Cameron's Live Coaching Call with Dawn Cartier of CivTech

You really have to spend time briefing them until they're tired of hearing the story. They have to know everything about the history of your company, your core values, your culture, your bhag, your vivid vision. They have to know all of your employees and your team. Like they really have to understand you. Then they really have to understand and be excited for this role and the opportunity. We often, companies often do a really, they, they brief the executive search firm for 15 minutes and expect them to do a good job. I, I would be briefing them for a couple of days. You know, I would be in their offices, I would be doing lunches with them, I would be going for walks with them. I would be like making sure that they can tell you about your company better than you can. Then they're ready to start recruiting. No different than how you would onboard a new employee. We have to onboard freelancers and contractors and recruiters the same way. So. Hey, Don, I'm glad you're here to do this live coaching call. Thanks for joining us.

Yeah, thanks for having me.

Yeah, this is very different. I've, you know, been running a podcast called the Second Command podcast for years where I interview people and I gain insights on their business. This is completely different where we're going to do a real deep dive and probably a pure coaching or a mentoring call. So before we go live into the real coaching side, why don't you just give us a quick one minute overview of your company. So anybody who's watching or listening knows what CivTech does.

There's CivTech. We're a simple engineering company, but we focus primarily in the transportation industry. We're really in the transportation planning. You think, you know you're going to build a new city. How many roads do you need? How many people might live there? How many lanes might there need to be? Where would you put traffic signals? And then we carry that through to the design side. Signals, lighting, sound, anything that would come from a car. We're also very focused in what I would call the multimodal transportation. Biking, walking, anything that gets a person from one place to the next. With a big focus too for us in transit. So the company expanded it, starting a few years ago into the Dallas market. We were up in Spokane, acquired a firm in Tucson and have a presence in Denver. And those offices are really being spurred along by what is more of a multimodal and transit focus. So we've got some great experience there and that allows us to play on a much bigger platform, I would say nationally versus our other traffic work. Which keeps us more local in our local markets.

Well, crazy. Those are four very different markets too. I mean Spokane and Dallas couldn't be any more different.

You would think that, but you know, compared. So where the home office is here in Scottsdale. So we're in Arizona and really Spokane on that eastern Washington, northern Idaho, we hit all of that from there and Dallas. From Dallas we hit Houston, Fort Worth and we're even reaching into Austin. Those two markets are much more similar as it relates to our services. Primarily because our work there is that we get a lot of opportunity from being a woman owned business. And they both have percentages that tie us in in a very big way. Allows us to meet clients and show them we do good work and then we push through so we can become our own prime consultants out there. Arizona has passed some laws that won't allow set aside for any state funding. So that percentage is much smaller. So the way we have to win work in those markets.

Wow.

Spokane and Dallas similar. Arizona really different.

So different. Okay, that's really interesting. And how many markets are you operating in?

I physically we've got four markets we're in if you count Southern Arizona as its own market because it kind of is. But I would say we're really doing work in probably 8, 8 total markets. When you look at Utah, Nevad, Idaho, Washington, New Mexico, Arizona, Dallas, Colorado right there.

So kind of west coast and northwest, then that kind of region.

Right. And as much as we'd love to be in California, we've avoided that so far.

Yeah, don't like. It's funny I've told so many and I just said that in a flippant way, but, but actually in all seriousness, I wouldn't even bother with California. It's so litigious, it's so bureaucratic. There's always the lure of like California. But when, when the rest of the market is there and is so much easier, it's almost a don't bother.

And we found that, you know, we found that we tried to do a setup to make sure we could avoid some of the other tax implications and things like that. But as much as it looked like a great marketplace for us, there was there really are a lot of people there that are local to provide services.

How many employees do you have now?

30.

So to start off the coaching, what I normally do with all my coaching clients or mentoring clients is I get you to give me a quick update on what's going well, what's not going well, what you're working on over the next month and where you're stuck. So why don't you just go ahead and do that as a quick update, I'll write down some notes and then we'll dive deep from there.

Actually, what's going well is adhering to the growth plans in Washington and kind of the work out of the Washington office and Texas and what's coming out of the Dallas office both had really well written and defined business plans. As business plans are being followed to the extent that there's some what I would call shotgun approach still going on in both locations, that's happening, but work is going really well there. What's not going well, I would say is on the flip side of that is the marketing here in the Arizona office at the place we've been located the longest, have really the most clients and the biggest presence. And so we're losing some traction in one potentially focusing on the other. The other real struggle for us is as we've grown and now we're supporting multiple offices is it's always a process problem. But the process problem for us has been on the accounting side and creating an accounting platform that can work without what I would say, limitations or maybe a single point of failure. Right now, some of our accounting functions have a single point of failure, meaning someone's sick and we're scrambling to figure out how payroll happens or those kinds of things. So a lot of effort there, a lot of brain damage around that. Clients getting invoiced on time proceed just procedures and getting everybody to step in line and doing the same thing at the same time for the company.

What are you working on then over the next 12 months and over the next month? Are there any areas that you're really focusing on?

