Building a $100M+ home services empire with Jeremy Yamaguchi

How do you choose your project?

That was just a, you know, a journey of let's go build things that help people close to me. And then, oh, this is a useful skill. I can extend it to, you know, people further afield and ultimately build a business around it.

You started multiple companies. Pretty impressive. There's lots to dive into with each one of them. Why did you become a founder?

I've been, you know, selling things to my hapless friends since my childhood, and I've just like always been very motivated to create things and build things and own things and be the captain of my own ship in some way.

Why home services?

In the first place, it felt very clear that home services was a rich vein to mine because of both how large it was and how undercompetitive it was. I like industries that are preexisting. I hate zero to one, like trying to figure out where product market fit may exist. And it's very difficult to move fast when you're in discovery mode. Is this the right idea to be working on? Whereas if you find a preexisting boring legacy industry that has limited competition and kind of tech sophistication, you can just go build a way better mousetrap in some way.

Welcome to Just Go Grind. I'm your host, Justin Gordon. On today's episode, we have Jeremy Yamaguchi. Jeremy has built and exited multiple home services platforms. He's had more than $100 million in GMV in lawn care and cleaning, and he's bootstrapped companies, gone to YC, and now private equity. He's building a venture roll-up in pool service, which is called Cabana Pools. His experience is wild— multiple successful companies, multiple exits. And just like Jeremy's ambition, Ro, the sponsor of today's episode, works with ambitious founders as well. With Ro, founders get a single pane of glass they can use to run and scale their business from day one. That's bank account, corporate cards, expense management, bill pay automation, and accounting to help them move as fast as they scale. Ro is trusted by thousands of companies ranging from 2-person YC startups to brands like Perplexity, Cal.com, Splitwise, and more. The big thing with Ro— every customer has a person at Ro, 24/7 customer support, phone, text, email. They will be with you every step of the way and at every critical milestone in your startup's journey. To learn more about why startups choose Ro, visit ro.co today. That's ro.co today. So if you're an ambitious founder with a massive vision like Jeremy, check out Ro. Let's get to the episode. Jeremy, welcome to the show.

Justin, thank you for having me.

I wanna take us all the way back to the beginning of this entrepreneurial journey because you started multiple companies Pretty impressive. There's lots to dive into with each one of them. But why did you become a founder in the first place?

Oh, man. You know, I think it's like, I've seen kind of the arc of how schools view entrepreneurship and kind of how entrepreneurship is represented in the zeitgeist change over the last 20-some years. It used to, I think, very commonly be the case that people used to largely think that entrepreneurs were born, not bred. And you couldn't so much teach it. Like B-school was for teaching middle management skills as opposed to raw entrepreneurship skills. You know, I think, you know, people have moved on that and think that you can teach the trade. But I was very much in the former camp. I was just a born entrepreneur. I've been, you know, selling things to my hapless friends since, you know, my childhood. And it's just like always been very motivated to create things and build things and own things. And you know, be the captain of my own ship in some way. So, uh, it goes back as far as I can remember. I've sold balloon animals at street fairs at the age of 12. I, you know, ran a bunch of side hustles as a kid, as, as far as I can remember. But it's, it's very much either in the genes or somehow picked it up in, in, in vitro.

Which is then even more interesting to think about what you've decided to build over your career, because You've kind of been this born entrepreneur and people like that who I know many of them, it's like, how do you choose your projects? 'Cause so you could do anything. It's like you're this driven person, you wanna create things. Let's start one at a time though. You're at 16 years old, you start a company there, it does pretty well. What's that company?

So I originally was a designer in my kind of middle teens, would create beautiful things on computers 'cause I found it fun. And then realized that I needed to learn to code to add function to the form 'cause I was tired of designing things that lived in a hard drive and no one ever saw and didn't really do anything. Taught myself how to code, started building websites for friends, and ended up building that into an agency in kind of my late teens that I ran until, you know, 20, 21-ish kind of timeframe. But that was just a, you know, a journey of let's go build things that help people close to me. And then, oh, this is a useful skill. I can extend it to, you know, people further afield and ultimately build a business around it. That eventually grew into like a growth marketing and kind of lead gen firm and kind of learned all the tricks of the trade around SEO, SEM. And kind of digital marketing through that practice. But it started off legitimately just building a website for some friends, you know, healthcare soap company is, I think, was the very first. I believe I charged them $300 for what was almost certainly like 3 weeks of work. But we got there. You know, this is back in the era of table-based design, you know, websites that took a little more doing to render, certainly cross-browser. But Yeah, that's where it started. And I ran that for some time.

Crazy where we're at now, right? With AI and everything and how people are building sites. It's so insane, the ability now.

Oh man. Yeah, I was salty that Stack Overflow existed later in my career. Like back in the day, it was like SiteGround and these ancient internet forums and Stack Overflow was just this incredible fountain of kind of anything you could ever want to know about programming. And now it's like, that's being obviated by Cursor and Windsurf and all these like crazy, you know, copilot tools. It's brave new world.

I was using like Dreamweaver back in the day with like W3Schools to learn how to code, like with my best friend. That's what we were doing way back in the day. And we just realized like the things we actually wanted to build, we didn't even need to code them ourselves. Like they literally was things that I could have just bought software to do it, which is kind of insane.

Yeah. Back in, I mean, Dreamweaver was an origin for me as well. Table-based design, man. It was a different regime, pre-CSS, pre-Tailwind, pre-any of this stuff. But yeah, started off just slinging code and kind of grew it into a consulting business.

How did you decide what was next from there?

So at this point, I was like probably 21 and realized that, you know, I'd built a business that was, you know, way more successful than I'd initially anticipated. I was, you making pretty good money for a 21-year-old, but realized I was ultimately limited by the finite number of hours I had in a day, right? You can only charge so much per hour. It was hard to hire really talented designer-engineer combo, kind of full-stack developers. So it was tough to scale the business beyond just myself. And so I was always on the lookout for something that had more natural scale than strict consulting. And I found that opportunity in 2009. I went to go book a housekeeping service and realized that the entire landscape was super, super offline, very fragmented. You know, even the large players, it was either like Craigslist or Yelp or the Yellow Pages, and you're like calling a bunch of folks and quality's all over the map, or you go into like Molly Maids or Merry Maids, these like large, at that point, public franchise firms. And even they weren't using much in the way of software to run their businesses. It was very, very archaic, very much like kind of fax machine, you know, file cabinet industry stuff. And so I was like, look, I know how to market these things. I know how to build software to automate kind of operations and make them run more efficiently. What if I built a marketplace for in-home services like carpets, windows, maids, you know, you name it, and just intermediated these transactions, right? I would build the software layer, I would do all the growth marketing and lead gen, take a cut of, you know, any jobs that got booked, Most of this is largely recurring, kind of, you can build a recurring book of business and went and built what was essentially like Handy, if you've heard of them, kind of like on-demand in-home services, you know, but fully bootstrapped, ran that for 3 years, ended up selling that to private equity in my mid-20s and kind of ended that chapter. But that was my first leg out of like services and consulting and into more of a scalable You know, productized business, even though it was ultimately a human service, it was, you know, scaled much better than my finite hours in a given day.

It's funny because there's— because of the companies you started, you could literally have a podcast about each one, but we don't have time for all of those. So, I am curious though, with that one, even to get into that first sale, because people who go through an acquisition, like any founders in the first one, they never know how to do it because they've never done it before. Why was that the timing to sell? What helped you with that acquisition? Was it just serendipitous? Like, tell me more.

