Mike Andes Coaching a MULTI-MILLION DOLLAR Business Owner!

Yes, finally sir, it is the famous Mike. What's up? Is your, is your real name Cash?

Yeah. It is pretty hard to meet the guy named Cash, isn't it?

Dude, I would give anything. Let's go. That's awesome.

But. Well, how's your day going so far?

Pretty good, pretty good. I looked at your website, went through your document. You're crushing it. How long you been in business now?

So I had a firewood company before this and we got up to about 100k a month in revenue and then I sold out of that. This one is about.

Two and a half years and so just rough numbers. We're doing about 1.8 to 2.1 EBITDA a year. So pretty profitable. And so right now the goal is we do, I think I put in there, we do all cold SMS outbound and we have super high cact ltv and I, I was, I was giving very, very conservative numbers when I put it on there. And so sales machines cranking. But we're very, very transactional. So you know, get a sale, do that, take the profit and that's not going to get us very big. And so the goal I want to get is to get at least 92% of these people re engaged to a yearly package. I don't care what the package is, what we have to do to offer to them, whatever the market accepts I will be cool with and then I can legit legitimize the back end and then from there I can start ramping up the scales and actually grow this thing into you know, something that's probably in the eight figure EITA range.

But saying that I spent so long just getting the sales process down and so my knowledge on subscription based stuff like that is very limited. And so I, while I've been reading up a lot YouTube videos, I figured why not talk to the smarter guys than me and that's why I'm here. And so the goal is to get about.

If I can get about 92% of customers on a subscription base and then keep my churn at a year at 10% yearly, those are numbers I'm comfortable with moving to the next step and ramping up my marketing. Again.

I'm sorry about that. Yeah. One thing I would note you might have just in terms of projections, 10 annual churn is going to be really, really low. Mostly just because of the, the like people moving.

Okay.

We see, we see about a 12 to 15% turn of just because people move houses.

Okay.

Are you mostly residential or all commercial?

Yeah, mostly residential.

Yeah. So we, we like like literally if we do no callbacks and no one's unhappy with our service, we'll still lose 50% of customers just because the average person moves every five years.

Five zero or one five one five one.

Okay.

Okay. That scared. Yeah.

So we kind of look at the base case. So for example, if you said 10 annual churn, what I would recommend saying is actually 25%.

Okay.

Because you 15% of it is just gonna be people moving. And like during, during COVID it spiked up to like all of our turns fight because people just kept. We're moving all over the place.

Yeah. So is there any way you think I could put in some. I'm guessing I could put in some. God, my pins are screwing up some referral or something in there. Because if I can get my churn down to about below 20 yearly, I can get another two spins on the, the multiple wheel. And so I think that's something I. So have you seen, have you been able to do anything like that where maybe you get like 10% referrals and those get into. And then that drops, you know, something like that.

Like the referral engine kind of thing.

Yeah. To reverse that churn rate.

Yeah. The bigger thing that we found is trying to upsell them like really cross sell them into other services periodically. Right. So just keeping them warm. And so it's like, hey, I want to up like anytime I have one time project, I'm trying to cross sell them into recurring. Anytime I have recurring, I'm trying to cross sell them back into recur in one time projects. And so.

And you don't think screws up like the valuing of companies like by having. Because I know, I know they like to have below 20 yearly churn. And so by doing that, I mean you can kind of offset and say yeah, we have this, but we also do this. And then they kind of are. Are cool with that.

Have you found ultimately they're looking for recurring revenue. You know, obviously the lower turn the better. But like in this industry, I rarely see any recurring home service under 20% simply because people move. Okay. As soon as someone's moved, especially in your business where like the grass keeps growing, we can upsell the following homeowner for you. Like if you do a big project and it sells some sort of warranty or ongoing service, a lot of times it's gonna be a tough upsell into a new customer that basically moved into the house.

Yeah.

You'd want to create some sort of program to kind of bring that down when people sell their homes. Like how do you do that transfer? But I would imagine a lot of your first customers are coming in from one time projects.

I see, I see. So what you're saying is the people that are valuing these companies, they understand, hey, you're going to get 25 yearly churn and that's a good yearly churn compared to a software company. You know, they might, they might get 10% and so they understand the, the nuances, I'm guessing.

Yeah. If they're, if they're, I'm assuming you're kind of building this to sell to private equity.

No, I just like to, I don't really want to sell it. I really like to take it into something, you know, pretty massive. But it's just kind of like a little stroke on my ego. Like oh, you know, I can value it here because I'm here. And so it's, you know, I'd always like to build it as if I'm gonna sell it. And so that's kind of how I, how I'm thinking through things.

