I just want to add on will I don't want to go back too much but you know not you know the difference between somebody like myself and somebody who's actually working in the business a search funer or buyer who buys a business Works in it I made I made and and I keep this till today right like I'm I'm fortunate that I have a team now but there's a time and I'm dealing with that right now where I might have to go in there I'm not opposed to going in there and running the business if I have to you know it comes down to me you know it's my personal guarantee and I made that decision now and I make it today that you know when it comes down to it I'm responsible you know for this company it may not be my fault but anything that goes wrong within the companies I'm responsible so I if I have to be there I will be there I'm not above that and I'm not too good at that I don't think it's a good worth of my time to be there every single day but I will do what I have to do to keep this company going and profitable so over the course of your seven-year Adventure here how many times would you say you've had to get in as operator as a stop Gap I would say B&B was the time that I was actually I wouldn't say I was running the day-to-day but I was definitely um pulling the strings and making and I was going in there quite often like often for me is like three to four times a week um just to make sure things were getting done but there's been times where I've had to physically gone go into like a location and spend time there and really figure out I I think what's important will what I've done is that and I encourage everybody to do this and I hear about this a lot on your podcast and I encourage my people to do this is you know literally get in the weeds you know if you if you have a machine shop you know learn the machines you know work the machines for a couple weeks or a couple days you know understand what they're doing you know if you have a company that has a milk run or has a delivery route go on the delivery routes you know meet the customers it was very important for me and still is to really try to understand every aspect of that business um and and I and I think you get a certain Buy in from people when you do that you know they kind of respect you a little bit more well many of my guests have found that that doing doing the actual whatever service is being delivered um earns credibility and respect from the team and that's as owner operators you who is almost more kind of a little bit arms length owner unless except when you have to be more in the business it it probably there's probably even more of a gap between you know how how close they feel you are to the business and you know and not so having you as owner come and and do the service and and you know get your hands dirdy is probably even says even more to them than my typical guest because you are fundamentally just owner investor um you're you're not the operator couple follow-ups on the so about you're thinking about buying a fund doing a fund you you entertains that and and one reason you said you didn't want to do it is because you couldn't stomach the idea of losing your LP losing money for your LPS and another was you didn't want to be funds have timelines they need to deploy Capital once they've raised it um and you wanted to not have that restraint you wanted to be just as patient as you needed to be um very sound reasons um and then there was an example of this so I guess you said you waited 3 or 4 years so it was between BNB and your second acquisition that that four-year dry spell occurred yeah I I don't I I can't really tell you why that happened or or if there was a again it just kind of happened it wasn't that I was looking but my next acquisition which is which is kind of ironic was another nut and bulk company in in Seattle and it's a little bit different it's more Industrial Supplies I I don't know if you heard of fasol or any of the listeners but it's it's it's kind of like a that goes in and services manufacturers who are building stuff and a lot of times they'll have these shelves of parts and Industrial Supplies and vending machines and and they'll restock them every every week and this was a little business in Seattle a three-person team and and I talked to the owner like I think it was like in 2018 or 19 and the business was a little overvalued and even though was it was in another state I figured look I I I think I understand this I don't know how I'm going to run it in another state but I I want to be able to have flexibility I want to be able to have that option to look at deals just outside of where I live and so the valuation was way too high I thought so about during covid um I think it was in the middle of 2020 or the end of 2020 um the business came back on on on online again and and again I'm I'm I'm not sourcing these directly I'm just I'm looking on bis bu sell you know all all these all these sites that we all kind of laugh at like that's where I'm that's where I'm finding a lot of these deals right because they're just they're just kind of in my willhouse and uh so this guy got a the the seller his name's Russ he got a different he fired that one broker he got a new broker and it it was for sale and and I went ahead and and and bought it and paid cash for it it wasn't a lot of money um but it was it was something it was it's just just it's it's my it's it's by far one of my less profitable businesses but as far as the return on Capital as far as how much money I put into the Mone it's one of the best businesses ever because these three people run this company like it's theirs um I hardly need to talk to them um they come to me when they need something and they just they