Okay, so yeah, this actually is a pretty important part of the old, the whole villain arc or origin story. So, so in, so started in 2009. By 2013, we were ranked the 5th fastest growing privately owned company in kind of Southern California by Fast 100. Fully bootstrapped, never raised a dime, scaled it across SoCal, kind of California, San Diego, LA, Orange County. And then around the same time, a handful of other competitors got started out of Silicon Valley. Company called Homejoy, started by Adora Cheung, raised $40 million from a16z, Google Ventures, and others. Exec, started by Justin Kan, raised a bunch of money, also came out of YC. And then Handy, started in the Northeast and raised a bunch of money. And they were all charging aggressively at this category that I'd been like kind of happily operating in as the only semi-sophisticated technology player. You know, my competitors were literal house cleaners.

Yeah.

So, you know, if they had a website, that was saying a lot. And then Handy, you know, Homejoy and Exec show up, they have like massive war chests, incredibly deep-pocketed investors. You know, they're hiring very, very impressive looking talent. And proceed to sell services at what had to be negative unit economics territory, right? Like, they were selling housekeeping for $20 an hour. You had to be paying your cleaners $25, $22 minimum. So, like, it was clear that they were vaporizing dollars just in order to eat market share. They were also flagrantly violating labor law because they were running them all as 1099s, but massively controlling the manner with which they, you know, which the workers completed the work. Mm-hmm. And so, I just saw this train coming down the tracks where it was clear that, you know, these deep-pocketed competitors were going to use money as a weapon and blow us out of the water, or potentially, like, I didn't know that would happen, but like suspected there was some risk there. So, I ended up taking the business to market, sold it to kind of an early-stage PE fund, and got out of that business entirely because I just didn't want to be in the way of that train. It turns out that that was a runaway train that was fated to fail. Homejoy summarily imploded like 3 years later. Exact sold for pennies on the dollar to Handy, and Handy itself sold, I think, for, you know, $175 million, but had raised $125 million. So not a, you know, wild success by any means. And they were the emergent winner of this very bloody, very long competition, you know, in home services or in kind of house cleaning services. So, you know, glad I did it. Took a week off, probably should have taken more time. And then started Lawn Love, which is the business that I, you know, most recently ran for almost 8 years. And happy to talk more about that.

Yeah. Why did you only take a week off?

I think some combination of just kind of natural entrepreneurial You know, just desire to be doing, right? Like, I think sitting still doesn't sit well with some people. And certainly, you know, I'd count myself among them. So yeah, it was, I felt like I knew confidently that I wanted to start another home services business, mostly because it's like $1 trillion a year in the US across all the verticals. Even then, like 3 years later, still massively fragmented, little to no sophistication, kind of like deep tech sophistication across most of these businesses. Many of them were well run and very well operated on a human level, but still used like fairly little software to run their business. So massive margin and kind of growth rate optimization could be had there. So knew I wanted to start another home services company. And frankly, it was pretty mercenary about how I came around to lawns. I started 3 businesses simultaneously.

Wow.

An on-demand house cleaning, on-demand pool cleaning company, which we'll come back to, an on-demand in-home personal training company, And then an on-demand lawn care company. And it just 3 funnels, 3 websites, threw a bunch of traffic at it, saw which one, you know, had the most early legs and the lowest initial CAC. And then it turns out that was lawns. So kind of unceremoniously killed the other 2, went all in on lawns and never looked back.

Let's take a step back here. Why home services in the first place? Because again, back to the point I made earlier, you could probably do anything. You're driven, you're, you're Creative, like, you know, SEO and search, like, you have these skill sets that apply to a lot of businesses potentially. Now, it's very good for home services given that, but like, why, why this industry?

I think, you know, most of it was just opportunistic, putting one foot in front of the other, really, right? Like, I, until most recently, post Lawn Love exit, where I stopped and spent a lot of time asking big existential questions of, you know, what chapter to commit my life to, it felt very clear that home services was a rich vein to mine because of both how large it was and how undercompetitive it was, right? Like, it was clear to me that if I wanted to go win in e-com with some, you know, fashion product, one, I didn't have like the right disposition and/or fashion taste to play in that game. But two, it's like, they're fairly mature markets with a lot of sophisticated players. And to win, you have to just be world-class at, you know, organic social or whatever to start the next, you know, call it Gymshark, right? That was not my skill set. I was mostly an SEO, SEM guy. Organic social was the weakest of all the kind of growth marketing muscles. So on some level, like the markets chose me because I ended up pursuing things that I had natural durable advantages in. And I was at least sufficiently self-aware that I didn't go chase prizes that were like too far afield from my default skill set. And so that was most of it. It was just like, I like industries that are preexisting. I hate zero to one, like trying to figure out where, you know, where product market fit may exist, mostly because I like to move fast. And it's very difficult to move fast when you're in this like discovery mode of, is this the right idea to be working on? Because it's like the status quo of like one step forward, one step back. It's not there. You got to go back and try somewhere new. Whereas if you find a preexisting boring legacy industry that has limited competition and kind of tech sophistication, you can just go build a way better mousetrap in some way, right? It's a pure execution game. It's a pure kind of put it on your back, run as fast as humanly possible game. And I like those games. Those games are fun. Those games come naturally to me. Is this even a thing? Games like the whole, like, does this market exist? If it does exist, is there any willingness to pay? You know, like, you could execute flawlessly and just like a tar pit path that I don't like. Like, those opportunities are not attractive.

So, it's very funny you mentioned that.

That's what guided the decision-making mostly. It's just like rank opportunism.

That makes total sense. I have this conversation with my best friend a lot around what I'm good at. You're trying to find your skill sets always as an entrepreneur. And we always say like, I can crank, like for podcasts, this is so fun and I enjoy it. And like, I can crank more episodes. This is a game that long term I know I can play. I'm like, cool, I'll play this game, like layer that in. You gotta know what you're good at and what you like and like where the opportunity is and then just double down on it, right?

Oh, yeah. Comparative advantage, man. Like do things that come easily to you that other people find challenging. And it turns out that dealing with like building blue collar businesses where you're dealing with, you know, characters that may be a little exotic and rough around the edges at times, while also building software companies within them and kind of living and dying and on the vicissitudes of Google ad markets is a specific skill that I happen to have. So, you know, some people find those things unpleasant. I find them kind of ordinary.

I think you described it as like, what, a high magnitude of suck type of industry? Is that what you looked for or something like that?

You know, it's, this is actually funny. I think about this all the time. I definitely like have, certainly have like an internal picture of myself as an above average glass chewer. Like, I can chew glass harder and faster and more vigorously than most of the next folks. But like, on some level, like, that also makes me a sucker. It's like, why don't you go do things that require a little less suffering? Right? Like, it's great that you can suffer, but like, the suffering isn't the point, right? Suffering necessarily towards some greater end and in a fundamentally good opportunity, that's worthy. Like, that's, that's, that's That's good suffering. Suffering just because you have the intestinal fortitude to allow it is not so much. Right.

Just because you can doesn't mean you should.

Right. Yeah. And I try to think about this a lot and make sure I'm making a distinction here. Grinding for grinding's sake is largely worthless exercise. Grinding towards some noble end through territory that other people would find more challenging than you is you exploiting your advantages.

Right. One thing I want to go back to that you mentioned just Real briefly, you said you would have maybe taken longer than a week in between the kind of first company, second company. What would you have done differently in that time?

I didn't have anything to do, like, like video games, man. Like, you know, I played some video games and I mean, I could have played more weeks of video games, I suppose, but like, I wouldn't have gotten much further in, you know, life-wise. It's, yeah, like, it's just some people are built for For action and for movement. And some people are built for leisure, and I'm not built for leisure.

Well, to that point, the other thing you mentioned, okay, going back and testing 3 businesses before Lawn Love, and you obviously came back to Cabana Pools eventually. Tell me more about that testing process, because a lot of entrepreneurs going through this, trying to like, how do you evaluate ideas? How do you test ideas quickly? Like, tell me more about your process for doing that.

