Mike Minutes Mastermind 01/27/2025

Ladies and gentlemen, boys and girls, welcome to the Mike minutes. Mastermind finally found this business center room on this cruise. Very good. Except I don't know if I'm supposed to be here. So if I have to cut up, cut the Mastermind short, if someone walks that door, we have to continue the rest of it tomorrow. I didn't want to miss today if at all possible. So let's go and jump in. Quick thing though, shout out to everyone today, just crushing it. On Augusta leads, we had 25 applications come in. I think 18 of them or so have been accepted. Some are pending. They're waiting for Augusta Nation owners to approve them or deny them. So very good job. We got kind of a slow start last week, but this today 25 applications came in. So someone's doing their work. I know it's not easy. Some people will say some weird stuff about it. I know some, some competitors will think it's a scam first.

But if, if I asked all of you the question like hey, would you buy a lead for seven, nine dollars? I think the vast majority of us would say yes if we knew that we could keep that customer for several years, upsell them into multiple services, especially for services that, that we do like irrigation or one time projects are 5, 10, 15, $20,000 jobs. Like there's a lot of people that are willing to take them. So kind of change your mindset a little bit because it's easy to let one or two competitors that say something weird to you kind of discourage you. And so I kind of was ready for it going in. So there's been plenty of people say stuff about me and like how I'm selling out and all this other stuff. But I ultimately know that this is really good for Guest Nation. It's good for the industry and it aligns with exactly what our vision is. And so it's taking what we have always basically been wasted and is how do we monetize it and also channel it in a way that is in alignment with our values, which is professional. Other vendors that are professional insurance insured.

And right now about only about half of people that apply to the partner program are we letting through. So I don't have the exact last time I checked on Friday, about half are oer getting. So it is pretty stringent and that's the type of people we want the leads to go to. And if we can take what used to be waste and turn it into monetized value to all of a destination, big win. So I recommend, you know, keep pushing through and some people have had a couple people say something mean or people think it's a scam. That's kind of the thing that you're selling me leads. That's weird. I understand that. But please those of you who have been hustling this weekend 25 applications, very excited about that. I just genuinely believe this will become a huge revenue source for all of us and it will have a big impact in the industry for us to start guiding the leads where we want them to go, which is to licensed insured professional companies that we trust will do a good job for our customers. And so very good job. Great job. I will keep updating you all on that. We have a month or two before spring rush so I just encourage you keep at it. Keep talking to people. A good idea. If you're like well who's willing to take the lead? Go to the people running Google Ads in your market because they are not getting these disqualify of customer for $79. They might be on Google local services for less but they're running Google Ads traditionally Google Ads you're getting between 100, $150 cost per lead. So if they're running Google Ads we can beat them out in terms of cost. It just might be a more of an education process. They feel we are giving money to a competitor, et cetera. But they will eventually get over that. Eventually there will be a demand for your market. There will be people that want to be in the leads program. They'll be backlist wait list to get on the program.

People backing up others inside of your market if so and so doesn't get a, you know isn't serving customers well and you kick them out. There's people behind them. So like that's where it will get to. But just shout out to everyone that is pushing through that initial kind of apprehension difference the way it's different at the beginning but I just generally believe it'll pay off huge. End of quarter when you're getting a couple thousand dollars because you simply made a few phone calls. Got four or five, six people set up now. Trust me, it'll be feel very good the awkward calls you might get the next week or two as you're getting things set up. So let's go ahead and jump right in. Looks like we got five questions.

So we can knock these out. Let's go. Cool. All right, let me zoom in a little bit more for you.

All right, number one, Mr. Anonymous can the text out text opt in button on the instant price forms default to checked instead of starting as unchecked and or could the button as a requirement to see the price and or could it be incorporated into the final by clicking except you understand agree receive text messages from Augusta Lawn Care asking okay, yeah, so Twilio is requiring this asking because I would never check this box personally. But if it was a requirement to see or accept the price, I would shrug and just go with it. So let's see what your and ors are real quick. Can you know, default should check instead of starting unchecked. Okay, we can't do that from it. They wouldn't allow us to get through compliance. That's the problem. Could the button be a requirement to see the price? So here's the thing. We need to get through compliance. Whether they click that button or not, that form will still get accepted. Everything will go through. And so we need to get through compliance in order to be able to make sure every single location is able to get their own Twilio account. And so that's what we focused on. We did not lock it down which means we did not make it where they have to check that box in order to continue. We are going to send them the text messages regardless. And right now we are not seeing any sort of repercussions for this. And so like if someone puts in their phone number, we're going to text them their, their estimate, we're going to text them everything else. And so, and so they can always opt out. It's very easy to opt out. You do not need to put in there every single message that hey, here's how you opt out. Put in stop. It says it right at the top. And as soon as they click stop or put and stop you, they'll never get a message from you again. So that's, that's where we're going. It's a, it's a matter of compliance where they have to check the box. They have to do a physical action in order to get compliant on Twilio. But we are not restricting them from moving forward because that would also be a friction to the sale. So if someone's like I don't really want to do it, great, you will submit the form, everything will go as normal. We need Twilio compliance right now. And if Twilio ever changes their rules and says, hey, you have to prove that they clicked on that button, then we would have to make it a requirement. But until then I don't want any more friction. There's a couple percentage drop off if you make that a Required form.