pretty much just run the business on their own and it was it was something that was like yeah I I think I can do this because it's it's it's pretty much like a hands-off thing now it does need some of our attention however it was something that I'm like wow this is this is perfect so I went ahead and got it and that was my second acquisition and how much revenue did that does that business do Quest Fastener and Industrial Supply Quest is doing over a million dollars a year you know that that was during covid and and it increased over that over time um that was that was during that that that was I mean they took a big hit but I think at the time they were doing just roughly about a million at that time okay okay so after these two Acquisitions of BNB in quest you're basically at about 2 million yes and so from then until now three years you jump another 18 million yes so one of you there must be one whale in here that we haven't gotten to is that what it is there's two okay so the next okay so I was going to spend time on your first two Acquisitions but maybe it's the the number three and four that are the the big needle movers just before we get to those and we're not going to have time to do the stories there but you'll tell us about them you know you're you were really strategic in your B&B socket acquisition in terms of really liking the moat I mean you you saw where the value was um but it was a two-person company so that's an enormous vulnerability this business up in Seattle Quest is a three-person company you don't appear to be scared by keyperson risk um I I you know I I think I I was at that time but I decided to do it anyways because I think what balances that risk for me is again it's not that you're completely you ensure yourself because you know you know the business right so if I feel like I'm I'm confident in the business right is is is it a is it a business where the economics are somewhat predictable well nothing's predictable 100% but if it's if it's something I understand something that I feel like the long-term economics are good and I kind of understand the B the business then I feel comfortable I think what's happening at this point will is that I'm developing this culture and this and this process of my companies now I have a holding company I have three companies and I I have this team these people that I can probably that I could interchange if I wanted to throughout the companies so what I'm really buying is the Goodwill of the business I looked to try to grow freelance Electronics by acquiring new customers it would take me five to 10 years and a lot of money to try to get inside of a company and say Hey I want to become your supplier that's something these owners these sellers these baby boomers that most of them they did all the work for me so that's the hard part so so if I could I'm not saying that I want this to happen but if any of those one or two people if they were to leave as long as I have a process and a system I could plug somebody into those companies and and now that I have people from my other companies you know the risk is less for me so so that was the whole thing that the biggest risk is losing customers and and that was the thing was that I had to really look at like what's the vulnerability of any of these customers leaving yeah yeah okay so that that that's a really key point the fact that you had existing staff in your existing first business freelance Electronics meant and people that you thought you could plug in to BNB or quest uh if you absolutely had to gave you kind of you thought kind of a bench of people that you could lean on if some key person at one of your Acquisitions left and then as you've done more and more Acquisitions your employee base grows and you feel like you can move that many more people around you have that that much larger of a bench to to to lean on and in case some a key person leaves let me ask you at this point in the story you got freelance you got your two Acquisitions you have Foundation kind of principles now at what point are you is it at this point that you're really starting to like make your vision of what this is going to be better and better defined are you still kind of Surfing bis by sell and when something interesting comes along having you know picking up the phone talking to the owner is it is is it still a little more ad hoc or is it is it to become a more truly mature holding company with a strategy I I would say that at this point is when that starts to really uh come to fruition I I think it's starting to shape I I do have a vision at this point um I have an idea of what I um you know if if not so much like how many companies we have or what type of companies they are right as long as they fit in in within the scope of what I know but of more of like okay this is kind of you know the cash flow that I think we want to work towards so so yeah I I do have this template and I think what happens is that um you know what the the last company that I bought so I bought Sierra Pacific Supply in in in 2021 or was it yeah 2021 was Sierra Pacific Supply and um you know that's the biggest company today and that that company was um a company that I knew of it was it was something that I I kind of heard about it and it's a it's a the company's an aerospace um supplier of rivets and fasteners and all kinds of it's been around for 75 years and it has an interesting interesting background and interesting story and you know I it was just the timeing it was during covid um it had a really really bad because it's all kind of related to Aerospace and Commercial travel business travel um and I bought it um at at really the downtime of of of that business and you know at at this