Yeah, for sure. So the big push for me all year has been transparency around the. Our work is project based, meaning that we make money on people's time. Generally speaking, we're still a company that, you know, an engineer bills X dollars for the hour. And we've not really been able to get past that, especially in the locations where we're doing more, call it city, state, federal work. They make you price everything by the engineer by the hour, specifically how much that person might make in the hour. They review our overhead every year. They tell us exactly how much we can charge for that. And we're limited to a 10% profit margin. So everything gets really regulated in that world. And creating transparency where these project managers every day can see exactly how they're performing on their projects and making sure that we've got dashboards that are up to date, like real time dashboards has been the focus that's gone. It's been an adventure, but it's gone. Gone really well. And next year, the focus, because I. I only see more of that work coming for us. I think we're growing in that marketplace is there's a whole bunch of. I think you could probably hear as I'm talking about the regulation side. There's a lot of paperwork in the regulation. So I am working on automating a system so that we can do instantaneous reporting for the things like. I mean, they make us turn into things like a labor distribution report. You know, how many employees here were billable versus unbillable? Does that unbillable time count towards something the government would allow? 4 in your overhead? And how do we report that quickly? And so that. That, to me, is kind of the next iteration of trying to. It's all data, Right? The data is there. It's just getting it all written into a platform where, again, we can put it in a dashboard, it can be seen on a daily basis.

I'm guessing it's unbillable work as well. Like the government's requiring this. But you can't. You can't bill them for doing it, can you?

That's right. So, like, putting all of this stuff together, I can't. I can't bill them for it. However, it's always kind of on the back end. The time that we spend putting together anything that's automating our systems or processes, we can build to overhead codes that they do recognize.

Okay.

But I won't necessarily get to build that into my overhead until next year. So the work that I did on this year, I'm talking about 2023. When we hit 2024, then they reviewed 2023. We agree mutually on how much overhead I had. Based on the things I'm telling you now that we have, then that becomes what is our overhead rate or our overhead multiplier.

Interesting.

So did some things count? Some things don't.

Yeah. When we were building out what was called Gerber Auto Collision in the US it's called Boyd Auto Body in Canada, we were doing a lot of work with the insurance industry, and the insurance industry wouldn't let us charge for specific things that we had to do. Like we would have to disconnect the battery as soon as we got the vehicle, and we would have to move the vehicle on the lot three to four times to different service bays. We weren't allowed to do that. But if we didn't disconnect the battery. We were going to blow up parts of the vehicle while we were working on it. So we had to do it and they wouldn't pay for it. There were ways that we had to kind of work around that where we gave them a choice or we would, you know, you couldn't just blow up a car to prove your point. Are there any government grant programs or government tax credit programs that you're available for?

The business we're in is available for the research and development tax credit. But, and I just did an op ed on this if you're interested. It's out there under the Arizona Capital Times. The amortization on that, it's crippling. So, you know, we're of course fighting that. I didn't realize that it was based on the expenses of the R and D tax credit, not necessarily the credit itself. So essentially for us, the credit is based on wages, wages. People here who are doing innovative things get used to create that tax credit. Those wages are now seen as an asset. So, you know, you pay your payroll, in this case of the payroll we had, 1.4 million of that was considered allowable towards R and D tax credit. That $1.4 million became then, I don't call it like an asset to the company which all got taxed this year. So talk about we're an s Corp. It's $1.4 million at my personal tax rate, crippling.

All right, so let's cross that one off the list. You talked a little bit about. One of the pain points right now was the single point of failure in your accounting and your finance department. How many people do you have that are working in your finance group right now?

Call it one and a half. But if you count me, I would say this year it's almost been my full time job in a sense that I've been trying to standardize operations in the accounting function itself. And we had some turnover which allowed us to get there, I think with the growth. The person we had before, it was great up until a certain size, but then we kind of outgrew the ability to do it all. So the kind of person who wants to do it all, but now we've got to segment the jobs out. So what we've done is we've kept all the invoicing, the project management invoicing functions internal, but we've moved all of the typical reconciliation accounting, those kinds of accounting functions to an external source. So I have an outside source doing that for us. And then I have an administrative assistant who's helping us on the receivables and collection side. And then I'm working on what I would call the bigger picture. How do we automate to. To try to allow us to do more of less people. How can we automate all of those functions?

That's good. I'm glad you've actually outsourced some of it. That's exactly where my question was going is. And have you looked at even getting a fractional CFO involved, where somebody can actually, who's done it before, who's built these areas and maybe can coach your team or even oversee your finance person? Or is that something that you are really capable of doing?

No, I don't think I'm capable of that at all. I'm an engineer, so for sure a horrible cfo. It's been on our list all year. Honestly, that's one of those things that was targeted. We have about three key areas we'd love to do some more outsourcing on, and a fractional CFO is definitely. I think it's. It's worth that space. Now where we're headed that we need that. And the other one we really need is fractional legal. You know, we review contracts, but right now I've got all that in my office as well.

Those are the kinds of things that in many aspects, some of it can not only be fractional, but it can also be offshored. Now, are you precluded, because you're doing government contract work from using offshore labor? Are you allowed to work with offshore labor?

I'm allowed to work with offshore labor, depending on where that offshore labor is from. So we are precluded from some countries and areas.

But you are able to work with some offshore?

We are.

There's a couple of really good recruiting agencies as well that actually can specifically help you source some of these outsourced, fractional kind of offshore people. I can introduce you to a couple on the fractional CFO side that are very good, and a couple that have got like 40 or 50 CFOs in the Southwest that might be worth plugging in. And you're able to build that out, correct?