Yeah. Like the reason I say that is because like the valuation in home services I've seen is like such a wide margin, even wider than like the software side. Because like in software it's very determined by like monthly recurring revenue, annual recurring revenue churn rates, et cetera. In home services, a lot of what's currently like the roll ups that are happening, the valuations are skewed massive by who is the buyer. And so if someone's a strategic buyer and they're just simply trying to get a diversified portfolio of home service companies, they will have a much higher margin than someone that's just trying to like buy a local business.

Yeah.

And, and so like, and same thing with like a lot of these companies that like H Vac for example, you have a very balanced demand between summer and winter because you have heating and you have ac. Like in my opinion that is why they've, they have massive in the past like 5, 10 years at private equity is just pouring money. And their, their multiples have more than doubled and it is because they have such consistent cash flow throughout the year and then they just, they just automate it, they put technology behind it and the thing scales so sweet.

Okay. Okay. Yeah, that I know there's different at different levels you kind of get different multiples, but okay, so thank you for that. That way I have a better North Star. So 25%. Great, cool one to look at. Okay. Do you think just base broad overview. Am I Looking at things the right way, keeping my sales system one time project and then cross selling them. Or I could be doing it something better. Like I said, I'm looking at the long play, you know, five, 10 years out.

And I know that the only way to get real, real big is with these, you know, recurring. So what are your thoughts? Am I doing it right? Can I do it better?

The goals? Yeah. Like assuming you have an offer that you already know you can sell for the recurring side, then it's just a matter of like where can you get a customer for the lowest. Right. Everyone's like I want recurring, therefore must market recurring. Not necessarily true if the pain point originally for the customer is your one time project.

Yeah.

And so in your case it's opposite of us, okay, Us. Everyone needs mowing. So we just go after them. Because I can get customers for 20 to 40 bucks and then I will upsell them into these bigger projects for you. It is a matter of I am going to sell them this big time big project and then I'm going to cross sell them into the recurring side. And then I would say, because the one time jobs I would assume are literally one time in nature, they're not even reoccurring like every few years. It's, it's probably like a one time thing, a massive tree, et cetera or whatever. I, I would really say like once you move them into recurring, the goal is actually to then keep upselling them one time projects.

And that, that's when I was thinking too because you know, if I can get them on recurring and say I can get like a 6k gross profit because right now I'm at like a 4.5k gross profit per customer. But I can adjust my pricing more profitable. That's, that's a whole different thing. But then it's like there's so many other projects I can do. You can do Christmas lights and then I could really, really ramp up that yearly value of that customer. Okay, so let me ask you then.

This, so that was the other thing I was going to say cash. Like I'd really be tracking your acv, like your annual customer value as well. Because like obviously you know, lifetime value is important, but if you get your annual really accelerated, I think you have the advantage here because you, you can afford to spend so much more on marketing which allows you to scale this much faster.

Right.

And so if you, you'll increase your lifetime value by adding recurring, but then you can, if you can add a second step which is reactivating recurring back to one time projects using cross sells of what other ever services you want to offer that increases the annual value dramatically.

So because tell me about the, the big north store like a five or ten year plan out is if I could get something where. And I only serve the high end, so only only 850 and up. And then for some higher end areas like Austin, it's like a million two. And if I could get a lot like a 1% of this market to just use my service and it's like everything you need outside, it's like, okay, they have us on a basis, we trim their trees, bushes, like everything you could think of. I think that's where massive amounts of money could come in where it's just like we do everything. And I, I read a book, there was a company like that that did all home maintenance and they just had them on a yearly, I'm sorry, monthly membership. And it was just like if anything breaks in your home, we're there, you know, the 15th of every month we'll fix it. Do you think that's kind of a correct, you know, Far North Star, my.

Only concern with it is that it is easy to scale in terms of revenue. I don't see these companies usually being super profitable or sellable. The reason is because the amount of systems required for it to actually function correctly, you add a lot of complexity. Like the person who's going to be the CEO or the operations manager for say an H Vac company looks very different than someone who's doing it for a tree company. He looks very different than someone who's going to do it for handyman service. And so go ahead, go ahead, go ahead. Like what I would probably do is look at each one of these as separate businesses and then probably just put them under a holding company.

So at that point, what you're going to be pretty much doing is you're going to be acting as a P and E company and just buying these companies and then just saying across the board, I don't like how this offer is. We'll run this, this will increase this and just. Okay, that's cool.

What you're probably going to do, cash, is because you're in this for the very long term, you're probably going to what you just said and operate like a PE firm. I would prob, if I was you, buy into the market. So you'd save two years on every single one of these acquisitions.

Yeah, okay. That's so smart. That's so smart.

So you know the reason PE gets away with Buying out stuff is they know, like for example, you, you buy a, a Christmas light company that does 500,000 annual revenue, you're going to buy a thing for 150, $200,000 from a distressed buyer and then immediately you're going to take it from 500,000 to a million simply because you send an email to all of your existing database and upsell them into that service.