time it's like you know it's it's definitely you know the best investment I ever made um but at that time it was actually a risk like I didn't we didn't know whe whether Aerospace was going to come back anytime or so right you know how' you get comfortable with that that was quite a gamble margin of safety I I I thought about worst case um you know um I I got that was my first that business was the first official SBA loan that I got um you know using 7A debt so I got an SBA loan on that um uh it it had a building that I didn't I didn't end up purchasing so I know a lot of these build a lot of these companies have the owners own the building and you have an option to buy that so it was all this stuff so we kind of went back and forth um but it just worked out it wasn't hard um the owner was was was a great guy still is um you know a little a little controlling but you know he's one of those guys in his 70s that was doing a lot was doing a lot and didn't really find that out until we went in but just a good staff some great accounts and then right after we took it over about a year later just you know things just started really to come back in full swing so it's just it's just a great business and we we just got lucky at that time can you give us some bullet points on Revenue sde terms of the deal yeah so it was um the the deal was with inventory again it was another inventory thing which was also undervalued um but with with with inventory and the business I think we paid close to well I also bought some of the receivables so I think it was pretty close to 1.1 million including receivables inventory in the business itself it's how much I pay for the business I I used about $150,000 um you know put about you know roughly close to 15% down on that um the the business at that time was doing you know roughly four to5 million in revenue and in the down year in the down year yeah okay all right and it's a distribution business so it's going to be low margins 10 10ish percent no their their their gross margins were you know the gross Mar margins are in in that industry they're going to be anywhere from as low as 30 all the way to 50 60% they're all over the map but hardware and mil military hardware and Aerospace types of products generally have a higher margin okay but but net net margin after overhead and everything oh the actual oper operating margins yeah um yeah they were at at that time or or generally it's they're going to probably be around 15 to 20% around there okay yeah um you know not not great but not terrible um yeah and and and the and the thing is the thing that's look at this is something that I've always kind of the model that I kind of always wanted with freelance Electronics which we couldn't really do is having a model where you know instead of just having inventory and just waiting for people to come to you and say hey I need this part and it's obsolete and I can't find it anywhere else you know can you you know how much and can you send it out today this company sources you know whether it's for Airlines or whether it's for manufacturers of aircraft or the or the defense it actually has a has a government sell so we sell directly to the federal government we actually customers or manufacturers come to us and then we Source it so we buy it from one vendor and bring it bring it to our location and then put a percentage on top of that so it's really having that flexibility of being able to Source whatever you want not having to go to Just One Source or rely on your stock so it was something that was that I've always kind of wanted in a business so when I when I saw this opportunity come up I was just like wow this is the perfect opportunity you know and and and I wasn't the only one that bit on it later on I found out there was other Searchers that it was their first business and they came up to me later on and said hey you beat me out on that deal you know and it was just it was just kind of funny so it it was one of those businesses that just you know was just Ju Just a just a great the right fit for us well and so what has happened subsequently so I guess you bought it in the in a in a valley and it came surging back so what does revenue look like today in that business um re revenue is going to be anywhere between 12 to 13 million this year fantastic so it's more than well over doubled yes oh it's almost tripled it's almost tripled depending on if you're yeah and in two years B that in 2021 so two three years yes okay this is great and so at this point you're so you really have a distribution industrial manufacturing theme going on here are you as you continue looking at deals that's your wheelhouse you don't look at anything else so you're never tempted by the HVAC business or the B2B Services business you are only looking at things in your wheelhouse at this point at this point in the story right so I I was always I think for my first businesses like when I set out to do this I was like look I'm going to stay in my wheelhouse as time went on I have looked at other businesses I I I made a I made an offer on a company that makes bad engages this was a couple years ago I know that sounds crazy that's another story in itself so again I thought that was something I could kind of understand but I have an open mind at this point will as as long as I if it's something I may not know the industry but it's something that I can learn and something that doesn't require a lot of capital right that's the whole thing you know how you know do I have to reinvest every penny that I make back into the business you know is it something that could somewhat run on its own is it a company that you know if I run into trouble do I need a specific type of of of