Yeah, I should be able to, because what we've been able to do is put that under a professional services fee. So we're able to show that because it's not really direct project, direct billable. So that's actually worked well for us. Where some of the other things that in my industry people would typically offshore, like CAD services, that can get very complicated because Then you're trying to show how that becomes billable labor. But these overhead services, I definitely can do the one challenge we've had. So this is why I love it. And you know, your network is big. The big challenge I've got is we use a product here that's very engineering specific, BQE core. And I love it because it's created this great dashboard of transparency, collects the data, it presents the data. The challenge I have is no one knows it. And so in trying to find some outsourced opportunities in the past, it's really no one to pick it up because no one knows the package.

And you've, you've looked on places like upwork, like yeah, that seems to be something that you almost even want to hire a, like an executive search firm to get them to see if they can go out and source this person for you. Like can they do all the research? But, or, or is it the kind of thing that any of your current staff do they know people that are good at this, that are now, you know, doing part time work in IT or.

No, they don't. So my current staff is primarily engineers. That's probably been part of the problem with this whole thing of getting to a standard process on billing and invoicing. They all love doing the work, but this part of the job, no one lives. So that's been, you know, its own separate hurdle. But no, I mean really, it's, it's been a struggle even using some search firms that only search in this space. Yeah, it's been a challenge.

Yeah, it's a weird one. I mean, I've gone so far as to use the press and mass media to write articles about it. This is a weird one, but it may actually work as well or may actually be worth reading, reaching out to. So as an example, years ago at 1-800-got junk, we needed to hire 30 people within about six weeks to work in our call center. And we were really struggling to find people. It was very low unemployment. I think it was the lowest unemployment in history in Canada. And this was around 2005. So we, we finally called the media up and we called the newspaper and we called the TV stations and they all wrote about us and came out to film us. And they were telling the story of how hard it was for one of these amazing employers because we just ranked as the number two employer in western Canada to not be able to find people and talking about the story. And because of that story, we ended up getting the people that we were hiring because they ended up seeing, you know, the press. But I don't know if there's anything you could ever do with that in terms of, of being able to, to reach out to the mass market whether or not you can even find someone. It's also a great way just to get your name out and get more publicity out there that you can then share on social media, share with your email list. But it's a little out of the box for sure.

Yeah, no it's, it's a great idea. Even thought about placing that. Really need some help with you know, BQ Core on LinkedIn just to see if people pass it along to people they know well.

There's also that, there's also the bonuses but again if you, if you do a recruiting bonus, you're not able to pass that expense off, are you? That's kind of being eaten up in.

Your profit it is that, that so internal. It's funny, I can pay a headhunting fee but I can't pay internal recruiting fees and have account for us. So you know, some of that though for the right person it's just, it works and it's better than. It's still a smaller amount than the head hunting bees and you know, gets us what we're where we're trying to go.

Are you able to pay a headhunting fee and have them do it for you but you pay them a thousand dollar headhunting fee and they post some stuff for you and they do some of the.

Oh yeah, maybe. Maybe there's, there's potentially a chance. I mean, you know, it depends on where we're working, how into the weeds they get on related business. So if you have an employee that you're also hiring their company, sometimes we have to turn that in and then but not always and I guess I've avoided it just because I don't have enough accounting staff to keep track of it.

I'm curious as well about, about your industry and your business and are you able to sell your services into other markets outside of the US at all? Have you looked at that or is that a huge distraction? And I'm just thinking about markets that maybe you can work outside of the controls that you have to allow yourself to be more profitable. But then second, and maybe really the first question is in the markets that you're in, are there other products and services that you can sell that you're not as bogged down with the kind of the payment structure that the states set in place for you?

Yeah, I mean so the, the company itself Was originally started on private development work. And that has no requirements. It's very simple. You know, how we price is simple, how we invoice is simple. It's the rise and fall of the economy that makes it tough to just stay in that one market. So we ended up diversifying to get way more public sector, and now we're about 50, 50. So the first question is, can we get out of the country and do some work internationally? I think the people I have here, including me, we would love that. Part of it is not understanding exactly. I think for us, it's not understanding exactly what those hurdles look like. You know, everywhere, like in the United States, everywhere we go, we've got to be registered in the state that we're doing work. We have to seal the work. Even if it's just the small letter, you know, it takes professional engineer. I know Mexico, we've talked about that a little bit. They've got registration requirements. I have no idea what it takes for us to do that, but I'd imagine there's opportunity. Yes.

What are some of the people that are in your space doing? Like, what are they doing to scale and to grow? Is it acquisitions? Now you. I'm curious if you're at a. I call it a hurdle point. That kind of companies get up a certain point where they hit this supply demand and they're making a certain, like, kind of a certain amount of revenue and profit equilibrium. And then to grow to the next level, they almost make less money for a few years as they kind of build out the team and build out the professional services, and then they build out the revenue, and then they hit an inflection point and they can really, you know, be profitable. Is that kind of where you are, that four cities, but you got to go from 4 to 20 or 4 to 15?