Yeah, so the number one thing that I had to de-risk basically was, can I acquire customers affordably? Right, I had a very like a reasonably high confidence that if if I could acquire some volume of either personal training customers or pool cleaning customers or lawn care customers, I'd be able to go find the the pool guys or the lawn guys to fill that demand. So at first, I didn't even talk to any lawn folks. I had no lawn people on platform. Hadn't signed up a single technician. It was pure just like lead gen arbitrage where I would. Or not even arbitrage, the leads would go nowhere. Like it was, it was, it was, I suppose, market research. But I would, you know, I built these funnels to convert customers that looked as if it was a fully built out kind of lawn mowing business. And, you know, customers could sign up online, and I'd get the lead, and I call them, and I kind of close the sale. And so I was fielding all these leads from like 3 different businesses, and just tracking where I was getting the lowest dollar kind of cost per clicks, where I was getting the lowest closed CACs and what that looked like, where did I have the highest velocity and volume of low-cost customer acquisition. And that's like fundamentally where I wanted to start because if I knew if I could crack that and I picked the right industry with the right kind of less competitive landscape on the customer acquisition side, I would be able to like solve for everything else on the backend, right? I'd be able to go find great technicians, I'd be able to go build the software to like Organize everything and plan the routes and you know run the business at scale. I'd be able to do all those things. That wasn't a mystery. The mystery was like what does the like CAC market look like and is there even search volume here? Right again getting back to how I'm not ever going to start a educate your market business. Like I don't I don't like you you can have world class marketing and like the best funnel alive or ever ever invented. And if like the volume isn't there, it doesn't matter, right? It's a, it's a top of funnel problem. So that's how I approached it. It was mostly just like, let's validate the demand existed. And then everything else followed from there.

Do you think that applies? I guess I'm more curious on where else do you think that applies in terms of industries, types of businesses? It just like, it's beyond home services, I'm sure, because I'm always thinking about other entrepreneurs doing different playbooks. And what what applies to what is like part of the thing is like, you can know all the mental models, but you have to know when to use which mental model, right? Just off of this idea. But for your playbook, what do you think it applies besides?

You know, I think, I think it applies very directly. I basically think of opportunities as, or like new startups as essentially a basket of various risks, right? And some businesses will be over-indexed on one risk versus another. You know, if you're building a hardware company, you'll probably have like, some meaningful kind of supply chain risk, right? A lot of businesses have deep technical risk. You know, we do not. We know that we can build the technology that we need to go execute what we're doing. We're not trying to like charge your cell phone over the air using, you know, novel, you know, microwaves or whatever, right? So there's no like fundamental technology risk. There's usually like some sort of market risk and like go-to-market risk. Does the market exist? And can you go acquire customers affordably at CACs that are reasonably, you know, far below your LTVs? And what are your payback periods and all that sort of stuff? You know, like kind of distribution risk, I guess you'll kind of roll that into. Then there's like founder market risk. Like, are you the right person to go execute against this specific basket of problems? Do you have the right skills and aptitude and disposition and all that? And then there's like financing risk. You might be an incredible executor, you might hire amazingly well, you might know the industry intimately. But if you just like are categorically incapable of raising money on good terms, you're not going to be able to go hire the people to go execute the plan. So like they're all just baskets of risk. I would just be very explicit if I were approaching a new idea in like decomposing all of those risks into their like line item kind of discrete parts. And then I would stack rank them based on what I thought were the most existential and like the most likely, both the In some way, they're all existential, but not all of them. But, you know, you usually will have more than a few existential risks, right? You'll need to solve both the hard technology and hire good people and fundraise, right? At a minimum. And sell it to someone who wants to pay you a reasonable amount of money to build a sustainable business, right? So you line all that up, and then you figure out where do you have the most confidence? Some of these things you can like highly confidently say, oh yeah, I can hire good people. Why? Because I have friends who already want to work for me, and I know they're good people. So like de-risked.

Yeah. Right.

The other one is, I don't know the answer to whether or not I can solve this fundamental technology, but it's going to take 3 years of research. And therein lies the big bet that we're making. So figure out where you can de-risk, where you have the least certainty across this basket of risks. And then try to prove it out in reverse order from least certain to most certain so that if you do get gotcha'd, you get gotcha'd early. Right.

Yeah.

Because the alternative is that you go do all the things that you already know you can do. And this is human nature, right? Like, humans are pretty inclined to work on problems that are easy to solve, and they already have like a notion for how to solve them. This is like fundamentally what procrastination is. It's, it's not that you're lazy, it's that you don't have an easy pre-baked notion of how to fix the thing or how to do the thing. And so it seems intimidating and kind of, you know, miasmic, and you don't know how to go and immediately Just knock it off the list. The things that you can knock off the list trivially, you don't procrastinate on. They don't stay on the list very long.

Just do it.

It's the stuff that you're like confused about how to solve that you end up wasting all this time in the, you know, should I even start phase. So yeah, I think like humans want to do the things that they know how to do easily. And it turns out the things that you don't know how to do and don't have obvious line of sight to, but that are still existentially important to your business, are probably the things that you should go do first, just to make sure that that isn't like Gonna kill you, right?

Yeah. Or hire the person that is that person that has the same skillset that applies to that thing that you aren't good at, but they are like, oh great, I have a phenomenal product person or highly technical person that pairs well with my SEO experience, whatever, you know, that type of thing. Right.

And maybe this is just my solo founder speaking, but like, yes, absolutely. But be careful, like hiring someone and expecting they're gonna like solve your big existential problems. In a world where you yourself can't do the job and don't know how to do the job, has a, has real risk of like, you know, false positives, right?

Yeah.

Yeah, by all means, I can absolutely go like, grow you super fast at super low CACs, but set, set, set high-level goals and make sure they get there quickly.

Well, it reminds me too, I was just talking to John Andrew on Twistle from Wander, this company, basically Airbnb competitor, and he's, he's a solo founder. He's Very experienced as well, and he's talking about the early days of getting Wander off the ground. And I think they did like a couple hundred thousand in revenue like month one, but like just testing out could people like are interested in the platform with a couple with only a couple homes. Like already demand was freaking insane. It's like oh okay validated that part now to the next thing with to validate. You know it's just like one step at a time, right? As you kind of I mean that process.

This is like the classic canonical Wizard of Oz thing, right? Like can you can you like fake it till you make it? Not in the sense that you're lying to customers, but in that, you know, in the early days of Lawn Love, it looked like we had this built, preexisting, established, you know, presumably well-operated lawn care business that customers were signing up for services for.

Yeah.

And it had existed for like all of 9 hours at the time. And it looked like, you know, you, you, one would assume we had lawn guys to go render services on the backend, but we also did not have them. Um, one would assume a lot of things that didn't exist and we just like, manifested them through sheer kind of manual, less than scalable effort.

To that point, tell me about some of the early days getting LawnLove off the ground. We're gonna get to Cabana in a second. But I wanted to just talk about that, as you're at that business, you're running that for a while, early days getting off the ground, and what helped that ultimately kind of grow?

