Rebuilding an Acquired Business for the AI Era

Welcome back to another episode of Bought the Biz. This topic came out of the blue today where Christi said we have to talk about the transformation at Rainmaker. This is not your classic ETA discussion, but it is the story about how a company really changed itself from an ETA small business into a technology platform. And I get to tell you all about Rainmaker, my company, and it's full of emotion for me. Big changes, but excited for you to hear some of the story and what we've been up to. Too, so you're not going to want to miss it. Bought the Biz is a podcast for ETA entrepreneurs who've gone from searching for a business to actually running one. It tells the real story of what happens after the deal closes. The day-to-day operational, emotional, strategic, and leadership challenges that just don't show up in the highlight reels.

The show is story-driven and practical, sharing real experiences from operators along with clear, actionable takeaways you can use in your own business today.

I'm Garth Fossano.

I'm Christi Loucks. Welcome to Bought the Biz. All right, so today on Bought the Biz, we are putting Garth in the hot seat. Garth originally acquired a call center business that is now transforming into an AI-powered SaaS platform. So we are going to do a deep dive into where he started, where he is today, and how he made decisions along the way. So Garth, let's just start with high level. You have an Acquiring Minds episode. If people want to go like listen to the full story of the acquisition, they can always go do that. But like give a quick overview of what you acquired and like timeline too, just to set context.

Yeah, like the timeline of my search or the timeline of how long I operated the business? Or both?

Maybe a little bit of both.

Okay, good. Okay. So I did about a 5-year self-funded search. It was on the side. I had a full-time job during that process and had been looking at a whole bunch of different types of businesses and opportunities. My background was in call centers. I was working in consulting and technology companies that were all around call centers. That was not my dream when I was a kid to work in call centers. I just like math and there's a lot of math that goes into it and it just sort of became a good fit for me. But I never thought I would acquire a call center business. I was looking at everything else. I didn't know that even existed. In October 2022, I closed and acquired on Top Dog Sales Center. It was supporting about 100 dog trainers in the United States and Canada, essentially operating like a BPO or business process outsourcer. That's where a lot of your customer service is handled today. Like when you call into a 1-800 number, you might get somebody in another country. It's an incredibly frustrating experience. A lot of those are managed by BPOs and I've worked at one. And so essentially I acquired a business where that these local small businesses in the United States and Canada outsource their sales to. So we would get leads for these businesses. We would call them, text them, reach out to them, answer inbound calls, convert them into paying customers. And It was a really cool service. I have been doing outsourcing and call centers for long enough to know that a couple of things were really unique about this business, and that's what made the acquisition really easy. The 3 things that were unique about it were we owned all the technology that empowered the customer engagement. That is not the way BPOs work. Like if you are— let's think of— I had to call United Airlines on an 800 number recently. It was a pretty terrible experience, as it always is. And United probably has a BPO that does some of those, that has the people handling those calls, but all those people are using United's technology, CRMs, all that stuff. So we had our own technology. We also were doing sales. That's really uncommon for an outsourced organization to be doing sales, and we were really good at it. And then the last thing was we had outcome-based contracts. Most BPO or outsourced contracts are, you know, you want this many people of this skill set, it's this many dollars per hour, and this is what you pay for. And if we don't provide those people, maybe there are penalties or something like that. So it's really just like a staffing game, but not a delivering an outcome or a service game. Whereas because this business had outcome-based contracts, it really aligned incentives, which was pretty cool. So I saw those three things and jumped in. It was around $2 million in revenue based on the financials that I acquired and Yeah. What else should I be telling you about the business?

So you were working with what types of companies at the time?

At the time they were all dog trainers, all owner operators, and all in the same franchise.

That was going to be— yes, that was what I thought that was the case, but I couldn't quite remember if it was like multiple or if it was— that was just a portion of it. Yeah. So you had just this really incredibly strong relationship with a single, like, with the franchise, or was it directly with the owners?

Directly with the owners. The relationship with the franchisor has never been strong, and we just haven't really been able to get through that one. It doesn't really make sense to us, um, you know, uh, yeah.

Okay, um, so you acquired it and you ran it for as it, as it was So to more or less, right, for a couple of years.