Yeah, exactly, exactly. Okay, so that, that's for. Thank you for that. Better North Star. And so what, what I big goal is, if I wanted to accomplish kind of what the big goal is, I could just have, you know, a PE firm that owns all of these. And so I could just have it. It's like I can offer some sort of, you know, recurring basis and it's like, well, it would work for me because if they need h vac, allowing 15h vac companies, they're all operating in the areas that I offer to. And then each one. Okay, that makes a lot more sense.

And, or from an enterprise value perspective, that's. If that's what you're trying to optimize for getting it to be eventually rebranded under one is going to be the highest value. Right. So for example, one example that does more franchising world is Neighborly, right. So they got purchased out by KKR Private Equity. But Neighborly has about 15 brands that are completely separate in home services. But the alternative is if you had a brand name and it was just like tree service, so if you did, you know, Superior Tree Company, Superior Christmas Lights, superior, whatever, that would also, that would be the highest value because you are actually rolling them up into one brand which does have a higher valuation than keeping them separate.

Yeah. Okay. Okay, that makes sense. So let me tell you kind of the steps I'm playing at right now. So like I told you about 2, let's just say 2 in your EBITDA because that's a lot easier than like 1.8 or 2.1.

Would you say that getting recurring revenue from these customers is what you would accomplish before? Because I can ramp up the marketing, but I don't want to, I don't want to have a very transactional business where it's just buy, sell by. So I want to have, you know, and so would you say getting recurring is the thing I need to do or is it cross sells or what would you say before I. You believe I could?

Yeah, like I, I really think it's more of a cross sell situation.

Okay.

And I will send you. Give me one second, I'll Send you an article I was just reading yesterday. Give me one second.

So you don't think it's something where I need to offer these customers like a home maintenance yearly plan.

Home maintenance like for everything right off the bat you mean?

I mean not everything but like because I, I, what I do right now is we trim their trees.

We trim their bushes, we put new mulch in power wash, clean their windows, clean their gutters and put a fertilization round of fertilization. And so we do pretty much a good amount of stuff.

And so I was thinking if I could just sell them like hey, would you like us to come back and do this every year? There's a lot of this stuff could.

Be done every year and how I would, I would pitch it cashier. Good. Okay, I sent you a link there might be helpful by the way, it's in the chat. But.

I would, I would sell this as a price discount to go on subscription. So this is a big thing Amazon's done the past year for basically every single thing that's consumable on Amazon. You'll see the little subscribe and save 10% situation. And this is a form of cross selling which is cross selling a one time into it's recurring. I would say hey, usually this would cost you $4,000. It's going to cost you 3,000 if you sign a 36 month agreement to be on this program.

I see.

And I would just be if you nailed your sales process for the one time bake it into your sales process to sell the recurring package.

Because that's what I was thinking because I was like putting all this in my head and then at the end of the day I was like dude, I'm just selling more like create a better offer. And so I'd rather not do discount unless I absolutely have to. Just because you know, margins and profitability. But what if I could also do something where it's like hey, you know, if you get us on a subscription base we save time on marketing. We'll also give you, you know, we'll hang up Christmas lights or we'll do this other thing. And the way I put it in my head is the, the reason I was able to have such a good CAC to LTV ratios. I just had a, as Alex Ramosi said, an offer people felt stupid saying no to. And so I was thinking well if I can just do that again and just create a second offer that I can cross out and it's a subscription, that would, that made sense to me. Does that make sense to you?

Yeah, I'll show you exactly. I'm just playing up the offer we just created similarly and is essentially we don't discount but we do show them the price change over the course of time. Let me just try to pull this up. So we do this for winter services.

We call it on a price.

Let's see here.

So basically what we do is we compare. Hey, if we were to do this pro bono, individually, here's the cost over here versus we're going to do all this other stuff and it's going to save you 700 bucks. So for you you could just be like, hey, if you call us up, here's what's going to cost every couple years. But if you just put us on the recurring schedule, we're going to, we're going to, it's going to be way cheaper and we're going to tack on these other extras. And you know you can do that because you don't have to go send an estimator, you don't have to do all these other things.

And plus I can just operationalize it too, which wouldn't be okay. So you think, do you think if I could, you think 92% to cross out of that is just, is that like, okay, that's something to strive for. That's going to be hard. Is that like dude you're fucking stupid. Cash, like that's impossible.

Like 92%. I would say you'd have to discount the initial. Okay, so we've seen our best operators that can sell winter services and this is like kind of the prime example. They're looking at 60 to 70%.

Okay.