professional skill set that I can't find anywhere else and and those are kind of the things that I stay away from so you know i' I've made offers on um you know a company that bought that that sold tomato paste you know so I I looked at a lot of different things so but basically these types of businesses that I've been buying um since I understand them pretty well and and a lot of times as you know and as you hear a lot of these sellers will will choose me or or want to choose a a buyer that is in that type of Industry even if the even if the offer may be a little bit lower the terms are a little bit different so so even though you're in th this in in manufacturing either directly or indirectly you wouldn't say generally that the employees at the businesses that you've acquired are have skills that are too specialized you feel like a lot of your employees are people that if if they if they left you could replace pretty easily yeah I mean I I would say for for the most part yes but obviously we we are in a in a in a really challenging environment and as far as ju just finding people with a certain skill set but just retaining people and I think what has happened is that you know we we do have a lot of you know a few people in our companies now that will be retiring in the next three to four years and when you buy these businesses like there's nothing written down there's no process so you go in there and you start talking to them like hey you know I you know they start they start coming to me you know pretty soon you know when I start talking to every employee and they'll tell me well you know I'm going to be retiring in two years so and I'm like well great do you know can you can you train somebody do you have anything written down and they look at you like you're talking another language right so and and then when you have them try to train somebody so that's the biggest thing like all that information is in their head so I I think those are the biggest challenges even even for the things that don't see hard seem hard when somebody's been doing this for 30 you know 20 30 years it it makes it really challenging to find somebody for but for the most part it's it's it's not too hard to find some of these people but we are having challenges with that and Dustin your your strategy that you shared with us earlier where everybody in your companies needs to be training somebody under them to do their job how's that going it sounds like you actually experience resistance to that at times it's going really great actually it was something that that took a lot of work um real quick I I did buy a b my last acquisition is Gates washer it's a Manufacturing Company um it's in Chicago it's um it's it's a manufacturer washers and it's been around for almost a hundred years um I think the best thing we did is we brought in a manufacturing consultant and they went in and just started training everybody they're still on the payroll and they go in bi-weekly so they cross Trin people they they do Six Sigma they do breast practices um we just got really really lucky you know I pretty much um we hired somebody like a general manager who's been pretty much running part of the company and then they also have a shop manager too so um those things were very very key for that kind of business because it does have a specific type of skill set so we have our holding company and I have a CFO in the holding company and I have two other people that support the CFO and and one thing that we did recently which is a part of the best practice is that we came up with processes and procedures on every single function as a template for now and for future companies that we want to acquire so it's basically telling the companies hey you could kind of do what you want you could kind of be autonomous but here's how to hire here's how to fire here's here's how to train so we have this process now and it has cross training in there and it has every single thing that we need to do a a disaster plan a weather plan you know now that we have two companies out of California they have volatile weather so this has really been huge and it's really really great and and so now I'm starting to get to that point where you know I could take on other companies where I probably couldn't take them on for cuz my people were were so well overwhelmed so you're you're You're Building infrastructure at the holdco level you have staff at the holdco level you have playbooks and processes at the holdco level so there's a standard process of how to fire and how to hire at all your companies so for the next companies that you buy you just give them the manual sort of thing um tell us a little bit about building the staff at the holdco level were these were these people that were already with you at freelance electronics that you've kind of carved out to be your hold Co staff or what did it look like to build the staff that you would what you would say is at the holdco level and not within any of the of the holdco of the opco within the holka yeah no that that's a good question I think it's really really important and the the the St the the three main staff I have four now that work for the whole C hold Co company three of them came from freelance Electronics so they've been with me for for 15 years you know and and I just want to say like what's what's really important about that is that we've had some struggles in that time when we were just one company right so so these people have you know have have stuck with me and stuck with the company for all these years when things are bad and and now you know I hope that everybody's being rewarded for this so I I have this you know awesome um experience in core of people people that