Yep. For really like 2, 2 years, 2 and a half, 3 years. I mean, honestly, there really hasn't been a significant change until recently. We've just been going through sort of the business transformation to get ready for that change. Yeah. We ran the business pretty much status quo, introduced a couple of new services. We're able to, you know, the business grew. Really well. That was exciting because of that. And we started to expand into additional business lines. That was part of the, you know, testing the thesis and exploring the waters was, is this service needed outside of dog training? Like, I mean, kind of obviously the answer is yes, but it's good to just have some more of those additional proof points. And we got those and found validation in a bunch of other home service industries. And so yeah, we're, we're now in a whole bunch of different types of markets outside of dog training.

Okay, so then, so you unlock more markets, you say yes, this is relevant to others besides dog trainers. Um, but how did you make the jump to we need to do something completely different? Like, just like talk through that actual process, right? Because was that just something that you forged in your mind? Was it something that the team started thinking about? Did you have advisors? Like, How did you get to even the, the point where you're like, I think this needs to change?

Yeah, that's a really good question. Advisors is probably the best answer. I mean, not that these ideas couldn't have come from within. Let me back up. When I acquired the business, I thought that there was a 20% chance it would be status quo dog training only for quite a while. I thought there was a pretty good chance that we would expand into a couple new verticals, do a couple more markets, um, and be running effectively like a BPO. And then I thought that there was less than a 5% chance that we would transform into more of a technology company and really systematize and put processes behind what we were doing. Um, we're on that 5% likelihood path in my mind now. And that path was a lot driven by my mentors and one of our board members, and that board member is now the CEO of the company. So he and I would do quarterly meetings, uh, like the board meeting every quarter while I was operating it as CEO, and I would give him updates. And luckily everything had been going really, really well. There wasn't too much to be concerned about, but he was always asking Hey, what's going on with AI? What are your plans around technology? And I had had a strategy that we would use technology rather than develop it. So we would like go buy something, implement it versus going and building it ourselves. Nothing really works well for what we were trying to do. And, and I know AI tools, you mean like, no, like your center tools, no AI tools. Nothing was working for— I mean, because generally a call center tool is built to support one business and one brand. They're really expensive. They require an IT team. It's a lot to manage and maintain. If you use some of the cheaper ones that are built for small businesses, they, they're terrible. Like a really common one is GoHighLevel.

Yeah.

The telephony, the texting does not work well. Like it's not good. And like, I, cause I've been working with a lot of these types of clients. I know that there's a brand out there that uses GoHighLevel for its franchisees and I called them and I test a bunch of them and you can tell someone in another country is picking up and the phone The connection's bad. There's all these weird delays, like, and that's not that the person is bad. It's just like the technology is bad. Yeah. And so you need to be able to have multiple people that are pooled resources. I'm using some call center words here that are supporting multiple different brands. And if they all have to toggle between already in one brand, you might have to toggle between like 15 tabs to do something because none of the systems work perfectly. But now if you're dealing with someone toggling between 15 times, 100 clients, like, it just doesn't work. And so we tried to build some stuff or configure some off-the-shelf things to work in that way, and, and it never got to the level that we were looking for. And so through the mentorship and advice of this board member, we decided to really build our own technology platform. The other shift that really made this possible was the development of AI and sort of how that has been progressing, because also it's really hard to train humans to support multiple businesses, multiple franchisees, all that kind of stuff. There's— the nature of the other— the old business was very difficult to scale. We were able to do it up to a certain point, but to sort of hit that next growth trajectory, we were not going to be able to do it as a services business. Now, I think another really important part of this decision was I have always known technology has been coming for the call center space. And so you might think you're crazy for trying to go into this market. Like, well, Why did you buy a business in here? And I know your business had a similar thing happen too. I thought there was probably 10 years, but the month after I purchased the business, OpenAI announced ChatGPT. And so change started accelerating in the market much faster. And so it was in 2020, it's 2020, 2024 in the summer was when we said, hey, like the change, the pace of change is happening really quickly. This business does have a lifespan now. It is less than 5 years. Should we— we were going to be in a good place in terms of as an investor on it based on how it had been performing, even if that were to start declining. But we said, hey, let's like use this foundation as the starting point for a new AI platform. And what's really interesting is that there are actually now VCs targeting the search space. They're doing this, they're calling it AI rollups, and they're buying legacy businesses like what searchers would be doing, implementing AI in there and really transforming it from a VC perspective. I feel like I stumbled into an accidental AI rollup.

Yes. Okay. So when you had this, let me, let me ask a very specific question. So when you had this, okay, we need to really lean hard into the AI space and it's going to look completely different than what we've been doing. Did you know what you wanted to build at that point or were you just like, you know, dabbling? Like, what was that?

What was that good question?