And, but that is without a discount. I would say if we went in say hey, your mowing price is literally going to be less if you accept this winter services thing that would get us the 90% marker. It also if you're require though you training your salespeople completely differently like to get to 90%. I think what, what has worked really well for us is when people come to you, they're not thinking about the recurring service. They just, they just have one problem, get them through the problem and then just create a follow up sequence that just like literally it's like the walkthrough of the project becomes the sales pitch for the recurring service.

Well, so what we do is we don't have any, we all of it is by text. I mean our whole sales process. And so it's really like, I mean all of this is run by just one guy. And so what I was Thinking is, I could do, is I could just make another follow up text sequence.

Yep.

And sell that. Okay, so 60 to 70%. If I had a really, really good.

Offer, another, another thing I just threw in there, I would probably do a comp incentive for your project leads. If the person sells into the recurring package.

We're all subcontracted.

Yeah, I would still, I would incentivize essentially like basically if they do a good job and they've talked to the customer, made them happy, you just basically say hey look, I will do all the sales process. I will sell them in this recurring thing and if they accept, I'll give you a bonus.

Dude, that's so smart because then I could just say like I could, I could factor them into it too and then I could use them. Maybe they're like oh yeah, that's looking real rough. Like you might want to get that checked out.

And then, and when they, when they do the walkthrough of the project, they will just seed the upcoming sales conversation. And so if the customer asks questions about like continuing service, they're like yeah, no problem, they're going to text you. Just respond back to them and they'll get you set up. Like they'll see the sales conversation because that's a really powerful moment to like the, the highest point of conversion is that walkthrough when you've just finished their one time project to convert them into recurring.

That's like even, even more so than like an office phone call or anything like that.

They will get colder and colder the.

More time minutes go.

Yeah, because the, the highest value to them is when they walk outside their property, the bushes are trimmed and the problem has been solved. That's the best point of contact in terms of timing for an upsell.

Dude, I could probably work that in there too because I could just have to. Okay, okay, I can do that. So.

Better looking metric. So if I can get 70% cross sell to a subscription package that would be like hey, that you have a pretty good offer set up like that.

Okay.

And then if I can get my churn, my yearly churn on that recurring to 25%. That's like hey brother, you're doing all right. Would you say that's correct?

Yeah. And then you could basically say okay, my annual value multiplied by 4W. Our 25% convert churn would be, you know, basically additional value tacked onto the one time job.

Okay, okay. And then so once I get that, because the next goal I want to get to is about 5 million because I think about. And then 5 million, someone went from 500 and tried to 10x5 million. So that's kind of the next stepping stone. Then I'll go to 50.

You think if I can get these two metrics, 70 and 25, that will be a good enough back end that I can say, you know what, I'm cool. Ramping up. I'm ramping up.

Even at 75 to 1. You could, you should pour money on this. It's more a matter. Go ahead.

Oh, I, I get that. I just am scared that it's just like, okay, go on, tell me why I should do that. Because I've always kind of.

Well, like again, I'm going to assume you're talking about like gross profit when we're talking 75 to 1. Yeah. So like anything more than a 10 to 1, most people tell you literally just like dump money on it. Because if you look at the return on that money, you know, if you say spend a thousand dollars and you know you're getting $75,000 back and even, let's just say 50% of that goes out the door to overhead, like, it's still a phenomenal return.

Right.

So like there's no, like if you have a 75 to 1, most people would literally say take out loans and dump money on it. Assuming that your back end can sustain, you know, in this case your contractors can sustain that level of influx of work.

No, I mean, we could sustain a little bit. I mean, I.

But from a valuation perspective, what any investor would ask you is what's your confidence level that that 75 to 1 will stay throughout an economic recession. And you creating a backend that has recurring revenue will fortify that even if you don't make increase that 75 to 1, which I think you will make it even better by having a back end that's recurring because you're basically tacking on extra additional value to a customer. However, even if you didn't, just the valuation would be increased simply by the fact that you'd be able to answer that question and say I have recurring revenue that even if they don't buy initially, or that, that you know, that that arbitrage decreases, I'll still make money.

So what you're saying is if this was your company, if you're my position, you would be like, dude, forget the back end, just do what you're doing now and just do more of it.

I would probably do that. Yeah.

Really?

And there I would, I would build the back end though, because it is first off you because you're subbing things out. You don't create any sort of more operational drag by you scaling. And so I would still build up the back end mostly from the valuation perspective as well as economic like just like certainty. Because if, if a recession does happen you that 75 to 1 will drop to 15 to 20 to 1 and all of a sudden your, your cost per click, et cetera will just double triple, et cetera. And so to prevent that from putting wiping out the business, having their curring is a very smart move from evaluation perspective and just from staying in business.

Okay, okay.