Yeah, so having kind of sold, you know, the kind of housekeeping marketplace, it was very clear to me that I wanted to raise venture for the next one, mostly because I wanted to be on the side of like the well-capitalized, deep-pocketed, you know, war chest having, you know, predator as opposed to the hapless bootstrapped founder sitting in the way of the train, which was my previous role. So I applied to YC and initially got an interview and flew up to Mountain View and kind of talked with a bunch of the partners over there. Got a no. So first, you know, their first response was, hey, this is interesting. You know, you clearly can kind of build things that people want and get to some scale. But it's— this is really early. At this point, it was just an idea. We didn't have any customers, we didn't have any revenue. I was just kind of, you know, mostly paper and pencil and charisma, which apparently was not sufficient. So I got the no, I flew back home. And then I just like, knew I was going to build this business anyway, right? Which Maybe it's like, if there's one critique, I'm a big fan of YC and the team over there. But if there's one critique of like, some of the like canonical founders that you see these days is that it's such a brand and it's such a known quantity that it feels like a lot of folks chase it for the credential. And in some important ways, they wouldn't build their businesses if they didn't get in. Right? Like, they like, it's like, if I get into YC, yeah, I'll quit my job at Google, I'll quit my job at McKinsey or whatever, and I'll go do this. But like, I don't know, like there's just something like that feels more organic and like maybe it's just like pure aesthetics for me, but like someone who will do it anyway. And this is like, you know, this is a, it augments their trajectory, sure. But it's like, you're committed to this idea because you believe in it foundationally, regardless of whether you get some like shiny credential along with it. Like, that to me just feels intuitively more—

Yeah.

like, you're probably more durable, right? Because you're gonna go through some grindy things, your business is probably gonna have, you know, meaningful down quarters, if not down years. And like, if you were just doing it for the network and the credential, well, then like, you kind of get that on day one, right? Like, it's like the Harvard dropout thing. Like, why did the classes, right? Like, you already, you already like validated it, right? So like, on some level, like, like, that's, that's one thing that I've kind of seen recent years. And I'm curious how that trends. Overall, still an amazing program. But yeah, so applied to YC, didn't get in, just went home and built the business. So grew really fast from very small numbers. I think our first month we did, you know, 4 mowings. So we had $200 of revenue. The next month we were like $700, $800 of revenue, then $3,500, then $7,900, and then like $13,000. And so like in the 6 months between you know, when we started, when the next batch was running, we'd like grown pretty significantly. And it was, you know, it was just like doing what I already knew how to do because I'd kind of built a similar business in a very adjacent vertical.

Yeah.

And so applied again to the Summer '14 batch, I think on the final day, and Paul Buchheit emailed me back and he was like, what have you done since we last talked? And I just like shared the revenue growth numbers, got another interview to kind of pitched them in Mountain View, flew back up there. And this time I think I pitched Sam Altman, Kazu Yunus, Paul Buchheit, and I think Kat Manialnik. And the whole tenor of the interview was very different. The first time I pitched PG and Jess Livingston and all these guys, that was very adversarial. They spent the 10 minutes just like utterly decimating me. It was fun, but I did feel like somewhat bodied coming out of that.

Yeah.

The second interview, wildly different tenor. Like, I think it felt like they'd already kind of decided to let me in at that point. And they were answering each other's questions and it was very collegial. Ultimately got a yes, got into the Summer '14 program. And then we raised a couple million bucks from, you know, Joe Montana and Alexis Ohanian and, you know, a large constellation of awesome investors. And that was kind of the beginning of our venture journey at Lawn Love.

One thing, well, a couple things from that. One, why did you want YC in the first place? It seems like you could have just kept building the business and just raised from angels or something else, or like raised a round. Do you think you needed YC?

I mean, I had no notion of how to raise money at all. Like, I was bootstrapped at the time. So I'd had no venture exposure, right? I had never raised any sort of kind of outside dollars of any kind. And I actually think that this is like, probably YC's— I mean, YC does a few things for you, the first of which is, give you access to a pretty great network. I, many of my lifelong friends are batchmates of mine. We've been in each other's weddings. We talk every day. So like that kind of durable community of very high achieving, hard charging, but like also still like pretty good people is like unambiguously the greatest thing you get out of the program, in my opinion. The next best thing is that you just get to raise twice as much money at twice the valuation. So it's like kind of an intelligence test if you, like diluting less and having more cash, should you say yes or not? So, like, that's most of it, right? They are very, very good at helping first-time founders build deal heat and get over much of the— much like, first, they educate you fairly well. Although PG, I think, was originally doing very rare work when he first started kind of demystifying venture for startup founders. And democratizing access to it a little better. And not just like venture, just like startup wisdom and how to think about ideas and how to execute. Now, much of his advice is like, by virtue of it being, I think, largely correct, has like commoditized.

Yeah.

And like entered the canon of like generally known startup wisdom. And so I don't think you go there to get like searing insights that you would have never encountered elsewhere. You go there to get like surrounded by an incredible group of very ambitious people who have very high agency and think in larger terms than you probably ever have in your life, and have access to lots of incredibly well-pocketed or deep-pocketed, very kind of well-respected investors. And so that combination goes, goes well together.

Yeah. And it's funny, because like we were talking before this interview about a little bit about HFZero, and like DayFund know what they're doing there. And like, They have like ten teams out of thousands that apply, kind of even crazier than YC. And like it just weeds out so many people. And like the final ten, you're like looking. I mean, they're they're getting to like three million recurring revenue in like twelve in a few months. Like like it's it's insane. And like people want that experience about they know they're going to be around other people that are very ambitious, kind of matches to like what they want in their career in life. And so they kind of surround themselves with that. One of the things with your round as well. So you went to YC. Obviously, you said the angels. Why'd you raise from so many angels?

I think it was mostly just we took what money we could get, to be honest with you. Like, I raised money from a guy named Gang Wang on Demo Day. He's the founder of DiDi Taxi. Spoke no English, pitched him through an interpreter, and he invested $100K on the spot. Like, I was just taking what checks I could get, dude. Like, it was, it was a greedy algorithm. I was optimizing for number of dollars at highest price. And knowing that, like, I would probably be getting great partners and ended up getting amazing partners. But one of the things I also learned through that first fundraise is, in many cases, your most helpful investors are not your largest checks. And you have to have seen this many times over the years. But, you know, some of, by far, our most helpful investors were folks who wrote $50K, $25K angel checks, but really loved what we were doing, had deep kind of relevant experience, and were extremely generous with their time. And like, I'm very, very glad I did the party round on that fundraise. And I very deliberately repeated again with Kavana. We've now raised from like 90 people. And this time quite intentionally, because you basically just like mint an army of evangelists who can introduce amazing talent to you, help kind of promote you broadly, get you in front of basically any investor you could ever want to talk to across any capital market. And so like, that's the superpower, right? Like, other than the minor headache of having to pitch a lot of people.

A lot more. Yeah.

Which like, whatever, just chew a little more glass, right?

Like, yeah, doing it anyways, take a few more meetings in a day.

That's not the end of the world. You know, like, other than that, it's, it is, it is a pretty big advantage to just have a lot of people who care about you and are economically incented for you to succeed.

Right. You know, it's and and the thing you mentioned there on just like pitch a few more people. I always think about how we're doing these like a lot of these internet businesses. Like obviously there's home services. There's connection there. But like how hard is it really to pitch a few more investors? You're not like we're on the coal mines and like doing this hard labor for fifteen hours a day. I'm like come on, we're doing internet businesses. I think the same thing about like running a media company. It's like okay, I'm like interviewing people and like writing and like. This is an easy job comparable to what you could be doing in many parts of the world.

100%. Don't bring shame on your ancestors. Like, just take the cash.

Exactly. Exactly. You're gonna be okay. What helped Lawn Love grow into— actually, I don't know how big it actually got, but like, what helped Lawn Love grow so much?

Okay, so yeah, so we, by the end, by the end of 2021, when we sold the thing, we'd scaled it to 120 cities across 40 states. Had about 250 full-time corporate folks and about 7,000 guys in the field mowing lawns every day. So fully a national brand in lawns. And we grew that over about 7 years initially. So we had 2 growth, growth kind of channels. On the marketing side, it was mostly SEO and SEM. So Google search and paid search predominantly. Organic social never really worked for us, mostly because I think lawn care is not an impulse purchase. It's not fashion or like food delivery or whatever. I don't just like on a whim decide I need someone to mow my lawn today.

Yeah.