Like a required field that has to be checked. There's a couple percentage drop off because people will fill it out they'll hit submit and it's like you can't go forward and let's jump out. There is a one out of 50 that will do that and so for now I'm not making a requirement. We will track this if we ever compliance things ever change at Twilio we will make edits but we I did as little incremental changes as possible and submitted several times until before they finally accepted and like that this is the lowest that they have allowed us all to get through on and if they ever change the rules we will adapt But I do not want to make it a requirement because there is drop off and more friction added and until they start actually.

Just saying hey did they we need proof that they clicked on the check which they they will never bill enforce that to my knowledge and they haven't been I know that so we're watching it carefully but I, I I'm really tracking the conversion rate and if that drops at all I'm trying to reduce it but get enough to be able to get through compliance. So that's why that button's there. If you don't know this person's talking about they're on the instant price forms. There's a little box that says you know basically allowing a guest along here to text them but that, but that button is literally there for compliance. It doesn't do anything so FYI but we I'm always staying abreast of what's going on Twilio and make sure we are compliant but that is a compliance thing that is not a matter of do they want me to text them or not because I'm going to text them their estimate and if they want to opt out they can that's just fine. Ricardo from Alexandria whatever happened to showcase reviews? Any updates or timelines were I think I talked about this on Friday. Yeah so I talked about it with Tori and a video it's a couple months old but if you look at home service Millionaire channel it's about Google. I talked about showcase quite a bit with Tori. He's head of the design web design and so showcase reviews is basically a lot of it's repeated inside of Copilot and it has a lot more customizations inside of Copilot. So we've spent most of our time and energy just on Copilot side of things. There's a few little updates that showcase is nice but it's not enough to even honestly download another app. So we have a couple things we're working on though in terms of text reviews to be able to track whether or not the person actually left a review. Because sometimes even if you do every 90 days, asking someone for a review and they've already left a review is a bad experience. So there's some value around that it's value around. Have like all your Facebook ad, Facebook reviews, Google app, Google reviews, Yelp reviews, Andy's reviews in one spot. It is kind of cool that way. But we're working on actually creating some more value before we actually would roll out. So it's still kind of in testing. We're still working on some stuff in the back end. But I don't just roll out basically a texting. I think that text people for their review. I don't really want to do that. So we want to add some more value to it. Marco from Augusta Lunker of Vancouver. We need to hire six people and train them to perform simple services such as mowing, edging, fish trimming, etc before spring rush in Washington.

We haven't built a system for hiring yet. Would you recommend we start interviewing and hiring after I get properly trained up in Bellingham February 11th, 14th so I can ensure we write the get the right candidates and make our brand transition over. Firstly, it looks like we'll have a late spring rush since it's starting to get really cold right now and it may potentially snow where we're at. Yeah. So I think February 11th and 14th get the training. You still will have a solid two to three weeks before you start mowing and honestly five to six weeks before you start having like spring rush. So I don't think there's a huge rush here. Um, at training we will go over a lot of the elements of setting up your hiring system, which interview questions to ask, vetting processes. And so I think that'll be helpful to know that and just knowing about paper performance and really being ingrained in systems before doing that would be my recommendation. I don't think there's any reason to hire someone now or any rush I should say. Now that being said, as soon as you can, it's good to start interviewing. And even if you're offering people dates that are six weeks from now to start, just know that if you're going to offer someone a job in six weeks, you got to keep them warm. You might have them come in once a week for a meeting. You might have come, have them come in for a day of Training you might have them come in for to get their uniform. You've got to keep that person warm, do some contact with them, text them each week, something. You got to keep them warm. Otherwise in six weeks they will literally go in the job. So just be careful about that would be my recommendation if you're hiring early. Diego Zagada from Naples, Florida. Hey Mike, got a few questions about investing in the holding company. What does the cap table look like? Ownership distributions, any outstanding states or notes. So right now the cap table is 100%. I own 100% of the company of all three entities. There are vesting schedules for the.