Yeah, I think, yes, it's exactly where we're at. So I would say at 20 people, 22 people, was really a sweet spot as we pushed beyond that. It requires a bigger overhead and platform and more procedures. Right. As we grow to get everybody doing it the same, and we're going to spend more doing that for a while. And while we get the work to build up to kind of get to the next level, you hit it perfect. It's exactly where we're at. It's painful and there's a lot of accumulation. I don't want to call it acquisition happening in my marketplace. And we're a perfect target for that right now because of our size and our markets.

Perfect target to be Acquired or perfect target for you to be doing some of the acquisitions or both problems?

Both, actually. And we've done a little bit of the acquisition side, so we'd love to be growing here by acquisition. I think it's a much faster way forward. You know, Washington, we've done completely organic. It's taken us a year and a half. We had a great plan and that's really rolling. Dallas, same, and Tucson, we did an acquisition. Work was automatic. So I see that as a faster path.

Okay, so let me talk a little bit about acquisitions. I've done a lot of it. Started doing my first acquisitions back in 1997 with Gerber Auto Collision and Boyd Auto Body. And the model that we perfected almost allowed us, I would say, to acquire 80% of our target clients quite easily. And then I've worked with a few companies like Title alliance who've done acquisitions in probably 15, 16 states. Another one in the call center industry that did 17 acquisitions in three years. So here's a model that could work really well for you. Every baby boomer CEO, right? And the baby boomers are 59, 60 is the youngest baby boomer and the oldest baby boomer today is 80. So it's really. The 60 to 80 year old CEOs are tired. They really don't have another 10 years in them right now. They were sold the Freedom 55. They're kind of worn out. They're a little nervous. Interest rates are freaking them out. They don't want to go through another economic downturn. They kind of want to be able to enjoy some of. And they're not, they're not the, the, the 60 to 80 year olds of, of our grandparents generation, like these are, they're healthy. They want to go enjoy their life, they want to travel, they want to golf, they want to hike, they want to enjoy their life, but they don't really know what the exit is. They also have what's called their golf course number. They want to sell their engineering firm for $5 million or $2 million. They want to go to the golf club and tell their buddies at, you know, Arizona Country Club, hey, I just sold my engineering firm, I got my 2 million. And their buddies are like, that's amazing. Good for you. So the key is to not worry about negotiating price, but to negotiate the terms. And here's where I'm going at this. I'll make up a number. But on average, a formula that would work is to pay them the average of 1 times revenue plus 5 times EBITDA. So it's the average of those 2. Let's say you're doing, you're a $3 million firm making a half a million dollars in profit. The average would be 1 times 3 plus 5 times 0.5. So it's 3 plus 2.5, you know, so the average is 2.75. So if you go in and offer somebody 2.75 million for a firm that's making they're doing 3 million in revenue and profiting a half a million, they're going to say yes right away. But here's, here's how you make sure they say yes. And you can play with the formula a little bit. There's no earn out. They don't have to keep working with the company. So they get to walk away day one. You don't want them to work with the company. And by the way, they don't want to work with the company. The last thing an entrepreneur wants to do is report to anybody, regardless of how good you are as a CEO. Plus you get rid of their expenses. They're no longer writing off their cleaning lady and their golf club membership and all their travel as business expenses. So all that kind of additional expenses drops back to the bottom line. You don't need their accounting department anymore because your accounting department can handle theirs. You don't really need some of their dead weight that they have. You probably don't even need some of their office space. So you can kind of free up some of the opex really quickly. You also pay them 70% upfront and 20 to 30% over three to five years. Generally over three years is easy. Most of them will take that over three years at Prime. They don't even need Prime Plus 3. They just want to sell for the two and a half million bucks. If you can give them 1.8 now and 700,000 spread over three years in equal monthly or quarterly installments at prime, they're happy. They've got their number. If there's no earn out, they're willing to take a slightly lower price than someone else might give them. And the reality is you're not going to lose any of their customers. You're going to gain their employees. You're going to pick up the market share. You're going to gain some of their government contracts or whatever. But you also can buy your way to efficiency very quickly. Like you can buy your way from the revenue that you're at now to two to three times that revenue in three years. You can kind of get over that hurdle point really quickly. The Banks will all loan to that. And the key is to work with a bank that's a small regional bank where you can actually go for dinner with the president. It's not like a West coast bank. Like it has to be a, some Arizona bank or some Scottsdale bank or a Phoenix bank or a Tucson bank that you can actually go and hang out with the CEO of the bank bank and sit and talk to. And they already understand entrepreneurs because they are an entrepreneur. The key is to find a banker that's more entrepreneur and less banker. Most of them will take the equity that the owner is holding as equity in the deal. I watched somebody do 17 out of 21 target acquisitions using that exact formula. Now everybody else goes out and they're like, I don't want to pay that price. I only want to pay this price. Other than they all argue over price. So most of the deals fall apart. Or we say, okay, I'll give you the price but you have to work for me for three years. They don't want to work for you for three years. And the reality is you don't even want them working for you for three years. So the deal falls apart. Or we say, oh, I'll pay you the price, but you know, we're only going to guarantee you 70% of the price until we know for three years what happens. Well, they're worried you're going to screw up their company even though you probably won't. So the deal doesn't happen. So the key is negotiate a price that's reasonable and don't spend all of your time and money and energy and legal and accounting fees on deals that fall apart. If you can negotiate a price that's reasonably fair and get them out of the way quickly with terms that they finance, the second part of the deal, like an owner take back or vendor take back, you're going to do a lot of acquisitions really quickly and you could pick up, I'll just pick a number for fun. You could pick up every two to $3 million engineering firm in any of the markets you want to buy to if the owners are in the 60 to 80 year old age group using that formula.