So then at what point would you say just do, do focus on the recurring instead of just doing more?

I would probably look at a few different steps. I do number one, like more like obviously talk to you know, Alex like more and better before you talk about new. Right. So I'd be doing more in that like can I keep dumping money on this? And when does my return start to diminish? Because if I can Continue Having a 75 to 1, I support money on it. When that starts to decrease, then step two is I'm going to build a recurring, I'm going to build out and basically how do I sell more so it's like better, like better ads improving like then it's more which is going to be, I'm going to sell them more services, I'm going to upsell them, et cetera. Then I would think about new which is adding the more product lines cross, selling them back into one time projects like Christmas lights, et cetera.

Yeah, yeah.

Like I would probably just keep doing more of what you're doing if it's working until you saw a significant drop in that arbitrage. And then I'd be focusing on the backend. The cool thing is with your backend, the way you have it set up with operations is there is no more operational drag to you to create the backend. Like literally in one weekend you could create that backend.

And is the only, the only operational drag is if it's like dude I have 30 subcontractors. Like I don't even know who's who anymore. Like then it's like okay, so would.

You hire an admin person?

Yeah, yeah. So you're saying like if I could take this to 5 EBITDA just by doing more of what I'm already doing, that's the route you'd go rather than like let me get the back end and then scale up.

Yeah, yeah. Like you have something that's working very, very well, okay, I would pour money on that. I'd be stacking that money aside in the event that you had, you know, an economic issue because you don't have the recurring. But then I really do believe you could kind of do more and better at the same time, which is go ahead and build the backend. You could literally do this in probably a couple weeks. You could build up your entire backend.

And I live in like a 1.2k a month apartment and I have like multiple six figures just in the market. And so I'm very, very cash heavy. And so in case, you know, if something bad happens, okay. So I should be looking more at.

Like.

How do I just do. I'm going to do this until I see. Until I'm like, okay, this week we went down to 60, next week it's 50, next week it's 40 or there's some other problem that I need to fix. But until, until I'm seeing a CACT LTV drop below, what would you say I do?

50. This is a benchmark. If you're at 75 now and you're tracking it very consistently, it's like, hey, when I under 50, that's when I start thinking about really pouring gasoline on this whole other aspect of the business.

Okay.

I think you could do elements of the, the back end in terms of upselling into recurring again without very much issue whatsoever. I would look at this as like, you could kind of do number one and number two simultaneously. I would just be careful about adding other services until the math doesn't make sense.

So what you're saying is I could do was I look at it more of like headspace.

Because there's only so much, you know, my brain can compute. And so I was dedicating like 80 to 90% towards a back end and then maybe like 20 to like just maybe look growing revenue and like that maybe reverse it. And so it's like, dude, I'm just gonna put 80 on here. And then, you know, I'm just gonna test, you know, a cross sell because I already have, you know, four new jobs going on a day. I'll just test across sale every day. I'll make one and tweak it like something like that.

Yeah. And I think, I think from a mind, space, perspective, the upsell, the back end of creating the recurring. I genuinely believe if you just said I have to get it done this week, you would get, you would get it done. And I mean like from some, from start to finish, the texts, making sure the contractors are Incentivized, and you have a program to track that. Like, I genuinely believe in creating the offer, creating the package to be able to sell customers. Like, I generally believe in one week you could build the entire backend and.

That would get 70%. 70, 70%.

At least 50. Like, if you build the offer correctly and you have the tools of, like, knowing what a good offer looks like, I genuinely believe that you could almost do that in a week.

Dude, I bet I could do it in a day. Like, if I really sat down, was just like, this is what I'm doing. Like, that's not that hard.

Yeah, especially because you're not doing new. If you're doing new, you add a whole another layer of complexity. That's why I just put that on the shelf. Like, I'm just going to keep selling more and then taking what I've sold them and sell more of it over the course of time.

And I could just rework how I'm wording it, how I'm doing it. Like, okay, dude. Okay, this is so clarifying, Mike. This is so worth it. Okay, then in that case. So let's talk about scaling. So right now we have four subcontractors.

I can probably, honestly, to get to five, I could probably just tweak pricing, try get, you know, the perfect pricing.

Maybe add one more contractor, stuff like that. So that's what you're saying I should be focusing on. And then, like, how do I maximize? And then at that point, once I get to 5, if my CACTI LTV is still there, then I thought just pour gasoline on.

Just keep going.

Well, what I was thinking is this, Mike. I was. I was like, I was talking to people that are a lot smarter than me, like you. And at that point, maybe I could find someone. It's like, okay, you're gonna. I need you over the next quarter to hire, you know, 20 new subcontractor teams. Like, this is your job and to manage them. Okay, here, this is. We need to be sending out this many messages and hire people that can do that. Because I know at about. I think at 5 million in profit actual coming in, that's 400k, about 100k a week. That's enough money, I think, to, you know, bring on some people. Would you say that is an astute thing to do, or would it be, you know, at 5 million EBITDA to bring on some people to try to jump to that 50 mark?