Ideation process like?

As it started, you know, we were like, wow, this AI transformation is going to happen. We need to get ready for it. We had a belief still that we would be able to continue to sort of like use off-the-shelf products, configure, continue to test the hypothesis before we went and built our own. So our thought process has been 2025, shift some of the core tech stack to more AI-forward platforms, 2026, build and launch our own. So that would really kind of be putting us on a late 2026, early 2027, really having our own platform.

Okay.

We went down that path. We found that we were not able to make happen what we wanted with configuring off-the-shelf platforms. And so we probably spent You know, we spent probably about 3 months, but because of hiring and building the new team, we probably spent about, you know, in total 6 months on that pathway. And then about halfway through 2026 was when we brought on the development team and we raised a seed round to fund the growth of the platform and building the platform. And, you know, now we're in the thick of that transition. You know, it's sort of, it's really with sort of mixed emotions that we wound down our call center on the 31st of December. So just a couple of days ago, literally 48 hours ago. Yeah. So that is, that is super intense for me. I mean, obviously it's super intense for the people that were impacted as well, but it was very hard for me to see like a business that I acquired was so passionate about and so passionate about and is really changing.

Yes. So tactically, um, what did it take to wind that down? I mean, you don't have to get like super nitty-gritty, but you know, how did you have to like plan that out to completely phase out this part of the business?

Um, I mean, a couple things. We wanted to make sure that the technology was going to be ready, so we had an early adopter program that we were able to get some customers live and do a lot of testing with this so that we were confident in it. I mean, you do have to make those calls sort of without all the information So we were feeling pretty good about it, but we didn't have everything figured out. I mean, luckily, I feel like it's been a pretty smooth transition both for our customers as well as our former employees. We communicated with both sets pretty early on, like, okay, we communicated early enough with employees where if they were upset and if many of them left, it would have been a very difficult December for us. But we felt like that was the right thing to do. We also gave them very strong packages for what is traditionally called call center work. So I think it would probably be even uncommon to get a package, but we did that. It felt like the right thing to do. With our customers, we've been communicating with them a whole bunch in advance as well. I think we do have some very tech-forward customers and they're very excited about this. They're very understanding and quick to adapt this. Adopt these, uh, this sort of technology. We do have some laggards. I mean, like, right before we were recording, I was talking with a customer who hasn't been able to go fully live because they haven't connected all of their, like, their Stripe and their Google Calendar now through, like, native real integrations, not sort of this hack. Exactly. And, like, we had communicated, we called, we did all of these things, no response. And now it's like like, you know, we missed the deadline weeks ago to fully implement them. And, you know, they're confused about what's going on. And it's like, I don't really know what to say, man. Like, have you not read your emails or called us back on all these things? Like, I don't really know. And so it's not easy for everybody. Like, change is super hard. But it feels really good to be sitting where we are today. Because like, you know, I know that we know that this is the right strategic path. It's only just a timing question now. Like, there is no way that what we are doing is not going to be a significant business in the next 5 years.

Can you tell, can you tell the world what you're doing? This is not a, this is not an advertisement. This is just like really, like, tell us what it is though, to be so that like we can, you know, point A to point B.

No, this is, it's good. So I mean, I'll explain the challenge that I think us as a small business, home services, so B2C, not the B2B businesses that we have been running, but you really become chained to your phone as a small business operator. Like a lead comes in, you just paid $50 on that for with Google. Like you better hit it hard, otherwise your competitor's gonna get it. And like you're gonna feel really chained to your phone and your business and your customers. And in some ways that's amazing in the beauty, but it's also like not a really good way to live your life over a long period of time. And so we have been working on a solution that automates the sales process for small business owners. So now you don't have to be chained to your phone. If you get a new web lead, it outbound calls them. It explains to them your service. It talks about pricing. It schedules. It can take a deposit or a full payment using Stripe all over the phone in a really natural, human-like, conversational way. And, you know, we can make it whatever you want. So we do have some customers like pest control. It's a little bit more transactional. Those dog training customers that I was talking about, it is literally like more of a therapy session asking a bunch of questions. About the dog, the impact, what's going on. And, um, you know, it is sort of mind-boggling to think that technology can do this, but the real thing it's solving for is now you have an autonomous sales platform. You don't have to manage a sales team, you don't have to offshore this, you don't have to have a VA in the Philippines tied into GoHighLevel to like use a really bad Twilio integration with terrible telephony. Um, so this is a huge unlock for small businesses. It's going to get better and better. I mean, I think one of the cool things that Sam Altman said was like, AI is the worst it's ever going to be today.