kind of been there through through through the crazy times and now that we're growing they're experiencing that so yes you know they're they're um they started with me at freelance Electronics um you know two of them that are on that are pretty much my CFO and and and a and a and and works with the CFO underneath her um they've been with me for those two people one of them's been with me for 12 years and the other one's been with me for almost eight years and um and then recently um one of one of the gentlemen he he worked with my company he was the warehouse manager QC manager and he left and he worked with the competitor and I brought him back and he's pretty much the CFO so he pretty much oversees on a fractional basis um most of our companies so so this was something that was kind of built over time um I was very lucky to have that I know other people have to go out and Source these kind of people but as as we get you know bigger I think the challenge is is do you want to become to top heavy right do you want to add more people on the holding company because this model for for and I could be wrong with this but this model may not work for somebody that's going to be selling their business to two to three years right you need you need people integrated in those companies so this is you know this model of of kind of having this autonomy in the companies and having support staff at the holding company in in my opinion it it really makes sense for a Buy and Hold type of strategy and to be clear that's because as autonomous as your opos are as your operating companies are there is some Reliance on the mothership on the shared services of the holdco so in fact they're not truly autonomous so to to sell one for example there would be the entity that that business would have some gaps in it like it wouldn't have a financial person for example because the op because the holdco is currently doing that for that business well yeah each each company has its own accounting department so they're pretty much handling that but like we're kind of like almost like the CPA right so the way I see it is that yeah they're they're all kind of separate companies and you know we at the whole code we actually not that it really matters because it's the same company but we charge a management fee to each company so so they can kick up so we're giving them support so you're you're absolutely right will like there's a there's kind of a gap in there if that happens so um but every company's different right the manufacturing company is is is is completely um on its own pretty much they have everybody there and they have to be because they're a Manufacturing Company you need a lot of resources in there for to to have that company you know to to be able to function on a daily basis Gates washer how big a business is it Gates washer is probably going to do six to seven million uh dollars this year so are you done buying $1 million and8 $100,000 Revenue businesses no we just bought one the bolon the bolon yeah you know I mean I don't know if you could really call that a business but yeah I mean I I think I think will I think that obviously we've been um buying companies that that that are doing more in Revenue which are going to cost more um I I think again that you know I I don't want to handicap myself and just say I'm only going to buy this type of business I think a lot of people get in trouble by doing that I think what it really comes down to for me is you know the return on Capital right it's it's not so much you know I'm GNA buy a $10 million business but it's only going to make two or $300,000 versus you know I'm going to buy a you know a million or2 million dollar business but it's making for 500,000 so it's really looking at those opportunities and trying to trying to act on them really fast let's talk about your decision to be a Buy and Hold so so before you started this project you considered doing a fund be being a professional Capital allocator raising money you decided against that started buying businesses that strategy got clearer and clearer over time and although you still have flexibility as you just said you're not you're not limiting yourself to what you'll consider acquiring um but it does sound like you are quite clear on a long-term Buy and Hold cash flow strategy um why how did you arrive at that what what's the vision there what's the strategy there it it was I I think we kind of touched on this earlier it was something that I believe that kind of fit my personality of being able to um not have a timeline on when I want to you know and when to buy or when to sell sell um it it was I I think that in my experience and from what I've viewed um from other companies is that you're going to go in there and run the company a lot differently if you know you're going to sell in three or five years versus if I'm going to buy and hold you know I'm going to make different decisions if I'm going to um do something temporarily for for for a quick gain rather than have a little bit of pain for the long-term gain right so I realized that early on that um that that strategy is just not going to work for me now I'm not say that I'm never gonna sell a business before but but I see it as I I know this is kind of a weird analogy I don't mean to get like philosophical but I I kind of see like the holding company it I get asked that a lot like why the holding company tell me about it I want to do the same thing and all that there was no really grand plan it was just it was a way for me to to organize in my head the structure of the company so it was easier for me to go out and execute what the vision was and that was to continue to buy companies from the cash flows so the the