You, you know, you need a lawn guy because your last guy just churned or you wanna fire him, or you just moved into a house. It's very like time bounded and transactional. And so we, we played best in the channels where there was really high, obvious stated user intent, like Google search, cuz you're searching for a lawn guy and I'm not interrupting your, you know, current scrolling session to sell my services, you're coming to me essentially. So mostly played in those channels that were very intent focused. And that worked very well for us. So we kind of grew lawnlove.com into a top 3 property in lawns on Google, we do like a million uniques a month, generate hundreds of thousands of leads a year, beat out the likes of like Thumbtack, HomeAdvisor, Yelp, Angie's List, all these guys. And that's a big part of the playbook and strategy at Cabana is you know, build an organic growth marketing machine and pipe that into the companies we acquire and can talk about that too. But so, kind of one attack vector was SEO, SEM, and kind of lead gen digital marketing. The other one was just scaling markets. So, we'd launch a new geography that would unlock a whole new series of kind of customers we could sell into, new demand channels, new SEO channels we could launch, that sort of thing. So, it was 7 years of just like sizing, Planning, launching, growing, lathering, rinsing, and repeating the whole like organic market scaling strategy.

To that point then, 2021, why was that the timing again of exiting this business? Obviously, you stayed on, I think, a little bit as well. But tell me something more of that exit as well.

Yeah, so, so we— it was actually kind of a meandering journey that landed, landed us where we finally ended up. So, we sold the company to a firm called Lawnstarter. Which is a direct competitor of ours to create what we think is the largest marketplace in lawn and garden in the country. It's doing super well. It's, you know, 9 figures a year growing very quickly year over year. Great business. But I originally considered selling this to, you know, private equity. I looked at selling it to, you know, a huge, without naming names, a huge kind of equipment manufacturer in the Midwest. who issued us a term sheet and then a week after had an earnings call and their stock plummeted 80% overnight as the market realized they'd missed the move to electric mowers. And, you know, they've since filed for Chapter 11. So, we dodged a bullet because they probably would have paid us in some amount of stock, was the plan. So, yeah, it was a— I wrote a 7,000-word essay on this entire, like, journey that ultimately landed in selling this company to Lawnstarter, mostly for myself. I've never published it because it's very sensitive and names a lot of names, but I wanted to capture it for posterity just because the brain cauterizes these memories pretty efficiently because it wants you to, you know, be happy. And like, it's important to remember, like, it's important to remember the grind. It's important to remember like how you felt in that moment because when you're inevitably in similar, you know, downswings of the future roller coaster, Wouldn't you want to be able to go back and read what you thought back when you were also, you know, grinding it out in some prior era? Right.

You know, it's funny you mentioned that because I have a one-line-a-day journal that I've kept for 6 and a half years. So literally, I have every single day, I have something around the day and everything. I can go back and see the progression from business school, starting this thing, being in a venture firm, all this stuff. It's like very helpful to have that. You're like, oh wait, I'm okay. Like, we're fine. Like, let's keep going.

I bet. Like, yeah, that's— dude, journaling, I'm finally entertaining it in the era of AI, right? My instinct was I will never go back and read anything I write. And now you can actually mine it meaningfully and you can certainly extract ideas from it. Hell, it's probably the substrate for like recreating my consciousness after, you know, I die, right? Like, imagine having all of your written content Like carefully curated for the AI to synthesize and, you know, reproduce.

Yeah, mine's all written. I probably need to take pictures, upload it into ChatGPT, and then get insights because like, yeah, I have, you know, 365 pages. Each line is a page. Each page has—

OCR is solved. It's easy. You just mail them somewhere, they'll OCR it and send you back the text.

Of course. Absolutely. Way easier thing. With OnLove then, with that exit, so obviously it went well and that was a phenomenal thing. How did you then decide that Cabana was the next thing?

Oh, man. So, this was like a crazy journey. And I think like I wrangled with a lot of the common tropes that multi-time kind of successful founders tend to wrestle with, which is, you know, 2 things really. One, I think it's very human nature that you want your next chapter to be grander and more momentous than the last one, right? Like, people rarely do a thing and think, I want to do like a way less impressive next thing. Like, if you were ambitious enough to have done it in the first place, your, you know, ego slash ambition almost certainly demands you go, you know, level up on kind of the next at-bat. And the problem with that is that after you've had some success, that leaves a very finite number of overfished ponds to play in, right? Like, if you're lensing everything through this, you know, is it a billion-dollar idea perspective, that's fraught because basically nothing that looks like an obvious billion-dollar idea is a good idea. Like, those are basically, those are mostly just tar pits. And the truly good ideas look a little funky, right? Like, in Paul Graham's terms, they look like a toy, right? They look like Airbeds and Breakfast, or they look like, you know, building a black taxi livery service for your rich friends in San Francisco, right? They look like that. They don't look like, you know, oh, this is a Obviously, like, creating the transportation layer for physical space, right? This is what Travis backs into after years of building a black taxi service and then discovers the potential and, like, actually takes it from Sidecar and Lyft and, like, you know, riffs off competitors. But, like, yeah, like, it's just a challenge because you put a lot of pressure on yourself and you set these incredibly high bars.

Yeah.

And you also have the second problem, which is that you know how tall the mountain is, right? And when you're an early-stage founder, you have the privilege of just being able to put one foot in front of the other, and next thing you know it, you're at base camp, and next thing you know, you're like halfway up, and then suddenly you're at the top. And you don't ever really have the opportunity to contemplate the entirety of the struggle end to end, right?

Right.

Like, you're just sitting there and you're just like, oh, just like, let's keep going. And the let's keep going is just incredibly powerful because you never have to like fully grapple with the sum totality of the thing, right? And then when you're doing it again as a founder, you're like, I know how tall this mountain is. The destination had better darn be worthy of the effort because I know how much effort it is, right? And that just like gets you. And it was a journey. So, I did 2 things that I think helped a lot. First, I said, I set an anti-deadline, and I got this advice from a friend, which is basically set a date in time before which you will not pressure yourself to have found anything. Because you're naturally inclined to want to like know what's next. You're naturally inclined to like be on to the next thing. You're, you're a person of action. You want to sink your teeth into something important. Don't do it. Like, it's a privileged and rare moment that you're in where you can literally do nothing and exist in space. And let time pass you and see what happens. And so you've earned the right to like do nothing for a minute. Exercise that right, because otherwise you're gonna jump into the first thing that comes to you. You're probably gonna climb some local maxima. You're probably gonna like, you, you'll knee-jerk into something that's just like proximate as opposed to optimal. And that's what I really wanted to avoid. So I, I did that. It worked very well. I played a lot of video games. I bought and renovated some houses. I like, just like honestly, you know, played around. It's the short version. And then when I got back into building again, about 6 months later, I very deliberately tried to just do things that I found interesting and kind of satisfied my own intellectual curiosity as opposed to, you know, were obviously amazing, big transformative ideas. So the first one is I, you know, worked with a buddy out of Airbnb's ML team to build a company called Clarity. Which uses LLMs to read, summarize, and annotate the news under this notion that, you know, maybe LLMs can help us read better across tribal aisles and break filter bubbles and be better informed broadly. I think absolutely works, an amazing and important product that should exist in the world. But as part of that building and kind of playing around, I also realized that to make this successful, you're gonna have to compete against Facebook, Instagram, and the New York Times for finite attention spans, which is a dubious proposition. And like, I would have to go be some talking head who just opines about like the zeitgeist and, you know, media day to day and, you know, whatever happens to be dominating the news cycle. And trust me, like, I can shitpost as well as the next person, and I'm certainly over— oversaturated in media and zeitgeist, but it's just like constitutionally not playing to my strengths. Like, I'm not built to be a talking head on television talking about Donald Trump's latest whatever.

Yeah.