And like, that's terrifying and amazing.

Yeah. Yeah. So a couple of the things that I mean with that is, you know, we are using a recursive learning database so that it learns and gets better and performs better for your business all the time. And it's using data points that a sales agent could never use, like tone, cadence, pausing, like all these types of things that we sort of hope a good sales agent would do. Like it's programmed in, it's going to do it. And you also don't have to retrain people. Like so many challenges in a call center with like attrition, training, staffing. Do we have enough right people on the right time of day? Like, you know, we can now do for each small business, 1,000 live conversations concurrently. Like, that was never possible before.

Yeah.

So it's really, really exciting. And then, you know, we are now also seeing some of the bigger companies like Google is now using AI to outbound call small businesses. So as these practices continue to get pushed out in the marketplace, this is going to be table stakes pretty soon. And, and if you're not using something like this in 6 or 12 months, like you are going to be at a competitive disadvantage, there's no doubt.

Okay, so you took your old experience, right, like call center, you knew the world, and mashed it up with an actual small business problem.

Yep.

And then threw AI at it.

Yeah.

And that's how you— and then you landed here with Rainmaker. Totally different business.

I mean, we are solving the same problem in a way that when I bought the business, you couldn't have solved it, but now you can. So it's more efficient. It's a massively lower cost to our customers. I mean, we were 10 to 15% of their expenses, which is pretty cheap for a sales team. And now it's a fixed fee. you know, between, you know, like $100 and $1,500 a month depending on your volume and what tier of service you're on. I mean, that's, that's just, that's crazy. Like that, like you can't even hire a person in the Philippines for that. And, but we're also on 24/7. So like there's no way to like match that price point with that level of service. Yeah. So I think it's exciting. Okay.

So then I, so I have, I have two questions and I'm just going to throw both of them out there.

Do it.

So the first one is, on a personal level, right? Like this is, this is your business. What, what were the risks you were willing to take, right? Like, or like how did you, how did you address those risks just on a personal level, like thinking through this transformation? And then two, maybe based on that, or, you know, add to this, this as an answer, but like, what would you tell other small business owners who are in the same seat going like, I have to modernize, I have to get on this AI or at least a technology bandwagon? Like, how do you think through these types of really sometimes big decisions on both a personal and a business level, right? Like, how does this all— I don't know, how did that work for you?

I mean, I thought the first— I mean, the reason you and I started this podcast was because the first 2 years of operating a small business was really hard. Um, I think it's fair to say that this has been even harder. Um, I don't— in a different way, But, you know, I was so lucky that I found search and found the business that I did. I was like, that was what I felt like I was meant to do. And it was so clear and so obvious to me. And this feels the same way too, but it's also a big step away from something that I had and I loved and I'm super passionate about, but I felt like the bigger risk was to not do anything. And in sort of some ways you like to take the harder path to challenge yourself. I mean, this is definitely that harder path. It would have been way easier to try to accept watching the business decline as AI eroded it. But it's, it's definitely harder to be one of the market makers in this space. I think from like a pure brass tacks perspective, like I'm making less money this year. Like I was fortunate that— well, let me actually caveat that. I paid off my, like, what, less money according to Uncle Sam, but sure, but slightly higher cash flow because I was paying off the debt so fast. For those of you in ETA, you will probably understand what I'm saying. So, you know, while I guess I am making more money cash flow, it feels like it's not. So that's a little bit sort of weird and seems very irrational. But the valuation of the company has massively changed, massively increased. I mean, from those kinds of perspectives, you know, theoretically, it's a huge win. Yeah, that's not why I do this. I do this because this is the right answer for my customers in the long run. It is a better service. It's only going to get better. I mean, I think, I think we should tell people like real numbers on this stuff. Like we, you know, I paid $1.8 million for the business with an SBA financing seller note, the standard ETA stuff. I grew it significantly during the first year and maintained that. And so it was doing really well. And we raised a $5 million seed round at, let's just say, like a $25 million valuation. So, you know, that is a crazy trajectory to have accomplished in basically under like, like 3 years. Yeah. Um, and yes, I mean, under 3 years. Yeah, that's— but again, that's not why, like, that wasn't the motivation. Uh, I think that, you know, I— this was just the right solution. It's the right market. It's a huge opportunity. And so this is a good kind of, uh, bet to make. And yeah, I think at the same time it's really hard. I love the business that I had and operated, you know. I also now have investors. I have all like our CEO and our C-suite now have a lot of options in the company. And so I do not have the same ownership that I had in the past. And that's okay. Like, that's totally fine. Yeah.