bigger the cash flows the bigger the the the the better that the companies do the more cash flows the more I could compound that money because I'm not taking a lot out I'm putting just about all of into the holding company and it's almost like this you know the the brand the the the trunk the tree of the company is the holding company right and you know the branches are the individual companies in itself and and those branches are getting nutrients which is cash flow and as long as those nutrients are coming through the tree the tree is going to continue to grow and get taller and taller but those branches sometimes are going to stop they're going to stop feeding on the nutrients right the nutrients is is going to stop so it's not that you cut off the branch necessarily I don't see that but it's taking those nutrients and putting them towards another Branch or adding more branches which is more companies so I felt like doing that doing that style doing that process was going to be best for what I wanted to do was was to continue to scale you know and and have and have these companies and have this cash flow so I don't know if that makes any sense to anybody but it was just something that really kind of made sense to me well it's interesting Dustin because I I feel like you fundamentally you're kind of prioritizing your own your own Freedom you want to be able to do things according to your timeline basically you don't want to be rushed to make changes you don't want to have to sell you want to buy when you want and so on and that's a version of Freedom not having LPS kind of lean on you to to to and impose you know their needs on your decisions and I feel like usually in life but certainly in business if you prioritize Freedom it's at a cost of something so you're not going to grow as much or you're not going to have as much success um but it it seems to have worked really well for you actually you're you've made an enormous amount of progress in seven years $20 million in Revenue all while prioritizing Freedom as opposed to doing you know a a a maybe a more aggressive strategy you know it's interesting I I feel like um it's not what I would have expected I would have expected a guy who who kind of wants to go slow and wants more freedom in his decisionmaking to therefore probably grow slower but you've grown really quickly and I guess one followup to that would be I think a lot of the growth story here is in what happened with Sierra that it your big business tripled in size so million dollar of your aggregate Revenue this year will come from Sierra that you didn't necessarily predict it's just been a wonderful investment that way is that a fair takeaway from your portfolio 100% it's it's all about timing and luck and and it's you know it really comes down to that but I I think going back to you know the the being limited on you make decisions and there's there's there there's um you know there's pros and cons to everything and I think like yeah there there's a limitation on what I can do what what what and and and I don't know what my problem is I don't know if it's like I don't trust people or I have to have total control or that My Philosophy maybe a little bit different than others but I do know to get to where I want to get you know I am going to have to raise money someday I am going to have to do something that that is going to be part of the plan and and and I'm not opposed to that um doing that but I think what I really wanted to do will for myself and maybe this is a part of having that impostor syndrome I don't I don't really know because it's like I feel like you know when you when you say those things and you say where we're at today you know as far as Revenue I look at it and I go wow and I know this sounds I hope this doesn't sound pretentious but it just it's it's me it's like wow you know I could do better than that you know and it's absolutely stupid first of all it's not all on me but it's it's this it's this you know this Drive of of wanting to continue to to get better you know and that's and that's what it is so my point is is that I had to do what I've done so far pretty much on my own and I'm not talking about I've had a lot of help right but I'm talking about with my own capital I had to I had to do that on my own and I get and I get offered I'm very fortunate you know I get offered a lot of deals um whenever there's there's raises for these These funds I people come to me all the time and I I you know again I I think having that flexibility to pounce when I want to pounce is is is the freedom that I really want and not being limited so as long as I have this stream of cash flow coming in and all of that can change right so you know these businesses and this growth that we experience is not going to happen forever Anything could happen and I know what's going to happen I've been in business too long to see that everything comes to a stop sooner or later the good thing is is that we will still be in a position to buy things if we have to I don't have to go out there hopefully and refinance or raise more money and do these things because we could actually I hope in those times that we could continue to start buying more businesses and and and have those opportunities you know to kind of take advantage when there's blood on the street and and and that's because even if there's blood on the street and your own businesses Decline and sales are hit hard in an environment like that you don't carry a lot of debt is that is that kind of part of the you know the the ab your ability to buy even if your own businesses are suffering I guess let's just step back talk to us about kind of the debt to equity ratios that you have at the hco yeah so