I like. I like the fact that you're waiting to 50 until 5, because at that point I would go hire an absolute savage. Someone that's literally done this before. They've ran a subcontracting model. Not for a $5 million company. We're talking about someone who's already taken from 5 to 50.

Right.

So you can afford it if you get to the five without having to go get the op that that cost. Right. It's like, I'm in this phase now. It's like, okay, like I'm hiring people that are like multiple hundreds of thousands of dollars a year. But the level of skill that's different than from them compared to the person. Like, you had to like manage and like tell them how to do things. Like, if you tell the right person, hey, I need to get 50 million and I need you to go get 20 new contractors for something. Like, yeah, no problem, I'll get it done. And you leave them alone. You don't have to give them like how tos. They just know how to get it done. Right. I would recommend that and I'd recommend doing that at the 5 million marker because then, then, then I would give you license knowing that that's being taken care of. Like, okay, now you can go focus on new and like creating these other verticals, whether it be buyouts and people up, whether it be just cross selling into other services, et cetera.

Okay, so get to 5 million and then I can. That's kind of what I was thinking, does that 5 million. And I've keep things very lean, both business side and personal side. I was like, then I feel comfortable and I can bring on a guy that's 450 and that's, that's. You're gonna get a pretty heavy hitter for that much money. Okay.

And just go on LinkedIn. Just go LinkedIn. LinkedIn will bring the best applicant for that, for that role.

So when. And we can talk about that once. I actually, I'm like, hey, my Met five, you know, okay, so.

Yeah, that's clarified me so much. And then at that point.

So just keep doing more of what I'm doing, figure out how to get to 5. If at any point I get below a 50, then work the back end to try to get up to try to get to these metrics of 70 and 25 and then go back to pouring gasoline. Unless, you know, I'm now at a 35 or something super silly like that.

Right? Yeah, I do believe you can build a lot of that backend without too much drag. Even if it's only 50% conversion or even 40% that'll be huge. And I think the return for your time is huge. For example, we could go get more contractors and grow to five. Or you could literally just do the back end part that takes you a week and all of a sudden double your annual value per customer and get there that way.

And the other thing is just testing pricing. There's. I mean, there's. There's plethora of ways I can do it without just going on a hiring craze. And I could probably do it maybe with, with five guys.

Okay.

That's a lot easier problem to solve than figuring out a back end. And so what I'm thinking is I can just get a back end.

Get a back end done and then just maybe one or two hours a day. Okay, what was the past day? What was the conversion rate on that? Okay, wink. One improvement test the next day, and they take one or two hours and.

Yeah.

What do you think about that?

You know, the, the arbitrage wasn't 75 to 1, but it would say 40 or 50 to 1. I think having a secondary lead source would be very beneficial to the valuation of the business because you are at risk if that's your only channel.

Well, and that's something I was thinking about, but.

Alex. And then, Neil, you went to it, didn't you? I think, I think we maybe know some of the same. Same people in our same circles, but I think because they mentioned you and they're like, oh, yeah. But they both said that I should look into that once I get to about a million a month. And Since I'm.

About 7 million, I'm.

Mostly thinking, like, down the road a little bit.

Yeah.

In terms of valuation. Right. Like, again, and like, if you're just trying to extrapolate cash, who cares? Like, take it while the good going is good. But if you're trying to look at valuation, like, that's my thought, it's just a matter of what are the questions that investors are going to ask. It's like, are you, Are you a risk? Is the channel a risk? Do you have recurring revenue? So, like, as long as you're checking those boxes and you're already thinking about it, it's good.

Well, that's kind of how I think of it, because even though I really want. I don't want to sell. I'd rather just, you know, because what else am I going to do? I'd probably end up with a problem and buying a bunch of money and nothing else to do. So I kind of just think of building a company that's valuable but let me ask you this, Mike. What do you. What do I not know? I mean, based on, like, you're high level than me and you've answered like all of my questions, so thank you so much. But what do I not know? Like, I know that's kind of a broad, but what do you, what do you see? Me?

Yeah, I think, I actually think you have the skills to get to 10 very easily. More of what you're doing is, is basically going to get you there. And the thing We've talked about 10.

EBITDA or 10 rev 10 revenue.

Okay. Like, I think that that's, that's a no brainer. I think the thing that I'm learning to go from 10 to 100 and you will, you'll get there probably pretty quickly is recruiting. And it is getting people to basically take the entire thing that you're currently doing and do 100% of it. So you get to move on to level two.