The team members are bringing on that are high level and people that we need to keep for the next 10 years. They have vesting schedules though, so they'll get a little bit now, a little bit in five years and four years and three years, two years, et cetera. So but as of right now, in two day I own 100. There is no other not, there's no other safes, there's no other phantom stock. There's nothing. But what we are mostly giving out to the team is phantom stock, which basically means they don't get any benefit until all of the safes would also liquidate. And so I will also own 100% of the voting shares. So even team members will not be able to like change the direction of the company. Number two, are you planning for the holding company to stay entirely in gross mode or do you plan to move into profit mode during the 8 to 12 year pre IPO period? How are you thinking about this? Do you have something similar to the stage of growth in mind? If we have a good use of funds and we can get a good return on capital, the money will be spent. If I don't think that if we're growing fast very quickly, I'm not going to just blindly throw money at it. So basically this is the reason like Amazon didn't make money for 20 years is because they just kept taking every dollar and they just kept pumping it back in the company. But it's ultimately what built the infrastructure required for today for them to be able to do two day shipping. So that's the, that's like more the direction I go is like we will probably invest everything back in the business, but I'm not going to take what should be a profitable year, for example, and be like, oh, we should just spend this because we're in growth mode. If there's not a good use of the capital, we will not spend the money. So that's like my general thesis when it comes to growth. 2, 3 investors participating via SAFE won't receive any distributions to their contract certain equity, whether it be distribution or equity redemption clause if no IPO or future investment would happen within that 8 to 12 year timeline. At 12 year timeline things everything would have to vest into an equity based upon a 409A valuation. So.

Say we hit the 12 year marker and we had an IPO'd then it could vest directly into equity. So basically an equity redemption clause. So at the end of your period. So that would basically be September.

30, 2037. If we hit that date and we had not IPO'd we would need to take the safes and we would need to convert them into equity. So yes or four will franchisees signing up for the investment be able to view the current financials or a less detailed overview of the company before committing. So on the investing tab is everything that is being shared at the end of each year after we have people on the inside of the investment, those are the people who will receive that information.

Mostly because I do need to be somewhat careful about especially now as we have a couple competitors that are kind of chomping at us a little bit and last year try to get us in court quite a bit. I'm going to be a little more type type with it, tight lipped with it and so yeah like I will, I will give as much as I possibly can but I have to speak as if this information will be shared outside the company. And so what I'll probably share a lot of is like location growth, average revenue per location, average revenue per user inside of copilot. The percentage growth year over year of Copilot members are, you know, things that we're doing to increase all those metrics and like what our projections are. But I got to be a little bit careful because I shared quite a bit and some of it got out and it kind of bit me in the butt last year and so I just want to be careful. I got to protect the company and so I'm not going to like go super detailed and start sharing, you know, you know, internal information like who's getting paid what, etc. So yeah there's, there's a fine balance. I have to walk there. And so a SAFE is typically like a friends and family round is typically much more even before like where we're at right now is very much past the friends and family round. Typically making a friends and family round to reduce the amount of.

Just Paperwork that is required for everyone to actually participate and the cost legally that would make it prohibitive to even raise this small of a round. But usually a friends and family rounds like pre money it's basically before like there's usually just an idea that a safe is and friends and family round is done. So you know. Yes. Then I think I've made in the video like there's a level of trust when you're doing a friends and family round and you're doing a standard agreement for future equity because you're not making a purchase of an actual piece of stock. You're investing in the idea and the idea that it's gonna be worth a lot more than $30 million down the road. And so you know, as, as the stock market goes up and down, interest rates go up and down, our valuation will be go up and down dramatically. Especially as a smaller tech firm. Especially on the copilot side like in 2021, there's a likelihood that I could have raised money at like easily 60 to $100 million right now because everyone was throwing money at it. Like I was offered what we got in our 4:9 valuation. I got offered more than that for Augusta during 2021 and we had way less locations, way less revenue, way less everything. So there was just so much money floating around. So that will happen over the course of 812 years. Like there'll be really good times. Boom and bust cycles happen. The interest rates went up and all of a sudden like that doesn't happen. So I'm not interested in that sort of thing. I want to keep it very centered on.