Yeah. But it's a, it's a bigger bet in some ways.

It's a much bigger bet. Yeah.

Yeah. Well, and I think it's just, it's such an interesting story to me because I think that so many, I don't know, at least what I see in my work with searchers, it's like people kind of come in with a thesis to say, okay, I know these are really strong businesses. They're really strong cash flowing businesses. Pick an industry. Like it does, you know, there's a million of them out there with the boomers and stuff. And they come in saying, okay, well, I can grow and scale that company and maybe implement some tech, some process. Like easy, quote, easy wins to improve an already strong business. But to like be open-minded to a full-blown transformation, I think is very unique. And I don't know that I see many people going in even thinking that that would be a possibility, right? Like, it's And I'm not— I'm not to discredit anyone, right? But just typically the chalk track is I want to buy a really profitable business, throw my intellect and expertise on it, and optimize it further based on the core of what it's doing, which is kind of what you did, right?

And that, that's what every searcher's thesis should be. Yes, yes. Let's just be super clear about that.

Totally fair. But I think the fact that you were open to it is really like that to me is fascinating because it just is a completely different path.

It is a different path. I, and I did, you know, less than 5% likelihood, you know, when I was doing due diligence that this would be the path. So I didn't think it was likely. I never did anything in the first couple of years to try to push it towards this at all other than paying down the debt at an accelerated rate. So that did put us in a little bit more of a position where we were able to do this. Yeah, I think that, you know, let me just say this again. This should not be the thesis of searchers. I, you know, for VCs doing AI rollups, sure, that's a, that's a different game to be playing. I think that searchers should really be thinking about how they're going to bring AI into their business, because if they are not doing that, someone else will be. That's a competitor. I do think a full-scale transformation is uncommon, especially a transformation from services. To technology that has often been really hard. But I think that the beauty was like, yes, I had this great growth. Yes, it was a modestly sized business, but it was still really small in the grand scheme of things. And so I think we were in a better position than what a lot of other companies would be to make that kind of a transformation. Yeah, I don't know. Like, this would definitely not be plan A as a searcher or for like any other business operator. You know, I think this is just incredibly unique that was able, like, had the background in this area, was able to bring in the right C-suite, the right team to support it, get the right investors lined up. All these sorts of things were, you know, kind of magical that they all came together as well.

Yeah, but it's creative and opportunistic. So kudos to you.

Yeah.

And your advisor, he is now the CEO.

Joe. There you go. Joe is an awesome guy. Awesome, awesome guy.

Yeah.

Cool.

Well, thanks for sharing. Anything else that you would like— any other parts of this journey that you would want other people to know about? Or like, whether it's on a personal, you know, existential level or practical business stuff?

I don't know if we have enough time for all the personal stuff.

Your existential—

my existential crises in this. I mean, I think it has been really, really hard. And I think you have all these doubts when you're doing something like this. You're taking an amazing business, really changing it. Look, I believe it's the right thing to do, but it's hard for some customers, like the customer I just mentioned. I mean, obviously it's been hard for our employees. And, you know, those moments are difficult. But I think it's very clear to me if we didn't do this move, somebody else would be going and stealing our customers, taking market share. And, you know, some of it has been incredibly rewarding over the past 48 hours too, where we've had customers that like would never have expected would understand the product. And, you know, they've been sending in like, this is amazing. Like, I got like, this is working. This is so cool. And one of the really exciting things was the first autonomous sale that we delivered in 2025. And we have our big team meeting coming as we're sort of relaunching the SaaS company. And I've gotten like on really fancy paper, the transcript excerpts of each of the key moments, you know, printed out on fancy paper and I'm framing it and going to be giving it to the team.

It's going to be so cool because like that's never happened before.

There are these AI sales companies, but no one has scheduled directly and taken a payment on a call until we got here. So this is super cool.

That's awesome. Well, congratulations. I think it's, it's an awesome story. Um, if people have questions, can they reach out to you?

Yeah, they can reach me on X @garthfossano. I'm also going to be at Holdco conference talking about this as well, and I think it's like a month and a half.

Yeah.

Awesome. Hopefully we'll see people there. Yeah. Cool.

Well, thanks for sharing, Garth.

Thanks, Christi Loucks. This is good. Talk soon.