Yeah.

And, and that, that's a different skill set because it now it becomes like, how do I attract someone that has plenty of job offers? They've done this before. But how do I get them involved? What do I give them pieces of equity? Do I give them options? Do I like that? That becomes a whole other skill set. And it is a skill set. Like, how do I recruit people? Like, not just workers, not contractors, executives. Right.

Because I think. Right. I think by the time I get to 5, I'll probably be about 5 EBITDA. I probably will be at about 8 revenue. Let's see, I'm running 60% net.

Yeah. So that, that sounds. Right. 5 to 8, that sounds about normal.

And then, and I genuinely believe, like doing more of what you're doing, like building on the back end will probably get you to 10 million revenue, dude.

Yeah. Yeah. So what have you found? Because you're playing, you're playing 10 to 100 with Augusta or what? Just your whole organization or what?

Well, that would be my revenue. Like, I'm not counting the franchise system.

Okay. Like, my revenue, Augusta, or for kind.

Of all of it combined. There's three entities.

Yeah, I heard you own a gym too, right?

Oh, that's like. Yeah, that's mostly just to learn from. Yeah.

Oh, okay. I didn't know if that was just something, you know, you could make 20 on your money there instead of, you know, 12 in the market.

You know, I, I got that one before starting the franchise, Augusta, just to learn the process.

Yeah.

So, yeah.

So how have you been doing recruiting people? I mean, just how have you been that scale?

Yes. Your vision like has to be big enough for them to fit their vision inside of. Right.

Like a true Hermozy fan.

Yeah. Like you. But it's so true. Like even over the past like several months, as I've been getting like very high level engineers, for example, engineers, like they, the person that you're trying to recruit could go work at Facebook.

Yeah.

Like, how are you going to compete with that? The only difference is you're not going to get on compensation, you're not going to get it on benefits, you're not going to get on like workplace culture, like how little they have to work. You're asking them to work crazy amounts of hours. So like the only thing that's going to differentiate you is going to be like, what am I trying to accomplish here? Right.

And that's the biggest thing. Like the like you mission.

Oh yeah. Oh yeah. If you get someone that actually buys into the mission, they'll work the crazy hours, they'll do whatever it takes to get across the finish line. Whereas if you're just doing it based upon like, hey, I can top out your current offer at Facebook, will you come work for me? You'll get a decent person with a lot of skill, but they aren't going to have the work ethic that you think they will need. Because like you're used to hustling all the time. When you move on to the next role and you give that toss to someone else, like, you will expect that same level, especially when you have a very large salary, you're paying them.

Yeah.

And so the only way, in my opinion, to do that, to get the person to give discretionary effort, which is like after hours on the weekends, when stuff's breaking, they hop in after hours. That discretionary effort only comes because they believe the vision.

Yeah.

And so like determining why you're doing all of this, like, what is the end result? Whether that be, we're going to sell, we're going to do X, Y, Z. Giving something outside of money as a mission is super valuable. So for me, I get everyone to buy into the fact that like 60 to 70% of home service business owners don't make any money. I think we can solve that with software and robotics. And here's what we're going to do for the next 20 years to fix this problem. And so.

Okay, I'm sorry to interrupt. Mike, go on.

No, no, you're good. But, but establishing what that is for you and then selling that, like you become a salesperson for now like recruited recruiting is sales.

Okay, so that's the game you're playing because I've seen your software. So is that the, is that y biggest revenue source? The and the Augustus kind of like what are you focusing most of your time on? Are all three separate?

They're all very synergistic, like the media, the software and the franchise. Like they have to work together and eventually we'll take them all public together because they're very synergistic. Like I need, you know, 70 people back here at command center for Augusta to be able to one day run the, the robotics for our franchisees that we will have a competitive advantage with. I need the software though, to run that hardware and so it'll all kind of more or less come together. But like having that 20 year vision or even a 10 year vision is what gets an executive, like someone who really has skills, very excited because that's why they're leaving their other high paying job.

Yeah. So you're, you're saying like the game you're playing, you're trying to get people to like, hey, listen, we're trying to revolutionize and just make sure I'm on the right page. We're trying to set it up so that, you know, in 10 years out, all of lawn mowing will be robotical. Is that kind of one of the plays I'm guessing you're making?

We know that like the cost of labor will continue up, the effectiveness of labor will continue down. Meanwhile, the cost of robotics and technology will continue to go down and its effectiveness will go up. It's like eventually this crosses, I think that the person that takes advantage and rushes the market and is very, very fragmented. Like there's 600,000 landscapers in the U.S. like the person that will eventually take 10 to 15% of the market, which no one has, will be the person that has the software that meets the hardware of the robotics when that cost comes down enough. But then also as the distribution. So the distribution for us is the franchisees.