I'm built to be you know, an operator who grows companies and scales them and plies his trades and scales across a wide discipline of kind of areas. And one of which is probably not really being a public intellectual or public persona, right? So I didn't, I didn't like that. And so walked away from that. I then started a marketplace for ADU building, which is kind of under this— I still think a really good idea, you know, under the premise that California has this massive housing shortage. Most of this is, you know, fully self-inflicted through restrictive zoning laws and supply constraints. And one of the ways that we're trying to remedy it is through SB 9, you know, assembly bill that allows you to split lots and build accessory dwelling units in your lots. But this law has been on the books for years, and the rate of ADU building is actually relatively modest. And the reasons for this are mostly financing. It's tough for people who own homes to Absolutely. You know, fund the construction of new ADUs. Also, it's very hard to find qualified, skilled general contractors who are familiar with ADU building and laws and kind of the cost constraints there. And then lastly, permits and regulations kind of suck, and they vary a lot from, you know, zip code to zip code. And so a marketplace that streamlines permitting, understands it intimately across every major kind of metro in California, preloads all the great general contractors who are ready for you know, you to go book them to go do the work, and then has deep relationships with financing partners to help you fund the construction of these things and intermediates that and takes a rake. Makes good sense, I think should exist. So, I started playing around with that. And then, but also came back to, this is kind of still an educate-your-market business, right?

Hmm.

Like, people need ADUs, but not even everyone knows that, like, what ADUs are. Like, many homeowners, if you surveyed every homeowner in California, probably like half of them have heard of ADUs. So like, that's still a large population, but are they thinking about it? Are they searching for it? Are they really like intending to move on this? You know, or is it just like a nice to have and you'd have to really go like teach them why this matters as opposed to play within existing streams of demand and just capture more of that demand. And so I decided through both of those kind of exploratory projects that One, I'm like a B-grade AI founder, right? I'm thoroughly undifferentiated. I'm just yet another me-too dude surfing a very large wave. But I'm a pretty differentiated home services founder, right? Like, I'm— there's very few people who have like built big national blue-collar businesses that aren't just pure blue-collar businesses, but are fundamentally technology companies masquerading as blue-collar businesses. And that's what I am.

Yeah.

And so, you know, that felt like a unique advantage that I should continue to exploit. And then second, you don't do something for 15 years, like between Lawn Love and, you know, Golden Shine prior to it, it was like 12 or 15 years of straight building in that industry. You know, that you don't do anything for that long unless you love it, right? Like you, you, you, you like the space that you're building in and you know you can spend real time in it and you can sit with it. So I came back to home services and I realized that I may not have started out intending to be a home services guy, but I certainly have ended up here. And so, you know, embrace, embrace the typecast, like just go all in. And so I decided to start another home services firm. And the question was really just like, what vertical and how to build it?

Yep.

And that was, that's the next chapter.

And you'd already researched before Lawn Love that you're gonna potentially do a couple different options. And then you started with lawns. But now What had changed to want to do Cabana Pools then? Obviously, it wasn't called Splash at the start too, I believe.

Originally called Splash, we rebranded to Cabana. So, mostly what I thought through was, what are the best verticals to build this sort of business in? I knew this time around that I wanted to buy companies in addition to growing them organically, mostly because you can attack on 2 different vectors, right? You're both scaling through the usual organic means, SEO, SEM, and through inorganic means, M&A. And it allows you to move way faster. You also get multiples arbitrage, which is a huge value creation lever, as you know. You also can lever these things a little bit so you can drive better returns to equity through judicious application of debt. You also can meaningfully change these businesses because you can parachute in and take better operating practices and centralized back office and custom software, and apply them to expand margins, increase growth rates, and build a durable competitive moat. And I was like, this is like a killer playbook. It's just like strictly superior to a, you know, building de novo strategy where you try to like start from zero, or a marketplace model, which has a lot of adverse selection problems on the labor talent. And so like, it just felt compelling across a variety of vectors. And I was like, this is the way to do it. What I ran into, though, is that there was just a dearth of good capital providers for the strategy. And I looked at this, and I was like, man, there's basically like 3 common paths that people take when they want to go buy companies, right? The first is raise a PE fund, standard 2 and 20. That didn't work for us, one, because 20% ownership isn't like meaningful in venture land, right? Like starting with 20% of the cap table feels pretty small. And more importantly, PE funds tend to have like 3 to 6-year hold periods, which meant that they— this is like the fundamental flaw with their model. They, you know, by and large, don't have the time horizon to invest in real technology. Because they— why would they, right? Like, they're thinking about the next recap in 2 years. Why would they spend $2 million and years of time paying down, you know, building out a proprietary technology stack?

Yeah.

The benefits of which accrue many years later into the hands of some future owner, right? Like, why would they do this? So they don't do it, right? And so, but that's exactly what we wanted to do. We thought that pools in particular. So I looked at all these verticals, I landed on pools mostly because pools are very synonymous with lawns. They're small ticket, they're out of home, they're density driven, they're predominantly residential with a significant commercial component. Labor dynamics are very, very similar. Like they're just, they rhyme with lawns. There's meaningful nuances between the two, but they're pretty synonymous. Right. So landed on pools, and then decided I wanted to go buy pool companies, and then grow them organically. And so ran into the dearth of funding options. So private equity was out. You know, I could have gone on that path, but it had those challenges, because I knew I wanted to build a national brand in pools. The goal was like, if you look at many other home services verticals that are meaningfully large, largely recurring, non-cyclical, have great kind of revenue profiles, Most of them have at least one or more private, like either public or like public scale private company, right? You've got like Terminix in pest control, or Rollins is like a $23 billion firm. You've got TruGreen and Lawns, you've got Orkin, you've got like all these brands, right? And doesn't exist in pools. And there's no law of nature that says that it can't. And it just takes the doing of like gluing together. a ton of super subscale, you know, pool companies and running them more efficiently using software to build a scaled competitive, you know, hopefully national level player in this space. So that's, you know, I saw a line of sight to go do that. And the question was just how to go do it.

So to that point of funding, funding is a starting point. I want to talk about a few things. One, funding it. I want to know a little bit more about your hiring playbooks. But let's start with funding. How did you decide?

Okay, yeah, so funny. Looked at PE, PE made no sense for that reason, because our time horizon was like, let's go build this for 10, 15 years if we have to. Like, our goal is like, let's build a public IPO-scale company and a national household name. And we're not going to do that in 3 years, we're probably not going to do that in 6, but we might do that in 10. So PE was out. The next path is like search funds, which search funds I think are better designed for, you know, in many cases, like first-time entrepreneurs who are just out of like GSB or HBS, And who are buying an HVAC company and want to spend 5 years doubling revenue and then flipping it for like 6 times when they bought it at 4 or whatever. Not really designed for the hyperscale, let's eat the entire market sort of playbook. And frankly, the economics of search funds are like incredibly rich for investors. You'll own 15 to 30% of this company if you raise as a search fund, which again, in venture land is a very small amount of ownership for common shareholders and like founders and employees. And a whole lot of ownership for investors. So, you know, search funds were out. Lastly, there was independent sponsor models, right? Which is where you kind of, you can bring a big deal to a large PE fund. You have no way of actually funding this thing yourself because it's, you know, $100 million. You'll get a couple points of a promote and kind of closing fee. You'll own maybe 2 to 3% of the final go-forward business. You'll often roll your fee into ownership in the future business.

Yeah.

Again, not a good model, because if you're operating the thing for 10 years, how are you going to do that with 3% ownership, right? Didn't make much sense. It's mostly just like you're a glorified banker, you know, a headless banker running around doing sourcing deals for PE funds. So none of them aligned with what I was building. And none of these paths seem to want to give me credit for having been a successful multi-time back-to-back exited founder in home services who just finished building a very meaningful player in the space. You know who did want to give me credit? The VCs, right? Like VCs, VCs. I had currency in venture land that I could spend, right? Like you raise more money on better terms. You like, this is how they kind of size the risk appropriately. And so it was just wild to me that the standard capital paths all dramatically underserved people like me who had resources and some success and a track record. You know, you can go raise SBA 7 loans to go buy businesses, you know, $5 million worth or whatever, personally guaranteed. So doesn't matter if you're, again, some kid out of GSB with no assets to lose. Matters tremendously if you've sold multiple companies and you like actually are on the hook, right?