Yeah, that's great. I've got questions for you.

Yep.

Okay. So we did something similar in the Tucson marketplace. And the only requirement of the owner is to help find a replacement. Right. We've got to get another person in there of knowledge and you know, engineering go to, to kind of take over management of that particular office.

I would find somebody, I would go and talk to Max Hansen at Wyscouts in Scottsdale. And I would get Max and his team to recruit a general manager or a vice president operations of a Tucson operation. And I would pay the former CEO of that or the former owner of that location a consulting fee of 250 bucks an hour to help in that market and give him a bonus of like 10 grand if he can find somebody. But I wouldn't, I wouldn't keep them on a salary to do it because they're not going to do much. They've already got most of their money. But you get someone like, someone like a company like why Scouts that is based in the market that you're based in, that is a culture based recruiter that only recruits senior talent in the first place, they can crush that deal. You get another one based in Arizona is Kathy Colas. Kathy does a great job recruiting and she does a really good job with mid senior level talent. You know, you get one of those two people and say target this market. I think you're going to find somebody a lot easier than an owner is going to, is my gut.

Yeah, that's great. And we've tried recruiting firms too and that's actually not really been all that productive. So I know Max, I can call him.

Okay, well here's how, here's how you work with recruiting firms as well. You really have to spend time briefing them until they're tired of hearing the story. They have to know everything about the history of your company, your core values, your culture, your bhag, your vivid vision. They have to know all of your employees and your team. Like they really have to understand you. Then they really have to understand and be excited for this role and the opportunity. We often, companies often do a really, they, they brief the executive search firm for 15 minutes and expect them to do a good job. I would be briefing them for a couple of days. You know, I would be in their offices, I would be doing lunches with them, I would be going for walks with them. I would be like making sure that they can tell you about your company better than you can. Then they're ready to start recruiting. No different than how you would onboard a new employee. We have to onboard freelancers and contractors and recruiters the same way.

That makes sense. That does. We have like a booklet put together. But I, you know, I've not really tried the whole let's go to lunch and talk about it. I think that would make a big, big, a big difference.

Yeah, I would do a booklet and I would do a video But I think it also has to be like you have. It's kind of like the. The little engine that could. It's like, I think I can, I think I can, I think I can. If you think the recruiter knows enough about your business, they're gonna fail. You have to know for sure. Absolutely. Like, if I had a gun to your head and said, you know, I pull the trigger if they don't. If they're not successful, you'd. You'd train them differently. If we had a gun to a kid's head, like, we would. We just don't. So we give them a booklet and we think that's okay. They're not going to read the booklet. Like, they'll still skip through because they're busy. Right. And you're a number. But the ones that they really work well with, and this isn't just Max, but it's. Any really good recruiter works really well when they feel like they're a part of your company. But it's our job to suck them into our vortex. The key with doing acquisitions is to remove every obstacle that the seller might have. And we think that we're. We think that the most important thing to negotiate is price. It's often the least important thing if we get all the other stuff done. And you could, if you could buy six out of the next seven companies you talk to, that's way less expensive than acquiring three. But having to talk to 20, the amount of time and energy and legal and accounting that you waste on talking to 20, that never happen. I would rather pay somebody a little bit more and negotiate, you know, land four out of every five.

So how did you find the companies you guys were targeting to acquire?

So what we did is we identified the markets that we wanted to scale in. This is what's different about corporate locations versus franchising. In franchising, you tend to go where a franchise prospect is. Like if we got a phone call from Buffalo, we're selling a franchise in Buffalo. In the corporate acquisitions, we picked the DMAs that we wanted to go into. So we would pick as an example Scottsdale, and we would say, we're going to go out and find the top 10 auto body shops in Scottsdale. We're now going to identify the top three that have the best brand, the best customer reviews online. They do the great revenue, they work with the most insurance companies. Like, they're the good brands in that market. Then we go. I went out and talked to all three of them, and I said, I'm either Buying you or I'm and I would tell them, or I'm buying Bob or I'm buying Fred. I'm buying one of the three of you. And if, if none of the three of you sell, I will open my own corporate location in this marketplace. But we're going to be in this marketplace. So you're either going to sell to us or you're going to compete against us. If you sell to us, here's the number and I wrote it down. One times revenue plus five times profit, divide by two. No earn out. You get to walk away. Day one. We're going to keep all your employees with us and we'll give you 80% up front. So you'd write the deal on a post it note and then I sold them on what their personal hobbies were. I'm like, so you get to spend more time with your spouse, more time with your kids driving around the US on your Harleys together and we're going to make sure that your company continues to grow with the people that you love. But because the terms were they can walk away day one with a price, they can tell all their buddies every deal happened and I was under qualified to be doing this. The first acquisitions that I did 98, I was 33 and I was walking into these 65 year old guys that owned collision repair shops telling them to sell me their business. I couldn't fix a car to save my life but I sold them on the valuation and there were no real terms that were negative because all they expected to hear was they have to work for me for two years which they don't want to. They have to be in part of a brand. There's going to be an earn out. There's going to be like all the things that they didn't want. I'm like no, none of that.