Oh, that's so smart. I see the game you're playing now. So how do I play that? Say I want to get into the billionaire boys club. How do I play that same game with what I'm doing? What am I missing?

Figure out why you're doing it and then reverse engineer the whole thing. So like why, for example, you want to be a billionaire? No one cares.

Yeah, yeah.

So like figure out something that is going to then lead to, quote unquote, the billionaires club. There's a mission Big enough that if accomplished would get you there. Like as a result, that's a result of.

Money is just a byproduct of creating value.

Yeah.

So like, if you want, like I want, I want to be able to have X amount. That's an outcome. Like now we just have to work back to the inputs and like the input is create so much value to people that they're willing to give you a billion dollars.

Yeah. No one, nobody's going to come work for me because I'm like, oh, I want to have a house in Monaco. Okay, cool.

Yeah.

So I see what you're saying. So I need to figure out what I would need to accomplish and just say I want to be the go to place that, that customers can reliably, that affluent customers can reliably count on for all of their exterior and interior home services. Something like that. And that's something people would say I could, I could play ball with that one. Like that seems big enough and cool enough. That, and I feel like I'm actually working towards something rather than just, you know.

Increasing how profitable Facebook's ad platform is. That kind of the game here.

Yeah. And like, you know, you want to be careful too because like most people are not going to cheer for the affluent person. Most people are not going to want to solve their problems. And so it's also a matter of like, how do I help the underdog? Right. So like really finding a problem, like if someone who's affluent, whether or not it cost them a thousand or five thousand dollars doesn't really matter. They can find the contractor. But if you said, hey, I want to solve the problem that customers have multiple vendors and they have to disrupt their day and take away time from their family in order to get all these random vendors that they don't trust or like aren't insured, aren't professional, I'm going to solve that. Or one stop shop. Like creating that solution for the average Joe is the thing that, that creates the brand that people want to buy into.

Yeah. Okay.

So for example, because we're both using Alex, for example, like, like they make money on their portfolio.

Right.

There's like only like 10 to 20 companies. But the, the idea of making world class business education accessible to everyone is appealing to the average Joe.

Right, Right.

And so they get their team to buy into that vision. The money maker is the, is the portfolio.

So you don't think people, you don't think people would just.

I get what you're saying.

Yeah.

Because the people that are buying into the money vision are just going to be like, well this people offered me 550 or offered me 450. Like, and that's not who you're wanting to work. Right. I see what you're saying. It depends.

Like if you're just, just want money motivated people, great. But realize you're going to be competing on price in terms of hiring that.

Down offers, you know, more money and.

Like, and then it's also a matter of like over the course of a couple years, like as you make more money, you will usually tend to like start thinking like, hey, why am I doing this? What actually is motivating me? And you start boiling it down and down and down and then you get to the root of it. Yeah, right. So for me it was like I started in lawn care. It gave me everything I've ever known. It got me like to where I am today. And I want to give that to as many young guys as possible. And so whether it be the books, whether it be the videos, everything just ties back to that one thing. And I know as a byproduct I'll be fine financially.

Yeah.

And so I think I would do some work. Like just personally, like asking yourself, like, really? Okay, I want to be like, why? Okay, well, why? Like, just keep asking why? Enough. And eventually this boil down to like, well, actually like, you know, I'll just make an example. It's probably not pertinent. Like, I'm tired of having like, you know, I hated, I hated my average. I hated being a. Having a job that I hated and I hated not being rewarded for the job that I did. I. And that's why I became an entrepreneur. And so you just boil it down enough towards like, oh, I want to create as many jobs as possible to be able to give people a place where they can make as much money as they want.

Right, right.

And then create something there that is a finish line that's worth fighting for. Just money.

I get that so much. And I know we're running out of time, so I'll say this last thing. So it's like when, when Musk was getting people for SpaceX, he said, we are going to be the new NASA or something along the lines of that. And so people that are like, okay, I will come work here for maybe even less money than Facebook because all I'm doing at Facebook is just nothing of value. But here I am doing something.

His goal, his goal is large enough to where he actually doesn't think he'll hit it in his lifetime. That's getting to Mars. He doesn't think they'll get there. Like making a space bearing.

Civilization on Mars.

He.

He genuinely. He said in interviews he likely won't see it in his lifetime.

Yeah. And that's what buys in people was they're like, you know what? That's something I can. I'd work my life for.

Yeah.

Okay. Mike, you know, I gotta tell you, man, thank you so much. I know you have a million things, and this has been some of the best money I've spent in a long time, so good stuff. Thanks, brother.

I love you, man. Best of luck.

I'll call you again once I hit that five.

You got it, man.

See you, buddy.

Forward to it. Take care. All right. Bye. Bye.