the the my my target is for me I try to be right around 50% under under 50 let's just say 60% or so so of of debt to equity right and and this is my and I look at it as my total kind of nut in a sense when I when I have a portfolio I I'm very very much I if if your job is a capital allocator if my job is a capital allocator then I have to know my numbers and you know I'm I'm not a mathematician I don't come come from that I didn't go to school but I I I really studied and made sure that I understand numbers and I understand my business you know and so many so many entrepreneurs so many people don't and and that's fine I get it but I have to do that if I'm going to be doing what I'm doing so yeah I have to you have to know what you're comfortable with and and for me it's like you know I'll take on you know more datb if I have to if again if I understand the risk and if it's something that I feel like wow you know what this is this just makes so much sense like I really um can't really losing the situation I mean I can but I really understand so I so going back to your Point like yeah I'll take on reasonable debt uh but I try to really keep those numbers under you know 50 to 60% debt to equity ratio you know and and and and I'm and I'm looking at everything and and I have you know the goal was is to have enough assets at again going to the concept is that I have other assets so I own um I own two of the buildings that that the companies are are doing business with right so I have that I have those options to be flexible right my my whole job is is you know it's buying businesses I think that's where the money that's where the highest Roi for me whether it's stocks real estate or buying businesses and out of those three it's the buying the businesses that's the hard the highest ROI ROI for me but if I see an opportunity I have that flexibility if my debt may be at a level where I'm uncomfortable I could always be at a point where I could sell one of those assets to buy a better asset and and that something that I've learned over time by kind of studying the war Buffett principles about you know taking a bad asset and putting it into a better asset so does that make sense on D yeah yeah and and so where are you going Dustin what what is the long-term plan here are you targeting a revenue number or do you have some other Northstar you know will that's a it's a good question I'm a very goal oriented person and I think it's it's I I have exceeded All my expectations so far you know by by by by chance I'm I'm very grateful I never dreamed in a million years you know I was I was happy when I had no money um struggling and and and happy now as I was and I I think that it's it's it's I never like to put like a a it's really hard I am a numbers person so it's really hard to say okay what is success is it 50 businesses is it five businesses is it 10 is it 50 million but I do have to have a measure and I and I think the way we're going and I think we would where I would feel like wow you know we we really um took this thing to an extraordinary level with probably taking the the whole the holding company to100 million do in Revenue you know so I I I think I would have said that would never be attainable years ago but I I think there's a there's a chance that I could that we can get there over how long um I I would say I have that written down somewhere but I don't know but I would s probably say realistically probably in 10 to 15 years you know maybe sooner maybe maybe longer maybe not um regardless I'm I'm I'm really um grateful to be you know even if even if we did anything like I was just going to take cash flows out of freelance electronics for the rest of my life and and just live off of that and be and be happy with it you know and I think at a certain point is where I figured like look I you know my my desire to grow and to learn was started to happen later on in life for me and so in in what do you mean what is what do you mean by that that I I felt like that when I was able to step back and not run the day-to-day of my companies is when I realize that look I I I want to take this to to different heights I I want to you know have let's see how many businesses we can get let's see how how how high we can scale this and again it was just something that started happening and and at this point right now for me because I'm able to really concentrate on what I'm doing and I'm able to have a lot of like space for myself right I have a lot of flexibility in my schedule like you know I heard I think I heard somebody on your show say or maybe it was another show and I apologize to say that just because I'm not running the day-to-day businesses doesn't mean that I don't have any stress anymore right it's a different type of stress it's a different type of responsibility so I I'm still responsible for everything I still think about okay well I have the leaders in my company I'm going to take care of them but what's happened now will is that I'm able to step back and I'm able to really just kind of work on myself you know whether it's mentally physically and just really trying to become the best money allocator the best entrepreneur I can and the best leader of my people and as a result of doing that will because there was a time when I was running freelance Electronics I was having panic attacks I couldn't get out of bed I couldn't remember the last time I had a vacation and I was a lot smaller company then so now bigger company because I was able to delegate let go and put a plan in place I have more drive and I have more energy than I've ever had in my entire career so I'm I'm just you know more pumped up than I ever was today and I'm ready to keep going I think you you