How did you tie down their employees so their employees would stay after they left?

We just created such a great brand that they wanted to stay. When you create a really great. It's why I suggested Max Hansen from Wisecouts. When you're a culture based company, when you really obsessed about creating a world class company culture, when your business isn't like beige, it's it, it has meaning behind it. Like when they're excited about your vivid vision, your core values and your core purpose, when you actually care about them, when you give all your employees five weeks paid vacation, like when you actually know their insecurities and your fears and you care about them as humans, like that's what you should be Doing, not managing accounting. When you really care about them, they're not going anywhere else. So it's no longer about handcuffing them. It's creating such a strong magnet. They just don't want to leave. They're like, why would I go anywhere else? Nobody else will treat me like this.

As you guys were acquiring these. So as opposed to kind of self generating your next offices where you could easily then control culture, how did you manage that? Culture change? Understanding that where, what they were doing and where you're taking to is so much better. Yeah, I still find people resistant to change.

So the first thing is we were only acquiring great companies. So we would never go and buy an auto body shop that was broken, right. That was toxic, that had negative energy. Like we wouldn't buy them. So if we were acquiring a really good company, chances are they had some really good people. We then just went in and all the things that we tried in the first six months to integrate them with wasn't the systems. We didn't care what they used to manage the day to day or what software platform they were on, or what paperwork they use. None of that mattered in the first six months. Do they buy into our vivid vision? Do they buy into our core values? We would fire people who didn't break, you know, meet the core values and start hiring people who did. We would give them more vacation time than they were ever getting anywhere else. Five weeks paid vacation, including their sick time. Most employers give two to three weeks. We started to care about them, we started to listen to them, that's all. So we just integrated them into the culture. As Simon Sinek in his book Start with why we went in there was the why, the how and the what. We really obsessed about integrating them with the why. Simon used to be on our board of advisors five years before he wrote the book. He used to sleep on my couch in Vancouver. So we got early days, indoctrinated into the core purpose idea. But that's what we, what we did before that. So what we did was we bought good companies. We gave them a great company culture. We obsessed about company culture, we integrated them into the company culture. Then we actually worried about the systems. The second part was, and this is what we did really well with Gerber Auto Collision was we didn't change the name right away. So in Canada, the company was Boyd Auto Body. So we would go out and acquire Northwest Auto Collision. Well, the signage would stay Northwest Auto Collision. We would change the colors to our red and white colors. And then in the Bottom right hand corner, it would say, a Boyd Auto Body Company. Twelve months later, we switched the sign again, and it was now equal. It was now Northwest Auto Collision, a Boyd auto body company. But the boat font was the same size all the way across. And then in year three, it went Boyd Auto Body. And we had by then had dropped off the name. But we didn't change the name of their company for two full years. Their letterhead changed to be in our colors, but it kept their name with a Boyd Autobody Company. So what we were doing was indoctrinating their employees into the cult. We were indoctrinating their customers into the cult. We were indoctrinating the insurance relationships that they had into the culture, but we were making sure they're going, hey, everything's the same. It's still Northwestern Auto Collision. It's still Ralph's Auto Body. It's still Galaxy Auto Body. These are actually names of shops that we acquired. But in the bottom right hand corner, and because we changed the colors, it was like, oh, okay, I get it. It's like, but it's still the same. But it's all red, white, and blue. It's still the same. And we didn't worry that it had to all be the same name, right? As Shakespeare said, a rose by any other name would still smell as sweet. It really didn't matter what they're called. What mattered is, do they operate the same? Do they believe in the same things? Do we treat people the same way? Are we buying into the same kind of growth that we're after? Once we're all there, then we can change the name.

That. That's actually genius. I see people do that too quickly. But I really love your idea there when you change the color immediately. Because, you know, to me, so much of our culture in our office is kind of instilled by the. The branding is the colors. The colors becomes part of the culture. And that's such a quick little catch. It's good.

And here's what's interesting about it, because I've heard the opposite, where people go, well, isn't it expensive to change the signs three times? I'm like, not really. If it's a $3 million business and it cost me five grand twice, that's only ten grand. What costs me more is losing an employee. What costs me more is worrying our customers. What costs me more is like. Like the after or the tremors or like earthquake feelings that people have of nervousness. So if I think about Maslow's hierarchy of needs, I want to build that safety and security and that trust. Well, the trust is the name is staying the same, the people are staying the same, the systems are even staying the same, the color change, no big deal. So you kind of like, we're just going to ease them into it. And it's almost in a way, like the drug dealer when we were in high school, he's like, hey, do you want a free joint? Hey, do you want another free joint? Hey, do you want to buy a bag of grass? They didn't start by selling you cocaine. They got you with the free joint. Right. We're going to get our new locations indoctrinated into civ tech by. It'll be like Fred's engineering a CivTech company. And then what's your colors? What are your branding colors?

Right now we're blue and orange. Orange behind me.

Glad you have the orange behind you. If that was. If that was not your company color, I was going to lose my parts. If you're. If you're listening right now, behind dawn right now is this bright orange wall, by the way, you're missing. You need to have branding behind you and not the awards on all.