Oh yeah.

And so, oh yeah, like every single vehicle felt misaligned. And I looked, so I started thinking about venture as a path. And I just went to first principles. And I was like, okay, I can raise from VCs. But like, many of them think that this M&A model is kind of weird, right? It doesn't smell like classic venture. But like, if you think about it, and like, frankly, most of them agreed, half of the VCs that I pitched, I heard something that sounded like, you know, this sounds amazing, you're gonna make a lot of money, I'd like to write you a personal check. But I can't do it through the fund because my LPs won't understand it, which like I get because, you know, LPs are clearly demarcating capital to private equity and, you know, other buckets to venture. And so if you smell like you're doing private equity deals in the venture fund they invested in, they're gonna feel like you're mismanaging their money. So I understand that like LPAs might not permit it, and there's various other reasons why some VCs can't do it. But I was like, look, the business of being a venture capitalist is fundamentally one of like, can I find asymmetric bets that if you think about them from bottoms up, make good sense? And there's just like some like, some like behavioral, kind of nonsensical behavioral reason why other people don't get it. Or there's some like, you know, cultural reason why people aren't doing this, but the reasons are bad, right? And the idea is actually fundamentally a good one. And it felt very clearly to me that this was true here. And that's also, by the way, where you make all the money in venture, right? Is when you're like a non-consensus and right, right? Consensus and right is a wasteland of, you know, middling returns. Non-consensus and right is you either lose your job or you get super rich. So—

Binary outcomes.

Therein lies the challenge. But like, so I just came back to first principles and I was like, man, What makes a better venture bet? It's basically 3 things. One, can you use venture dollars to grow at venture rates, right? At Lawn Love, we grew for 5 years straight, somewhere around 18% a month, month over month compounded for 60 straight months, just using SEO, SEM, no M&A, never bought a company. So if we could just do that on the organic side, this is obviously a venture bet, and then we can grow way faster inorganically. So this seems like a pretty clear yes. You know, 2, can you grow into a large enough market so that if you're successful, the prize matters for venture returns, right? Most VCs trying to underwrite to, you know, if you do what we think you can do, do you at least return the fund? You know, given the size of most venture funds, that's usually a billion-dollar-some outcome. And like, the answer here is also a clear yes. There are dozens of home services platforms that have traded for tens of billions of dollars. In many cases, like, I think Rollins right now is trading for like 35 times EBITDA, public market. Public market's valuing them, a legacy pool company, not a software company, at 35 times EBITDA. Like, that's like software-style margins almost, right? And so you absolutely can build businesses that matter and are deca-billion-dollar kind of enterprises in this space. And then third, are you using software in some important way to like, change how you deliver a service, right? Expand the margin profile, grow way faster, run the business more efficiently, etc. You know, I just finished building back-to-back custom software stacks and field services for Goldenshine and then LawnLove. You know, we built everything from like routing tools to like customer support tools to analytics to, you know, hiring and billing and invoicing and everything. Like we built Zendesk, we built HomeAdvisor, we built like ServiceTitan, whatever. And so we know how to build this. We've built it not once but twice. And we know the leverage that you can get through building custom bespoke stuff that solves your unique idiosyncratic needs. And so it was like clearly a venture bet, right? We can grow fast enough into a large enough market and we use software to create margin expansion in a competitive mode. That's definitely a venture bet, except unlike most venture bets, here you're investing in like something with like venture-style upside, if it works, right? Multi-billion-dollar outcome. But you're not, as I like to say, yeeting your dollars into the cash incinerator and chasing some pre-PMF startup and hoping to get to escape velocity, right? And hoping not to dilute too much in the process or whatever. You're buying a stable basket of cash-flowing assets. And then you are recycling those cash flows to buy more cash-flowing assets and to invest in R&D. And it's pretty easy to imagine that if you are a VC who cares about downside risk, you have just bought a basket of assets that— and you have a LIC pref against this basket of assets that presumably should trade for multiples larger than you acquired them, right?

Yeah.

Because you now have more of them. And this is the multiple math. And so very, very, like, reasonable line of sight to getting your money back or like 3 to 4 times your money. at a minimum, with an option on like 100x. Yeah, essentially, that's quite super compelling if you care about that sort of thing. I don't know that this works for like the biggest players, because I think, I think like Andreessen would probably be angry if you gave them 1x back. Like, I think they'd actively be annoyed.

Take it and go bigger.

They don't want to bother, like they'd rather you die. So like, like, some investors probably don't care about the downside protection. Some investors definitely are like, whatever, this smells too private equity-like, I can never touch it regardless of how much sense the fundamental logic makes. But many people don't see it that way. And so a year and a half ago, when I first raised the $6.7 million seed round for Cabana, it was mostly raising from family offices, high net worth types, and a few VC firms. Our lead investor is a company called Asymmetric, who Understood it really intimately. Great firm. Rob, Sam, the whole team over there really understand the synthesis between kind of roll-ups and venture and how this makes a lot of sense. And they love this model. So, they were the largest check in the round. They've since reinvested 2 more times. And yeah, they're awesome partners. But like, they were rare. The average firm, again, wanted to write me personal checks and couldn't do it through the fund.

Didn't see it.

That has changed. Like, you know, I kind of have been talking about this recently, but now it seems like this has gone from very kind of non-consensus to like moderately consensus, if not fully consensus. I just saw, you know, Josh Kushner with Thrive just announced—

Yep.

He just announced like Thrive Holdings, right? Like this is a buy and hold holdco. Strategy. You know, GC just raised a billion and a half dollar venture buyout fund, as you know. Yeah, a16z, Lux, all these guys have been doing it. So it's definitely becoming much more mainstream. And as it should, like, it's in many cases just a superior way to attack fragmented markets versus classic vertical SaaS. Like, if you think about it, imagine a market like pools, where you have 100 and What is it? Like, you have 72,000 pool cleaning companies in the US. The average company does $130K a year of revenue, which means that you're basically talking about what we call a single puller or a chuck in a truck, right? It's one guy, maybe with a helper. And then you get what? You're gonna go sell this guy SaaS for $50 a month. They churn at 20% annual rates because they go graduate to getting a real job, right? And like, they leave the industry at alarmingly high rates. And like high built-in churn, super low LTV, limited whales to go hunt who are like at scale. You know, selling it to HVAC might make more sense because it's 10 times the size. It's actually 15 times the size, about $150 billion in the US. Pools are 10. So like those larger companies who can go pay large dollar values, you know, do $100 million a year in revenue, $50 million in EBITDA, you can sell them a very expensive piece of software that makes their business better. Those companies don't exist in pools. So the whole model of like chasing down all of these rabbits and like trying to build a business around it, maybe you could have like one player who's moderately successful in that industry, but you're probably not gonna have more than one. And it's just like, it's a tough go-to-market kind of CAC to LTV grind. Whereas here, if you can buy companies and just use them as the bootloader for vertical SaaS, right? Like you build your own software into the companies you buy. First, you have $0 CAC. You have zero churn, right? And you aren't ever spending money on R&D speculatively building features into the abyss, hoping maybe that your customers might want them and that they change the value that they derive from your product. You're only ever building stuff that is like acutely painful to you because you're building it for yourself.

Yeah.

And then you're not getting $50 a month or some sub— like small subfraction of the total economics that you're generating. You capture 100% of the economics that you're generating.

Right.