said in the preall that you feel like a kid again I loved that I do does that sound familiar I do I'm I'm absolutely you know it as as there's things that happen every day but I am so excited man I'm just I'm just it's a dream I I I honestly do and I I don't know what I did to deserve this but I I'm just absolutely having fun I I love what I do and I love finding businesses and this is this is the best thing that you know for a career that's ever happened to me well that's so wonderful to hear Dustin and um you the dream you're you're living your own dream and you're Le living the dream of many people listening right now uh this just seems like the absolute most fun career and so before I close us out I do need to get to this one important question which is a little bit back more into into the weeds um but it's so Central to this game if you will you buy businesses that run themselves yes you'll you'll dip in if you have to if there's a crisis what have you but as as we touched on much earlier in the conversation so often in our world of ETA entrepreneurship through acquisition or search the expectation is that the Searcher the buyer is going to come in and be owner operator and you identify businesses that don't need that and in fact as I think I also said I actually generally Advocate that people not entertain that fantasy you should expect when you buy a business that it is going to consume you it is going to be your full-time job and then some at least for a while so how do you do that Dustin how do you identify businesses successfully you you do this successfully that really do run themselves the day-to-day is basically they're running themselves barring a crisis or where they you know they need something from you what teach us please well I don't know if I'm going to give any secret or t or or tell you anything that's that's different that you haven't already heard of the audience but I think I'm going to reframe and kind of backpedal a little bit and and I think what it is is that look I think a lot of people would argue even myself there's no such thing as a business that really runs itself right so I I I believe the goal is is to reframe it as let me find the business that requires the least amount of of oversight the least amount of fixing um what is the business that with the right process in the right people that if I visit it once a year um there won't be nothing would really change except for the fact that it has more money than it did today than it did a year ago so I think that what I do is that I look at a business and going wow this is a business that we can hopefully structure in a way where it can run on its own because one thing that all of these companies don't have as as you probably know as a lot of people who agrees is they don't have processes you know they don't really have processes they don't have succession plans they're they're they're just they they need a lot of Direction and vision and once you figure out what it is your job the first day in life said this again is to understand even you think you may know that during the oi phase during the due diligence phase but it's like why how does this company really make money and what are their business that we're in and once you figure that out then I'm able to come in there and go okay I think we could get this business in a sense where it aligns with our holding company where we don't have to hold its hand and solve every single problem and that's hard and and the thing is is that we're going to have those companies that we buy in the future that is going to be the complete opposite we're going to go wow we really screwed this up so what you can do in the beginning to try to mitigate that is is obviously you you have to know what you want and you have to you know it's going in there and like everybody does it's like you know these are these are the things that I like these are the things that I don't like you know and right away if I find out that you know an owner is doing five or three or four jobs um that's a red flag right there that I'm going to probably have to hire four or five people or I'm going to have to to be in there and this may not meet the model so it's finding those types of businesses not there where they run on its own but with the right process I could get it to the point where it could run 80 90% on its own and and one one quick thing is that every company has in in you know in this model and again this is still beta testing right we're still my goal is to still scale this is to have you know this is when you come to us and this is when you don't come to us and everybody knows you know anything under certain amount anything under $10,000 you can buy anything over that you needs it needs an approval you know th those types of things so there's financial decisions there are um you know Personnel decisions that they can make on their own and pretty much as long as they know when to come to us then they come to us so they you they have to know what is their Authority what they can do and what they cannot do great Dustin thank you for that if people want to reach out what how do you like them to do that uh you could find me on LinkedIn um you could also find me on I I have a Twitter account I probably have like 10 15 followers I don't have anything but I I I never tweet but I'm on Twitter a lot um but yeah you could reach out to me to LinkedIn okay Dustin carry on congratulations on what you built I'm excited by your own excitement on your path it's going to inspire a lot of people um eager to to track your progress here in the years ahead thanks very much for sharing it with us thanks will I hope you enjoyed 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