I wish you could see the other side. I've got the Autobahn in blue and orange right here for you. But I'm staring at it, not you.

So you're right, it needs to be behind you as a zoom background. And again, I'm not even showing, like, I'll show you what my background would normally be. I would even switch to something like this, right? So that at least behind me is some kind of branding. But if you're in a physical space, you're missing a massive opportunity to have your brand behind you and your company color. So I would make sure behind you are your company colors. And the other part is that the awards and certifications that we have, it's great that you went to school. It's great that you worked so long, so hard, but no one really gives a shit. What they really want is the pictures of your family behind you. Like, I would rather see the pictures of your family behind you as that are big, because that's what we connect with, right? I connect with you and your humanity and your family. The stuff that's behind us is a very 1980s way of, you know, the confidence I have in you is getting to know you as Don and who you are and seeing your brand. It's not so much some, you know, corporate seal that we've got a certification from some school. And I tell Doctors this, I tell chiropractors this, I tell dentists this. Like stop using the name Dr. Because that's creating a barrier between us. Use the name Dave and Kelly, like let me call you by your real name. Let me see who you really are.

But I totally agree with you on the engineering side too. We're as an industry and this is, you know, in many ways we're in a huge disruption. I think AI for a lot of us in engineering is going to create a disruption because AI is going to be able to replace a lot of the jobs that we have. Probably not our jobs, but some of our employees for sure. And. But we're also still stuck in a process that we haven't moved off from. And I think largely that's what makes engineers. The engineers, they're very resistant to change.

It's actually one dichotomy. Right now it's one of the four groups that we would never award a franchise to at 1, 800 got junk. We picked engine engineers, MBAs, accountants and pilots. Pilots had to follow a checklist. Engineers wanted to keep everything the same or break it and reconstruct it. MBAs had to create these fancy models around it all and accountants wanted to manage the numbers and not the people. They made terrible franchisees. So I think for you, you just said something else though which was around AI. The only employees that should be worried about AI replacing them are the employees that are not playing with and leveraging AI on the day to day basis. Yeah, I think there's an opportunity. Have you seen the dashboard called there's an AI for that?

No.

So it's called there is an AI for that and it's a dashboard of approximately 8,000 different AI tools, of which chat GPT is only one. And the key is to let the engineers and the people that work with you play with some of these tools and then report back on a Monday like with a five minute book report of hey, here's a cool tool and here's something I tried using it for. I don't know whether that is something that helps you in your industry or not, but you definitely want people playing with these tools.

I think something like that would be really helpful right now. I mean there's definitely a way we can make our job. We could be getting more done with tools like this. And I do think if we don't understand this tools and figure out how to integrate them into some of our processes or even create a prepared proprietary process with those tools, I do think they'll get replaced. So I think you're. You're totally right.

Are there any products or services that your business or industry can create that is outside of your current client base? Like when we. At the end of the day, we have three resources. We have people, time and money. And can you create think products or services with those people, time and money that you could sell that are to the outside world or that are to your client base, but aren't necessarily being paid for by government?

Really good question and certainly something that we've been spending a lot of time tossing around. And one, if, you know, automated vehicles being this next huge. It's not even the next huge thing. You know, if you're anywhere in Tempe or Arcadia or kind of that Central Phoenix, if you're out in the morning, there's more wayos on the street than traditional vehicles. And the connected vehicle side, the challenge we're having is figuring out how to integrate in the data. Everything's being driven by an ability to collect data, see data, sell data. And I think what's tripping us up is the idea that all this data is out there and that companies much larger than international, you know, where 20,000 people, engineering companies invested early in those. They saw it, they had resources, they went after it. And I think as a bit of a smaller player in that market, trying to figure out that niche, like where we can wedge ourselves in has been a little bit difficult with how fast the market's moving. So it's. I'd love to figure that out.

Well, I don't. And I'm not sure if you have to figure it out or if your R D can stand for rip off and duplicate. So the hard thing about engineers is you're one of the really smart cohorts of people who try to figure everything out. I was the stupid kid. I had two roommates that were engineers. And I was never anywhere close to as smart as these guys were because they. But they tried to figure everything out. What I tried to do is find the cheat sheets. I tried to find the teaching assistant who would give me a copy of the exam the night before the exam. And we'd go for beer so I could then have a copy of the exam for 12 hours. Meanwhile, they'd been studying for six weeks. I'm wondering if there's companies out there that are doing stuff that you can just R and D what they're doing. Have you heard of a company out of Kansas called Rhythm Engineering? So Rhythm does all the traffic signals and they do multiple countries. But, you know, when you show up at a, at a stoplight and you see the gray boxes on the side of the road. It's their software that are in those gray boxes that are counting traffic flow and deciding when the stoplight is to go red, yellow and green.

Got it. So they're doing the predictive signal controls.