If your software does what you say it can do, and actually improves route density and margin profile and all this other stuff, why give away 80% of those economics? Keep them all. And more importantly, keep them all in a business that now changes the EBITDA multiple. So like, you're not just like cash flowing better today, your enterprise value creation is enormous through that lever, right? If you can reliably double margins, you know, hypothetically. Then like that creates enormous long-term value because you now are not only changing the numerator and the denominator, but like you can recycle those cash flows faster to go buy more companies and whole velocity changes. And then more importantly, you end up as the— if you do this right, you end up as the only acquirer of choice for any quality asset that ever hits the market because no one else has built a custom stack that can reliably expand their margins like you have. And so why would anyone sell to anyone else? You can pay more for their companies because you can— like, their companies are worth more to you because you can bolt them into your system and like expand the margins instantly, right? There's this enormous layer.

You're basically trying to become like a Rockefeller or Warren Buffett. I was like, acquiring all the things and like, oh yeah, we own that. No, we own that one too.

Just pools, just pools. Like, I'm very happy to be a pool boy for as long as I need to be.

But well, you're pretty committed to it now.

Oh yeah, we're all in. We're all in.

Knowing that you have the playbook from home services companies, obviously before, but you don't necessarily have the playbook of acquiring companies in this way because you haven't done it in that capacity. What are the complexities, challenges now that you're running into with this?

I mean, the buying businesses part is definitely important, right? Like, I think, I think there's like 4 pillars that you have to do really well in our business to succeed. One, you have to execute well at M&A. Right? You have to source good deals, you have to buy them for reasonable multiples, you have to make sure you don't get, you know, fumble into bad companies, you have to make sure that you structure them appropriately, you have to capitalize them well, you have to not take on too much leverage, all that important stuff. Second, you have to integrate them well. Like, you can do all those first things right, and if you integrate them poorly, you destroy a ton of value.

Hmm.

Second, you have to run operations well in your existing legacy blue-collar business. And this is a non-trivial problem, right? Like, Many people don't get to scale because hiring great field service managers and building the infrastructure and process and systems around them to allow them to do their jobs at a high level is very hard, right? And so building the machinery and the muscle and the process to go do that well is critical. Third, you have to grow organically as well, because if all you do is just buy companies and you never can grow them organically, you know, one, it kind of spoils the story, because then you just look like a finance kind of like you're a one-trick financial arbitrageur, like every other PE firm.

Right.

Like, if you can grow them organically, you also can pay more for them, because you're not just buying the current cash flows, you're buying the presumed future reliably kind of expanded cash flows. And then third, fourth, you got to build software into them. And if you build software well, you unlock a lot of the first 3 things even better, right? Like you can better integrate companies into software stack that's designed to ingest new businesses. Like no one else builds software to like integrate companies into because it's— ServiceTitan is not thinking, how do I make this HVAC company, you know, more acquisitive? They're thinking like, how do I design a better route and, you know, streamline a few steps operationally, right?

Yeah.

That's mostly what they do. And like, how do I extract as much value out of you as possible as a customer as well? But like, we have to do those 4 things well. So M&A, This is a learned thing. We did our first deal in April of last year. We since have done 9 deals. We did 6 bolt-on acquisitions between April and kind of the end of the year, and then 2 more large deals that closed simultaneously on January 2nd of this year. So, we've done 9 total acquisitions. So far have been both, I guess, good and lucky in that we've bought great companies. Like, the partners, the owners that we partnered with have been phenomenal. First company we bought is a company called Pool Logic in San Diego. Owner, founder is called— his name's Kyle Bowman, ended up staying on for an entire year and acted as GM and ran the business, which was critical given that this was the first company that we ever bought.

Very critical.

And we were learning a lot of things the first time, right? Like, not getting the first one wrong was probably existential. And I'm like, very happy to say we did not get the first one wrong. But like, those risks also diminish over time, right? Like, when you're buying your 10th company, you're buying your 30th company, it's like an N of 30. Like, unless it's a massive acquisition, it's probably, it's not a rounding error, but it's not existential, right? Like, even if it's not the best deal you could have done, you have, you know, a lot more flexibility and leeway. But early on, man, you gotta get it right. So, I mean, this comes down to like sales. Can you talk to people? Can you convince them to part with their life's work in your direction at reasonable multiples and on good terms, right? Can you build confidence that you're going to treat their company well and their employees and their team and their customer well? That's most of it, right? Yeah, the dollars are compelling and you obviously want to pay, you know, good value for these businesses, but they really care about like, are you going to come in and shred the legacy, right? Is what I like. And I learned this having sold multiple companies. Like, I feel very different about companies that I've sold that went on to do great things and that are bigger and, you know, more impressive than they were when I sold them. than I do about companies that I sold that have like gone to zero. And while the economics didn't matter to me that it went to zero, it spiritually matters.

And you're a pureblood entrepreneur, so I get it.

How could you do this?

Yeah, like, killed my baby.

Something like that, right? And so like that, that to me is, is a lot of how I think about it, basically. It's like, you gotta, you gotta You got to put in the work and earn the right to tell people directly to their face, look them in the eyes, shake their hands, and tell them you're going to treat their business well. And you're going to, you're going to do right by everyone in and around it. And we have very much done that. And I'm very proud of that.

To wrap things up, I just like one more kind of main thing here. You obviously have a massive vision for where this is going. You have experience from doing this before. You mentioned these 9 companies already you've acquired. What does that velocity look like in the next few years? Like, are you acquiring 20 a year? Are you acquiring 30 a year? How big does this get potentially? I just want to know kind of the next steps and where you're getting to with Cabana Pools.

Yeah, so I think the answer is we've done 9 deals, we should do at least another 3 to 4 this year, and then the goal is like 10, 20, 30, 40, 50 a year. Sort of thing. So let's just keep stepping up acquisition cadence. Let's ramp it opportunistically. But this is the beautiful thing. Like, so we do plan to be very acquisitive and buy lots of companies and build all the machinery and kind of infra necessary to consummate those. But you can kind of— the beautiful thing about firing on 2 demand vectors is that if deal markets go crazy, funding dries up, there's like limited deals to go get done, or you know, prices aren't where we need them to be. We can just grow these companies organically, right? Like, we don't— we're not private equity. Private equity has like one trick, then it's M&A. And like, not to shade, but like, they're good at that trick. It's a beautiful trick. We like it as well. But like, M&A alone is limiting in that, like, we could spend 2 years doing nothing but just like building more product to dial in operations, and we'd be creating a lot of value in our business if we never bought another company, right? And so, like, having that as a baseline and then being able to be aggressively acquisitive on top of that as often as we find great deals, which are many, is like why I'm so excited about this, right? It's like, we plan to buy a whole lot of companies, but I'm sure there'll be years where we say, this is great, like, let's Tune the companies that we currently own, right? But plan is infrastructure to build, to buy like dozens a year minimum is definitely like, that's the model.

And that's how you get to where you want to get to in terms of the company.

Yeah, multibillion-dollar outcome.

Last question, what do you need help with?

So, you know, I'm an inveterate marketer, man. Like, I love kind of building links and outcompeting my competitors on search rankings. So if you like this podcast, throw us a link and reach out directly. I'd be happy to talk to folks who are building in and around this space because, you know, rising tide floats all boats. One thing that's also really cool about pools is the landscape is pretty collaborative. Like, I've talked to a lot of the other folks building interesting companies in this space. And It's really, it's awesome to see how much people are kind of cooperative as much as they're competitive. It's not knives out, you know, zero sum. It's very, you know, let's work together to transform this industry and see where we can take it. And everyone kind of wins if that happens. So it's been awesome kind of making more connections there. So if you're in and around pools, I'd love to talk to you. And if you have a pool company, that you would like to find an amazing exit for, that would be a worthy conversation as well. So that's probably— those are my immediate asks.

Cabana Poles, check it out. Jeremy, thanks for the time. Appreciate it.

Justin, what a blast, man.

Good chatting.