The fundamentals of business. And like I know it's right in terms of growing locations, increasing the average revenue per location, increasing the profitability of each location, the unit economics in terms of Augusta in terms of copilot, the product needs to be solid. We need a, we have a year of catch up to do essentially to make it get it where I want it to be. Like I would have loved to what we were going to do in 2025 to have been last year where like the, the, the app will look different, it'll look fundamentally different than mobile, mobile Apple, completely different. It'll be offline mode, et cetera. Like I would have let it be at the same time we were doing the safe and.

But you know, obviously things didn't align that, that way. So there's obviously levels of risk though. So I, I, we do get valuations at the end of the year. So I will, I'll have a really good gauge of like where what our actual valuation is based upon the companies we have valuation last year and I think we'll blow the doors off of this year especially because we combine the three entities. By combining the three entities not only more than triple the revenue or more than double the revenue the combined entity which improves the valuation but also the three combined are much more valuable than the one, any one of them by themselves. And so I think we'll knock this like my goal, my personal goal is that like come September if we close at the 30 million dollar round and literally a couple months later I can do a 409A valuation and get it far above that to our immediately. Anyone that's invested like you're already in the green. That's my goal but I can't promise that I'm not going to share too much information to think that people can pro. I can promise that that's not my goal. That's not what we want to do. So it's like you either believe in long term of this or you don't. And if you don't, that's totally fine. Invest in your business, keep growing, have 100% control and that's awesome. I support you 100%. This is not like necessarily in the cards 12 to 24 months ago. This is a matter of I want people to participate. Having the money will definitely allow Copilot specifically to get there much faster and try to make up for the time that we lost last year. And I do think there's a little bit of an arms race because of AI and some of the stuff that I want to do will eventually get done by other competitors. And so there's a little bit not rush but it's a matter of there's an opportunity that I think we are able to get to but we need, we need a solid two years of doing other things first. So a lot of it has to do with like how AI can be used to do automated scheduling and a lot of other cool stuff. So anyways, Andrew from Bentonville. I'm thinking of creating a promo for local real estate agents to give to new homeowners in the area. Something along the lines of 50% off your first routine maintenance service. How can I work with CC on this? They and the clients have a good experience. If this is a bad idea in general, feel free to let me know. Thanks. I would probably do in the form of like a door hanger thinking like instant quote door hanger where they take a picture of it. I'd make a form around that and they can just email it to you. That's gonna be the sway because then you could actually deal with the entire process. And even a command center gets it inside of their inbox. They know what to do with that because they, they're used to what an instant price form looks like. So I would try to make it very much like an instant price form. Their way of kind of opting into your discount would be to fill it out and send you a picture. And here in the next few weeks, we will have the ones with the QR code. You could take that. You could then make a different QR code to a different form that you have that offers that and then change the design on the door hanger however you want. I would personally not go with 50% off. It's usually not going enough to activate someone. I'd probably go 100% off right off the gate. And the reason I'd be willing to do this is because you might even need two services for free, honestly. Or like a $99 because this is your customer acquisition cost and so you can activate this person and one out of two of them become a paying customer. Good deal. What you're the, the better this deal gets in terms of the value is what you're banking on is the goodwill that the real estate agent gets by giving this to their customer. Because this is their customer. So make this deal really good because otherwise they're not going to rent the attention of that relationship to you for 50 bucks or not like 20 or $30. Like they're not going to typically do that because they know what you're trying to do. So make the value so good. They're like, oh man, thank you so much. Can I get more of those $99 coupons or like free coupons like for my customers, like they're loving it. You've got to have that value higher, in my opinion. And a 50% off on your first visit doesn't do a whole lot. I think A$99 completely free. And then you've got to put like the name, the realtor's name and then their name on it or something like that. So you can attribute who's actually getting the leads.

Minimum or two services, two free. Your first two free services on us. Welcome the area. And then your whole pitch is.

You have to realize that you have to sell the real estate agent on the fact that they are going to get goodwill from their customer by giving them that coupon. And that's what you have to sell them on. So make it really good because Otherwise if it's 20, $30, the agent's just going to make you're they're doing lead gen for you. But there can be real value that you give for free to their customers. And it's like a housewarming gift or whatever that typically comes after home purchase. You're good to go. All right, everyone, I hope you have a fantastic Monday. I will probably be sporadically do mic minus next few days. I'll be back in the office on Friday. Annual family vacation. Very fun stuff here on a cruise for a few days. Picking up a little vitamin D as we call it. And so appreciate you all and I look forward to seeing you all tomorrow. Take care.