Yeah. Have been doing it forever. I used to coach their CEO, Reggie Chandra. I coached him about 10 years ago. That's the kind of stuff that I think you in the, in the civil engineering and traffic engineering or side of space is to be looking at businesses that are in and around your industry to think about what can you be building or developing that is different or ancillary to where your core competency is right now. And I remember years ago a client of mine in Vancouver was, they were a really great graphic design website shop. They built websites. And then finally they're like we're going to kill ourselves if we have to build another website. Because it's constantly find another client, build another website, find another client, build another website. And they realized that every website they were building had a shopping cart. So they decided to build some really great shopping carts. But then they realized that a lot of their clients didn't have a lot of money. So they built really great shopping carts for the Olympics and they built really great shopping carts for Target. And they built, they started to build and it's called Elastic Path, couple hundred million dollar company now. But they decided to build a piece of software that they could sell to everybody was the same three inputs, it was the same people, the same time and the same money that created something that then could be replicated. And I wonder whether your engineering team could build something for the industry as you continue building what you do as the day to day. Like are there other things that you could build or develop or sell? It could be research. You could become one of the best in the world at selling data that you have. You know what I'm saying?

Yeah, I do. And in fact there's a company that I've been following that did something that talk about the R D. I think we could probably do it better. Yeah.

When it's kind of like everybody I'm laughing at people who are saying that Tesla is going to have all the competitors like every other car company making electric vehicles. I'm like, have you got no idea what Elon's building? He's not building a car company. He's building the first autonomous vehicle network on the planet. And he has more traffic data than any other car company at Waymo and everybody else combined, because every Tesla is mapping. He's building the data pool. And, you know, Bill Gates said this in 1998 in net gain. The book Net gain, whoever controls the data controls the world. You might have more products there inside of what you're doing that could be sold versus the actual service that you're selling at the same time.

I'm actually sure we do. We do have quite a bit of data. Interesting.

Yeah. And I think that's where you get some people to take a look at your business from. Have you heard the concept of Rembrandts in the attic? Let's say that you were. I. You and I were in Arcadia. We're driving down Lafayette, and all of a sudden we see this home, and we're both. We both want to buy this home. And. And you go in, you're like, I'm going to bid $3 million for this house. And I come over and I bid 5 million. And you go, cameron is crazy. That house is not worth 5 million. It's barely worth 3 million. But what happened was I went up in the attic and I noticed there were two Rembrandt paintings in the attic that are.

Each.

Were each worth $3 million each. So I'm paying 3 million for the house and another 2 million for $5 million worth of Rembrandts. You didn't notice the Rembrandts in the attic? Your business is not worth the revenue and the profit. That's just what the house on Lafayette's worth. The real value in CivTech is these other assets. And it could be the IP, it could be the people, it could be the, you know, engineering data. It could be the ability to build something. Could be something that you do every day that somebody else is willing to pay millions for. In another market. I think the opportunity is to get some smart people to see the forest for the trees, because they're going to see the Rembrandts in your company that you don't necessarily notice. Or the. Or if you spent time. Less time managing the finance of the business and more time thinking about the Rembrandts that are with inside of CivTech or inside of your engineering business. I think you're going to set yourself up for some big wins.

I love the idea of asking the leadership team that question. That's the question, right? What assets do we have in the business that I can't see?

And I would also even reach out, like, you know, people in the Scottsdale and Phoenix market reach out to some people. That are in the M and A space and say, look, we're not, we're not selling, we're not buying. We just want you to look at our business and tell us what assets we might have or what thing, what products we might have that we're not even noticing that we could sell. Or start looking at the other people in the industry to see what are they selling. Or listen to your customers and say, what are you buying?

Good one too. I haven't asked that question in years. You know, like I think a product of being around for so long is those early questions that you often ask, you stop asking.

Sure, that's. And that's where someone dumb like me comes in. Because I don't know the industry. Like I. I've coached companies in so many different industries and I've never. I don't know anything about their industry, but it's almost. I'm more valuable because I don't. Because I can see things from a very different perspective that I don't get stuck. When I was coaching the CEO and the second in command at Sprint, I. I've never worked for a cell phone company or a telephone. I don't no idea how these companies work. So I was able to talk to them becoming more entrepreneurial and meanwhile they're the 82nd largest company in the United States. I had no business being in their boardrooms, but I wasn't in their boardroom because I was an IT professional or a tech. I was in there. I don't even know what to call the industry. That's so funny. It was. I coached them for 18 months. But what I could coach them on was the stuff that no one in their industry was thinking about. Is this helpful?

Yeah, it's so helpful. I do think fresh set of eyes is so important, especially in an engineering industry that's been slow to change. Right. We've got a lot out there, but we're just so slow to tick along the stage. No, it's been great.

So let me give you 1, 1 comment to wrap on that because I think you just touched on something. If the rate of change outside your business is greater than the rate of change inside your business, you're out of business. Yeah, I think that's the opportunity is there is a huge rate of change happening right now in business in general. You need to look at other businesses and other industries and the leaders and it might even be leaders in your industry outside of the US like what are they doing? I'll give you one as an example. There's an engineering firm, and I met with the CEO of the engineering firm in Delhi, India, about 15 years ago. They make all of their money not in engineering, but in real estate development. They know where all the highways are being built, they know where all the off ramps are being built, and they're doing all the real estate development 10 years before that stuff happens in separate companies, all legally, all above board.

We do know that.

Well, if you know where. If you know where the off ramps are going to be, then I would be starting to do some real estate acquisition and some packages in that space. You'll make a lot more off that than you will off engineering, it's no doubt. I gotta jump. Don, thank you so much. Appreciate it. Hope this is all helpful.

It was wonderful. Thanks, Cameron.

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